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Assignment on: Business strategy. A scenario on Tesco Company

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Business strategy is a set of works that enable an organization to achieve long term objectives.

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Assignment on Strategic Business Management and Planning in Tesco

Executive summary.

This Assignment focuses on Business Strategic Management and Planning in Tesco, one of the giant grocery shops in the UK. The first part depicts the mission and vision statement of the Tesco and also highlights the ethical, cultural, environmental and social perspectives of Tesco. In the second part of this assignment, the Business Environment of Tesco is critically reviewed through two different strategic models: the SWOT analysis. The core competences and sustainable competitive advantage of the company is discussed in the third segment while the strategic development of Tesco over the years underwent many reforms and in the fourth segment some recommendations are given to improve Tesco’s new business strategies.

1.0 Brief Background of TESCO

Tesco is one of the leading grocery shops in the UK 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 meters) 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.

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 McLaren, who succeeded Jack Cohen in 1973, Tesco decided to try something dramatic and different: to become an ‘inspirational mass retailer’. Now Tesco stands far ahead of its competitors because of Tesco’s well-organised strategy and quick response to the customers’ demand.

2.0 Mission, vision, ethical, environmental and social perspectives of Tesco

2.1 tesco’s mission.

Mission is the prime goal of an organisation to achieve the end results. Through minute observation it can be said that Tesco’s mission is to improve more opportunities for the customers offering them loyalty cards and convince them to buy the double even in the economic downturn. Tesco takes pride in vast productivity and continuous improvement of the products.

A research by Sufi and Lyons (2003) from the literature shows that most of the writers are agreed upon defining mission statement as: concern for the customers’ purpose, identity/ image, differentiation factors, corporate values, products, markets and concern for the survival, growth, profitability, company philosophy and employees and social concern.

Tesco is now a brand name meeting the demands of the customers operating throughout the world.

2.2 Tesco’s vision

Vision can be defined as the desired or intended future state of an organization or enterprise in terms of its fundamental objective and/or strategic direction. Vision is a long term view, sometimes describing how the organization would like the world in which it operates to be. Tesco’s vision reflects in their slogan Every Little Helps a lot. As a fast growing company it has gone from simply selling groceries to providing anything from loans to mobile phones. By setting out in all these new directions Tesco endeavours to be close to the customers.

2.3 Ethical

Tesco has successfully been maintaining its commitment for being a good neighbour through stores. Tesco created over 24,000 new jobs around the world in 2008 (Tescos’s websites). Since 2000 the company is regenerating UK communities venturing partnership with local communities. The other contributions that Tesco is making include supporting local economics, promoting active lifestyles, supplier relations, UK code practice, monitoring animal welfare.

Cultural Values

Our Vision guides the direction and the decisions we take as an organisation. Tesco is a company built around customers and colleagues, high-quality assets around the world and multiple opportunities for growth – and these characteristics are central to our Vision for the business.

Strategic planning

Strategic planning is a step by step process with definite objectives and end products that can be implemented and evaluated. Very simply, it is a process by which we look into the future, paint a picture of that future based on current trends, and influence the forces that will affect us.

Strategic planning looks three to five years ahead. It charts a definite course based on strong indicators of what the business environment will be like in those years.

Indicators include census demographic statistics, economic indicators, government policies, and technological advances. They reveal strong trends regarding changes in lifestyles and the economic and political climates, which are important factors influencing the facilities planning and management industry. Some of these trends are potential opportunities, some potential threats, and some are both. Examining the possibilities and formulating strategies to meet the challenges can help the organization take full advantage of opportunities and minimize threats. In short, we can take control of the future. We can use our energies and resources more effectively and conduct our business more successfully, despite changes in the environment.

3.0 Environmental analysis: PESTEL FRAMEWORK

Bonn (2001, pp.63-70)states that ‘when review the organisation’s environment, it requires an understanding of how different problems and issues are connected with each other and what affect one solution in a particular area would have on the areas’.

Strategic planning effects the organisation in various ways. Since as a supermarket Tesco emerged reforming strategic changes from time to time to have a strong voice in the competitive market. There are different strategies that the company shuffled and reshuffled over the years which can be analysed both externally and internally. To analyse external factors in the context of modern business world PESTAL ANALYSIS has been handy to illustrate Tesco’s external environment. PESTAL ANALYSIS includes the aspects such as political, economical, socio cultural, technological analysis. In the following chart they are illustrated:

3.1 Political Factors

Tesco is operating in the UK as well as throughout Europe with around 4000 stores. Because of Tesco’s massive performance and noticeable presence in the market, the company is highly influenced by the political and legislative conditions of these countries.

