LONGITUDINAL STRATEGIC DEVELOPMEN STUDY OF TESCO
Past Strategies Deployed3
Extension of Service4
Creation of Sub-brands5
Current Strategic Situation7
PESTEL Framework Analysis10
Strategic Direction for Future12
Expansion into Growing Economies12
International Strategic Alliances12
Strengthening Competitive Positioning In Food Retail13
Tesco is a United Kingdom based multinational grocery retailer. Tesco is the third largest retailer on the global level after Wal-Mart and Carrefour. The expanse of the business is in fourteen countries in three continents. The company was started in the year 1919 and has grown tremendously in less than a hundred years to reach the level of third largest retail chain in the world. The Tesco brand name was formed in the year 1924. Tesco sells roughly 40,000 food products in its superstores. The major product portfolio consists of clothing and food products. Tesco has also strengthened its own brands over the years and they account for almost half of the company’s sales. The paper assesses the strategic development of Tesco since its formation. Significant attention is paid on the strategic development of the company during the previous twenty five years. The paper carries out an analysis of the past strategies of the organization along with current strategic situation. Two tools of strategic management are utilized to appraise current strategic situation of Tesco. The first one is SWO T analysis and the second one is Porter’s Five Forces Model. The last part of the paper talks about the future strategic direction for Tesco based on the analysis of current strategic situation.
Past Strategies Deployed
The section discusses the strategies adopted by Tesco in its recent path. Some of these strategies have proved to be highly successful and many of them are continued even to this day. Several strategic initiatives have been adopted by Tesco over the course of its history. The organization has started operations as a supplier of food and drinks, and continued its growth to become the third largest retailer in the world. Diversification – The first strategic move of the organization was to diversity its business into fast moving sectors. These sectors included clothing, consumer electronics and automobiles. The next round of diversification strategy changed the outlook of the organization to service sectors. Tesco initiated offering DVD rental services, healthcare services, financial services and even music downloads (Corporate Watch, 2004). The fundamental strategy of Tesco has remained to be the most cost effective supplier of goods and services. The organization is driven by the motto to be the lowest-priced supplier, irrespective of the industry is has operated it. Acquisition – Tesco followed its acquisition strategy for a relatively small period of time. The organization acquired a chain of forty supermarkets during late eighties. The retail chain used to operate with the name Hillards (Miller, Agnes and McBrewster, 2010). The second acquisition of Tesco came in the year 1994, when a retail chain of 57 stores William Low was acquired by Tesco, which lead the organization to expand its operations in Scotland. In recent years, Inverness was acquired by Tesco and was branded as Tesco town (Tesco PLC, 2011). Tesco’s entry in Ireland was executed through purchase of the retail arm of Associated British Foods which contained a very huge proportion of Ireland consumer market. Extension of Service – Tesco has the distinction of being the only retail chain which was successful in establishing the concept of online purchasing. The...