Strategic decisions are ones that are aimed at differentiating an organization from its competitors in a way that is sustainable in the future. (Porter, 2002) Porter strongly advocates that decisions in business can be classified as strategic if they involve some innovation and difference that results in sustainable advantage. According to Porter, (2002) operational effectiveness and efficiency are the key elements of success in any organization. A company can outperform its rivals or competitors in the market only with superior management and efficient control creating a difference from the others which eventually attracts customers. Porter defines operational effectiveness as performance of similar activities as its rivals but better than them. A company can perform its rivals only if it can operate in different ways which are not in practice as seen in Tesco.com.
After the establishment of various virtual supermarkets, a new phase began when established brick and mortar supermarkets entered the online grocery shopping arena by adopting a ‘click and mortar’ strategy. In the UK there are Tesco, Sainsbury’s, Asda, and Waitrose.com. These players, by combining the strength of traditional retailing with Internet shopping, have achieved rapid growth.
The SWOT analysis of Tesco.com reveals that it is most powerful retail brand, reputation for money, value, commitment, and provides wide range of products. It is growing at a brisk pace with expanding its horizon to other parts of world through acquisition and merger. Tesco.com has good opportunities in markets of European and Asia and focuses on acquiring the market through acquisition of smaller stores and merger or partnering with leaders in the specific markets. Also the success factors of Tesco reveals that Tesco had formulated its strategies around its core competence. These core competences are:
PROVIDE POTENTIAL ACCESS TO A WIDE VARIETY OF MARKETS:
Enables the creation of new products and services. For instance, Tesco has established a strong leadership in food retailing industry. The core competence that enabled Tesco to enter retailing of food and non-food products was a clear distinctive brand proposition that had a focus on a properly define market segment. Tesco is recognized as the company, providing the most customized and efficient service, based on a good customer relationship management.
TESCO MAKES A SIGNIFICANT CONTRIBUTION TO THE PERCEIVED CUSTOMER BENEFITS OF THE OUTCOME:
Delivers a fundamental customer benefit. In order to identify core competences in a particular market, the question of - why is the customer willing to pay more or less for one product or service than another- needs to be addressed. For example, Tesco have been very successful in capturing the leadership of the retailing market. This shows that Tesco designs and implements effective supply systems and deliver an efficient "customer interface". Tesco was the first UK grocer to launch a loyalty card and has been the most effective. Palmer (2004) claims that until recently, it was the only grocer to use the information to mail customers every month.
DIFFICULT FOR COMPETITORS TO IMITATE:
Highlights the need for a core competence to be competitively unique. This indicated the importance of product differentiation. For example, for many years up to 2003 (In 2003 Tesco has been recognised a leading UK food retailer) Tesco had a very strong position within the retailing industry. It had a different approach to the service concept, providing good corporate reputation and introducing new premium quality products (MarketWatch, 2004). Tesco.com bases its business strategy on these capabilities. Capabilities result from Tesco's ability to combine and...