For employment legislations, the government encourages retailers to provide a mix of job opportunities from flexible, lower-paid and locally-based jobs to highly-skilled, higher-paid and centrally-located jobs (Balchin, 1994). Also to meet the demand from population categories such as students, working parents and senior citizens government imposes new regulations which may create mounting pressure on grocery stores like Tesco and it competitors. Tesco understands that retailing has a great impact on jobs and people factors as traditional stores go out of business or are forced to cut costs to compete. Being an inherently local and labour-intensive sector, Tesco employs large numbers of student, disabled and elderly workers, often paying them lower rates. In an industry with a typically high staff turnover, these workers offer a higher level of loyalty and therefore represent desirable employees.

3.2 Economical Factors

Present economic factors are vastly influencing demand, costs, prices and profits. In the ebb and tide of economic downturn, Tesco has reduced price and added value to draw more consumers even when the unemployment rate is high and demand for many goods is decreasing.

These economic factors are largely outside the control of the company, but their effects on performance and the marketing mix can be profound. Although international business is still growing and is expected to contribute greater amounts to Tesco’s profits over the next few years, the company is still highly dependent on the UK market. Hence, Tesco would be badly affected by any slowdown in the UK food market and are exposed to market concentration risks.

3.3 Social/Cultural Factors

Current trends indicate that British customers have moved towards ‘one-stop’ and ‘bulk’ shopping, which is due to a variety of social changes. Tesco has, therefore, increased the amount of non-food items available for sale.

Demographic The adoption of Electronic Point of Sale (EPoS), Electronic Funds Transfer Systems (EFTPoS) and electronic scanners have greatly improved the efficiency of distribution and stocking activities, with needs being communicated almost in real time to the supplier .

3.4 Environmental Factors

There has been increased pressure on many companies and managers to acknowledge their responsibility to society, and act in a way which benefits society overall (Lindgreen and Hingley, 2003). Hence, by recognizing this trend within the broad ethical stance, Tesco’s corporate social responsibility keeps on working on these vital social issues.

Graiser and Scott (2004) state that in 2003 the government has intended to launch a new strategy for sustainable consumption and production to cut waste as well as reduce consumption of resources and minimise environmental damage. In addition, the focus is now towards; the own-label share of the business mix, the supply chain and other operational improvements, which can drive costs out of the business. National retailers are increasingly reticent to take on new suppliers (Clarke, Bennison and Guy,1994).

Now-a-days consumers are becoming more and more aware of health issues, and their attitudes towards food are constantly changing. In this regard, what Tesco adapts is to accommodate an increased demand for organic products.

3.5 Technological Factors

Technology is a major macro-environmental variable which has influenced the development of many of the Tesco products. The new technologies benefit both customers and the company: customer satisfaction rises because goods are readily available, services can become more personalised and shopping more convenient. Tesco can be applauded for online shopping as its slogan says “YOU SHOP, WE DROP” at the doors.

3.6 Legislative Factors

Various government legislations and policies have a direct impact on the performance of Tesco. For instance, the Food Retailing Commission (FRC) suggested an enforceable Code of Practice should be set up banning many of the current practices, such as demanding payments from suppliers and changing agreed prices retrospectively or without notice (Mintel Report, 2004).

5.0 INTERNAL ANALYSIS OF TESCO: Swot analysis

5.1 strengths.

Tesco’s strengths are hidden in its massive productivity and supply chain. Every door to store concept is the force that has enabled Tesco to reach beyond customer’s expectation. While the sluggish economy is badly affecting the business, small or large, Tesco maintains steady growth and supply even better than before. Loyalty cards have also been strengths of Tesco to encourage the customers into multiple buying. Good reduced price with a bulk of choices has branded.

5.2 Weaknesses

Being a large supermarket, to satisfy customers of all rank, Tesco sometimes sells goods at lowest price that result in huge loss. Tesco’s bulk amount of loans is also great concern for the company. Sometimes to lower down the price Tesco involves in bad bargain with the suppliers which causes non conformance to the customers’ demand and satisfaction and in many cases products become out of stock for time being. Reliance upon the UK market: Debt reduction:

5.3 Opportunities

Some of Tesco’s main opportunities are on the internet. No other grocery shops in the UK offer immense opportunity that Tesco can provide. Tesco’s online shopping exceeds the remaining competitors in terms of speed, facilities and availability. Thus Tesco opportunity to flourish its wings in the market has been great threat for Sainsbury, Asda and so on. Even the local small businesses are about to be abolished from the scene.

Non-food retail: The growth in Tesco’s hypermarket format in the UK means that there are expectations of seeing its 13% share of retail sales climb sharply over the next few years.

Health and beauty: Tesco’s UK health and beauty ranges continue to grow, and it is currently the fastest growing skincare retailer in the market.

5.4 Threats

Tesco has changed its threats into opportunities by making sound strategy of cutting down prices on foods. The present recession has widened Tesco’s scope to hold the majority of UK grocery market share. But Tesco feels strong rivalry from Sainsbury and Asda as they have come forward with good low price sometimes offer even better quality.

6.0 Market Development Strategy:

By entering new markets like China and Japan it can serve as a key growth driver of the company’s revenues and expansion strategy. Tesco’s interests in Japan are likely to continue growing in due course, as Asian markets are showing an increase in consumer spending and increased trend towards retailing. These new markets are also demographically high opportunity markets.

