This report is set out in order to evaluate the marketing strategy adopted by Tesco along with how they gain a competitive position internationally through globalisation. Under the findings of this report, the approach which will be evaluated will be related to Porter’s competitive positioning. This will be used to show how Tesco gain a competitive advantage over their rivals such as Asda using the generic strategy. The five force framework will also be investigated to anaylse the competition it faces and finally how Tesco segments there market, identifying the gaps available to develop. In order to write this report a collection of different sources were used. These sources included books, journal articles, media articles, websites, Tesco’s annual reports and information from Tesco’s website. The information gained from these sources helped to discover how Tesco manages to gain the competitive advantage in their industry. It has also helped to focus the importance of successful competitive positioning with models from Porter to establish the position in the minds of the consumer. 1.0 Introduction
This report includes a theoretical model which will reflect the practice of Tesco in relation to strategic analysis. It will look at the competitive positioning approach and the models/concepts used by Porter to gain a competitive advantage over Tesco’s rivals. By doing this it will show what other companies in the industry would need to do in order to take over the competitive advantage that Tesco have. Strategy is based on the long term of a business and is the direction and scope of the organisation. It aims to achieve advantage in a changing environment through its configuration of resources and competences (Johnson et al, 2008). There are generally three different levels of strategies associated with organisations. The top level is known as the corporate level strategy which is alarmed with the overall purpose and extent of the organisation. The second is the business level strategy which looks at particular markets and how to compete successfully in them and the third level is the operational strategies which look at how the organisation delivers successfully (Johnson et al, 2008). 2.0 Findings
2.1 History of Tesco
Tesco began when Jack Cohen first opened a market stall in the East end of London in 1919 and since then began trading in 1924. This shows that Tesco has been serving customers in the UK for the best part of a century. Today, they class themselves as much more of a weekly shop as they have introduced new services, products and ways to shop all driven by their ‘Every Little Helps’ philosophy (Tesco, 2008). In the last decade Tesco has grown their business to become the world’s third largest grocery retailer by determining an excellent level of service wherever they operate. They have a strategy for growth which is based in five parts. These include core UK business, non food, international, retail services and the community (Tesco, 2008). Tesco’s market share is still growing just short of 7% although that is not as fast as it was. This is because at present the economy is in a recession and so customers are changing their habits (Leahy, 2008). ‘According to the Institute of Grocery Distribution (IGD), the UK food industry group predicts that Tesco will grow at a faster rate than Carrefour in the coming four years. Tesco’s growth will be spurred by international expansion in markets such as China, the US and India’ (Hall, 2008). This means that Tesco who are currently the UK’s biggest retailer will leapfrog Carrefour by 2012 to become the second largest retailer in the world after WalMart (Hall, 2008). Within the UK, Tesco employ over 280,000 employees and have over 2,100 stores. Tesco stores have four different formats (See Appendix 1). These are the express stores which sell a range of up to 7000 products with the first express store opening in 1994. The metro store first opened in 1992 bringing the...
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