Information Technology Management- Tesco Plc.
SWOT Analysis
Tesco Plc. is one of the world’s leading firms in the retail industry. The firm has continued to maintain its position in the sector by continuously analyzing its information systems (Rosnizam et al., 2020) Overall, SWOT analysis is a strategic management tool utilized by company managers to carry out a situational evaluation of the company. This essay will discuss Tesco’s SWOT analysis concerning its present information system environment.
Strengths
Tesco Plc. has a robust information management system tools that are utilized to manage, assess, and efficiently run the company’s departments. The firm has high-quality information systems that meet international standards requirements (Rosnizam et al., 2020). The firm has fully automated its operational processes using the latest technologies. Tesco has a fully equipped management information system that allows the interconnectivity of various sections in the firm. The information system in the company. is used to determine the number of hours that employees have been working over a period. The company utilizes technology systems to collect data about customers which helps the firm to understand the customers’ shopping habits and trends. Currently, the company has a robust system that tracks product sales, product stock levels, and price policies. The system enables the firm to control the flow of stock, the quality of the products, location of the commodities, and other operations in the firm’s warehouses. With the rapid advancement in information technology, Tesco Plc. has utilized information systems such as the internet to attract more customers hence an increase in sales. The firm uses information technology systems such as those that link-up different stores, supply chain systems, human resources systems, financial systems, e-business systems, employee scheduling systems, Tesco Personal Finance (TPF) systems for the loan application, and food labeling systems.
Weaknesses
There are several weaknesses associated with the use of the RFID technology that is utilized by Tesco Plc. RFID technology is not fully developed and may cause data errors when used to capture information from tags that are close to liquids or metals. Poor data capture may result in errors in product pricing which may adversely affect the company’s sales revenue (Rosnizam et al., 2020). Tesco’s information system is facing the risk of unauthorized access to company data by some employees. Tesco Plc. has an ineffective updating of the information system which causes various security gaps. Presently, the company’s investment in technology does not reflect its vision.
Opportunities
The adoption of new technologies with robust information systems provides a significant opportunity for Tesco Plc. to employ new and efficient marketing strategies such as differentiated pricing strategy in the new markets (Rosnizam et al., 2020). Tesco Plc. has the opportunity of designing a better information system that will enhance the firm’s ability to predict the sales of the company’s products, through accurate demand prediction. Tesco’s information system has the opportunity to ensure seamless communication between the managers and staff hence increasing productivity and the accuracy of decision making. Tesco Plc. has the opportunity to use the current information system to reduce errors in data capture by enhancing the capability of the RFID technology.
Threats
Tesco Plc. information systems face several threats in the retail industry. The development of new and superior technologies by the competitors or market disruptors is a major threat to the firm’s information systems. Monitoring of the network for system weakness detection in preparation for future attacks may compromise the entire information system (Rosnizam et al., 2020). The rapid advancement in information technology threatens the firm’s information system because data may be changed to cause misinformation within the firm’s information system network. The company’s information system is threatened by information system overload that may result in the crashing of the system. The overload may render the system inaccessible to authorized users hence poor service delivery.
Forces Governing Competition- Porter’s Fives Forces
The threat of New Entrants
Four major retail industry players dominate the UK market. These brands are Tesco, Sainsbury, Asda, and Safeway which collectively own a market share of 70 percent. In the last three decades, the grocery market in the UK has been changed into a supermarket-dominated business. Key brands have remained strong due to their operational efficiencies which have locked out new entrants in the market. Similarly, new entrants have found it hard to enter the market due to the high initial capital requirements. New entrants face barriers such as economies of scale and product differentiation, aspects that have been attained by Tesco Plc. and Asda. Therefore, the threat of new entrants is not a major force that is governing competition in the retail industry in the United Kingdom.
Bargaining Power of Suppliers
The bargaining power of suppliers represents a force that is held by the suppliers which determines who is supplied with the commodities. Tesco Plc. and other major retailers in the UK offer better prices to the suppliers than the smaller supermarkets. On the same note, suppliers based in the United Kingdom are threatened by the immense capability of large retailers such as Tesco Plc. to purchase their commodities at a lower price from overseas. The bargaining power of suppliers is a force that is presently governing competition in the retail industry in the UK.
Bargaining Power of Customers
According to Porter’s model, buyers gain more power than sellers when the latter offers a standardized or undifferentiated product. Tesco Plc. has managed to reduce the power of consumers through its loyalty card-Club card, which enhanced customer retention hence profitability. Price-sensitive customers are more influential and have more bargaining power than sellers. In the case of Tesco Plc. The bargaining power of consumers is a medium force that determines competition in the industry.