In the case of Tesco, one of the suggested strategic options is in international alliances with the local retailers in Asian markets. It will be considered as a method of development and may be formed to exploit current resources and competence. By entering into joint ventures or partnerships, in order to gain a larger economy of scale and larger market presence, Tesco will draw on the extensive local knowledge and operating expertise of the partner whilst adding its own supply chain, product development and stores operations skills to deliver a better shopping experience to customers. However, given the huge scale, potential and complexities of these markets, Tesco may feel that being the first mover is not necessarily an advantage. The success of the partnership will be related to three main success criteria: sustainability, acceptability and feasibility. Sustainability will be concerned with whether a strategy addresses the circumstances in which the company is operating.

Product Development: Diversification

Changes in the business environment may create demand for new products and services at the expense of established provision. Ansoff’s matrix suggests that if new products are developed for existing markets, then a product development strategy has to be considered by the management level of a company. In expanding and diversifying Tesco’s product mix, it is also crucial to implement internal development when new products are developed. The nature and the extent of diversification should also be considered in relation to the rationale of the corporate strategy and the diversity of the portfolio.

7.0 CONCLUSION

In large organizations as Tesco strategy should be analysed and implemented at various levels within the hierarchy. These different levels of strategy should be related and mutually supporting. Tesco’s strategy at a corporate level defines the businesses in which Tesco will compete, in a way that focuses resources to convert distinctive competence into competitive advantage.

Clarke I., Bennison D. and Guy C. (1994) The Dynamics of UK Grocery Retailing at the Local Scale, International Journal of Retail & Distribution Management, Vol. 22 Issue 6, pp.11-20;

Datamonitor Report (2003) Food retail industry profile: United Kingdom, January;

Datamonitor Report (2003) SWOT Analysis Tesco PLC, July;

Datamonitor Report (2003) Company Profile: Tesco PLC Analysis, October;

De Toni A. and Tonchia S. (2003) Strategic planning and firms’ competencies: Traditional approaches and new perspectives, International Journal of Operations & Production Management, Vol. 23 Issue 9, pp.947-976;

Drejer A. (2000) Organisational learning and competence development, The Learning Organization: An International Journal, Vol. 7 Issue 4, pp.206-220;

Finch P. (2004) Supply chain risk management, Supply Chain Management: An International Journal, Vol. 9 Issue 2, pp.183-196;

Flavián C., Haberberg A. and Polo Y. (2002) Food retailing strategies in the European Union. A comparative analysis in the UK and Spain, Journal of Retailing & Consumer Services, Vol. 9 Issue 3, pp.125-138;

Graiser A. and Scott T. (2004) Understanding the Dynamics of the Supermarket Sector, The Secured Lender, Vol. 60 Issue 6, November/December, pp.10-14;

Johnson G. and Scholes K. (2003) Exploring Corporate Strategy, 6th ed.,Prentice Hill: London;

Lindgreen A. and Hingley M. (2003) The impact of food safety and animal welfare policies on supply chain management: The case of the Tesco meat supply chain, British Food Journal, Vol. 105 Issue 6, pp.328-349;

MarketWatch (2004) Company Spotlight: Tesco, Datamonitor, September;

Mintel Report (2004) Food Retailing -UK, Retail Intelligence, Nobember;

Myers H. (2004) Trends in the food retail sector across Europe, European Retail Digest, Spring, Issue 41, pp.1-3;

Palmer M. (2004) International retail restructuring and divestment: the experience of Tesco, Journal of Marketing Management, November, Vol. 20 Issue 9/10, pp.1075-1101;

Porter M. (1980) How Competitive Forces Shape Strategy, The McKinsey Quartely, Spring 1980, pp.34-50;

Balchin A. (1994) Part-time workers in the multiple retail sector: small change from employment protection legislation?, Employee Relations, Vol. 16 Issue 7, pp.43-57;

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Article Editor:

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The Strategy Story

TESCO – British Retailer that redefined Grocery Shopping

The first time I visited a ‘Tesco Extra’ store was at midnight, making an emergency run for next morning’s breakfast. The store seemed to occupy the area of an entire football field in Ashby-De-La-Zouch, UK. Even at an ungodly hour, Tesco was well-lit with visiting customers.

Inside, there were never-ending aisles lined up with groceries, food items, clothing, electronics, and whatnot. It was easy to lose way and lose track of time in the colossal supermarket.

I thought to myself that this would be the only store of its kind in the county, but I was wrong.

Tesco has 4008 stores across the UK and Republic of Ireland , with 7005+ stores and franchises across the world. In Europe, Tesco has established itself in Hungary, Slovakia, Czech Republic, Poland and Turkey. In Asia it has stores in Thailand, South Korea, Malaysia, Japan and China.

