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Organization Overview:Tesco was founded in 1919 by Jack Cohen.

Tesco is one of the largest food retailers in the world, operating around 2,318 stores and employing over 326,000 people. It provides online services through its subsidiary, Tesco.com. The UK is the company's largest market, where it operates under four banners of Extra, Superstore, Metro and Express. The company sells 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 as convenience produce, many stores have gas stations, becoming one of Britain's largest independent petrol retailers. Other retailing services offered include Tesco Personal Finance. The UK grocery market is primary dominated by few competitors, including four major brands of Tesco, Asda, Sainsbury's and Safeway that possess a market share of 70% and small chains of Somerfield, Waitrose and Budgens with a further 10%. Long term business strategy of the Tesco is to successful international retailer, to grow the core UK business, to be strong in non food arena as in food arena to develop retail services such as tesco.com tesco telecom, tesco personal finance, and to put community at the heart of what they do. Tesco work off the business value that their core purpose is ³to create value for the customer to to earn their life time loyalty´

SWOT Analysis:Strength
y Tesco is the top grocer and leading retailer in its home market of the UK. Tesco also leads the world in online grocery retailing.20% of the total Retail market, 12.3% of the Grocery market. The company has a strong brand image, and is associated with good quality, trustworthy goods that represent excellent value, own brand account for the 50% of the sales. More than 800 stores at UK. Good logistic- more than 1600 truck movements daily for retail stores, and 1000 delivery vans for internet orders. Strong Human Resource ± UK¶s biggest private sector employer, 2,27000 staff at UK out off 307000 staff worldwide. Different market formats such as such as hyper market, convenience store and wide range from cheap and cheerful value to upmarket finest selection. Tesco's UK stores are divided into six formats, differentiated by size and the range of products sold it operates under four banners of Extra, Superstore, Metro and Express.

y y y y y

as China is one of the largest economies in the world with tremendous forecast growth and will present many opportunities for Tesco. like the Morrison's group successfully purchasing the Safeway chain could alter the balance of UK supermarket power. US shopping giant Wal-mart purchased Asda. any changes in the UK supermarket industry over the next year for example. It also operates in Asia: in South Korea. Untapped New market with higher margins like health& beauty. Asda can now compete extremely well on price and range of goods. Czech Republic. ASDA deal to buy Safeway . Slovakia. the Republic of Ireland. Electrical Products.y Operating in a globalized environment with stores around the globe (Tesco now operates in six countries in Europe in addition to the UK. Malaysia. Books & Entertainment. Clothing Threat y Wall Marts Entry to UK market. and affect share. Thailand. Tesco's rank as the top UK supermarket has been threatened. Opportunity y y y Non Food Segment as it captured only 5% of the UK market Expansion at China Market. Hungary. Japan and Taiwan) Weakness y y Non-Food Section ± Only 5% of the UK market Highly dependent on the UK market. Turkey and Poland. concerns to avoid the powerful duopoly and thus even tesco can t do any mergers and acquisition to increase market share. y y y Safeway bid battle UK Govt.

Wm Morrison Bid. Electronic products: Technika. Tesco Telecom).com. good HR logistic. at expansion y Different Market Formats. customer centric approach. Dot com business. Existing New Market Development y International Expansion y New market segment y Different market format Diversification . Fuel. Band y Focusing on the Non Food Value.TOWS Matrix Strength Weakness y Top Grocer and largest retailer at UK y Dependency at UK market is . Brand value . and higher margin y Moving to higher margin new markets. Non food segment. Ansoff Matrix Existing Protect& Build Market Penetration y Value Range & Club cards y New market segment y Different market format y Private labels New Product Development y Non Food segment y Retail Services eg:-Financial services. the weakness that should be different market format. Tesco. Club Cards. markets can minimize the weakness associated with less y Perceived high brand value can help captured Non food Market. and segment along with the Threats new product and services can expansion to different minimize the major threat of decrease geography can minimize the in market share either due to entry of threat and weakness Wall mart. acquisition by Asda. Tele communication Package (Tesco Banks. All this can over come to expand and Opportunities help to increase the market share at exploit other geography.

