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Strategic Management of TESCO Supermarket

Strategic Management of TESCO Supermarket

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Published by: sunb2 on Apr 14, 2010
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Strategic Management of TESCO supermarket: PESTEL analysis,Porter's 5 Forces analysis, Critical success factors, SWOTAnalysis, VALUE CHAIN analysis, TESCO'S strategic options,Core Competences & Cultural Web.I INTRODUCTIONThe food and drink retail sector represents the largest industry inthe UK, providing employment for over three million people inprimary production, manufacturing and retailing. In 2003 retailaccounted for 9% of gross domestic product (Datamonitor, 2003).In recent years UK supermarkets have come under increasedscrutiny over their treatment of suppliers, particularly of own-labelproducts, yet the development of strategic supply networks hasbeen an integral part of most supermarket strategies for the pastdecade.The report below provides an insight into the supermarketcompany, Tesco, with emphasis on its external environmentanalysis and company's analysis of resources, competence andculture. Two future strategic options are suggested in regards tothe resources based strategies.
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Tesco is one of the largest food retailers in the world, operatingaround 2,318 stores and employing over 326,000 people. Itprovides online services through its subsidiary, Tesco.com. TheUK is the company's largest market, where it operates under four banners of Extra, Superstore, Metro and Express. The companysells almost 40,000 food products, including clothing and other non-food lines. The company's own-label products (50 percent of sales) are at three levels, value, normal and finest. As well asconvenience produce, many stores have gas stations, becomingone of Britain's largest independent petrol retailers. Other retailingservices offered include Tesco Personal Finance.2.0 INDUSTRY ANALYSIS: PESTEL FRAMEWORK
2.1 Political Factors
 Operating in a globalized environment with stores around theglobe (Tesco now operates in six countries in Europe in addition tothe UK; the Republic of Ireland, Hungary, Czech Republic,Slovakia, Turkey and Poland. It also operates in Asia: in SouthKorea, Thailand, Malaysia, Japan and Taiwan), Tesco'sperformance is highly influenced by the political and legislativeconditions of these countries, including the European Union (EU).
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employment legislations
, the government encouragesretailers to provide a mix of job opportunities from flexible, lower-paid and locally-based jobs to highly-skilled, higher-paid andcentrally-located jobs (Balchin, 1994). Also to meet the demandfrom population categories such as students, working parents andsenior citizens. Tesco understands that retailing has a greatimpact on jobs and people factors (new store developments areoften seen as destroying other jobs in the retail sector astraditional stores go out of business or are forced to cut costs tocompete), being an inherently local and labour-intensive sector.Tesco employs large numbers of; student, disabled and elderlyworkers, often paying them lower rates. In an industry with atypically high staff turnover, these workers offer a higher level of loyalty and therefore represent desirable employees.2.2 Economical FactorsEconomic factors are of concern to Tesco, because they are likelyto influence demand, costs, prices and profits. One of the mostinfluential factors on the economy is high unemployment levels,which decreases the effective demand for many goods, adverselyaffecting the demand required to produce such goods.
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