TESCO is much more than a chain of supermarkets selling a million products. It’s a giant conglomerate, spanning across so many verticals. It’s the equivalent of one of the FAANG companies but in the Grocery & Retail sector. It becomes imperative for business enthusiasts like you and me to understand the business model of this retail giant called Tesco.

It’s considered a part of the ‘Big Four’ supermarkets alongside ASDA, Sainsbury’s, and Morrison’s in Europe.

Infographic: The UK's favourite supermarkets | Statista

The Birth of Supermarkets in Britain

Founded in 1919 by a war veteran – Jack Cohen , Tesco began as a grocery stall in the East End of London, making a profit of £1 on sales of £4 on day one. Tesco’s first store was launched in 1929, selling dry goods & its own brand of Tesco Tea. A hundred more Tesco stores were opened in the next 10 years.

With 100+ mom-and-pop stores in Britain, Jack wanted to expand his product range. He traveled to the US in 1946 and noticed the self-service system, where customers would select different products on the shop floor and finally checkout at a counter. Jack brought this concept back to Britain, giving birth to Tesco Supermarkets and changing the face of British Shopping. His motto was to “stack ‘em high, and sell ‘em low (cheap).”

Tesco has a wide range of supermarkets depending upon their size, range of products, and location. This also helps regulate their Supply Chain to reduce wastage.

business strategy assignment tesco

Tesco Business Model is based on various verticals

Tesco has deep-rooted its businesses in the European market so well, it’s difficult to miss out on the Tesco hoarding anywhere. Its Businesses and subsidiaries are:

business strategy assignment tesco

A glimpse into the Complex Supply Chain

A supply chain is one of the critical aspects of the business model of a giant retailer like Tesco. Tesco has its priorities set when it comes to procuring products from different parts of the world:

  • Use expertise to offer a better range of products at reasonable prices
  • Use economies of scale to buy more for less
  • Leverage and maintain relations with global branded suppliers
  • Grow the brand

It procures goods from over 44 countries, majorly China. A stock of up to 90,000 different products (30% are food & beverages) is transferred via the global sourcing office located in Hong Kong. Keeping wholesalers out of the loop, Tesco procures directly from suppliers. The conglomerate has developed and maintained long-lasting relations with suppliers’ world over—the main ones being General Mills, Kellogg, Mars, and Princes.

Tesco has set up a separate division to regulate its supply chain, “the machine behind the machine” – Tesco International Sourcing (TIS). It can be compared to the East India Company of the 18 th -19 th Century, catering to only one customer – Tesco.

TIS is connected to over 1000+ suppliers across 1200+ factories . It’s responsible for over 50,000 Tesco product lines in terms of quality control, sourcing, production, designing, timely delivery, and sorting trading/customs documentation.

All activities are coordinated centrally at TIS, with just 533 staff members. These staff members undergo rigorous training to detect & analyze Supplier-violations and conduct Auditing.

business strategy assignment tesco

Tesco coordinates with TIS on a daily basis to procure products in the following ways:

  • The local team uses customer insights to create a Product Brief (new or modified) specified for each region.
  • TIS analyzes the product brief and develops a Product Sourcing Plan depending upon – stores that need this product and figuring out minimum transport time and cost, as per the region.
  • The Plan is executed, and specific demands are handed out to Suppliers all over the world. Expert TIS Buyers make sure the best deal is made.
  • Inbound logistics are consolidated at specific Tesco Depot to receive the product efficiently from Suppliers.
  • Local teams then make sure the product is distributed to different Tesco stores from the Depots.

Tesco adding eCommerce to the mainstream business model

Being in the Top 50 retailers globally as of 2021 , Tesco’s annual revenue worldwide in 2020 was £58.09B , a 9.1% decline from 2019 (due to the Pandemic & disposing of its Asia operations , to focus on the core business in Europe).

It shifted from Brick & Mortar to Brick & Click stores. The Click+Collect functionality on its website accounts for 43% of E-grocery sales in the UK. The Click+Collect concept enables customers to place their orders online and collect their orders a few hours later at the nearest Tesco Depot. Tesco created these specialized Depots for online orders only.

Despite shutting down most its mall operations, Tesco survived 2020 through its online retail store Tesco.com , with double the orders. Its E-commerce net sales had shot up by 31% from 2019-2021.

business strategy assignment tesco

A Global Operations & Technology Center in Bengaluru was also set up in 2004. This center serves as the backbone of distribution operations for Tesco worldwide. Its business functions are- Finance, Property, Distribution Operations, Customers & Product. The employees at this Center are Engineers, Analysts, Designers, and Architects.

Tesco’s Marketing Strategy

Tesco has always believed in acquiring loyal customers and regaining stakeholders’ trust. It aims to reach customers from all financial backgrounds. So it launched 2 of its own sub-brands – Tesco finest for the affluent customers and Tesco Everyday Value for the rest of the crowd.

