Introduction to Global Strategy
Global strategy is wider aspect which covers three areas such as global, multinational and international. This strategy assist to designed organisation targets in order to expand operations in international market. Therefore, the business can accomplish their objectives to determines various benefits. In this context, present report is based on Mark and Spencer and Tesco which are strongest retailer enterprises in UK (Haslam, Butlin and Lehman, 2014). They are deals in clothing, home products and many other goods in UK and global business market. In these businesses, there are more than 82,904 employees are work in different part of market. M & S and Tesco have total sales revenue in 2014-15 is £43,573 and £9,223 million respectively. In addition to this, in report British Home Store (BHS) has also taken which is the department store chain and has 165 branches in London.
For gaining insight knowledge of the companies, report covers different models with its implications. Therefore, Porter's five forces taken which is determines opportunities and threats in the industry. Furthermore, it includes PESTLE analysis that helpful to identify opportunities and threats in macro environment. Moreover, porter's value chain has been implement that assist to identify strength and weaknesses in primary and supporting activities in the business environment.
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Question 1 Portfolio organisation and integrated organisation
As per the view of Marquis, Toffel and Zhou, (2016), portfolio organisation refers as collection of assets which held in institution or any private individual. For example, Tesco and M&S. In this type of enterprise, investment collection are owned by the same individual or the organisation. Investment includes shares such as bonds, equity, mutual fund and may more. Main aim of considering investment is debt that design to earn more interest and mutual fund that are pool of money and invested by professional (Marquis, Toffel and Zhou, 2016). However, Ingram, Wright and Buttriss, (2013) stated that integrated organisation is considered as model which can be applied to describe and analyse functions and operations of enterprise. There are many aspects which influences to each other and simplify complexity in the businesses
Within the market, global retail industries has high worth around 28 trillion by 2019. This is because, their 2015 sales is around 22.6 trillion and company is growing continuous so that they will easily accomplish their objectives and targets in successful manner. Now both retailer Tesco and M&S uses E-commerce which creates several benefits to operate functions and operations in international market. With the help of analysis opportunities and threats of company, the companies can assess their market functions.
Merit and demerit for adopting portfolio or integrated organisation in management
- With the help of adopting portfolio, organisation can easily diversify the business in different types of elements which assist to make effectively results.
- In this way, another business can also merge which assist to promote profitability at workplace.
- There is high conflicts take place when integrated organisation is working.
- Lack of proper understanding take place due to different perception of various employees.
In order to carry Porter's five forces model Tesco and M&S can easily identify opportunities and threats within the environment.
Porter's five forces
It includes following elements through Tesco and M&S can identify impact of market and their performances in effective manner:
Threat of new entrants (High)
In UK market, there is high threat of new entrance. This is because, there is wide market so that other new players can easily invest their high money to attract customers (Beel, Jones and Rees Jones, 2016). Hence, Tesco and M&S has threat of new businesses. In addition to this, when they are operating in global market, it is also threat to make themselves popular due to high competition and break loyal customers from the market. Although, both businesses have quality product advantages so that they can easily offer discounts to customers and attracts them at new workplace.
Threat of substitute products (High)
In market there are various substitute products available as Tesco and M&S. To meet with customer requirement, it is very important to make continuous innovations that assist to keep brand position very strong that remains distinctive as per customer base. However, it is very easy to get same design through copy at lower cost by another business. For example, ASDA has similar products range as the chosen enterprises. Hence, competitor can easily copy products as Tesco and M&S that assist to attract customer with low price products.
Bargaining power of buyers (Moderate)
Buyer power of customer is significant. This is because, price of customer is very sensitivity which can be force to the hand of retailer. Customers can easily switch towards other businesses because they have many alternatives. Thus, it is moderate that impact on the business performances. They are generally prefers low cost for organisations products to meet with their needs and requirement (Haslam, Butlin and Lehman, 2014). Competitors of M&S and Tesco continuous focusing on customer relationship so that it creates problem to attract people at workplace. In research of 2016 sales, it has been found that the chosen organisations had 40% value share in departmental stores. High share of this segment makes stock surplus in apparel and footwear due to unseasonable conditions that decline value of the companies.
