Business Research Method

STEP analysis of Tesco

The College of Technology London

Module Lecturer Students Name Students ID Assignment Due Date PGDBA2: Business Research Method Dr.Mohamed Asim Sheikh Muniruzzaman 094293-75 29th April 2010

Title: STEP analysis of Tesco

Introduction
To analyze macro environment, it is important to look through the factors that are effecting an organization. An organization depends upon its supply chain, customers demand, market needs, supply of raw materials and available resources. All of these variable dependencies could be affected by the macro environment. If an Organization wants to run its business smoothly, be in the race, be in the competition and wants to increase its market share it has to take it in concern about all the macro environmental factors.

STEP Analysis
There are number of checklists to identify the factors that effects a company /industry, STEP analysis is one of the checklist that categorizes the environmental influences such as Social, technological, economic and the political factors. Sometimes there are two other forces are there which is subsumed by others. By the analysis researchers can see the impact of each factor on macro environment and at the same time impact on each other. The research results then can be use to take the advantage to reduce the threat in preparing the business and strategic planning. This research proposal is conducted to see the insight impact on the supermarket company Tesco. The main emphasis on the external environment where the factors like resources, competence and the culture counts. Tesco is the largest retailer in the world, they are running their business over 14 different countries in the world and there are about 470,000 people are employed. They are running their business in four banners like Tesco Metro, Tesco Extra, Tesco Superstore and Tesco express. Tesco selling about 45,000 products including clothing and other non food items. It is the largest and the cheapest petrol retailers in UK and also they got their own product like Tesco value, finest and free range. Tesco is running their business over 14 countries, they are trying to extend their business through all over the world and to do that they have to take some strategic planning which is done by strategic management. This research is conducted to see through the external macro environmental factors that are Tesco facing and how they are coping up with those factors.

Design a proposal to investigate the factor

All the factors of STEP analysis are effective to the macro environment but our research would be conducted to see the most important factor amongst them which is Economic factor. Economic factors are likely to influence demand, profits, price, product and also profitability. The main problem of the economic factor which influential is high volume of unemployment which effects the production, quality of service, company performances and also customer dissatisfaction. This research will analyze all the Macro Environmental factors separately with the help of the secondary data which was done by the researcher previously using qualitative methods.

Research questions
1. How external environmental factors effecting Tesco? 2. How Tesco should adopt their strategic planning? 3. How it is important for an Organization? 4. What are the Impacts of Economical factor?

Literature Review
A number of authors and researchers research STEP analyses where we can see the reason why STEP analysis is important for an organization; they critically evaluate it and describe every aspects of analysis One of the best growth paths for a business is to regional or global. But most companies hesitate to go abroad .They see obstacles and risks stemming from tariffs , language differences , cultural differences , devaluation and exchange control risk and bribery(Philip Kotler 2003).by analyzing STEP analysis a company or business can overcome their obstacles it helps management people to look in to the main points where there have to concentrate , a business If its big enough in to the regional sector they have to globalize their business to abroad as well as increase their market share. Tesco is doing their business over 14 countries, before they get into the new market they surveying that particular market briefly who are their rival competitor , are there any other industry whos producing the same product or similar and if they have a strong competitor they are using their economical power to gain the leadership. The main strategic motto if Tesco is cost leadership. Kotler (1998) claims that STEP analysis is a strategic tool to understand companys growth, decline, position, necessity, direction. STEP analysis in other word helps to take strategic decision, planning, business forecasts, development of the product. STEP analysis analyze to the extent in the changes of political , socio-culture , economical and technological forces that tends to predict the maximum limit of the changes that can be happen

and the consequences that could happen to the business. In contrast industry based approaches concentrate on the business those who are producing the same products and environment which is competitive, its also concerned about the relative power of buyers and the suppliers, and analyzes the actual or possible threats from the rival company (Ian Worthington & Chris Britton 2006).They summarize that a business is only depending upon Political , socio-cultural , economical and technological forces that could be the forces which the company has to look through STEP analysis whereas according to Porter to his porters five-forces model of competition argues that its not only the external factors that influences the competition but its the intensity of the company or companies within its operating and its not influenced by the competitive rules of the game but also the strategies within the industry. Porter also claims that a industry doesnt depend on only one forces its the collective factors that which determines the maximum profit potential. Main Aspects of STEP Analysis Economic environment refers to the economic system of the country, the structural anatomy of the economic policies of the government to the organization of the capital market, funding policy, and the infrastructures of the socio-economic forces (A. pushparaj 2008-2010, 12.37). Tesco is trying to cope up with the economical environment in Japan but the main problem is economy of Japan is quite up growing they are at the top most level where they can manipulate with other company which came from abroad. Another author Roger Cox & Paul Britain indicate some good points about the economical effects on macro environment , according to them the standard of leaving is depending upon the economical inflation and deflation , when inflation rise up customers stop spending and there demand goes down and at the same time prices also going up, in inflation time most of the business lose their customer which becomes a threat for their existence (Roger Cox & Paul Britain 2004) In a company review in datamonitor (2004) it says about Tesco in comparison with the economical factor, Tesco is in the leading position of supermarkets but they are based in UK, though their business is growing internationally still if there are any changes in the UK economy that could shake the foundation of Tesco.