Tesco also launched the Club Card in 1995 as a Membership card, to maintain customer loyalty and keep them coming back. The Card operates on a point-based system with discounts on products, & other subsidiaries like double data on Tesco Mobile. With 5 Million subscribers in the first year , Tesco finally overtook its competitor – Sainsbury’s to become No.1 in the UK.

The Club-card strategy was used to obtain customer data and observe buying habits. This data was analyzed, allowing Tesco to put the right products on shelves while eliminating unpopular ones. Tesco realized that the Club Card isn’t just a quick fix & temporary promotional tool; it’s a promotion in itself. This made the Tesco Club Card unique and long-lasting.

Tesco also realized that spending Billions on traditional marketing efforts and maintaining a ‘one-size-fits-all’ brand image wouldn’t work. It decided to hyper-target specific customers and to earn their trust. For starters, thousands of head-office staff and senior executives were sent to work in stores – to demonstrate how Tesco values its customer. Customization became key for its new marketing strategy; sending out discounts on birthdays via Emails and campaigning from door-to-door.

Tesco also made a partial shift to Digital Marketing which costs much lesser and has a wider outreach. It created well-tailored profiles on all social media platforms. On Twitter, it has more than 15 accounts, separate for each of its business units. The online customer care account on Twitter is active 24-7.

All supermarkets commonly advertised themselves to have quality products at a reasonable cost; Tesco wanted to differentiate itself as a unique brand. It introduced step-by-step Recipes prepared from ingredients available at any Tesco store, with Chef Jamie Oliver as its Health Ambassador . Tesco Food and its variety of recipes were a massive hit. Later on, the monthly Tesco Magazine as a food & lifestyle magazine was also launched, with 4.65Million readers worldwide.

The beginning of the pandemic in March 2020 left people apprehensive about visiting a physical store to buy groceries. To deal with customers’ concerns, Tesco came up with an instructional advertisement in April ‘20. With crisp instructions similar to that of an in-flight safety video, this ad showed customers how to physically shop and behave at Tesco stores. It was considered to be the most effective advertising and communications campaign of 2020 as per YouGov BrandIndex .

Competition

Tesco’s earliest competitor has been Sainsbury’s since the 70s. The Tesco Club Card strategy in 1995 helped it overtake Sainsbury’s to become the No.1 Retailer in the UK, but not for long. The ‘Big Four’ supermarkets in Europe have been in close competition throughout the years. Tesco has acquired a 28% majority stake in the UK market.

The horse meat and accounting scandals were a real setback for Tesco, letting competitors take over the European market. The newest German entrants – Aldi and Lidl had caught customers’ attention and market share in a short span of time.

With a combined market share of 12%, these German retailers posed a threat to Tesco. So much so that Tesco began the ‘ Aldi Price Match ’ campaign to curb the growth of the German discounter and win back customers. Tesco started price-matching thousands of its products with that of Aldi, offering better quality and branded products at Aldi’s prices.

Tesco has a majority market share in Britain, with Sainsbury’s and ASDA in tow:

business strategy assignment tesco

Tesco Adding Sustainability to its business model – The Little Helps Plan

It’s a well-known fact that giant conglomerate retailers are one of the major causes of rapid climate change and increasing carbon footprints. Tesco realized its impact on the planet and launched the Little Helps Plan as a core part of business in 2017. This plan serves as a framework to attain long-term sustainability. Its four Pillars – People, Products, Planet, and Places are aligned with the UN’s Sustainable Development Goals.

business strategy assignment tesco

Until now, the Plan has enabled Tesco to:

  • Permanently remove 1 Billion pieces of plastic from its packaging
  • Redistribute 82% of unsold food, safe for human consumption
  • Remove 52Billion unnecessary calories from foods sold

Apart from this, it also aims to increase sales of Plant-Based Meat alternatives by 300% by 2025. At present, it has 350 plant-based meat alternatives on the shelf.

Apart from partnering with various other organizations, Tesco entered a 4-year partnership with World Wide Fund for Nature (WWF) to address one of the biggest causes of wildlife loss – the global food system. It aims to eliminate deforestation from products, promote recyclable/compostable packaging and minimize food waste.

Tesco is one of the few successful retailers in the world, with a compelling history. Tesco has overcome numerous issues across its supply chain, faced global criticism, and still stands undeterred in the European market with its rock-solid business model. It has always adapted to its unpredictable consumers and continues to do so while caring for the planet.

The business is healthy. We said we would rebuild the relationship with the brand and consumers; you will see that in every measure of customer satisfaction we do that. The business is healthy, vibrant and there is a lot of optimism of what we can do going forward. CEO Dave Lewis, who took over Tesco in 2014 (during the struggle years) & stepped down in September 2020

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business strategy assignment tesco

An Engineering grad, currently working in the fields of Big Data & Business Intelligence. Apart from being immersed in Tech, I love writing and exploring the business world with a focus on Strategy Consulting. An ardent reader of Sci-Fi, Mystery, and thriller novels. On my days off, I would spend time swimming, sketching, or planning my next trip to an unexplored location!

