. How Successful Has the Strategy of Tesco Been Within the Industry?

Topics: Tesco, Charoen Pokphand, Hypermarket Pages: 8 (2339 words) Published: February 21, 2013
In nowadays Tesco has a presence in 13 markets and around 4000 stores worldwide. Tesco, the biggest retailer in the UK with amazing group sales of £51.8 billion and gross profits exceeding £2 billion. In 1937 Tesco opened Britain's first self-service store. This new system allowed for the faster servicing of people and lowered the costs of labor. Throughout the 60's Tesco used so called "pile it high, sell it cheap" strategy that was set in motion by Cohen. This new strategy proved to be unsuccessful. Tesco had a grocery market share of 29.0% and became UK's largest retailer in early 2005 and was ahead of it competitors. The main reasons for this were: An "inclusive offer" . Tesco met the needs of low, medium and upper class customers in every store. Tesco's started its own-brand products, which include the upmarket "Finest" and low-price "Value" ranges. Thus they were able to increase their profits rather than selling other brands products. Customer focus: they made an unusual strategy move by not focusing on " maximizing shareholder value " this move was taken by Sir Terry Leahy, chief executive since the mid-90s.The company's mission statement reads, "Our core purpose is, 'To create value for customers to earn their lifetime loyalty'. We deliver this through our values, 'No-one tries harder for customers', and 'Treat people how we like to be treated'". Since 2000 the company has a four-pronged strategy implemented by Laura Wade-Gery: • "Core UK business" – Tesco made a large-scale expansion into the convenience-store sector that move was innovative and energetic. • "International" - Tesco started its international operations, focusing on retailers with weak strategies in Central Europe, Asia and the US. • "Non-food business" – Tesco also entered other lines of business like clothing, consumer electronics, health and beauty products, media products etc. Many high street chains were soon threatened. • "Retailing services" -Tesco also entered into areas like personal finance, telecoms and utilities. Tesco entered these sectors by joint venturing with the major players. Overall Tesco's success is probably based on their ability of getting the basics of retailing right more often than most of the competition.

For a strategy to be effective, senior management must take into consideration all the distinctive competencies of the company, and they must review the environment. They must understand what competitors are doing, or planning to do and take that into consideration. They must critically examine other factors that could have positive or negative effect. This is the so called SWOT analysis.

• TESCO have secured commercial image within the global market by winning Retailer of the Year 2008 at the "World Retail Awards". This can be used for a great marketing campaign towards the demographic segment for future growth and sustainability. • The present environment shows that global retail sales are showing decline. Unlike other companies TESCO Group have published raise in sales of 13% for UK markets and 26% growth in international markets. • TESCO is a business that is looking to expand and has reserve funds of credit in combination with income derived from property portfolio funds.

• Tesco's Finance were affected through bad debt, credit card overdue debts and household insurance claims. • Tesco's position as a price leader in UK markets can lead to a lowered profit margins in order to maintain the key price points on must have goods. • As a Grocer retailer they are not set up to service as specialist in specific product areas which can be done by other smaller retailers. • Having in mind the current economic conditions, Tesco's key value message will be successful, never the less there is a weakness in non-essential, mid to high priced items which will suffer due to the rising costs of living and lower disposable of incomes. Opportunities

• Statistics suggest TESCO...
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