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TOPIC-STRATEGIC MANAGEMENT CASE STUDIES
By: Sonali Agarwal Sakshi Shubh Deepika Rawat Megha Talwar Surbhi Sood
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We gratefully acknowledge the support of our Business Growth and Strategy teacher Ms.Achint Arora for nurturing; guiding and making us understand, the various strategies adopted by the business firms. She helped us in analyzing the internal and external environment required for proper strategy planning. Her insight about the project has been a crucial ingredient of this project. It was her vision which helped us in completing the project successfully. We whole heartedly thank Apple, Starbucks, Pizza Hut, Mc Donald’s and Tesco and above all Google for providing us all the information we required for this project through their websites.
1) Introduction to strategic management Strategic Management Approaches to Strategic Management Strategy Formation Strategy Evaluation and Choice Limitations of Strategic Management 2) Case Study 1 Apple Overview Mission Statement External Analysis Internal Analysis Value Chain Analysis SWOT Analysis Effective strategies used by APPLE Recommendations 3) Case Study 2 Starbucks About Starbucks Starbucks performance till 2008 SWOT Analysis Strategic changes by Starbucks Performance after the strategic changes 4) Case Study 3 Pizza Hut About Pizza Hut Mission Statement Marketing Strategy- Think Global, Act Local SWOT Analysis Pricing Strategy Recommendations 5) Case Study 4 Mc Donald’s About McDonald‘s Strategy changes Resistance to changes Feedback SWOT Analysis 6) Case Study 5 Tesco Overview SWOT Analysis Strategy Overview Conclusion
http://en.wikipedia.org/wiki/Strategic_management http://naratvshow.com/?p=518 http://topics.nytimes.com/top/news/business/companies/starbucks_corporation/ind ex.html http://en.wikipedia.org/wiki/Starbucks http://www.mckinseyquarterly.com/Starbucks_quest_for_healthy_growth_An_inte rview_with_Howard_Schultz_2777 http://en.wikipedia.org/wiki/Starbucks http://money.cnn.com/2008/07/30/markets/thebuzz/index.htm http://www.reuters.com/article/2008/01/31/us-starbucksidUSWNAS851720080131 http://blogs.hbr.org/quelch/2008/07/how_starbucks_growth_destroyed.html http://www.nytimes.com/2009/01/29/business/29sbux.html?_r=2 http://seekingalpha.com/article/283187-starbucks-steamy-performance http://www.huffingtonpost.com/2011/08/02/starbucks-growth_n_916380.html http://thehiringsite.careerbuilder.com/2011/06/03/howard-schultz-on-howstarbucks-got-its-groove-back http://ycharts.com/analysis/story/starbucks_brews_up_16_revenue_growth http://news.starbucks.com/article_display.cfm?article_id=184 http://en.wikipedia.org/wiki/File:Starbucks_Map.svg www.Pizzahut.com Yum France Investor Day Report, 2006
www.papajohns.com www.dominos.com www.pizzatoday.com http://www.pizzahut.co.in/ http://www.slideshare.net/quvol/final-pizza-hut-2010 Organization Effectiveness and Change Management - Google Books www.scribd.com http://www.docstoc.com/docs/24386017/Brand-Strategy-of-Pizza-Hut http://www.ivoryresearch.com/sample36.php http://www.ivoryresearch.com/sample5.php http://blogs.hbr.org/hbr/kaplan-norton/2008/09/tescos-approach-to-strategyco.html http://www.corporatewatch.org/?lid=252#stra http://www.bized.co.uk/educators/16-19/business/strategy/activity/strategic1.htm http://www.freeonlineresearchpapers.com/case-study-tesco-plc http://en.wikipedia.org/wiki/Tesco http://www.mbaknol.com/management-case-studies/tesco%E2%80%99s%E2%80%98steering-wheel%E2%80%99-a-tool-for-strategic-value-creation-andbusiness-transformation/ http://en.wikipedia.org/wiki/Tesco.com http://www.fundinguniverse.com/company-histories/Tesco-plc-CompanyHistory.html http://www.insidecrm.com/features/strategies-apple-loyal-customers/ http://www.thehindubusinessline.com/features/brandline/article2828944.ece http://www.businessweek.com/magazine/content/06_20/b3984065.htm http://en.wikipedia.org/wiki/McDonald's
new technology. a new economic environment. which are designed to achieve these objectives. or political environment. vision and objectives. It depends on the organizational structure. it specifies the scope of activities an organization wishes to undertake. These points are highlighted below: A global/transnational organization may employ a more structured strategic management model.e. and then reassesses each strategy annually or quarterly [i. and need to encompass stakeholder views and requirements. . scope of operations. due to its size. developing policies and plans. projects and programs. and the proclivity to change of its business environment. assesses its competitors and sets goals and strategies to meet all existing and potential competitors. Approaches to Strategic Management Strategic management can depend upon the size of an organization. regularly] to determine how it has been implemented and whether it has succeeded or needs replacement by a new strategy to meet changed circumstances. a firm would then undertake an environmental scanning within the purview of the statement.. An SME's CEO (or general top management) may simply outline a mission. often in terms of projects and programs. It entails specifying the organization's mission. Strategic management provides overall direction to the enterprise. This is due to its comparatively smaller size and scope of operations. An SME (Small and Medium Enterprise) may employ an entrepreneurial approach. Strategic management includes not only the management team but can also include the Board of Directors and other stakeholders of the organization. Strategy Formation The initial task in strategic management is typically the compilation and dissemination of a mission statement. coupled with the markets a firm wishes to serve.Introduction to Strategic Management Strategic Management Strategic management is an ongoing process that evaluates and controls the business and the industries in which the company is involved. and pursue all activities under that mission. or a new social. Following the devising of a mission statement. financial. as well as possessing fewer resources. new competitors. and then allocating resources to implement the policies and plans.
strategic business unit objectives (both financial and strategic). it's extremely important to conduct a SWOT analysis to figure out the internal strengths and weaknesses.Strategic formation is a combination of three main processes which are as follows: Performing a situation analysis. This advantage may derive from how an organization produces its products. mission statements (the role that the organization gives itself in society). These options. overall corporate objectives (both financial and strategic). Strategy Evaluation and Choice An environmental scan will highlight all pertinent aspects that affect an organization. objectives are set. both micro-environmental and macro-environmental. how it acts within a market relative to its competitors. self-evaluation and competitor analysis: both internal and external. in addition to areas in which expansion may be unwise. whether external or sector/industry-based. once identified. Concurrent with this assessment. feasibility and acceptability of an option. Suitability Suitability deals with the overall rationale of the strategy. some are in the short-term and others on the long-term. the actual modes of progress have to be determined. These pertain to: The basis of competition The basis of competition is the competitive advantage used or established by the strategy. These objectives should be parallel to a time-line. This may require taking certain precautionary measures or even changing the entire strategy. Mode of action Measuring the effectiveness of the organizational strategy. or other aspects of the business. . and tactical objectives. have to be vetted and screened by an organization. Such an occurrence will also uncover areas to capitalize on. The key point to consider is whether the strategy would address the key strategic issues underlined by the organization's strategic position. This involves crafting vision statements (long term view of a possible future). and external opportunities and threats of the entity in business. In addition to ascertaining the suitability.
Many theories tend either to be too narrow in focus to build a complete corporate strategy on. time. especially if it is rigidly enforced. it can lead to group think. and information.org/wiki/Strategic_management . Resources include funding. Source: http://en. When a strategy becomes internalized into a corporate culture. Limitations of Strategic Management Although a sense of direction is important. or cash flow in the market Acceptability Acceptability is concerned with the expectations of the identified stakeholders (mainly shareholders.wikipedia. Populism or faddishness can have an impact on a particular theory's life cycle and may see application in inappropriate circumstances. it can also stifle creativity. employees and customers) with the expected performance outcomes. risk and stakeholder/stakeholders reactions. Many theories of strategic management tend to undergo only brief periods of popularity. people. or too general and abstract to be applicable to specific situations. can be developed or obtained. which can be return. It can also cause an organization to define itself too narrowly. fluidity can be more important than a finely tuned strategic compass.Feasibility Feasibility is concerned with whether the resources required to implement the strategy are available. In an uncertain and ambiguous world.
and he brought with him a new corporate philosophy of recognizable products and simple design. overtopping ExxonMobil.900 temporary full-time employees worldwide. Source: wikipedia . Apple is the largest technology firm in the world. growing to $108 billion in 2011. the iTunes media browser. in Cupertino. It is the largest publicly traded company in the world by market capitalization. is a multinational corporation that designs and sells consumer electronics. dropping "Computer" from its name. Apple has 357 retail stores in ten countries.. Apple Computer was predominantly a manufacturer of personal computers. Aperture. the iWork suite of productivity software. returned to become Apple's CEO in 1996 after his company NeXT was bought by Apple Inc. and in the world from 2008 to 2011. and an online store. the Safari web browser. For more than two decades. As of July 2011. and Macintosh computer line-up. as well as the largest technology company in the world by revenue and profit. iPhone. with annual revenues of more than $60 billion. a mobile operating system. 2011. the iLife suite of multimedia and creativity software. Jobs. the company has received widespread criticism for its contractors' labor.. and iOS. and for its environmental and business practices. a suite of music production tools. Inc. but it faced rocky sales and low market share during the 1990s. Apple's core product lines are the iPad. Logic Studio. California. Its software includes the Mac OS X operating system. including the Apple II. Overview Apple Inc. a suite of professional audio and filmindustry software products. Fortune magazine named Apple the most admired company in the United States in 2008. However. its worldwide annual sales totalled $65 billion. formerly Apple Computer. a professional photography package. and personal computers. computer software.. and Power Mac lines. the company had 60. With the introduction of the successful iPod music player in 2001. iPod music player. worth more than Google and Microsoft combined.400 permanent fulltime employees and 2. Founders Steve Jobs and Steve Wozniak effectively created Apple Computer on April 1. As of 2011. with the release of the Apple I. 1977. Macintosh. Final Cut Studio. and incorporated the company on January 3. As of September 24. Apple established itself as a leader in the consumer electronics industry.Case Study: APPLE Inc. who had been ousted from the company in 1985. The latest era of phenomenal success for the company has been in the iOS range of products that began with the iPhone. iPod Touch and now iPad. 1976.