Threats of Substitutes
Substitution of products can reduce the demand for a specific product, especially when customers switch to alternative products in the market. In the grocery retail industry, consumers can substitute one product for another. Substitute products and services in the market determine the profitability of industry players. The threat posed by substitutes is a major force that determines competition in the retail industry within the UK; hence firms such as Tesco Plc. are countering this threat by acquiring smaller retail outlets.
Bargaining Power of Competitors
The larger retail industry players such as Tesco Plc. and Asda has grown significantly regarding their sizes and market dominance. Industry players such as Tesco Plc. have diversified into non-food products in response to customer demands and stiff competition from other firms. In the UK grocery sector, the bargaining power of competitors is a strong force that has compelled industry players such as Tesco Plc. to be more innovative and retain its market share. The grocery industry players have responded to the stiff competition by reviewing their pricing and enhancing customer service.
Wiseman’s Framework of Strategy Management
Wiseman’s framework focuses on the theory of strategic thrust which is an approach that links strategy with information technology. Firms identify strategic information systems when they utilize the Wiseman’s model. There are five strategic thrusts that Tesco Plc. can use to develop a business case for executing a systems management program. (Rosnizam et al., 2020). Strategic thrusts are key competitive maneuvers that companies make and directed at one or more strategic targets.
Differentiation
Based on Wiseman’s model, differentiation of Tesco’s products and services is critical in establishing a competitive advantage for the company. Differentiation is achieved through innovation within the firm. This innovation can only be beneficial if there is an information management program that coordinates innovative ideas from different departments (Rosnizam et al., 2020). The information system also synchronizes processes to create differentiated products and services.
Cost
Firms such as Tesco Plc. can gain competitive advantage by ensuring low production costs. Consequently, an information management system management plan would improve the levels of effectiveness and efficiency of processes and activities within Tesco Plc. According to Rosnizam et al. (2020), improved efficiency and effectiveness is critical in attaining a competitive advantage in the retail industry. Adopting an efficient and effective information system would enable Tesco Plc. to market its products and services at a lower cost which would result in profitability.
Alliance
Firms seek to increase their market share by forming an alliance with other organizations operating in the same competitive industry. Alliances can be executed through mergers and acquisitions. The advantage of mergers and acquisitions is that they enable firms to increase their market shares (Rosnizam et al., 2020). Tesco Plc. can increase its market share by merging with other firms within the industry or acquiring relatively smaller firms with the retail industry.
Innovation
Under the Wiseman’s framework, innovation refers to the firm’s ability to develop new information systems that are unique and increases its competitiveness. The company can invest in innovative programs that develop new information systems that would improve the company’s overall efficiency. Developing and implementing innovative ideas is critical in an information system that is robust and secure. Innovation is advantageous because it enables a company to address the changing customer needs and preferences as times change (Rosnizam et al., 2020). Consequently, through innovation, Tesco Plc. would improve its systems to address customer needs and operational requirements to remain competitive in the retail industry.
Growth
Growth as a thrust under the Wiseman’s model is concerned with increasing the firm’s market share and sales volume. Growth can be achieved through effective marketing strategies that target a specific market segment. Effective marketing and advertisement increase sales volumes. Growth is beneficial because it results in increased sales revenues, hence profitability for the firm (Rosnizam et al., 2020). Profitability enhances a company’s competitive edge in a specific industry. Tesco Plc. can achieve growth by implementing an information system that is effective and efficient.
Conclusion
Tesco Plc. utilizes its robust information system to achieve efficiency in its processes, thus gaining a competitive advantage over its rivals. The automation of Tesco’s key processes ensures consistency regarding product quality. Tesco Plc. has the opportunity to develop new information systems that can further enhance the effectiveness of its processes. Wiseman’s framework was developed out of increased use of information systems as a competitive weapon. Overall, SWOT analysis is a strategic management tool utilized by company management to undertake a situational assessment of the company.
Reference
Rosnizam, M. R. A. B., Kee, D. M. H., Akhir, M. E. H. B. M., Shahqira, M., Yusoff, M. A. H. B. M., Budiman, R. S., & Alajmi, A. M. (2020). Market Opportunities and Challenges: A Case Study of Tesco. Journal of the community development in Asia, 3(2), 18-27. Retrieved from: ftp://ftp.repec.org/opt/ReDIF/RePEc/ibf/rbfstu/rbfs-v6n3-2015/RBFS-V6N3-2015-9.pdf
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