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Business Chronicler

Tesco Business Model Explained – What Makes It Successful?

Key takeaways.

  • Tesco's Business History
  • Tesco Business Model Explained - How It Works

Strong Brand Reputation

Lowered operation costs, cash-generating operations, boosted profit margins, property-related maximized value, focus on innovation, tesco stakeholders, customer segments, marketing strategy, physical evidence, future plans, opportunities.

  • Sainsbury's
  • Question: What's the Business Strategy of Tesco?

Question: What Kind of Ownership Does Tesco Have?

Question: what tools and strategies does tesco use for its digital platform, related read.

According to Tesco, the retailer doesn’t just sell food and other items. It markets authentic food and shopping love stories. In my opinion, Tesco has truly redefined grocery shopping. I’ve seen that myself the first time I entered one of its stores. It was late at night, but the supermarket was still filled with clients.

Tesco’s never-ending aisles were the ones that struck me as impressive. Every shelf had an abundance of food products, groceries, clothes, and so forth. That first visit made me curious about Tesco’s business model and marketing strategy. So, here they are, presented exhaustively, together with the company’s main competitors and marketing mix.

  • Tesco does all it can to serve its customers and local communities through its affordable products and responsible services;
  • Lately, they’ve shifted from exclusively low-cost items to increased value and a line of premium goods;
  • Its international presence, strong brand reputation, and wide range of selling channels make Tesco a leading retailer.

Tesco’s Business History

Jack Cohen founded Tesco in 1919, but the first store was launched in 1929 in London. It may have started small, but the company now owns other businesses. Among those, there are Booker, Tesco Mobile, Tesco Bank, and Dunnhumby. Over the years, Tesco became a multinational corporation with at least 30 companies under its umbrella.

At first, Tesco was selling groceries. Jack used to sell those goods from a humble market stall. He had that idea as soon as he returned home from the war. After several years, he began to market tea a few years before he opened the first Tesco store. In the next couple of decades, Cohen managed to expand his retail business.

He included self-service locations and a more comprehensive range of operations. Most of Tesco’s expansion is due to numerous acquisitions. The retailer started to engage in buying other businesses sometime in the 1950s. Interestingly, the company continues to rely on this strategy to this day.

Slow but steady, Tesco increased its product range. You’ll find different items, from food to books, toys, furniture, clothes, and even fuel. Today, Tesco is a large international retailer, operating almost 5,000 stores in many European countries. However, its primary focus remains the UK market.

As you can see, Tesco’s growth was organic and through acquisitions. Moreover, the company rebranded most of the other businesses it has bought.

Tesco Business Model Explained – How It Works

Tesco’s business model relies primarily on expansion through acquisition. But, they also focus on their clients who support the company’s organic growth. The retailer’s motto is Keeping It Simple, and they apply this approach in their business model, too.

  • Mission – Tesco’s mission is to serve its clients while taking care of its community and the overall environment. Its experts try to be responsible. According to them, customers are the core and backbone of the company;
  • Value Proposition – offering clients good-quality products and all the items they need or want at affordable prices;
  • Selling Channels – it has online and offline distribution channels. It owns thousands of stores all over the globe. Moreover, most of its products are centrally distributed. The rest is delivered by suppliers directly to Tesco stores.

The core values of the company’s business model include convenience, affordability, accessibility, high value for customers, and a pleasant shopping experience.

Strategy Pillars

Tesco has three main strategy pillars: customers, products, and channels.

At the core of the entire business, Tesco places its customers. They’re the ones who become loyal or choose another retailer if they’re unsatisfied.

Also, the company gathers numerous valuable insights from its clients. These three pillars are interconnected. They influence each other. Clients buy products that meet their expectations and fulfill their needs.

Better products attract more customers. Finally, diversified distribution channels are more appealing to a larger public. Hence, Tesco can address more market segments.

From quality to safety, labels, and designs, Tesco pays attention to how their goods are perceived and presented to their customers. Aspects like product development and category management are involved. They always try to improve their offer based on insights from partners and clients.

Tesco operates through the following types of selling channels:

  • Wholesale locations/warehouses;
  • Large stores;
  • Small stores – convenience shops;
  • Online platforms.

Through its products, Tesco aims to create value. They rely on their loyal clients to expand their brand and differentiate their strategy.

Tesco’s Six Strategic Drivers

Tesco is well aware that a differentiated brand leads to long-term value. Hence, Tesco’s employees want to provide improved services and products daily. They even offer a brand guarantee.

The company has also established several ways to decrease its operation costs. Through this action, it wants to create opportunities for significant savings.

The target is to accumulate a certain sum of cumulative retail cash in only three years. This amount of money should come from operations.

They can increase the entire Group’s profit margin if they achieve and maintain sustainable profitability. That can be accomplished through waste reduction, attracting new clients, implementing new technologies, etc.