There are only a handful of companies like Intel and Microsoft which manufactures microprocessor and operating systems (OS). From mobile phones to laptops there is a new product advertised almost every week. There is high competition due to high industry growth. If any new players wish to come into this business. These suppliers are hard to switch due to dominant production of such components. Manufacturers of these products try every possible strategy to attract the attention of customers through promotion and advertising. But there are many sources which do provide small PC components like memory chips. According to the present conditions Apple does have a Gross margin of 35% which exceeds that of Dell‘s 19% andHP‘s 24%. HP. The major players of the industry are Dell. companies are highly responsive to any new product as they can imitate at low costs. processes and services. disk drives and keyboards. It is almost reaching a status of mature market with intense competition but it is still growing. Substitutes for most of the products are easily available at a lower price. a high learning curve exists which means the customers take time to get accustomed with the new product. they need to have a differentiated strategy form the existing companies. Although buyers do look for quality and brand name. health and safety management system and in the environment quality of our products. Companies like Acer and HP acquired Compaq are already competing with Apple and other companies with notebooks on the basis of cost. Apple strives for continuous improvement in our environment . Acer and Lenovo. Apple. There is a high entry barrier due to the standardization of the PC components. health and safety of our employees. Also. The existing brand names make the entry barriers high. There are companies which are coming up with low cost strategies to compete with the existing manufacturers and this had led to intense rivalry. software and internet offerings. creative professionals and consumers globally through innovative hardware. There is always a threat of forward integration by the suppliers since the products manufactured by these suppliers are highly sophisticated and the other components needed for the production of PCs are not so difficult to imitate. some of the components they need are purchased from these substitute providers at a low cost.Mission statement Apple is committed to bring the best personal computing experience to students. Apple fights with its highly innovative products whereas Dell and HP have better marketing and distribution strategies. External analysis The industry has a fast growth. educators. Suppliers for this industry are powerful. customers and the global communities where they operate. For example if a consumer cannot afford to buy an Apple iphone then he/she has the option to buy any alternative low cost smart phone from some other company. Also there are a wide range of MP3 players available in the market which ranges . Everyday new and innovative products flood the markets. In this extremely competitive environment. Apple computer is committed to protecting the environment .
from $30 to $499 and from 1 GB to 160GB. Customers have a great trust on company‘s elegant products and they always look forward to be loyal to the brand. The type of consumers for this market can be categorized as home. Buyers do have a high switching cost which discourages them from buying a similar product from another supplier. Exit barriers for this industry are high. And so they expect companies to give them something which is different than what others have. They have a wide range of products like computers (Mac book). Also there are several websites which give access to downloading and listening music which becomes a high threat for products like itunes. The customers always have an advantage of choosing the electronic good according to the need and taste. who look for something unique. The new step in ―Consumer Electronics Industry‖ has outshined Apple Inc‘s performance as a smart company. ipods and iphones which are highly differentiated. There is a lot of capital requirement to establish a firm inside the electronics and PC industry. Companies have to move faster than the imagination of both their competitors and the consumers. makes a difference in the PC industry through its innovative product design and high standard applications. Not all the products are made by the same firm. Everyday a new product or a new application or version for the existing product is available. Internal analysis Strengths and Weaknesses: Apple Inc. Consumers are very demanding and it makes it necessary for the firms to compete with each other and become the first mover or the best as a second mover in bringing out a new innovation. If not. The ―integrated system‖ of computer was its differentiated strategy which presented the Macintosh along with its own Operating System (OS). The young generation in particular is very trendy and they love to show of the new things as a fashion statement. small and medium sized business. Since buyers are mostly not concentrated they have less bargaining power for prices and models. leaving the other dependent firms in dilemma. Macintosh has been the powerful tool to build the success story of the company. corporate. And so they have to depend on other firms in the industry for making a final product ready for the customers. But there are a number of substitutes available which makes buyers powerful to choose from the available options and also because they are very price sensitive. Apple targets customers who are ―techno savvy‖. This industry has a vast customer base and companies have to be customer oriented and should innovate according to their demand. it is not long for them to go down in history forever. Apple keeps it Price strategy different from its competitors which give . The innovative products like iPod and iPhone have been very successful in potential music market. Technological changes in the industry are very fast. It is both an opportunity and a threat when it comes to rapid technological changes. So it is very difficult if one firm leaves. Customers desire to buy its products as they are ―icons of the digital industry‖. education and government. There is a chance of exit becoming almost impossible due to strategic interrelationships between these firms.
the issue of cannibalization may be a reason of bothering the expected revenue generation of the products. The high prices (especially Computer) keep it access limited to only people with high income level. It is really the strongest advantage for a company to be independently manufacturing from scratch to finished product with application and peripherals. and redefined intuitive operation with the iPod. iPhone. Apple has been able to perfect the chain of activities in innovation. Print Advertisements. VALUE CHAIN ANALYSIS Technology and Product Design: This Component is the true core of Apple‘s Capability.computers and other entertainment devices at low cost. integrated distinctive styling with the multi-colored translucent iMac cases. The success of some products like iPod and iPhone cannot decide its sustainable competitive advantage because the industry has intense rivalry and imitation is also a threat. Production: The bundled packages of Apple-developed hardware and software became the cornerstone for its own production process. Core Competencies: Apple has been the leader of the Consumer Electronics industry and has maintained a distinct image in PC manufacturing and Music too. The research and development oriented products give an extraordinary performance and products like Mac which soon became an identity of Apple Inc. The hard drive based player called iPod has a stunning design which has become the ―icon of the digital age‖. Steve Jobs personally unveils all new . then manufactures it and finally markets it wholeheartedly. Apple starts from its new ideas of product design. Newton). Apple has been able to command a premium in market and gain above average returns owing to its innovation and differentiation of technologically superior products. It offers the best designed hardware and incomparable software in its products. which motivated the research and development at the company. and Apple definitely can withstand the changes with its innovative skills. designs it through its own resources and funding. Apple achieved unparalleled performance via 64-bit architecture. Apple treats component production as a natural extension of design process. Hence. The Apple computer had compatibility issues with Microsoft Office and IBM PCs. Apple continues to command a market premium for producing a ―better mousetrap‖ throughout its history. Television commercials. While every product introduction has not been a success (Lisa. Marketing and Advertising: Distinctive marketing campaigns have been a strategy of Apple to attract customers and to spread the information among them. Over due course of time. iTunes and iWorks suite of products. Apple has a ―Think Different‖ motivation and it believes in ―Value Creation‖. Posters in Public areas and wrap advertisement campaigns have been successful ways of outshining the new product. Innovation plays a key role to remain the leading company in the dynamics of fast-growing markets. As the company has a wide product line. The Apple has been giving ―Plug and Play‖ solutions. The learning and innovation in technology in its products has led Apple to leverage its expertise in iPod. The Core competencies responsible behind the success are mainly the ―Unique resources‖ and ―Differentiation strategy‖. each new product makes the previous one dull against it.
OPPORTUNITIES: The laptop and consumer electronics market growth is high.). Macs vs. This adds to better targeting to the market and consequently. Customer Service: Apple believes in keeping a place in customer‘s heart. less penetration The product life cycle of apple are very small Weak presence at enterprise and governmental business arena. A perfect example of this is Apple‘s willingness to develop software to run Windows XP on its new Intel-based iMac and then post it online free to iMac users. and aggressively pursuing hardware and software updates. Downloadable music and mp3 players are highly marketable. Apple market share is far behind its competitors. customer service merely becomes the realization of receiving a little more than expected. PCs. Apple integrated their primary activities so well that it is transparent to the consumer where one activity begins and the other ends. it is a special concern of company‘s CEO. SWOT ANALYSIS STRENGHTS: Strong cash base Intellectual capital Technology leader Brand image Charismatic leadership iTune store Partnership with intell computers Strong brand loyalty Strong R&D WEAKNESS: High proprietary system Niche market . In such an environment. reviews corresponding marketing campaigns and approves new product development guidelines. .product introductions. other MP3 players. etc. The credit for such a strong relationship between the company and its customers goes to company‘s customer service and the nature of products which fulfills the need of today‘s stylish people. the customer loyalty is a great strength to the company. Apple created a virtual love affair with their customer base by delivering technically superior products (iPods vs.
. . THREAT ST strategies (maxi/Mini) -Strong brand loyalty is effective to overcome the threat of extensive competition and substitute products. -Strong cash base can be used to create antivirus solutions. Increase in worms and viruses on PC so the antivirus solution can be developed by apple. WT strategies (mini/mini) -low priced products should be created by investing in its Rand D to attract the market share from its competitors. apple market demand for laptops and can increase its market share. PC.as apple is the technology leader in its market it overrules the threat of fast technological changes. THREATS: Extensive competition Substitute products Low prices of competitors Technical advancements Economy downfall TOWS MATRIX STRENGHT WEAKNESS SO strategies (maxi/maxi) WO strategies (mini/maxi) OPPORTUNITIES -Strong r and d and technology -By tapping the opportunity of can be used to tap the high high market demand .
Complete Solutions: Apple's products complement and complete each other. Once you've become smooth. they become comfortable with the interface and familiar with the superior performance the brand offers. while PC appears uptight and old. By selling products with lower entry costs. Why? Because Apple makes it so easy. By creating this early exposure. With leaked rumors about new developments. Products That Deliver: Apple carefully considers what consumers are looking for. it creates an opportunity for new users to be introduced to Apple. most Mac programs are produced by Apple. Buy an iPod. would you want to go back to uptight? Varied Products: Many consumers may not be ready to buy an Apple computer. Media Fodder: Media outlets. Are You a Mac?: Let's face it. Apple gift wraps news stories that are just begging for speculation and hype. from hardware to software. but they're willing to give gadgets like the iPod or iPhone a try. Apple turns classrooms into showrooms. This is a space where Macheads can not only get service but also hang out with others who enjoy Apple products just as much as they do. but also make them want to buy more products from you in the future. love to write about Apple. This sort of control over the entire user process. so its products are a result of both extensive research and strong design. Apple encourages current and new customers to get excited about what it has to offer. Consider Apple's I'm a Mac campaign. the company has not only eliminated this problem but has made an excellent customer-loyalty move. . and you can download music via iTunes. It's plain and simple: Robust and easy-to-use products not only make your customers happy. By creating this space. By perpetuating this cycle of media frenzy. Apple captures customers before they even know that they are customers. a problem that made it difficult for Apple to set its very different products apart from the rest of the computing crowd. For the average user. Apple keeps its customers excited about buying new Apple products now and in the future.Effective Strategies Apple Used to Create Loyal Customers A Store Just for Apple: Apple has historically been troubled by big-box sales staffers who are ill-informed about its products. The Mac guy is smooth and confident. Education Sales: By selling its products to schools and universities. strengthens customer loyalty. If these users enjoy their gadgets. This meticulous planning is a large contributor to Apple's high customer-satisfaction rates. Apple stores are a friendly place where Mac and PC users alike are encouraged to play with and explore the technology that the company offers. By creating a store strictly devoted to Apple products. they're more likely to consider buying an Apple computer in the future. up-to-the-minute and smart. It pushes a strong identification with everything young. Apple users generally don't have to stray to find products and solutions they want. Apple is a hip brand. If students go through school using Apple products. especially bloggers. its very own expo and mysterious shutdowns of its online store.