Evaluate the central methodological issues

STEP analysis is the core process to figure out the further future establishment of a business. It helps an Organisation to fix its strategic planning. Economical force is the centre and the driving factor that influence the macro environment.

Tesco is currently undertaking a four-part strategy to help aid growth. This includes

winning in the core UK through its inclusive offer; growing non food market share;

being innovative in retailing services; and growing its international business, gaining market share (Datamonitor , p32/34, Reference Code: 1674)

Source & The access of data

For the research Im going to use secondary data The data for the research will be collected from Journals, E-book, newspaper, Research paper, documentary , company web site, books etc. By analysing data or read through the articles we can easily choose which is going to fit or not. For the research Im going to gather as much information as I need and which relevant. Im going to use about 30 sources. My study is going to be Qualitative methods based thats why I dont have to go for the interviews.

Data gathering techniques

Before a researcher goes to gather data they have to be confirm about the data reliability, suitability and accurate and also adequate of data. Reports prepared by research scholars, economists of universities, etc in different fields. Historical documents, public records and other published documents. Internally published company handouts, Company reviews, and Company magazine. Reports, publications which is connected to the company or industry. Electrical and trade journals. Various foreign governmental journals or any other international bodies paper handout.

Outline of the main data analysis techniques

Gathered data should be accurate and adequate and at the same time should be reliable so that it will be easy to understand and sense what is right and what is wrong. I planned to use Qualitative research method. The reason behind that Qualitative method is well accepted in the social science and also in the educational researches.

Competence in the research techniques I am quite skilled and knowledgeable to use various techniques according to my plan.
The research proposal is the evidence of my skill. Even if i need more knowledge Ill go through the books and various research papers to extend my knowledge.

Example of gathering data

I have been to the Tesco stores to talk to the store manager and gave me a clear picture of Tesco and he also provides me the company magazine which they publish inside the store for the staff. Leader never leads the people, people let the leader to lead them, in a business customer are the leading factor, if the customers are satisfied they will lead the business to the top. Different web sites, magazines provide charts and graphs which shows the success story of a supermarket. By analysing them we can understand the market situation.

Project schedule
A project is a planning work which is consists of set of activities and there has a time frame to finish it. My research will take about 53 days. My research planning is scheduled as follows which is shown by the table and Gantt charts below: Project Schedule No. 1. 2. 3. 4. 5. 6. 7. 8. 9. Activity Going through previous Research paper Gathering Materials know how to implement methods Running tests Interpretation of data Start writing the research Rewriting Rechecking the research paper Submission Table 01. Time period 9 days 9 days 6 days 8 days 10Days 5 days 2 days 4 day

Gantt chart of Project Schedule

Ethical concerns
My research report will help Tesco top executives to look into the problems they got and where they have to concentrate. My research will be accurate and practical which will not effect negatively. There are few political issues related in my Research, macro environment will be illogical without political issues. The research is based upon the true statistical data and its all about the weakness of an Organisation thats why Ill maintain confidentiality. I am going to ensure that by keeping it on my own. I can offer them only my resources but not my work.

Conclusion
Tesco is the leading market share holder in UK and also in Czech Republic ,they are become a giant because of their branding , low cost , world class service and quality .To help the customer

Tesco change their motto into Every little help. Tesco become the number one retail name in UK and them wants to be the number one supermarket in the world. To be the number one they has to look into their macro environmental factor which going to effect them in near future which is economical factor. In some places like Japan, they are still behind cause of their economical hurdles. In Japan there is huge market, if Tesco Implement their step analysis especially on economic factor they will be able to capture the whole market which could be a big success.

References
1. 2. 3. 4.
http://www.ivoryresearch.com/sample5.php Kotler,p (2003) Marketing insights from A to Z Worthing,I.and Britton,c.(2006) The business environment. P- 7 http://www.rajputbrotherhood.com/knowledge-hub/business-studies/the-economicfactors-affecting-business-environment.html 5. Datamonitor (p32/34) 6. Cox,R. & Brittain,P(2004) Retailing : an introduction.P-73