Strategic Analysis Tesco

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Strategic Analysis Tesco

By | August 2006
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(a) Undertake a strategic analysis of an organization of your choice and review its current and recent past strategy. Tesco was founded in 1924 by John Edward Cohen in the East End of London. The name ‘Tesco', was first used on tea, and was derived from the initials of Cohen's tea supplier, T E Stockwell, combined with the first two letters of Cohen. Tesco Stores Limited was incorporated in 1932. In 1935, Jack Cohen visited the USA and was impressed by the supermarkets' self-service system which enabled more people to be served faster, with lower labour costs. In 1947, the Tesco branch in St Albans, a small shop by 21st century standards (200 square metres) was the first Tesco to be converted to self service, although it didn't immediately catch the public's imagination. In the early 1960's, Cohen lobbied Parliament to have the Retail Price Maintenance (RPM) act abolished, efforts supported by Edward Heath. The RPM allowed manufacturers and suppliers to set the price of goods thus preventing large retailers, who could buy in bulk and had greater buying power, from benefiting from economies of scale and undercutting the prices of smaller shops. To get 'around' this, Tesco offered another incentive to get customers through the doors. These were collected by customers when they spent money in the store, and were then traded for goods in a catalogue. An effective discount. In 1964, Parliament passed the Resale Prices Act, curtailing RPM, which by 1979 remained in force only on books and pharmaceutical goods. Until the 1970's, Tesco operated on the 'pile it high, sell it cheap' formula Cohen had imported from the USA. However, the market was changing, leaving the company with slim margins and a serious image problem. Under the leadership of Ian MacLaurin, who succeeded Jack Cohen in 1973, Tesco decided to try something dramatic and different: to become an ‘aspirational mass retailer'. It discontinued the use of Green Shield trading stamps and launched 'Operation...
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