With the iPhone. And to start a wide marketing plan to reach every in oder to achieve the last objective for Apple‘s vision. You have to consider billing errors. Unless something goes wrong. Apple was wise to stick with building a good product and letting AT&T handle the service. the iPhone presented an opportunity that could have made Apple much more involved. a smiling icon and slick-looking hardware remind customers every time they use Apple products that what Apple offers is appealing. pockets and offices. Because of this consistency. Consistency: All of Apple's products have the same basic architecture. They know that it will be easy to adapt to new hardware. New Innovations: Although the architecture of Apple products is consistent. customers who already own Apple products have a good idea of what they'll be getting before they make a purchase. Apple makes its products accessible and attractive. the average consumer's interaction with the company is likely to be low. you don't have any reason to speak with an Apple customer-service representative. and this makes them more open to making a repeat purchase.insidecrm.com/features/strategies-apple-loyal-customers/ Recommendations Apple should start thinking of hitting other regions such as growing countries.Outsourcing Unpleasantness: With Apple products. Attractiveness: From packaging to aesthetic design to user-interface experience. The company offers consumers a number of different ways to enjoy its products. quality of wireless service. Apple makes it easy to stay loyal to a brand they already like. . By giving customers an opportunity to employ Apple in their living rooms. contracts and a number of other factors that often lead to customer frustration. interaction becomes multifaceted. similar to administering iTunes for the iPod. With a phone. Of course. Bright colors. Source: http://www. its portfolio is not.
The Company also sells a variety of coffee and tea products and licenses its trademarks through other channels.Case Study : Starbucks About Starbucks Starbucks Corporation is an international coffee company and coffeehouse chain based in Seattle. 976 in Great Britain and 645 in China.org/wiki/Starbucks . Success of Starbucks was the result of its founders' passion for quality coffee as well as exotic tea and their good business sense helped them run a profitable business. along with handcrafted coffee and tea beverages and a variety of fresh food items. However Howard Schultz purchased Starbucks when Jerry Baldwin and Gordon Bowker decided to sell the entire Starbucks operations in Seattle in 1987. 1.wikipedia. Many of the company's products are seasonal or specific to the locality of the store. It is a roaster. Starbucks purchases and roasts whole bean coffees that it sells. Starbucks had 11 stores and 100 employees. through Company-operated stores. and schultz had this dream to create a national brand around coffee and a unique experience in Starbucks' stores that. It built customer loyalty cup by cup as buyers of its products developed their palates. with 19. . and writer Gordon Bowker. they would be able to extend from the West Coast to around the country. including 12.241 in Canada. Starbucks-brand ice cream and coffee are also offered at grocery stores. hopefully.com/?p=518 Starbuck’s Performance till 2008 In 1987. history teacher Zev Siegel.781 in the United States. It is the largest coffeehouse company in the world.062 in Japan. grocery and national foodservice accounts. such as licensed stores. 1.http://naratvshow. Washington and was founded in 1971 by an English teacher Jerry Baldwin. then relied on the caliber of its product to give patrons a sense of discovery and excitement. The company depended mainly on word-of-mouth to get more people into its stores.435 stores in 58 countries. Source :http://en. marketer and retailer of specialty coffee in the world.
K.wikipedia. and it almost had a life of its own. UK-based Seattle Coffee Company. Little by little. What they were building seemed to work wherever they opened stores. In recent years however. its endeavor of expansion has been coming to a screeching halt. Source:http://topics. In August 2003 Starbucks opened its first store in South America in Lima. In September 2002 Starbucks opened its first store in Latin America. They had a little bit of luck and business acumen and perhaps just the fortuitous opportunity that comes along with perfect timing. re-branding all the stores as Starbucks. Japan.svg International presence of Starbucks Starbucks has expanded rapidly in number. Starbucks has been losing some of the signature traits it had been founded on. Starbucks was able to gain a leverage to accelerate the expansion of its network. market in 1998 with the $83 million acquisition of the then 60-outlet. Being a public company. averaging five stores opening every week. These were all company-owned stores. Source:http://en. not franchised. For 15-plus years or so. the dream started becoming a reality. in Mexico City. into the 2000s. In order to keep the company in ―full control of the quality of its products and the character and location of its stores" franchising was avoided . Starbucks successfully went to Initial Public Offering (IPO) in June 1992.org/wiki/File:Starbucks_Map.com/top/news/business/companies/starbucks_corporation/index. Starbucks entered the U. In 2008. Mr.nytimes. Schultz faced a difficult task: He had to slow down the company to make stores feel more like hip neighborhood coffeehouses while also delivering the steady growth that investors have come to expect from Starbucks. which turned into one of the most successful IPOs of the year. almost everything they did worked as they built this very unique brand around coffee and a values-based organization.And from that point on.com/?p=518 .htm l http://naratvshow. in 1996. The first Starbucks location outside North America opened in Tokyo.
Shares of Starbucks had fallen more than 30% in 2008. Aggressive pace of new store pening It was not too long ago that the arrival of a Starbucks was a major event. 2. But in the last several years. As the economic doldrums persisted and customers continued to cut back. Starbucks found itself in an economic climate that had most people reassessing their daily spending habits on luxury items. This was the heavy lifting of retailing. Starbucks was being forced to make more cuts. In February 2007.S. it got to a point where that clearly was no longer the case. Starbucks nearly tripled the number of stores worldwide.com/Starbucks_quest_for_healthy_growth_An_interview_with_H oward_Schultz_2777 Factors Undermining Starbuck’s performance 1. the warm feeling of a neighborhood store. Caribou and other more exclusive brands.mckinseyquarterly.011 in 2007. airport concourse and roadside rest stop in America seemed to attract a Starbucks. from 5. The early adopters who valued the club-like atmosphere of relaxing over a quality cup of coffee found themselves in a minority. where a local store manager has to earn brand loyalty and increase purchase frequency in his neighborhood one customer at a time. As good times vanished in the Great Recession of 2008. But sooner or later chasing quarterly earnings growth targets undermined the its brand. In five years. a recognition that a town or neighborhood was worthy of the chic Seattle-based chain. a leaked internal memo written by founder Howard Schultz showed that he recognized the problem that his own growth strategy had created: "Stores no longer have the soul of the past and reflect a chain of stores vs. Starbucks increasingly appealed to grab and go customers for whom service meant speed of order delivery rather than recognition. the point of . Such strategies took top management's eye off of improving same store sales year-on-year. The company‘s revenues and profit tumbled as a result. Eventually. recession. Starbucks introduced new store formats like Express to try to cater to this second segment without undermining the first. Opening new stores and launching a blizzard of new products created only superficial growth. But many Starbucks veterans had switched to Peets. To grow.http://www." New store openings and new product launches fueled the stock price.886 in 2002 to 15. amid a drastically tightening consumer spending environment and concerns of a U. every street corner. Economic Downturn Economy appeared to have certainly dampened Starbucks' performance. And while Starbucks used to claim that its aggressive pace of new store openings wouldn't cannibalize sales at existing Starbucks. That store manager's efforts were undercut when additional stores were opened nearby.
BIGGBY Coffee. 7-Eleven and Dunkin Donuts provided coffee in a "no-nonsense fashion". lattes and iced lattes.indews. The primarily doughnut oriented restaurant chain had decided to put ready to serve coffee at the top of its focus. Competitors such as McDonald's and Dunkin Donuts not only had extensive menus. but also the financial resources and position to leverage their strengths and thus threatened Starbucks profitability. Starbucks introduced many new products to broaden its appeal.saturation was reached and cannibalization of existing store sales undermined not just brand health but also manager morale. baristas hired for their social skills and passion for coffee. cities.php 4. they can get their drinks for less. Dunkin Donuts. The woman said she was sitting at a Starbucks and saw her future husband across the street at another Starbucks.. In terms of perception..but not at the same Starbucks. McDonald‘s priced their drinks about 20% lower than Starbucks. Caribou Coffee. Dunkin Donuts was another direct competitor that had essentially waged war against Starbucks in the coffeehouse market. Panera Bread. McDonald's.and alienated many core customers in the process. They also challenged the baristas who had to wrestle with an ever-morecomplicated menu of drinks.. DVDs and other non-caffeinated beverages. It expanded its food offerings while introducing efficiencies like those automated espresso machines.com/marketing/starbucks_competitors. Dunkin Donuts was also moderately priced to satisfy economic consumers. Diversifying non-coffee menu As the company grew and customer traffic increased. Source:http://blogs. In late 2007. and Einstein Bagels. they will directly compete with Starbucks. White hot chocolate.. With products such as the Dunkaccino. The company tried to do too much. These new products undercut the integrity of the Starbucks brand for coffee purists. Coolatta. which attracted customers who were extremely price sensitive. 3.S. Not only can the customers get breakfast and coffee in one place. the chain had put its most popular brew up against Starbucks‘. It brings to mind the hilarious joke from the mockumentary "Best in Show" about a married couple meeting at Starbucks. Dunkin‘ Donuts made a surprising announcement: In a national taste test in 10 major U. . The taste test showed that of the sample tested more people preferred the taste of Dunkin Donuts coffee over Starbucks. It's funny because it wasn't that far from reality. Stiff competition Starbucks competitors in the coffee beverage sales included 7-Eleven. Starbucks also lost its focus on coffee and tried to peddle food. no longer had time to dialogue with customers. A reason for the popularity of the McDonald‘s coffee bar was the convenience of being able to get breakfast and a premium roast coffee at the same place. as well as regular and seasonal hot and iced coffee. With over half of customers customizing their drinks.
