Professional Documents
Culture Documents
I INTRODUCTION
The food and drink retail sector represents the largest industry in
decade.
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Tesco is one of the largest food retailers in the world, operating
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For employment legislations, the government encourages
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These economic factors are largely outside the control of the
Tesco's profits over the next few years, the company is still highly
share of the business mix, the supply chain and other operational
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The type of goods and services demanded by consumers is a
• Wireless devices
• Intelligent scale
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• Self check-out machine
(Finch, 2004).
Graiser and Scott (2004) state that in 2003 the government has
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production to cut waste, reduce consumption of resources and
new tax on advertising highly processed and fatty foods. The so-
called 'fat tax' directly affected the Tesco product ranges that have
and reduction of buyers' power can limit entry to this sector with
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amount spent on groceries at its stores. While prices are lowered
compensate.
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that impact new entrants and the existing ones. Other barriers
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3.3 Bargaining Power of Customers
viable, and such products are now widely available at the majority
of large chains.
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3.4 Threat of Substitutes
size and market dominance of the larger players, with greater store
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consumer information that can be used to communicate with the
There are companies that have always understood that they were
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promotion of an “every penny counts” environment. The company
reputation.
have less time for shopping, Tesco employed this on-line systems
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4.2 IT Integration
that IT has risen beyond its traditional support role and taken up a
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buyers to their virtual doorstep from around the world. Other
price and volumes. For many years Tesco has been supporting
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company policy and company's main approach to have unique
aims to control the work of its suppliers and heavily relies on their
Initiative.
Branding 5 3.5 3
IT Integration 4 3 3
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Supplier 5 3 4
Management
Total 14 10.5 11
CULTURE
Tesco is the top grocer and leading retailer in its home market of
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the strategic capability, including resources and competence, of
development
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in the 1990s suggests that over time companies may develop key
service and its delivery. For example, trust in the Tesco brand
lies at the heart of these services and in 2003 the number of retail
accounts per week are being opened and Tesco sees these areas
MarketWatch, 2004).
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have to adapt and change. The example of this was when the
company has launched its loyalty card and went into banking.
management.
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deliver an efficient "customer interface". Tesco was the first UK
grocer to launch a loyalty card and has been the most effective.
Palmer (2004) claims that until recently, it was the only grocer to
advantage.
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5.3 Cultural Web
for granted for understanding how they connect and influence the
strategies.
each other, and towards those outside the company that can make
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measurements are constantly under the management review to
and reinforce the way things are done. On-going meetings and
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The first strategy of cost leadership is one in which Tesco can
strive to have the lowest costs in the industry and offer its products
so well that they are able to price their products competitively and
create brand loyalty for their offerings, and thus, price inelasticity
differentiation.
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strategies are aimed at the broad market, Tesco may also choose
The danger some organisation face is that they try to do all three
IMPLEMENTATION
the business situation. Risk and value trade-offs are made explicit,
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Market Development Strategy: Joint Developments and Strategic
Alliances
complexities of these markets, Tesco may feel that being the first
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sustainability, acceptability and feasibility. Sustainability will be
to the expected return from the strategy, the level of risk and the
strategy.
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can introduce new product lines. This may require more attention
it does not mean that the innovator has to possess all requisite
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8.0 CONCLUSION
The success of the Tesco shows how far the branding and
making their retiling concept into a virus and spending it out into
the goals, the effect of possible actions towards these goals and
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levels of strategy should be related and mutually supporting.
APPENDIX B
Studies
Strengths
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to grow share in food, while increasing space contribution from
The deal has turned Tesco into the country's second biggest
Tesco has grown its non-food division to the extent that its
insurance now has over 330,000 cats and dogs covered, while the
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life insurance policy followed on from the success of last year,
supermarket and this year the group had sales of over £577
Ireland increased by 78% during the last fiscal year. The company
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as well as its efforts to branch out into finance and insurance have
strategy that has accelerated its advantage. Its UK sales are now
Weaknesses
Tesco's profits over the next few years, the company is still highly
this isn't a major weakness in the short term, any changes in the
UK supermarket industry over the next year for example, like the
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due to its huge investment in space for new stores.