RANKING Strategic option Market penetration New product Developme nt Expansion of market over Seas Diversificat ion Supplier Linkage Distribution Channel Key Strategic Factor Infrastruct HR Branding ure & Reputation Consum er Taste Rankin g ? ? ? ? ? ? ? ? A B A C = Factor important for strategic option. = Factor not very important.Question 1: Using Exhibit 7. acquisition or strategic alliance).2 identify the development directions available to Tesco. Ans. Market Penetration Expansion of market to overseas New product Development Diversification Internal Development *** * *** *** Acquisition & Merges * *** ** ** Strategic Alliances ** *** * *** . Assess the relative suitability of each of these options by ranking them. Question 2: For each of the top four development directions in your ranking compare the relative merits of each development method (internal. ?= factor may be or may not be important. Ans.

such as Samsung Group in South Korea (Samsung-Tesco Home plus). acceptability and feasibility. It also makes small acquisitions as part of its strategy for example. y y Expansion of market to overseas:y For expansion at new geography the organization should focus on development methods of Strategic alliances and acquisition. in order to gain a larger economy of scale and larger market presence. Strategic alliance can be another method product development eg. New product development:y The new product development can be done with existing capabilities or with new capabilities. y The success of the partnership will be related to three main success criteria: sustainability. Tesco can take the advantage of extensive local knowledge and operating expertise of the partner whilst adding its own supply chain. The other method for can be strategic alliances with other organization so that the company can take the advantage of the competencies of the other organization to fill the gap and increase its market share. club cards. product development and stores operations skills to deliver a better shopping experience to customers eg. Tesco has formed a strategic relationship with US supermarket. in its 2005/2006 financial year it made acquisitions in South Korea. Own label. thus it require internal development. Although the case doesn¶t specifically talk about any example of internal development but it is well understood that organic development is one of the most important method of new product development. and Charoen Pokphand in Thailand (Tesco Lotus). Safeway Inc.com home shopping model to the US. The strategic alliances can be another method example in 2008 Tesco acquires 50% shares of Royal Bank of Scotland and thus started Tesco Personal Finance (Tesco Bank). Tesco's international expansion strategy is by entering into joint ventures with local partners. By entering into joint ventures or partnerships. Merger and acquisition are not so important for the internal development. The main development method for that can be internal development which mainly focus on building on and developing own capabilities. to take the tesco. y y . one in Poland and one in Japan.Market Penetration:y Tesco is Focusing on market penetration by Value range.

Due to limited financial information in the caselet it can¶t be evaluated.Diversification:y Diversification mainly applied in the new market with new product. Acquisition and mergers can also be a method of development but less important in the present case. Resource Deployment:HR Market Penetration Mark Expansion New Product development Diversification Infrastructure Distribution channel Supplier linkage . thus both internal development and strategic alliance. Question 3: Complete your evaluation of the options that now appear most suitable by applying the criteria of acceptability and feasibility Ans. Market Penetration good minimum favoured Market Expansion Very good maximum Favoured (higher returns) Feasibility Financial feasibility:.3 Acceptability New product Diversification development Return good Very good Risk maximum maximum Stakeholder May or may not favoured reaction be(yes if returns are higher) Note: the above evaluation is done on our judgment and cannot be backed by any supportive data due to unavailability of information.

based up on the economics of scale concept. retail services . . Due maturing grocery market at UK Tesco moved to non food.Question 4:.It will increase the revenue.Another argument can be the changing need and demand of the customer which stress up on the new product development.As all the product have its product life and sooner or later the market for them mature new product development is require.If you were the chief executive of Tesco which options would you prefer? Explain why these might be different from your favored options.4 Based up our analysis we suggest the company opt for i) Market Expansion: . Ans. eg. ii)New product development :.

ALOK DE KIIT SCHOOL OF RURAL MANAGEMENT KIIT UNIVERSITY BHUBANESWAR.NO-7 SUBMITTED TO: Prof. . ORISSA.STRATEGIC MANAGEMENT Case study On TESCO PLOTS TO MAKE EVEN MORE DOUGH SUBMITTED BY: GROUP.