4. Source:http://topics. High pricing. Stiff competition.wikipedia. Diversifying non coffee menu.htm l http://naratvshow.org/wiki/Starbucks http://www. Weaknesses 1. sending the stock tumbling. High quality and diversified products. Starbucks stock. 2. once seemingly invincible. . its customer traffic declined for the first time since the company went public.nytimes.com/Starbucks_quest_for_healthy_growth_An_interview_with_H oward_Schultz_2777 SWOT ANALYSIS Strengths 1. 2. 4.com/top/news/business/companies/starbucks_corporation/index. Has a strong position to take advantage during economic recovery.The brand experience declined as waiting times increased. 3. loyal customer base. Due to these factors. Overextended premium coffee market – self cannibalization. 5. had declined by over 50 percent. In 2008. Strong. When we look at that—the money invested and the money that they had to write off—those decisions were made with a lack of discipline. complaints surfaced that Starbucks felt more like a fast-food restaurant than a coffeehouse. Schultz was horrified to learn that the stores that they ultimately had to close had been open less than 18 months.com/?p=518 http://en. By the end of its fiscal 2008. Strong global brand.mckinseyquarterly. 5. 6. Current economy. 3. When Starbucks reviewed some of its underperforming stores. Gradually. Targeting selective customer age group. Strong relationships with the employees. in the summer of 2007.
Searching for new customer and market segments to Expend market segmentation expand.Opportunities 1. 2. Threats 1. 4. Competition targets the same markets. Free internet in all Starbucks coffee shops. 3. 2. Expend segmentation. THREATS ST strategies (maxi-mini) WT strategies (mini-mini) It can price its products high Creating new complementary as it had strong loyal customer products which contain good base. Has a strong position to take advantage during the period of economic downturn. Expansion opportunity. Economic downturn. High price of dairy products. quality and lower price to attract more customers. 3. TOWS MATRIX STRENGTHS OPPORTUNITIES SO strategies (maxi-maxi) WEAKNESSES WO strategies (mini-maxi) Opening new stores overseas Providing free internet in all as it had strong global brand Starbucks' stores to attract image. more people and fight competition. by offering new customized drinks like blenders with fresh fruits. Alienation of younger domestic market segments. .
less is more. the company announced that stores where few customers order decaffeinated coffee after noon will no longer brew the coffee ahead of time and will instead make it on demand. For example. "These decisions have been made to ensure the company is leaner and prepared to endure a worsening economic climate. Starbucks announced the closure of an additional 300 underperforming stores and the elimination of 7. Starbucks seemed to be a mass brand attempting to command a premium price for an experience that was no longer special. He focused his efforts on the customer experience. he reduced his salary to less than $10. Schultz said in a letter to employees. At the same time. including renegotiating prices with landlords and suppliers. when employee made the drinks by hand and customers were excited by top-notch coffee. in the world of marketing. Starbucks moved aggressively to open stores overseas. recapturing some of the magic of the chain‘s early years. Sometimes.‖ Mr. The company also took other cost-cutting measures. Schultz to try to invigorate the company. In a conference call with Wall Street analysts Schultz also said the new cuts were necessary because of the unprecedented dip in consumer confidence and the rapid weakening of the economy. . It planned to increase international store openings by 75 outlets to 975. As part of the cuts. Starbucks tried to appeal to newly value-conscious customers.600.000 a year. James L.175 from 1. Closure of stores In January 2008. On January 28. He retook the reins in an effort to revive the corporation during a global economic crisis in 2008. 2009. These closings and layoffs effectively ended the company‘s period of growth and expansion that began in the mid-1990s. controlling costs and investing in traffic-driving strategy" were: 1. Mr. Howard schultz was on an ongoing drive to reinvent the way Starbucks was doing its business. CEO Howard Schultz also announced that he had received board approval to reduce his salary. and brought back Mr. Starbucks had cut its forecast for 2008 U. Some initiatives that Starbucks was taking to ―enhance long-term fundamentals by slowing growth. store openings to 1. To encounter this fundamental problem it had to cut prices (and that implies a commensurate cut in the cost structure) and also had to reduce distribution to restore the exclusivity of the brand. Donald. Schultz laid off 1.000 employees to reenergize the brand and boost its profit and closed 600 underperforming locations in the United States amid growing economic uncertainty while scaling back the rate of store openings domestically.S.Strategic changes by Starbucks In 2000s. Starbucks faced a difficult operating environment. While cutting costs. from $1. trimming vacation and personal days for hourly store employees and adjusting the way individual stores operate.2 million.000 positions. where business remained robust. Starbucks ousted its chief executive.
nytimes. and trust in the Starbucks brand remains at a high level. http://topics. .com/2009/01/29/business/29sbux. executive vice president. ―Despite the challenging economic environment.hbr.wikipedia. a loyalty program was introduced for registered users of the Starbucks Card (previously simply a gift card) offering perks such as free Wi-Fi Internet access. Focussing attention on increasing profits in existing stores by: Aligning the company‘s cost structure in fiscal 2009. and Investing in the tools and training store managers need.http://blogs. ―Our customers are telling us they want value and quality and we will deliver that in a way that is both meaningful to them and authentic to Starbucks. chief financial officer and chief administrative officer. underscored the company‘s strong financial position and outlined a two-fold growth strategy for the company: 1. ―Our customers‘ connection with.org/wiki/Starbucks On March 18. Starbucks Coffee Company held its Annual Meeting of Shareholders in Seattle where Howard Schultz.html?_r=2 2. and free refills on brewed drip coffee. Meeting customers‘ needs for value and quality.‖ ―We‘ve also been putting our feet into the shoes of our customers and are responding directly to their needs.nytimes. has a strong balance sheet and generates solid cash from operations.ht ml http://en.‖ During the Annual Meeting. outlined the company‘s strategy to grow for the long term. We are laser-focused on delivering the finest quality coffee and getting the customer experience right every time. Other users commented and on suggestions. chairman. Troy Alstead. It also introduced new discount programs like its $25 Gold Card.html http://www.org/quelch/2008/07/how_starbucks_growth_destroyed. Starbucks is profitable. 3. Improving operational efficiencies and making technology investments.com/top/news/business/companies/starbucks_corporation/index. Starbucks started a community website "My Starbucks Idea" designed to collect suggestions and feedback from customers. 2009.‖ said Schultz. Introduced loyalty program In May 2008. Started community website "my Starbucks idea" In early 2008. president and ceo. no charge for soy milk & flavored syrups. which offers 10 percent off on all items.‖ said Schultz.
Starbucks has suffered a loss of customer traffic to its stores and decided to lower its prices on some popular products. Starbucks announced a modified pricing structure in July 2009. Specialty retail operations included licensed stores.000 retail stores.‖ said Schultz. Despite the closure of 600 under-performing retail stores.starbucks. Starbucks operated 7.wikipedia. Fruit and yogurt parfaits and warm breakfast sandwiches were made part of its regular selection. Starbucks also sold bottled Frappuccino coffee drinks and a line of coffee ice cream. branded products. products and experiences that could be offered to its customers. foodservice operations and generated 16% of Starbucks total revenue in 2008. ―The health of the company. Starbucks planned to open another 10.979 stores internationally. as well as offering promotions on iced drinks. Starbucks sold coffee and tea products directly to business units. Pricing strategies For the first time in its history. 2. Growing its consumer products. Impacted by the recession.‖ (http://news. Product mix Starbucks revamped its menu. Starbucks constantly searched for innovative ideas. There were more . licensed stores and foodservice channels. It also redesigned its menu to feature lower priced brewed coffees. packaged tea and coffee.com/article_display.238 retail stores in North America and 1.cfm?article_id=184) Other strategic changes made were: 1. Distribution strategy In 2008.org/wiki/Starbucks ―Our customers like the changes we‘ve been making.2. In addition. Starbucks had been developing the company‘s brand through third parties outside the coffee house. The revenue from its company operated stores accounted for 84% of its total revenue. and Focusing on disciplined global store expansion in key markets. the continued relevance of the brand and our disciplined go-forward plan make us optimistic about Starbucks future. In addition to sales through its retail stores. Making strategic investments in key initiatives by: Entering the $17 billion instant coffee market earlier this month with the launch of Starbucks VIA Ready Brew instant coffee. Through its joint venture partnerships with Pepsi and Dreyer‘s respectively. 3. such as brewed coffees and lattes. http://en. even as the economic environment is impacting the way customers interact with companies and brands. adding a healthier selection of food.
while there are 9.63 in May 2006. In its first quarter of fiscal year 2008. the share price of Starbucks Corporation decreased sharply by 54% compared to a high of $39. hotels and cafes. Starbucks suffered a 3% decrease in transactions for the first time. teas and CDs. http://naratvshow. The stock and revenue perked up considerably since the recession where the stock traded below 10 dollars a share.000 company-operated stores. offices. Starbucks had experienced a rapid expansion and an incredible success until 2007 when the economy took a downturn for the worst. which accounted for 25% of company‘s specialty revenue.com/analysis/story/starbucks_brews_up_16_revenue_growth) .than 7. Graph showing starbucks' revenues and corporation price (http://ycharts. as investors believed that the company had overextended itself in a premium coffee market. Located in places like airports and supermarkets. Starbucks also sold whole bean and ground coffees to foodservice operators like restaurants. During 2007 and 2008.com/?p=518 Starbucks' performance after the incorporation of strategic changes The strategy sparked a comeback for the coffee powerhouse.400 licensed and franchised stores. Starbucks slowly made a come-back. licensed stores generated licensing fees and royalties as well as revenue from supplying Starbucks‘ coffee.
