Pestl Analysis

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The concept was first used by Michael Porter in 1985 ( Porter, 1985). The value chain is employed to describe the activities within an organisation which together create a product or a service. It is the cost of these value activities and the value that they deliver that determines whether or not best value products or services are developed (Johnson and Scholes, 2006). Porter identified the 'value chain' as a means of analysing an organisation's strategically relevant activities in order to understand the behaviour of costs. Competitive advantage comes from carrying out those activities in a more cost-effective way than ones competitors. (

According to Porter, the primary activities of the company are:

•Inbound Logistics. The process can be briefly described as the areas concerned with receiving the goods from suppliers, storing them until required for further distribution and operations within the company.

It is an ultimate goal for every cost-efficient company to search for new ways of reducing its cost whilst at the same time adding value. By 2003, the annual distribution volume had increased to more than 1 billion cases delivered, out of 25 distribution centres, covering 7 million square feet of warehouse area, holding 9.9 days stock for stocked products. The scale of the ambient distribution centre increased: for example Thurrock, which opened in 2002, is 500,000 sq ft with a weekly assembly capacity greater than 1 million cases. A similar very large non-food national distribution centre is located in Milton Keynes with automation for select product lines. ( Fernie, 2004). In Tesco's situation being one of the largest retail operators in the UK it is important to have its stock constantly replenished. Between 1983 and 1996, Tesco made big steps towards modernising its supply chain, introducing POS scanning, centrilised automated ordering, centrilised distribution,...
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