Tesco goes even further, and its dedication to creating profit from its real estate is impressive. There’s an ambitious desire to repurpose their operational space among their plans. This would enhance the company’s offer toward its clients.

Innovation and technology are essential to Tesco’s goals. But, they can only do that if they have meaningful insights and experienced experts in all the areas of their business model: product, clients, and channels.

  • Internal stakeholders – the management board, Tesco’s employees, and Tesco’s shareholders (Fidelity International, Schroders Plc., and others);
  • External stakeholders – suppliers, customers, local communities, local governments, competitors, and pressure groups.

Tesco targets cost-conscious clients. Its customers search for great deals, value variety, and bargains. To segment its clients, Tesco uses experiential positioning. That’s something they do especially regarding their beauty and health product lines. Another thing their use is multi-segment positioning.

Regarding demographics, most of Tesco’s customers are between 25 and 34. More than 54% of them are male clients , whereas female customers are around 45%.

Tesco’s marketing strategy bases its success on the company’s well-positioned brand image. This further attracts the perfect clients for the retailer through well-done customer targeting. It does that instead of the traditional way of segmenting the market based on psychographic and demographic factors.

At the core of its strategy, there are cost-conscious clients who’re always searching for the best deals and price offers. At first, Tesco was known as a low-cost and high-volume retailer. More recently, the company rethought that strategy. Nowadays, there are two main product categories you’ll find at Tesco:

  • Tesco Value – low-cost products;
  • Tesco Finest – premium products.

Tesco’s positioning targets the middle ground by providing both valuable yet affordable products and mainstream items. Still, the retailer keeps expanding its product line to keep up with customers’ new needs and preferences. For instance, they launched farm-fresh products in 2016. Their regular rebranding actions help them attract new clients.

Marketing Mix

As a marketing expert, I know too well that all companies address the four classic marketing mix Ps. They’re called the 4Ps. However, there are also three additional Ps that not all businesses consider.

These elements were first introduced by  Philip Kotler,  whom I’ve studied a lot as a Marketing student. Regarding Tesco, I’ll discuss all seven of them.

This retailer provides many types of goods, from groceries and food to electronics, appliances, fuel, furniture, and more. The goal is for the customers to find everything they need in one of Tesco’s stores. I like Tesco’s product development strategy. They have their own brands. My favorite is Tesco Organic, but you can also find Tesco Everyday Value and Tesco Finest.

Besides highly-convenient products such as readily-prepared meals, you can shop for non-food goods like clothes. Or, if you want to do your shopping from the comfort of your home, you can easily access Tesco’s mobile app and order everything you need with a few clicks.

Tesco tries its best to offer affordable and competitive prices. That’s great when you consider that most of its clients are price-conscious. Moreover, the retailer’s own-brand items are marketed at different price points to cater to clients with different budgets.

Many times, customers will benefit from special discounts or promotions. The most common ones are multi-buy deals, seasonal offers, and discounts offered for a limited time. I appreciate how loyal clients are rewarded with loyalty points through Tesco’s Clubcard program.

Moreover, the company’s online shopping platform features dynamic prices based on stock levels and current demand. All in all, clients have a positive perception of Tesco’s prices.

Tesco has thousands of stores in numerous countries. However, many of them are within the UK. They also have a wide variety of store formats. Tesco operates hypermarkets, convenience stores, medium-sized supermarkets, and small urban supermarkets. Its online presence is also strong.

All these, together with the company’s international operations, robust supply chain, and click-and-collect service, have made Tesco one of the most popular and successful retail brands worldwide.

Promotions have always been part of my expertise and my favorite marketing area. Digital marketing, social media, and advertising are the activities I engaged in the most as a market professional. Tesco uses various promotion channels to advertise its services. These include outdoor ads, TV ads, print, radio advertising, and online media.

Loyal customers know Tesco’s in-store promotions all too well. The company relies on banners, posters, and shelf labels. These point-of-sale materials are effective at capturing clients’ attention.

Tesco also releases press statements and engages in community activities and events as public relations strategies. Finally, the retailer has accounts on social platforms such as Facebook, Instagram, and Twitter.

Communicating with its potential clients online through social media and newsletters, Tesco reaches a broader audience and creates a stronger digital community.

Any activities meant to help a business achieve a goal represent a process. There are standard procedures and a few customized or unique tasks. One example that comes to mind is what an employee does when a client places an order.

In Tesco’s physical locations, clients select their wanted items. Then, they go to checkout to pay for those goods. That’s where a store assistant takes them through the payment process. Still, I prefer Tesco’s self-service machines. That way, I can make the payments independently and save time not waiting in line.

As of 2023, around 345,000 individuals are Tesco employees. Many of them are customer assistants. They’re valuable for the retailer’s overall success. Typically, these people are competent and friendly. They should be since Tesco invests a lot of time and financial resources into their development and training.

The company also has satisfying reward schemes that all employees benefit from. On the other hand, many young staff members complain about lack of motivation. So, Tesco should work on improving that.