Starbucks said its profit increased more than eightfold in the second quarter. he believes. 2011. as more customers visited its stores and spent more. It was a painful period for the company in early 2009.huffingtonpost.1 million. Operating cash flow on track totaled to $1. Schultz improved greatly in 2010. shares of Starbucks had risen above $24 a share. . as more customers began to visit its stores around the globe.with little regard for profits or common sense.5 billion by fiscal year end.7 billion and its profit jumped nearly 32 percent to $1.7 billion. including a new line of calorie-conscious food and two types of coffee that will be marketed for a limited time. Debt as a percentage of total capitalization was at the lowest point since December quarter of 2007.Starbucks‘ performance in the Q3 of fiscal 2009 marked its first earnings growth since Q1 2008 — the company earned $152 million.com/2011/08/02/starbucks-growth_n_916380.4 billion. up from $562 million in fiscal 2009.6 million. Starbucks continued its strong performance in 2011. Starbucks seemed to be expanding just for the sake of growing -.25 billion. That‘s up from $346. Same-store sales growth had returned. but the fortunes of the chain and Mr. (http://thehiringsite. driven by the perfect blend of customer traffic and transaction value increases. in the same quarter the previous year. for the quarter that ended January 1.com/article/283187-starbucks-steamy-performance) Starbucks reported that it earned $382. "I think we‘ve done a very good job in creating the kind of experience that really does differentiate Starbucks from everybody else. In February. or 45 cents per share. and its operating income increased to $1. In july 2011. The decision to close 600 stores was the right one.com/2011/06/03/howard-schultz-on-how-starbucks-got-itsgroove-back) In 2010. Starbucks had succinctly raised prices on top-selling drinks (like my double espresso) with no apparent resistance by caffeine addicted patrons. Now.44 billion. the chain was concerned about competition from McDonald's and the like. 2012. The company‘s total revenue increased 16 percent to $3.3 million. compared to its loss of nearly $7 million just a year earlier.62 per share. or 50 cents per share. (http://seekingalpha. The Seattle-based company's 2011 fiscal year revenue increased 7 percent to $11. The company enacted its first dividend and upped the amount of shares available for repurchase.‖ (http://www. Thanks to more traffic in the stores and renewed earnings growth. Its international arm and sales outside its own stores both helped increase profits to $217. Starbucks marked its 40th anniversary with a redesigned logo and a spate of new products. Returns on equity and assets were at the highest levels in two years. schultz said that two years ago.html) In March 2011.careerbuilder. It's revenues increased to a record $10. or $1.
com/2008/07/30/markets/thebuzz/index. which makes Via instant coffee.html http://money. Revenue from this segment increased 72 percent.com/top/news/business/companies/starbucks_corporation/index. It also benefited from the addition of 241 new stores during the quarter.The company delivered major gains in its consumer products business. http://topics.244 stores worldwide. Starbucks ice cream and other items for sale in grocery stores and other retailers.htm . Starbucks now operates 17.cnn.nytimes.
Kansas. Long John Silver‘s. the restaurant sign only had space for nine letters. Every customer says.S Passion for excellence in doing anything. ‗I will be back!‘ We are the employer of choice offering team members the opportunities for growth. A & W and Pizza Hut Worldwide). the first UK restaurant opened. Execute with positive energy and urgency. It is a part of Yum Restaurants International (who also own KFC. Source: http://www.A. Taco Bell.Case Study : Pizza Hut Pizza Hut It started in 1958 when Frank and Dan Carney opened the first Pizza Hut in Wichita. The first Pizza Hut restaurant was small.R.E. Since then Pizza Hut became the biggest Pizza Company on the planet. Source: http://www.slideshare. with over 600 outlets across the country.co. It is the UK‘s leading pizza restaurant and delivery chain too. Listen and more importantly. Because the building looked like a hut…Pizza Hut was born! Fifteen years later.net/quvol/final-pizza-hut-2010 .pizzahut. Safety is always first. respond to the voice of customer. We are accountable for profitability in everything we do. advancement and rewarding careers in a fun and a safe working environment.in/ Pizza Hut’s Mission Statement ―We take pride in making a perfect pizza and providing a courteous and helpful service on time all the time. Frank and Dan wanted to have ‗Pizza‘ in the name. Accountable for growth in customer satisfaction and profitability. ‖ P.L. providing our shareholders with value growth. Recognize the achievements of others and have fun doing it. with enough room for 25 seats. which left space for just 3 more letters.
style and appeal. festivals). senior citizens) or on basis of lifestyle (singles or couples) or special interest groups (celebrations. To tap the market for young single in.Pizzahut. As Pizza Hut is the world‘s largest Pizza manufacturing company believing in strategy of ―Think Global. Source: www. Pizza Hut launched ―The Ultimate Cheese‖ to give them the ultimate pizza experience. parties. it diversified to adapt their cultures and provide their favorite flavors. at the same time. Pizza Hut Malaysia success has been due to imaginative and innovative thinking in continuously developing. marketing and promoting new pizza products with unique and distinctive flavor.to. friendly ambience in which to relax and have a great time with family or friends.hurry office goers looking for ―fast lunch‖. Pizza Hut launched a Hand Tossed Pizza which was Pizza Hut‘s first step in traditional stuffed crust segment. taste. Pizza Hut Malaysia at the same time offers a cozy. In Malaysia for instance. To satisfy the New York pizza lovers.Pizza Hut’s Marketing Strategy Pizza Hut has always tried to target and satisfy various customer categories in different countries depending upon various factors and situations. Pizza Hut introduced variants with extra cheese or large in size. It offers not. Pizza Hut came up with ―Personal Pan Pizza for One‖. Act Local‖. In order to fulfill its marketing objective of maximizing customer satisfaction by providing high quality products. somewhere in USA. Pizza Hut targets both urban adults as well as families with pre teens and teenage children by offering a delicious mix of nutritious Italian-American cuisine which includes world‘s favorite pan pizza. it has believed in the following marketing strategy: “Think Global. The Personal Pan Pizza revolutionized lunch and became the perfect solution to satisfy pizza cravings in a hurry.com . This pizza was 30% larger than Pizza Hut‘s largest pizza. In some countries.thin and not.tothick crust on which the entire family agrees. teenage. to capture the interest of ―Echo Boomer Generation‖ which is the ultimate cheese loving population. In order to target the entire family experience. Pizza Hut introduced a ―The Big New Yorker Pizza‖. office goers. when Pizza Hut wanted to grow in international waters as Asia. Act Local” Pizza Hut has tried to target each and every diverse population segment either in the basis of age (kids.
The overall marketing strategy such as the launch of innovative new product ranges every couple of months. While the company maintained the highest quality standards. Spicy Korma and the Tandoori range. Source: Organization Effectiveness and Change Management . Domino’s Pizza Founded in 1960. Secondly. Since pizza is a food foreign to the Indian palate. The staff members dance to disco tunes in Mumbai and do ‗bhangra‘ in Amritsar. and a special Jain menu sans root based ingredients (garlic and onion) are again a reflection of the company‘s adaptation to the local preferences. The world‘s only 100% vegetarian Pizza Hut restaurants are located in Ahmedabad. Surat and Mumbai. They created Indian Toppings and vegetarian pizzas such as Paneer Tikka. Pizza Hut tried to develop a bond with the Indian consumer. and expects every employee to be a ‗customer maniac‘. Pizza Hut wants to satisfy its customers by offering them the best. . Pizza Hut‘s advertising strategy also lays emphasis on its being an international brand with an Indian Heart. Domino‘s pizza is the recognized world leader in pizza delivery operating a network of company founded and franchise-owned stores in national and international markets.Google Books Competition at Core In the segment of pizza restaurants. Pizza Hut continuously reinforced its product quality and standards to remain in sync with the Indian consumer. Families with young children are also recognized as an integral segment of the target audience. Pizza Hut went in for an Indianization campaign.Pizza Hut: INDIA Pizza Hut made its entry in India in 1996. For instance. The target markets for the company are the young adults (18-29 years). and the Palat(turn) pizza commercial in Hinglish reflect the adaptation. which have been extremely successful. highlighting the premise that the pizza is a catalyst that brings people together ensures that this is a foreign brand that connects the Indian consumer. or communication campaigns are centered on the group. Pizza Hut not only serves the best pizzas but also sings and dances for the customers. Its communication is reflective of family values and family bonding. or the frequent introduction of exciting customer initiatives. Pizza Hut‘s arranged marriage commercial in Indian settings. The company understood that the Indian consumer is value conscious and not price conscious. there are 4 major international players in addition to various national players operating in every country. Dressings on salads are completely egg less. eating out has evolved into a form of entertainment. Birthday parties and get-togethers are a regular feature at the fast food joint. In India. In the efforts to provide that overall dining experience. they also delivered affordably.
Domino‘s is world‘s fastest pizza maker. Over the period since 1996. With more than 8000 restaurants and delivery units spread across in 50 countries. superior quality. Domino‘s holds the 2nd position in international pizza market. They have endeavored to establish a reputation for being a home delivery specialist capable of delivering pizzas within 30 minutes or else FREE to a community of loyal customers from all their stores around the country.dominos.Domino‘s Pizza‘s vision illustrates a company of exceptional people on a mission to be the best pizza delivery company in the world. exceptional customer service and the value for money offerings. Domino‘s Pizza India has remained focused on delivering great tasting pizzas and sides. It makes 14 pizzas in 2 minutes and 35 seconds. Domino’s Pizza Hut competitor Little Caesars Papa Johns Source: www.com .
Little Caesar launched its first restaurant in Gurgaon. why firms attack and how firms respond. chicken wings. salads and pastas. They are looking forward to grow in India and other international locations with highly qualified franchisees. Better Pizza. With 25 outlets in the country. at the age of 22. soups. John Schnatter. This is done by undertaking Industry Analysis which assesses the attractiveness of the market based on its economic structure through Porter’s Five Force Model.he knocked down the broom closet in his father‘s tavern.com Seeking Competitive Advantage To outperform the competitors and to grow despite them. Papa John's boasts over 3. The company is famous for its advertisement campaign of ―pizza! Pizza!‖ which was later altered to ―pan! Pan!‖ to promote their Pan Pizzas. such as cheese sticks. Papa John's is the world's 3rd largest pizza company and is known the world over for its delicious and superior-quality pizzas.00 only which means those customers do not have to call before taking the delivery of their pizza. They can just drop in to a ―Little Caesar‖ outlet and collect their hot-n-ready pizza instantly. Source: www. It has notable differentiating strategy wherein it sells ―Hot-n Ready ―pizza for $5. .Papa John’s In 1984. India in 2009. fresh pizza at a value to consumers in India. It is famous for selling more pizzas at fewer prices. Papa John's Pizza is fast becoming a favorite amongst pizza lovers in India. The company claims to be the largest carry-out pizza chain in the world.papajohns. Source: www. Papa John's were able to achieve this by sticking singlemindedly to their promise: Better Ingredients. installed an oven and began delivering pizza out the back of the bar. Today Papa John‘s remains focused on making superior quality pizzas along with a variety of other menu items.000 restaurants around the world and has earned the praise of residents in every hometown. John believed he could make a better traditional pizza by using fresh dough and superior-quality ingredients.com Little Caesars Little Caesars is 4th largest pizza manufacturer in USA. From day one. Papa John's is looking to feed more pizza-hungry mouths. They are pleased to offer hot. Pizza Hut must know why competition prevails.littlecaesar. 12 more getting ready for launch and 23 more to start serving by the fiscal end.
sandwiches or pizza in some other form as frozen pizza or pizza mixes. The reason is number of competitors is large. hot dogs. pastries. industry growth is high and the fixed cost involved is also high. Threat of Substitutes Thirdly. . there can be a threat from substitutes which in case of pizza industry can be other types of junk food as burgers. Domino‘s. there are 4 major players in pizza market namely Pizza Hut. Threat of New Entrants Secondly. However if the new entrant is experienced then it will be able to compete with the existing players else. Papa Johns and Little Caesar and the degree of rivalry among them is very high. since industry growth is high. it attracts new potential firms to enter into the market.Porter’s Five Force Model POTENTIAL ENTRANTS THREAT OF SUPPLIER’S BARGAINING POWER RIVALRY AMONG EXISTING PLAYERS THREAT OF BUYER’S BARGAINING POWER THREAT OF SUBSTITUTE S Rivalry Among Existing Players At present. the economies of scale enjoyed by the existing players will force the new entrants to exit the market.