Bargaining power of Suppliers (Low)
In starting time M&S generally deals with British suppliers. Thus, their primary focus on maintain relations with them effectively. After some time Tesco and M&S both pressure to outsource and reduce cost through contact with other country's suppliers. Through focuses on private label, it is also gives power to the external suppliers (Ingram, Wright and Buttriss, 2013). Switching cost for the both enterprises depends on outsourced suppliers which is quite low.
Competitive rivalry (High)
Competition is very strong for the retail sector companies. In this aspect, various types of products are selling in market such as home wear, clothing and fashion products, etc. Tesco and M&S are deals in high competition so that it is difficult to capture international market to grow businesses. Competition is also growing in online segmentation in which users are chosen and collect whatever they want. The cited firms had made online stores and also gives membership cards which assist to grow high sales in market. Loyalty membership cards assist to make strategy that has been follows by another supermarkets chains. New businesses also capture the market through determines products and services with low cost strategy. Hence, it declines sales of clothing company in market.
With the help of Porter's analysis, it can be determines that Tesco and M&S need to concentrate on their performances. In this way, innovations and creativity need to be implemented which creates effective results at workplace. In addition to this, products are need to be sell at low prices which creates various benefits at large volume. With the help of strong position, they can make loyalty towards customers in effective way. Therefore, it could be said that the chosen organisation has advantages to deals with strategic partnership to make position in global market
Question 2 Strategic alliances and Merger & Acquisition
As per the view of Shatz, Popper and Cohen, (2016), strategic alliance demonstrate as agreement among two or more parties that pursue a set of agreed targets and objectives at time of independent organisations. It includes short of legal partnership entity, agency or corporate affiliate relationship. However, it can be stated as two and more enterprises that can form strategic alliance and possess one or more assets or any expertise knowledge which help to outsource relationships. It makes parties desire for accomplish long term outcomes and win-win benefits through creates innovations as per mutual results On the other hand, Beel, Jones and Rees Jones, (2016) identified that merger and acquisition is area of corporate finance, strategy and management which deals in consideration with another enterprise. In other words, it could be said that merger and acquisition is determines as consolidation of different company. It can be differ in two terms such as combination of two companies to one business whereas, acquisition is a form of one company is taken by another enterprise (Beel, Jones and Rees Jones, 2016). These two elements are major aspects of corporate finance in the world. Main motive of create merger and acquisition is enhances value that brings high standard to maximise wealth. In order to carry external macro environment analysis, position of Tesco and M&S would be assessed in environment.
Benefits and limitations due to strategic alliances
- Strategic alliances allow to the business to gain competitive advantages through various resources and people.
- This is also creates product introduction and assessment of trade barriers which make changes in technological advancement.
- Additional cost need to be implemented in company to demonstrate effective functions and operations.
- Different types of culture and perception create clash of corporate culture to deprive themselves for future opportunities with competitors
Benefits and limitation of merger and acquisition
- With the help of merger and acquisition, company has excess cash so that they are able to enhance productivity and outcomes at workplace.
- In addition to this, business can also diversify in further profits and revenue.
- Price is no uniform and standardisation when merger and acquisition is take place.
- Shareholders have no ideas because the business take very high debt to acquire which is so risky.
- It is very difficult to cop-up with new culture, system and management that create negative impact on the performances.
It is very difficult to cop-up with new culture, system and management that create negative impact on the performances.In order to take strategic alliance, Tesco and M&S can effectively work in international market. This is because, it assist to promote the business result for delivering profitability in the enterprise.
