An evaluation of Tesco’s competitive position within the food industry market. Corporate strategy ASB-4004.
December the 14th 2009.
Shahbaz Ansari- abpa40, 500 200603
Word count- 3300 excluding references, appendices, and tables. Contents page
Business strategy P3
Corporate strategy P3
Company values P3
Value chain P4
Joint Ventures and Mergers and Acquisitions P4
PESTEL analysis P5
Figure 1: Tesco’s main competitors P7
Figure 2: Ansoff matrix for Tesco’s marketing strategy P8 Figure 3: Tesco’s sub-bran poisition in the United Kingdom P9 Figure 4: Tesco’s competition in the UK P10
Figure 5: Tesco’s internal competition P10
Core competencies P11
Human Resource P12
Appendix 1: Retail Competitors Analysis by Mintel P17
Appendix 2: Leading UK food retailers, market shares, 2008 P18 Appendix 3: Tesco UK store formats, 2008/09 P 19
The company that our group has chosen to analyse is Tesco. Tesco was founded in 1919 by Jack Cohen who began his new venture by selling surplus groceries from a stall in the east end of London; One his first day he made £1 profit and £4 of sales (Tescoplc.com [history]). Tesco has come a long way since then and is now one of the largest food retailers in the world, operating around 2,318 stores and employing over 326,000 people. Not only has Tesco managed to monopolise the food sector, they have also diversified into a number of other sectors, some of which being insurance, mobile networks, clothing, and electronics. However, this report shall have a focus of the food sector in the United Kingdom. Albeit that Tesco has 2,200 stores locally, it is categorised as operating in a globalised environment. Currently Tesco has stores in seven European countries; the United Kingdom, Poland, Hungary, Turkey, Slovakia, Czech Republic, and the Republic of Ireland. Furthermore also operates in Asia, stores can be found in China, Malaysia, Japan, Korea, Thailand, and Taiwan (Tescoplc.com [community plan]; Tescoplc.com [core UK]). The long term business strategy of Tesco is currently fivefold; to be a successful international retailer; to grow the core UK business; to be as strong in the non-food arena as the food arena; to develop retailing services- such as tesco.com, Telecoms, and Tesco personal finance; and to put community at the heart of what they do (Tescopl.com [long term strategy]). How Tesco chose to implement the corporate strategy is via a steering wheel model; that all of the key elements of the business, customers, operations, people, finance, and community, are dealt with an equal and balanced scorecard (Tescoplc.com [CR strategy]). It has been stated by Tesco that the steering wheel has been implemented to place emphasis on the fact that corporate responsibility is not a specialist function in Tesco, it is a part of everybody’s job every day (Tescoplc.com [CR strategy]). Tesco works off the business value that their “core purpose is to create value for customers to earn their lifetime loyalty” (Tescoplc.com [our values]). Great emphasis is placed within “people”, without their customers and employees Tesco’s success would not have been possible. For the remainder of this report the variables that can affect Tesco’s competitive advantage shall be considered and evaluated. Value chain
When considering the value chain of Tesco there are a number of primary variables that can either add value (+), lose value (-), or have the potential to add value (P+). For the primary activities;
These have an integral importance in the creation of the value chain as they provide the earliest opportunity to create value, therefore because of the elements related to the logistics Tesco try to achieve and maintain the level of consumer choice in store (+). The...