Threat of Supplier’s Bargaining Power Threat can also come from suppliers when there is large number of buyers from these suppliers.pizzahut. Broad selection of products to target different segments. the pizza industry is highly competitive and due to high growth rate.com Scanning the Environment : SWOT Analysis Strengths Weaknesses High overhead costs due to large number of restaurants High price pizza which leads to loss of customers. threat of potential entrants. threat of suppliers bargaining power is high. high switching costs. Internal franchisees. .pizzatoday. and non availability of raw material substitutes. concentration is high or a large availability of substitute goods. high concentration of suppliers. Source: www.Threat of Buyer’s Bargaining Power Threat can also come from customers or buyers when there are number of suppliers of buyers. conflicts among Name Recognition First-Mover Advantage (pioneer advantage) Competitive advantage as pizza hut has he largest network of full service restaurants and delivery services.com www. As the competition among existing players. it is highly attractive too.
Pizza hut has tremendous scope of expansion through its new online ordering system. Pizza Hut home delivery network and entry in to new markets. The differentiation strategy followed by any pizza chain is sooner or later adopted by all pizza industry players. TOWS MATRIX STRENGTHS OPPORTUNITIES SO Strategies (maxi-maxi) WEAKNESSES WO Strategies (mini-maxi) In order to target different sections it may increase its revenue by creating more innovative pizzas.. Out of these threat from Domino‘s is main concern. Any competitor offering same quality and diverse flavors might be a real threat to Pizza Hut. Expansion through online ordering system may help in reducing restaurant costs. Threats Main threat is from competitors.Opportunities Increase revenue through more and more innovative pizzas. . Increase in brand loyalty through good customer service.
The internal conflicts among the franchisees should be minimized to cope up with the various competitors in the market.99 which was much higher then its competitors. in India. Pizza Hut implicitly increased its price . while sometimes increase prices also. but reduced the quantity of products in its “Value Meals combos”. Pizza Hut’s Pricing Strategy Pizza Hut follows ―A High/Low Pricing‖ strategy as far as its new products are concerned where it fixes the price higher then its competitors and then gradually lowers the price below the competitor‘s prices. they are more satisfied with value meal combos. it sometimes maintains the same prices while sometimes reduces the prices. Thus in order to provide maximum value to the customers and enhance the brand value. it didn’t increase price of existing pizzas. ―Bundle Pricing‖ is used where 2 litre bottle of Mountain dew was offered free with ―The Extreme pizza‖.THREATS ST Strategies (maxi-mini) WT Strategies (mini-mini) Since pizza hut is a recognized brand it should keep finding new methods to lure the customers so that even if its one strategy gets imitated the other one is still suitable according to the changing customer needs. the price of ―the Extreme‖ was fixed at $9. But several sales promotions were used to reduce the price of the pizza below its competitors. For instance. Pizza hut believes to give “Value for Money” to its customers. In simple words. Therefore by reducing quantity of meal combos. For instance. As far as the pricing of established products is concerned. Since both Pizza Hut and Pepsi are partners. when Pizza Hut launched The Great Indian Treat. This is because consumers at pizza hut hardly buy single pizza‘s. it is applying ―Price Skimming‖ strategy for its new products.
Source: www. Maintain the product quality by continuous innovations thereby giving surprises to the customer off and on. Pizza Hut must obtain total cooperation of its employee‘s thereby increasing productivity.thereby encouraging customers to try new flavors and at the same time. instead Pizza Hut is brand which must be available anywhere and every where people thinks of PIZZA. It could establish Pizza Hut senior club which will organize activities for oldies.200 where pizza hut offered 4 pizzas of different tastes. Emphasis on development of “Home Delivery” Network: Although in developing countries like India. maintaining its market share and sales.com Recommendations High Quality Personnel: In order to maintain the no. location and location”: the most critical success factor for any hospitality business is ―Location‖.1 position in Pizza market. This scheme provided value for money to the customers. Thus Pizza Hut’s pricing strategy revolves around providing maximum value to the customer at an affordable price. .scribd. “Location. Pizza Hut also launched what is named as ―Pan 4 all‖ at Rs. For this. Pizza hut never plays the price game as it has positioned its brand on high quality and excellent customer service. Thus Pizza Hut must increase it coverage. beating competition and enhancing customer satisfaction. Pizza Hut does not aim to be premium brand with selective distribution. But Pizza Hut must think of more innovative ways to reduce the cost and increase the speed. proper training program with high incentive schemes must be established. Pay more attention to untapped segment of Senior Citizens: Pizza Hut must innovate and launch some product for Senior Citizens. And even Pizza hut customers don’t mind paying a little more than its competitors because of the service it renders and quality it promises. Pizza Hut has opened up a ―call center‖ to fasten the speed of home delivery. Innovations can be based on consumer‘s reviews and feedbacks as to what changes are they looking for in their pizzas.
where the pizza market is still in growth stage. Source: http://www.docstoc.com/docs/24386017/Brand-Strategy-of-Pizza-Hut . Pizza Hut must do innovative promotions as done in USA. UK and England which will increase its brand awareness and brand equity. More and More innovative promotions: In developing nations as India and China.
as well as sales in company-operated restaurants. Businessman Ray Kroc joined the company as a franchise agent in 1955.Case Study: Mc Donald’s Mc Donald’s McDonald's Corporation is the world's largest chain of hamburger fast food restaurants.S. The original mascot of McDonald's was a man with a chef's hat Truck on top of a hamburger shaped head whose name was ‗Speedee . french-fries .8 billion. cheeseburgers.Its prominence has also made it a frequent topic of public debates about obesity. employing .9 billion. or the corporation itself. McDonald's operates over 31. soft drinks. He subsequently purchased the chain from the McDonald brothers and oversaw its worldwide growth. McDonald's primarily sells hamburgers. smoothies and fruit. the company began in 1940 as a barbecue restaurant operated by the eponymous Richard and Maurice McDonald. The corporation's revenues come from the rent. wraps. the company has expanded its menu to include salads. A McDonald's restaurant is operated by either a franchisee. the company has become a symbol of globalization and the spread of the American way of life . In response to changing consumer tastes. corporate ethics and consumer responsibility. serving around 68 million customers daily in 119 countries. trademark on a clown shaped man having puffed out costume legs. Headquartered in the United States. royalties and fees paid by the franchisees. and was eventually replaced with Ronald McDonald by 1967 when the company first filed a U. breakfast items. in 1948 they reorganized their business as a hamburger stand using production line principles. McDonald's restaurants are found in 119 countries and territories around the world and serve 58 million customers each day. and 9 percent growth in operating income to $3.000 restaurants worldwide. an affiliate. shakes and desserts. chicken. McDonald's revenues grew 27 percent over the three years ending in 2007 to $22. With the expansion of McDonald's into many international markets.
Mcstop is a location targeted at truckers and travelers which may have services found at stops. The new design allows different music to be targeted to each zone.org/wiki/McDonald's After 30 years without a major design overhaul. Some locations are connected to gas stations/convenience stores. Less plastic more brick and wood Contemporary art or framed photographs Plasma TVs for news and weather reports. The main reason for makeover is to attract ADULT APPEAL instead of just kids. It has added healthier items like premium salads targeted at women. McDonald's. golden sloping curve. it also owned DONATOS PIZZA. It has revamp its menu to attract a new breed of customer. These changes are as follows: Comfortable arm chair. contemporary. The traditional McDonald's yellow and red colors will remain.wikipedia.000 eateries around the globe in a 21st century makeover of unprecedented scale. To warm up their look. funky graphics. Until December 2003.5 million people . Other McDonald's are located in Wal-Mart stores. The idea was to symbolise commitment to the environment. McDonalds promises to be a 'forever young'. The redesign is risky and has many franchisees up in arms over the high costs of a makeover. photos on walls Wi-fi access Shedding kiddie bright colors in favour of more muted and universal colours. but the red will be muted to terra cotta and olive and sage green will be added to the mix. with modern hanging lights to produce a softer glow. the burger giant chose New York-based Lippincott Mercer in the summer of 2004. McDonald's began divesting itself of other chains it had acquired during the 1990s. McDonald's Europe had removed the red background behind its golden arches logo and replaced it with green.more than 1. and apple slices and skim milk for children more upscale items like Asian chicken salad show up on its menu. the 51-year-old fast-food giant is adopting a hip new look. Dining sections will be separated into 3 sections: . while others called McExpress have limited seating and/or menu or may be located in a shopping mall. The children have grown up eating and enjoying McDonalds and then grow into adulthood. After conducting a global contest among design firms. It is redesigning its 30. Many changes are being made in order to attract adult appeal. http://en. But company officials believe the overhaul is needed. Focusing on its core brand. The company owned a majority stake in CHIPOTLE MEXICAN GRILL until October 2006.The company also operates other restaurant brands. Changes The big red roof looks too dated today its being replaced by a flat roof topped by a newly designed. cool hanging lights. Contemporary art or framed photographs will hang on the walls. such as PILES CAFE. restaurants are visited by more than 40 million people every day. when McDonald's fully divested from CHIPOTLE through a stock exchange. the restaurants will have less plastic and more brick and wood.