Tesco and M&S are multinational companies that are providing retail products in various parts of global and domestic market. They both are deals in different types of products that assist to make effective results. In order to get better understanding of multinational organisations, PESTLE analysis has been taken for assess their outcomes (Anthopoulos and Fitsilis, 2014). They are as follows:
Tesco and M&S is operates at global level. Thus, there are various rules and regulations exist in market that are made by governments which need to be followed. There are various types of political factors which greatly influence to the performances of both organisations. For example, tax rates, stability in the country and many more things. With the help of going financial instability within the corporate world, governments of other nations can encourages retailer to creates jobs for domestic population
These types of factors are most important concern for Tesco and M&S. They are mostly like leverage cost, demand and profits, etc. Thus, it is essential to know about changes in prices, policies, taxation and many other factors which could be affects to finance part of the enterprise. Hence, it is very important to grow continuous enterprise in international areas (Marquis, Toffel and Zhou, 2016). However, the company is dependent on UK market in term of share which is around 30% of total market share. Internationalisation and diversification are two key strategies which pursued by the firm over the years. It is the main reason of success of the companies in international areas. In addition to this, decline in disposable income level also creates impact on the organisation performances. This is because, Tesco need to be shifted towards their advertisement and brand value instead of selling luxuries items
In order to changes in social aspects, trends and customer perceptions, etc. businesses need to concentrate on their outcomes. Increased number of food products and non food items are need to be sale within the market. It will assist to make effective results at workplace in term of goods and services. As per market demand of customers, Tesco and M&S should provides products and services. Due to beliefs and attitude of customers, the organisations are influences by social conditioning. However, customers are more aware towards their health issues so that their approach is change towards food constantly (Laesslé, 2015). Hence, Tesco adopted organic food items so that they can easily meet with changes of customer effectively.
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With the help of advance technology, the chosen companies can easily determine several opportunities at workplace. This is because, advancement in technology brought various new things that assist to meet with targets and goals in effective manner (Bascavusoglu-Moreau and Li, 2013). In this way, Tesco and M&S can also provide self-serving services at workplace. Hence, it will assist to make convenience and ease for customers. It reduces labour cost and extra charges which make significant growth within the business environment. In addition to this, the organisations are also made investment that significant to produce efficient project to fulfil long term objectives. It also reduces carbon footprint to develop effective results within the business environment
In order to increase pressure on companies, it is important to address environmental issues. In this aspect, there are several ways adopted which creates effective operations for society. Tesco adopted several techniques through they can reduce carbon almost 50% in 2020. In addition to this, they both are also minimizes waste produce from the stores through enhancing social conscience
In UK there are various governments policies and legislations determines that directly impact on the performances of Tesco and M&S. For instance, Food Retailing Commission (FRC) in 2004 suggest code of practice need to be introduced that ban in many other current practices. It includes changes in price without notice or demand payment from suppliers. In order to facilitate these policies, Tesco provides their customers with price reduction on fuel. In addition to this, there are various promotion offers when price is lowered
Question 3 Corporate governance, CSR, leadership and competitiveness
As per the point of Webb, (2014), corporate governance is refers as system of rules, practices and process which directed and controlled by the company. It involves essentially to creates balance in interests of business stakeholders such as customers, management, financiers and government, etc. However, it included participation of different participants such as shareholders, board of directors and company's management, etc. (Webb, 2014). Hence, it assists to create shape between corporate performances and proceedings towards relationship between owner and managers. On the other hand, CSR is stand for customer relationship management which assist to maintain relations with various customers who are take place within the business environment. Leadership and competitiveness are also important element which assist to promote effective results within the enterprise (Beel, Jones and Rees Jones, 2016). In this context, British Home Store has been taken which is the largest departmental store chain that has 165 branches is located in high streets.
Porter's value chain
Value chain is demonstrate set of activities which operates by firm in order to deliver valuable products and services. It includes primary and supportive activities which assist to make effective results to support the product or services (Sandino-Vargas, 2014). They are as follows:
Primary activities are directly relate with physical creation, sale and maintenance which can support to BHS products and services. It includes following elements:
- Inbound logistics: This element is relates with receiving, storing and distribution of input internally. With the help of suppliers relationship, value can be creates effectively.
- Operations: These are transformation activities which need to be change input into output that sold to customers. With the help of operational system, value can be creates in business environment
- Outbound logistics: These activities assist to deliver products or services of BHS to their customers. It includes things such as collection, storage and distribution which take place internally and externally in the organisation.
- Marketing and sales: Marketing and sales are determines as process which need to be pursued for clients instead of competitors of the organisation. Benefits that are offers need to be communicated them with effective source of value
- Service: These activities are related to maintaining the value of products and services for customers when it is purchased.
