COURSERA ASSIGNMENT

COMPETITIVE POSITIONING

Done by Rohit Anil Menon.

 Company chosen;
TESCO SUPERMARKET

Tesco plc is a British multinational groceries and general

merchandise retailer headquartered in Welwyn Garden City,
England. It is the third-largest retailer in the world measured
by gross revenues and the ninth-largest in the world measured
by revenues. It has shops in five countries across Europe, and
is the market leader of groceries in the UK (where it has a
market share of around 28.4%.

Tesco was founded in 1919 by Jack Cohen as a group of

market stalls in Hackney, London. The Tesco name first
appeared in 1924, after Cohen purchased a shipment of tea
from T. E. Stockwell and combined those three initials with the
first two letters of his surname, and the first Tesco shop
opened in 1931 in Burnt Oak, Barnet. His business expanded
rapidly, and by 1939 he had over 100 Tesco shops across the
country.
Tesco has expanded globally since the early 1990s, with
operations in 11 other countries in the world. The company
pulled out of the US in 2013, but as of 2018 continues to see
growth elsewhere. Since the 1960s, Tesco has diversified into
areas such as the retailing of books, clothing, electronics,
furniture, toys, petrol, software, financial services, telecoms
and internet services. In the 1990s Tesco repositioned itself
from being a downmarket high-volume low-cost retailer,
attempting to attract a range of social groups with its low-cost
"Tesco Value" range (launched 1993) and premium "Tesco
Finest" range.
 Tesco is listed on the London Stock Exchange and is a
constituent of the FTSE 100 Index.
COMPETITOR ANALYSIS OF TESCO
ASDA
On Oct. 2, 2020, ASDA, a wholly-owned subsidiary of Walmart
following its 1999 acquisition, was purchased by Zuber and
Mohsin Issa and TDR Capital. The company has a total of 635
retail locations, 584 of which are supermarkets. ASDA also
operates larger format superstores, which sell items such as
clothing and furnishings in addition to groceries. ASDA's
competitive strategy prioritizes maintaining the lowest prices of
the so-called Big Four U.K. grocers. The company is also
improving its store layouts and online sales channel to reflect
evolving shopper habits. ASDA is also working to improve the
nutritional value of private-label products.

Sainsbury’s
Sainsbury’s is the second-largest grocery chain in the United
Kingdom, with 1,418 locations. These locations are split
roughly in half between supermarket and convenience
formats. According to customer surveys and reports on brand
strength, Sainsbury's is regarded as the highest-quality grocer
among its peers. This allows the company to charge a premium
for grocery products, though price reduction has been an
important element of its recent competitive strategy. To
increase customer engagement, Sainsbury's is experimenting
with different store layouts, expanding its offering to general
merchandise categories and promoting its in-store banking
services. The convenience format is a priority in upcoming
store count expansion plans.

Morrisons
Morrisons operates 492 supermarkets and 50 convenience
stores. The company also participates significantly in food
production, being the second-largest producer in the U.K.
Morrisons operates 18 food manufacturing facilities, eight
distribution centers, and engages farmers to source poultry,
meat and produce. Morrisons is working to drive efficiency
improvements along with its vertically integrated structure
while reducing everyday prices. Creating a more balanced
approach to promotional pricing is also an important element
of the strategic price review. Morrisons has adopted a strict
capital expenditure budget, and most of the new store openings
are in the smaller convenience format.

Aldi
Aldi, which is headquartered in Germany, operates over
10,000 stores in 19 different countries. Aldi fills the discount
grocer niche, offering low-priced items with a
disproportionately high private label offering. The company
typically does not accept manufacturer coupons. In addition to
discount groceries, Aldi holds weekly specials on general
merchandise products.

Lidl
Lidl operates over 11,200 stores in 29 countries and is
headquartered in Germany. Like Aldi, Lidl is a discount grocer
that does not prioritize shopper experience or presentation.
Staffing is kept to a minimum as part of the expense reduction
effort. Lidl maintains less of a focus on private brands than
Aldi, opting instead to source many low-priced foods from the
country where the store is located. Lidl also has a revolving
weekly special stock of general merchandise.