Flexible zone‘ for families will have booths featuring fabric cushions with colorful patterns and flexible seating. The roof change erases 40 years of brand building and there has been no business case presented which justifies the change .Only 20 recently opened restaurants in the U. primarily in Tulsa and Columbus.an amount roughly equal to a restaurant's annual profit .S.businessweek. The focus is on young adults who want to socialize. Many now visit more McDonalds after makeover than they did before. Resistance McDonald's won't confirm the cost of a redesign however estimates are made between $300. and by the end of 2006. ‗Linger zone‘ will offer comfortable armchairs and sofas. Another 20. is absolutely the right way forward for a family fast food chain. ‗Grab and go zone‘ will feature tall counters with bar tools for customers who eat alone. http://www. Ohio. Here are some feedbacks: Many feel that re-imaging of McDonalds restaurants are a welcome sight. .Tearing down a store and rebuilding from scratch could cost $1 million The franchisees will have to pay for the renovations themselves. It's something that McDonald's has to do if it wants to be part of the 21st century. especially because they already spent millions remodeling their restaurants in the past few years. There is food out there and better and with more competition. sport the makeover in its entirety. and linger. have been completely remodeled. In Europe many feel its beautiful and more flexible like a lounge. more than half of the 13. therefore the move to change to adult colors may actually end up alienating these young consumers who have made the brand so successful.S.com/magazine/content/06_20/b3984065. Some observers feel that McDonald's core equity lies with kids . restaurants will feature some element of the design.720 U. which has some of them seething.000 to renovate an existing outlet -. taking away the childish mascot Ronald McDonald and introduction of spicy dishes such as Mc Spicy Chicken. Many feel that no matter how much they change its same old thing. where increasingly kids and adults eat meals together. All brand-new restaurants will have to hew to the redesign blueprints.htm Feedback The proposed change has clearly drawn both early flak and applause.000 to $400. Many still prefer other fast food joints/restaurants over McDonalds and its Redesigning won‘t change that. Many franchisees are dead set against this change. Others have said that shedding the ‗kiddie‘ image through the change in colors. Few find photos not at all new and extremely boring. hang out.
OPPURTUNITIES EXTERNAL THREATS They are benchmark for creating ―cradle to grave‖ marketing. Invests more than $1 billion annually in training its staff. It also sponsors Olympic atheletes. High employee turnover. Sued many times for having ―unhealthy food‖ with addictive additives leading to obesity epidemic. Nestle Chocolate. In today‘s health conscious environment introduction of healthy food items is a great opportunity. They have been criticized by many parent advocate groups for their marketing practices.SWOT Analysis STRENGTHS INTERNAL WEAKNESSES Test marketing for pizza failed leaving them much less able to compete with fast food pizza chains. Heinz Ketchup. KFC etc. . Starbucks. Like lamb burgers in India and in Middle-East separate entrances for families and single women. Serves only branded processed items such as Kraft cheese. more money spent on training. Provide optional allergen free food items such as gluten free and peanut free. Major competitors like Burger King. Takes food safety very serious and is required to to run through 72 protocols every day. Easily adapt to appeal cultural differences.
) S-O Strategy Since it has adaptable nature both in in terms of cultural differences and food (strength) and moreover today is scenario of healthy environment(opportunity)it can utilise its adaptive nature to overcome cultural differences and introduce more healthy food items in its menu according to different cultures .) S-T (Utilising Strengths to minimise threats. They are highly trained in their work so the probability of making error in preparing beverages of allergic customers is less or reduced. and others have failed miserably. W-O Strategy It has a weakness of high employ turnover but still it can work in its advantage as its employees are efficient and work effectively.) W-O (Minimising the exposure of Weaknesses in order to exploit the Oppurtunities) W-T(Minimising the exposure of Weaknesses in Order to minimise the Threats. .STRATEGIES S-O (Utilising Strengths to exploit Oppurtunities.Moreover it takes food safety very seriously and follows around 72 protocols daily (Strength) and moreover many customers are either allergic to certain items like gluten and or peanut butter OR dislike gluten or peanut butter it can introduce gluten free or peanut free beverages. And as it uses only branded processed products like Nestle chocolate. S-T Strategy Since it has a very good brand image but has been many times criticised for using children for advertisements it can now give an family oriented advertisements as now it is trying to attract adult appeal. W-T Strategy Since its test marketing for pizza failed leaving them much less competitive with fast food pizza chains and on the other hand it has threat of being sued many times of for providing unhealthy foods with addictive additives leading obesity epidemic and pizza being the top most item in unhealthy foods it can use its weakness of marketing failure in pizza to overcome its threat of providing unhealthy food. Heinz ketchup it helps in reducing the probability of unsafe food for customers. Some of these changes have succeeded. other brands have undertaken permanent or seasonal color changes for a variety of other reasons. While McDonald's is changing color to appeal to adults.
Transformation was accepted without resistance. It brought in a new age dimension to the brand and made it younger. Pink is a brave.Here are few examples of color change strategy/Makeover that worked and that didn’t worked. However on the other hand. as it was consistently adding several lakh subscribers each month after change. property and lifestyle. The aim was to consolidate its presence in the various business areas in which it is present – personal grooming. The country is dotted with the brand‘s Orange signage which stands out. blue or Green. Bank of Baroda Bank of Baroda suddenly changed its colors to to bright Orange. Shortly Hutch was acquired by Vodafone and the brand color was changed to global Voda Red. aerospace. Blue and Ruby. Worked Hutch goes Pink Godrej Bank of Baroda Hutch goes pink Makeover of telecom brand Hutch in 2006 with ‗Its Pink‘. The color change was SUCCESFUL by any standards. Godrej Godrej Launched its new multicolored brand from a single color and transformed into a 3 colored brand: Green. confident and exuberant color. Failed Coca-Cola .The change of colour of Hutch from Orange to Pink was because of two reasons: Hutch replaced brand Orange. The need to refresh and differentiate the brand from competition as 90% of Indian brands were Red. Since then Bank of Baroda has gained significantly higher recognition and cut through clutter.
there was no change whatsoever in the chemical composition or any ingredients of Coca-Cola. Here is a clear example of a change in color that did not work.COCA-COLA Some time back. beautiful and quite appealing in themselves. and returned to their trademark red containers. faced with such feedback. the Coca-Cola company halted further production of these white cans. The white cans were unique.thehindubusinessline. Of course. but the significant change in color had psychologically affected several consumers. Exactly one month after launch. http://www. even though it was only a temporary move. Some other consumers also said the white ―polar bear‖ cans were confusingly similar to cans of Diet Coke.ece . However several consumers reported that the taste of the drink had changed.com/features/brandline/article2828944. This was a temporary change to support the efforts of the World Wildlife Fund in protecting the polar bear. in the US. Coca-Cola launched white cans emblazoned with silver polar bears. that the white cans no longer carried the same Coke taste they had enjoyed for so many years. replacing their trademark red cans. They were also very different from the red cans which they replaced. getting them to think their favourite drink had changed. and it was accompanied by a high-decibel campaign with the logo ―We are turning our cans white because turning our backs wasn't an option‖.
The company was founded in 1919 by Sir Jack Cohen as a group of market stalls. Till 1990‘s Tesco was a UK based grocery store but now it has diversified its operations geographically and entered into different areas and thus has an ultimate product ranges few are groceries. . is the third largest retailer in world by revenue and second largest measured by profits. Tesco is operating through 5381 stores. Since that time the company has grown and has reflected the changes in retailing. Tesco opened its first store in Edgeware. North London in 1929. United Kingdom. Tesco is listed on London Stock Exchange and had market capitalization of approximately 24.72. It gets its name from the combination of name of the founder of Tesco and a partner in the firm of tea suppliers who Cohen worked with.E. financial services and consumer goods.Case Study: TESCO Overview Tesco Plc. a British multinational grocery and general merchandise retailer headquartered in Cheshunt. generating revenue of 60. CASE STUDY The objective of this case study is to find how Tesco has turned from UK focused grocery store (till 1992) to world‘s second largest retailer (after Walmart) by profits and how it tackled external threats and took the advantages of the opportunities available and became the number one retailer in UK.2010).000 people all across the world (as at feb. telecoms.93billion pound and giving employment to 4.Stockwell. 2012.4billion pound as of 15 July. T. Here we are going to focus on the performance of tesco from 1992 to 2004 and the strategies it applied to achieve its goals.
tesco had strong financial background to suppot its future growth plans.Since its expansion is so aggressive. Tesco is estimated that it can enter into non food business and can operate it simultaneously with its food business.SWOT ANALYSIS:Strengths: Second largest retailer in UK: Tesco had market share of 16. Tesco has little free cash for any other operations. it had the opportunity to expand globally and give competition and survive and lead amongst competitors. Loyalty schemes: Tesco had different loyalty schemes like clubcard. Online presence: With the popularity of internet and lack of time with customers it had the opputunity to serve through online service. Low cost leadership: Products available at tesco stores were less costly comparative to other competitors. Lack of geographic diversification Debt reduction: Tesco is not expected to reduce its debt until at least 2006. It will help to the growth of the company in overseas business line. International expansion: As till 1992 Tesco was not operating outside UK but foreign competitors were entering UK. It is going to use the structure for the market strategies and the merchandising techniques to the growth of the company. Tesco is going to format the hypermarket with their increased sales by shares of 3 percent in the coming few years.7% in 1992. Being one of the market leader it was the preference of customers so it has the strength to do something new with the existing customer as it has the high probability of being accepted by its loyal customers Strong financial performance: Being one of the leading retailers in US . Opportunities: Non food retailing market: In UK. Tesco has a large capital expenditure program mainly due to its huge investment in space for new stores. . Weaknesses: Concentration in UK: Tesco was operating only in UK and there for had no recognition and brand value outside UK and therefore it was difficult fot it to work globally.
. Asda & Safeway) The arrival of two new store formats: warehouse clubs (Costco) and limited assortment stores (Aldi.This can be explained through its strategic overview. Lidl.Threats: Increasing difficulty in getting planning permission for large greenfields sites Three strong competitors (Sainsbury. Netto) On the basis of SWOT analysis tesco took different strategic decisions.
Tesco Strategy Overview Segmented private label Products More to existing customers in existing stores Services Telecommunica tion Hypermarkets New customers in new channels Convenience stores Internet Expanded non food Financial Services Increase Sales France Ireland Europe Central Europe New geographies Turkey South-east Asia Asia North-East Asia .
Cherokee. They are entertainment. tesco healthy living. all private labeled products are labeled tesco and the company uses sub brands to segment the market. has been a great success. Tesco non food market share in UK increased from 1% in 1999 to 6% in 2004. from value packs to gourmet treats. Different sub brands available are tesco finest. Teso homes have been doing well also.In September 2004 tesco announced that 20% of its sales came from non foods and some of its stores are becoming destination of non-food products eg. Segmented Private label:According to this strategy. normal and finest. Non-food products:To achieve growth in non foods.1. Services :Service Tesco Services Partners Bank financial Royal Scotland Year launched of July 1997 Details 50/50 Joint venture. This strategy was a great success for tesco. We are continually innovating and investing in new lines to increase choice for our customers…. 3. introduced in February last year. household and clothing. value. in store pharmacies. Tesco‘s petrol stations. Tesco extra hypermarket in Newcastle (100 million pound non-food turnover).lable products (50% of sales) are at three levels. from raw ingredients to ready meals.4% market share. Florence and fred are the fastest growing in UK with 4. health and beauty. -“Tesco selects.the tesco finest range. tesca organic. tesco kids and tasco value. Tesco focused on building its capacity in four non foods areas.”--. Tesco‘s clothing ranges. This strategy was based on the preferences of consumers of different income groups and thus attracting the customers. prepares and packages everyday products in dozen of different ways-from fresh to frozen. Targeted Tesco clubcard holder initially .Tesco Annual Report1999 2. The company‘s own.