Support activities make effective results for primary functions. With making support, primary activities are plays vital role in the success of business. In this way, procurement support operations determines with certain activities . It makes effective support to other elements of primary activities. It includes following aspects:
- Procurement (purchasing): These activities is determines as functions what done by the firm to get results from different resources (Anthopoulos and Fitsilis, 2014). With the help of finding suppliers, BHS need to ensure the best price for their products for develop effective results.
- Human resource management: Human resource management also play a vital role in success of primary activities of the chosen business. Through recruit, hires, trains and rewards, etc. BHS will create advantages of HR practices. People are most significant resources for creating value (Haslam, Butlin and Lehman, 2014). Thus, it is very important to determines good HR practices.
- Technological development: Technological development activities are relates to manage and process information. In addition to this, it is also includes protect company knowledge. Hence, minimize information technology cost that assist to staying current with technological advancement (Ingram, Wright and Buttriss, 2013). Therefore, technological and maintaining technical excellence are effective sources that creates value.
- Infrastructure: Infrastructure are another element that support to system and functions to maintain daily operations of BHS. In this aspect, accounting, legal, general management and administrative elements are the best example that are necessary to create advantages in company
From the above analysis, it has been shown that in BHS there are wider implications of porter's value chain. In this way, idea of seeing a manufacturing system is carry with subsystems. It includes input, transformation process and output accomplish through acquisition and consumption of resources. The chosen firm includes money, labour, material, building, equipment and management, etc. As results, value chain activities are carried which determines cost and affect to profit
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Question 4 Reflection
As per my point of view, porter five force analysis is demonstrates market outcomes so that Tesco and M&S need to concentrate on their operations. There is high threat of new entrance so that company should focuses on their innovations and creativity. Further, customer are demanded qualitative products at low price so that the companies should demonstrate benefits with focusing on transformation activities. In this way, I learned that the chosen businesses has effective choice to determines products and services at workplace. With the help of analysis competitive rivalry, it has been shown that organisations need to concentrate on existing performances. This is because, another competitors also demonstrate their functions and operations to delivers effective results. Further, PESTLE analysis shows macro environment effect through market forces on the enterprise performances. In this way, economic factors are highly creates impact on the business outcomes. This is because, in every country there is high taxation which creates adverse impact on the chosen businesses performances. In respect to make effective results, all legal and environmental rules need to be followed at workplace.
However, PESTLE analysis also considering performances objectives to develop results within the environment. In this way, I learned various factors which need to be develops at workplace. Hence, businesses should concentrate for developing elements which creates results at workplace. Through determines value chain it has been shown that there are several primary activities which runs by supportive elements at workplace. However, business should implements each and every activity with supportive elements. Therefore, business will get their targets and performances effectively at workplace. Moreover, human resources' management part of the company is very important so that it required more effective which assist to accomplish targets within the businesses. Through determines value chain, it has been seen that company has effective elements which support to develop positive outcomes at workplace. As results, targets will be achieved for accomplish the activities.
In addition to this, I learned that technological development activities are also important part which establish to enhance positive results within the business environment. Through focusing on advancement of technological aspect, the company can reduce cost and time to implement objectives. As results, targets and effective results will be accomplish that made for enhance business performances. Apart from this, infrastructure facilities also assist to grow functions and operations because accounting, legal and general management practices within the business environment.
In order to focus on report, it has been articulated that global corporate strategy is very helpful aspect to enhance market share. In this way, business can target potential customers from various parts of the international areas. Furthermore, report summarized about porter's five forces model which applied to analysis external environment impact on the business performances. It assists to find competition, buyers power, suppliers power, competitive rivalry and threat of substitute. Therefore, Tesco and M&S can analysis their performances to deals with global market strategy within the environment. Moreover, report also concluded about PESTLE analysis which assist to find out external factors that creates impact on macro environment of company. In this way, there are certain elements included which highly impact on the business performances. Due to changes in rules and regulations of economic environment, there is highly impacted to the organisation performance when they are deals in global places.
Economic factors are creates major impact due to changes in currency, taxation and many other aspects. Therefore, the company is not easily deal at international market. Technological factors are also implemented which would assist to enhance profitability of market to organise various tasks. At last value chain analyse that shows support of primary activities through supportive elements. In this way, BHS has greater advantages to make sure they are able to deliver effective results.
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