Waitrose
British grocer Waitrose operates 336 locations, most of which
are supermarkets. Waitrose is considered a premium grocer,
emphasizing the quality of staff members and production
practices. In an attempt to overcome its reputation as an
expensive food provider, the company has pursued several
price-matching campaigns in which it matches Tesco's prices
on select items. Some stores include restaurants that serve hot
foods, while certain locations specialize in general
merchandise in addition to food.
 CAPABILITY ANALYSIS

Porters five force model

 What Are Porter's Five Forces?
Porter's Five Forces is a model that identifies and analyzes
five competitive forces that shape every industry and helps
determine an industry's weaknesses and strengths. Five Forces
analysis is frequently used to identify an industry's structure to
determine corporate strategy. Porter's model can be applied to
any segment of the economy to understand the level of
competition within the industry and enhance a company's
long-term profitability. The Five Forces model is named after
Harvard Business School professor, Michael E. Porter.

Porter's five forces are:

1. Competition in the industry
2. Potential of new entrants into the industry
3. Power of suppliers
4. Power of customers
5. Threat of substitute products

Porter’s Five Force Model of TESCO SUPERMARKET.

1. Competition in the market: The intensity of competitive
rivalry in the food and grocery retail industry is extremely
high. TESCO faces intense competition from its direct
competitors, including Asda, Saintsbury’s Etc. The slow
market growth essentially means that these increasing
market shares from competitors have intensified the
market rivalry, which is threatening TESCO market
leadership position.

2. Potential of new entrants in the market: The threat of

entry of new competitors into the food retail industry is
low. It requires huge capital investments in order to be
competitive and to establish a brand name. Gaining
planning authorization from local government takes a
considerable amount of time and resources to establish
new supermarkets and this is therefore a considerable
barrier to new entrants.

3. Power of buyers: The bargaining power of buyers is fairly

high. In cases where products have a slight differentiation
and are more standardized, the switching cost is very low
and the buyers can easily switch from one brand to
another It has been proposed that customers are attracted
towards the low prices, and with the availability of online
retail shopping, the prices of products are easily
compared and thus selected.
4. Power of suppliers: The bargaining power of suppliers is
fairly low. It should be noted that the suppliers are
inclined towards major food and grocery retailers and
dread losing their business contracts with large
supermarkets. Hence, the position of the retailers like
Asda, Morrisons etc is further strengthened and
negotiations are positive in order to get the lowest possible
price from the suppliers.

5. Threat of substitutes in the market: The threat of

substitutes in the grocery retail market is considerably low
for food items and medium to high for non-food items.
In the food retail market, the substitutes of major food
retailers are small chains of convenience stores, off
licences and organic shops which are not seen as a threat
to supermarkets like TESCO that offer high quality
products at considerably lower prices. Moreover, TESCO
is further getting hold of these shops by opening Express
stores in local towns and city centres creating a hurdle for
these substitutes to enter the market. However, the threat
of substitutes for non-food items, for instance clothing, is
fairly high. It should be noted that so long as the
economic recession prevails, customers will be inclined
towards discounted prices hence TESCO is a threat to the
speciality shops.
CONCLUSION
In this assignment I have presented the definition of SWOT
analysis and Porter’s Five Force Model Theory and applied
their concepts to a local supermarket located in the United
Kingdom
Sources Visited For Information:
1. https://www.investopedia.com/terms/s/swot.asp
2. https://en.wikipedia.org/wiki/SWOT_analysis
3. https://en.wikipedia.org/wiki/Porter%27s_five_forces_ana
lysis
4. https://www.investopedia.com/articles/markets/092315/wh
o-are-tescos-main-competitors.asp

5. https://en.wikipedia.org/wiki/Tesco