They are : Fascia Format Hypermarket Average Area(m2) 7. motor insurance.Travel Services travelcare Dec 2002 Online travel sold through tesco. Tesco visa.600 One-stop weekly Large stores offering a shop full range and non food products .com. Tesco started provided different tesco financial products like Clubcard plus. initially prepay . Store Formats:Tesco segmented its store portfolio into four different store formats to capture mere customers. home insurance. personal loans. Tesco gives its financial services offer strong in-store support and has TPF cash machines in every store. Low prices than British telecom 50/50 joint venture. 4. saving account. Low cost packages andt ravel deals Leading shopping and information site for women in UK.com ivillage. Tesco personal finance made a profit of £160million across 4. travel insurance. tax free savings. pet insurance.travel money etc.contracts later launched ivillage.500 Sales Purpose Destination Shopping Description Very large stores offering maximum food and non food range Superstore 3.2 million customer accounts in 2004 which rises from a £30million loss in 1998.com Inc (US) Dec 2000 Tesco Telecom Fixed Cable and Wireless Jan 2003 Servista Vertex Line Telephone Mobile Phones O2 May 2003 Financial services: In partnership with RBS. Initially 50% stake then 100% ―Tesco Talk‖ home telephone service. life insurance.
Internet:Tesco is the world‘s leader e-grocer with operations in three continents.com was formally launched in 2000. 161 metro and 83 extra stores. Date June 1994 Company Global TH Acquisition 57% # of Details stores 44 Purchased share of 44 store publically .Tesco financed its glabal growth with the profits of its UK operations. ” Tesco Annual Report 1995 5.Metro 1000 Top-up High street store in large city centre shopping areas aimed at workers. ―The different Tesco store formats are designed to suit the varied shopping patterns of our customers. Tesco objective was to capture large. growing market so as to add meaningful scale to existing UK business.000 in 2004.Tesco has a range of operations and competitors around the world and enters new countries by buying a well run retail chain. we take account of the specific needs of the local community and are careful to ensure that architecture and landscaping are in sympathy with the surrounding area… Improvements in our ordering and distribution systems now allow us to supply smaller compact stores in areas which were previously difficult to serve. shoppers and local residents Petrol station forecount shops selling a range of everyday product. It also offers a wide range of other products.Tesco.20. The flexibility they provide also helps us meet the changing demands of planning policy.Tesco‘s internet sales increased from £4 million in 1997 to £577million in 2004 while average orders per week increased from 1000 in 1997 10 1. moving away from conventional stores and thus in 2004 it had 227 express. In designing new stores. Express 200 Impulse Tesco focused on developing either large or small stores. New Geographies:Tesco was leader in UK but now it needs to expand its business and thus entered in international market to create new market for its products and services. 447 superstores. books. Tesco.com is one of the few success stories in selling groceries on the internet. 6. Tesco has operated on the Internet since 1994 and started an online shopping service named 'Tesco Direct' in 1997. including electronic goods. broadband and financial services.
3% Kmart Czech 100% & Slovakia ABF Retail 100% May 1997 1998 Lotus 49% Mar 1999 Nov 2003 Home Plus Kipa 81% 51% 2 5 Tesco is rapidly expanding internationally and now has operation in more than 12 countries. £2 billion) to itself in returns terms (and in the short time allotted). Tesco has learnt that it must achieve leadership or exit the market." – “Tesco always acknowledged that owning (and even organically developing. -.” Morgan Stanley. And we can add that many shareholders were relieved that Tesco made this decision. prior to planning restrictions) Catteau in 1993-97 was never an end in itself. Tesco Hungary. September 2003 operate in. Charoen Pokhand owns remainder Purchased share in two hypermarket operation from Samsung Small chain of five modernhypermarkets in Izmir in western Turkey with sales of £124m.000sqft Sept 1994 Dec. average store size 5.listed Hungarian chain. Jan 1999 . when the opportunity to take the next step forward emerged (to acquire some or all of Docks De France in 1996). initial stake raised to 84. Till 2004 it was operating in 2 continents but after 2007. it entered in US market and thus now has stores in 3 continents. 1995 April 1996 Wm Low & 100% Co. Tesco could not justify the considerable outlay (c.280sqft Retail food and general merchandise business of US retailerKmart in former Czechoslovakia Acquired Food Retaining business of Associated British Foods in Northern Ireland and Rebublic of Ireland 13 Tesco owns 49% of Tesco Stores Thailand which acquired 75%of Lotus (£270m sales). However. average store size 3. Catteau Savia 5% 100% 36 13 57 Regional supermarket chain with 45 stores in Scotland and 12 England Increased stake in Catteau to 100% Small retail chain in southern Poland. 1994 Nov.“Our strategy is to expand rapidly and become the strongest player in the markets we Paul Kennedy. CEO.
Tesco Steering Wheel Strategy:- --―Tesco doesn’t want one leader. According to Sir Terry Leahy.” This is the statement made by Sir Terry Leahy. the biggest challenge was of delivering a distinctive and consistent buying experience to consumers in every store when more than 400.7. We want thousands of leaders who take initiative to execute the strategy. CEO of Tesco.000 employees are working for it in .
2 17 10 6 26 15.2* 30. Tesco has turned from one of the leading UK retailer to top retailer in UK ang second largest in the world in terms of profits. Tesco success story is a great example to lean how strategy as well strategic management are important for success of an organization. Tesco communicated its new strategy to its employees via a "steering wheel. representing the four BSC areas of focus: financial. Every strategy has reaped benefits to tesco in terms of profit and customer loyalty by increasing their satisfaction level.multiple countries.0 24.1 22. The Tesco steering wheel has four 90 degree arcs. customer. and employee performance.2 - Sources: BBC News and Yahoo UK . community. They aimed at improving its competitive position in the market by becoming more customer focused and concentrated on differentiating itself from other retailers through the services it provided.4 19.6 16. Recently.6 11.3 16.1 10.4 9.8 16.8 10. Tesco supplements its steering wheel report with "shopping lists" that capture key elements of the strategy in simple forms that employees can follow in their everyday activities.9 16. The steering wheel has helped the company stay focused on its strategy even as it experienced rapid growth over the past two decades.3 29.2 18. to the steering wheel report to encourage employees to be excellent citizens in the communities where they work and live. operations.9 23. Tesco added a fifth dimension. Conclusion:In the light of above analysis it can be concluded that since the introduction of strategic changes by tesco." a simple symbol and metaphor for a tool intended to drive performance and help employees navigate into the future.8 Asda Safeway Morrisons 14.6 16.8 12.2 10.1* Sainsbury's 19. Market Share of the Top Four Supermarkets (%) 1998 1999 2000 2001 Sep 2003 Apr 2005 Feb 2006 Tesco 22. Every store gets a monthly steering wheel update.5 12. a summary of its metrics within each of the four arcs.1 14. tesco‘s performance has been improving domestically as well as globally. so that all employees in Tesco's multiple regions and formats get feedback on their performance.So to keep local store managers and employees engaged in satisfying consumers in their shopping experiences tesco came with the concept of ―The Tesco Way‖.8 15.
2% 1.965 729 18.291 162.031 26.509 10.818 3.800 19.5% Turnover per full-time equivalent 159.385 2.459 1.297 141 71 1.213 90 29 1.982 21.100 70 4 1.157 1.832 10.878 23.974 Underlying operating profit UK Rest of Europe Asia 1.822 163.694 218 152 2.309 2.004 24.174 Return on capital employed Retail statistics UK Number of stores Total sales area (000 sq ft) 692 17.780 24.Tesco's Summary Five Year Record Year ended February 2001 (£m) 22.678 .557 2005 (£m) 37.664 2.010 33.443 1.4% 1.146 3.203 1.332 10.585 2002 (£m) 25.760 3.534 11.400 21.526 184 122 1.829 160.181 1.207 166.821 2.398 23.064 11.280 2004 (£m) 33.669 30.814 27.070 Group sales Turnover excluding VAT UK Rest of Europe Asia 18.0% 1.737 860 20.8% 1.401 2003 (£m) 28.
75 22. Sept 2003 References— http://www. We've been pretty careful.html http://www. Chairman.bized. October 2003 – “We never say never to the U.wikipedia.uk/educators/16-19/business/strategy/activity/strategic1. Tesco. We don't always get it right. It has many future options.com/sample5. Chairman. We're very cautious because Britain doesn't have a great track record over there.employee (£) Weekly sales per sq ft (£) International Number of stores Number of hypermarkets Total sales area (000 sq ft) Source: Tesco Annual Review. so good.S.org/wiki/Tesco 215 68 10.freeonlineresearchpapers. but we're pretty happy about our country selection.” David Reid.com/case-study-tesco-plc http://en.S. It's a big market.org/?lid=252#stra http://www.php http://www.” David Reid. Tesco.ivoryresearch.hbr.928 21. Tesco.48 23.co. 2005 These data also suggests that tesco‘s strategic actions were a huge success and helped it in achieving its objectives.php http://blogs.ivoryresearch. It can now with its strong global financial structure.86 22. happily. So far.(IN 2007 tesco entered in US market) “We're not in South America. in Asia. then maybe one day it will be in the U. Chairman. it's a good market in many ways.397 250 102 13. But equally.43 21.org/hbr/kaplan-norton/2008/09/tescos-approach-to-strategy-co. We haven't invested in Russia or Indonesia. You have to make choices about where you go.111 554 273 24.669 309 152 18.com/sample36. October 2003 – "We don't want to be sitting here in 10 or 15 years' time saying China has been a great success and what a shame Tesco wasn't there. If we could find the right way.” David Reid.htm http://www.89 . we'd obviously have a look at it. But still tesco has the opportunity to grow by expanding its business in othes continents. if Tesco is in Europe.115 440 194 22.corporatewatch. enter in US and give challenge to Walmart in its domestic country.
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