Since its expansion is so aggressive, Tesco has little free cash for
particularly in the UK. While 'fill the gap' strategy would be useful
Opportunities
retail sales climb sharply over the next few years. It can use its
Tesco's non-food sales will double over the next four years.
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Worldwide it has sales of £7 billion in non-food, some 23% of the
longer sounds like the consultancy-speak that it once did, and they
are getting there using the basic tenets of value, choice and
new space opened in the UK last year was for non-food and the
result has been to increase its market share from 5% to 6% and its
to 12.8%.
in the baby goods markets. Across all health and beauty ranges
have come to expect and this year invested £27 million on health
and beauty pricing alone. The company now has 19 stores with
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Further international growth: Tesco now operates in six
will add 2.5 million square feet to sales area and could well enter
the tesco.com home shopping model to the US. Telecoms are the
Threats
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investors in price, Safeway because of new ownership and
With both Asda and Tesco committed to price leadership, this could
returns as each country moves past critical mass. This might not
China or Japan.
and range of goods. For the moment, Asda is the third largest
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Tesco is well aware of this, and has so far been quick to keep up
with price cuts or special offers at Asda. Wal-mart may also decide
to wield its buying power more heavily in the UK, and this could
and marketing, as well as land prices (which are currently low) and
investment, this represents a high risk area for Tesco to bank on.
APPENDIX C
VALUE CHAIN
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Primary Activities
value (P+))
Inbound logistics
Inbound logistics are placed at the first stage of the value chain as
The logistical tasks, in this case, include the receipt of goods from
Operations
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the shelves, and the stock (+). In order to obtain future
Outbound logistics
The third stage of the value chain is the outbound logistics that is
add value by saving the customer time (+), whilst increasing the
obtain (P+).
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the value chain. Clubcard gives further discounts and loyalty for
Support Activities
Company Infrastructure
provide the continued focus on the costs and cash control of the
has now increased its staff count who are involved in upgrading its
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theft, an expense the customer will now not have to cover in the
customer the benefits of a well recruited, well trained staff, not the
Technology development
42
REFERENCES
Kingdom, January;
October;
43
Finch P. (2004) Supply chain risk management, Supply Chain
Issue 3, pp.125-138;
November/December, pp.10-14;
the Tesco meat supply chain, British Food Journal, Vol. 105 Issue
6, pp.328-349;
September;
Nobember;
44
Myers H. (2004) Trends in the food retail sector across Europe,
Ritz (2005) Store wars, Business Review, Vol. 11, April, pp.22-23;
pp.56-82;
BILIOGRAPHY
45
of Database Marketing & Customer StrategyManagement, Vol. 12
Issue 1, pp.66-73;
Kingdom, January;
October;
November;
46
Dennis C., enech T. and Merrilees B. (2005) Sale the 7 Cs:
Issue 3, pp.125-138;
November/December, pp.10-14;
47
Guy C. (1994) Grocery Store Saturation: Has It Arrived Yet?,
Issue 1, pp.3-11;
6, pp.4-6;
the Tesco meat supply chain, British Food Journal, Vol. 105 Issue
6, pp.328-349;
48
MarketWatch (2004) Company Spotlight: Tesco, Datamonitor,
September;
Nobember;
pp.871-882;
49
Palmer M. (2005) Retail multinational learning: a case study of
Ritz (2005) Store wars, Business Review, Vol. 11, April, pp.22-23;
experience from Tesco online, British Food Journal, Vol. 105 Issue
4, pp.274-278;
Issue 3, pp.194-206;
50
Firm Competitiveness, Competitiveness Review, Vol. 10 Issue 1,
pp.56-82;
51