It’s also known as the environment. It consists of all of Tesco’s tangible elements, such as menus, furniture, equipment, business cards, etc. Tesco’s logo and its colors are also considered physical evidence. Last but not least, the company’s brick-and-mortar stores and mobile app are found in the same marketing mix category.

Tesco’s plans involve a lot of environmentally-friendly initiatives. They’ll focus on a greener and more sustainable future. Their goal is to lower their carbon footprint to zero by 2035. I must say that’s an ambitious objective. According to its representatives, they’ll use renewable energies and avoid plastic materials.

SWOT Analysis

Let’s see the most important strengths and the most dangerous threats that Tesco faces.

  • Significant market share – especially in the UK. Tesco is a major retail player worldwide, but it’s the first of its kind in the UK;
  • Successful overseas operations – Tesco has more than 400 stores in numerous countries, including China, Ireland, Hungary, and more;
  • Strong brand recognition – one of the greatest Tesco strengths is its brand recognition. That’s because the company has invested a lot in promoting its brand and raising awareness;
  • Plenty of customers – each day, Tesco sells its items to millions of clients across the globe, in both physical locations and online platforms;
  • A wide range of products – clients can find almost anything they want at Tesco, from groceries to electronics and even clothes.
  • Quality control issues – things like expired products have damaged Tesco’s image and brand reputation;
  • Strategic problems – these include not paying its suppliers enough and dealing with technological failure;
  • Failure in penetrating the US market – occurred because of Tesco’s poor store locations, small store formats, food packaging concerns, and slanted customer research.
  • Entering emerging markets – Tesco could explore a few developing economies like Mexico, Brazil, Turkey, and others;
  • Strategic alliances – joint ventures and collaborations with other successful companies could help Tesco grow even more. I must say that they’ve already considered this option;
  • Online shopping store – Tesco’s mobile app works well, but I would also add a home-delivery feature. I’m sure it would become appealing to more clients.
  • High competition – the retail market is highly competitive everywhere, especially in the UK. Here, many grocery retailers provide good-quality products at affordable prices;
  • Inflation and high living costs – economic recessions, the pandemic, inflation, and other crises have made customers change their shopping habits. This affected all companies, including Tesco;
  • Brexit deal – when the UK left the EU, Tesco felt a severe negative impact. To be honest, all UK-based companies felt the same. Tesco went through a rough patch because it operated in numerous European countries.

Main Competitors

As I said, Tesco faces steep competition, especially from the following retailers. Retail competition is fierce in the UK, but the top three brands are Tesco, Asda, and Sainsbury’s. 

Aldi  is all about thrift shopping. It relies on low operating costs, limited stock-keeping units, and high-profit margins. The core of the business has three values: consistency, responsibility, and simplicity. To drive and increase its profits, Aldi applies private brand margins.

Lidl is highly popular everywhere, including where I live. Many of my friends go there for a pleasant shopping experience. They’re satisfied with the retailer’s low prices. Still, I’m not a fan because Lidl has a limited product assortment. I must, however, give it to them regarding their intelligent pricing strategies.

ASDA uses everyday low prices as its business model. It focuses on selling high product volumes. Moreover, customers benefit from frequent discounts.

These promotional offers are made possible due to the retailer’s economies of scale. ASDA also has a strong online presence via its e-commerce platform. Its prices are lower than Tesco’s and the value it provides to its clients is remarkable.

Sainsbury’s

Sainsbury’s has physical stores, mobile apps, and online shopping platforms. So, it’s covered on all existing selling channels. It markets high-quality products such as groceries, clothes, and general merchandise. Sainsbury’s relies mostly on database marketing and incentives derived from sales promotions.

Question: What’s the Business Strategy of Tesco?

Answe r: It focuses on expansion through acquisitions. It also adapts to its clients’ shopping preferences and needs. Tesco sells affordable yet good-quality products and has numerous loyal customers.

Answer: Tesco is a PLC retailer. PLC translates as a public limited company. It means that everyone, including yourself, can buy some of the retailer’s shares as long as you’re over 18 years old.

Answer: Tesco uses multiple digital tools, including artificial intelligence, cloud-based software, and big data. These are the main ones, but it also relies on a few disruptive technologies.

Bottom Line

Tesco’s policy and business model rely on cost leadership. It focuses mainly on product variety, accessibility, availability, and customer service. Tesco promotes comfort, boosted value, and affordability. These traits made it highly popular among UK customers. Its global brand has become strong enough to support a massive customer database.

According to Tesco’s employees, they strive to offer clients a rewarding and smooth shopping experience. All these business and marketing tactics have propelled Tesco to the vanguard of the entire retail industry.

If you enjoyed reading about Tesco’s business model, read the company’s SWOT analysis. I’ve presented it in more detail here. (insert URL interlinking after the SWOT article is published).

  • Aldi Competitors ;
  • Costco Competitors ;
  • Walmart Business Model.
  • chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://www.tescoplc.com/media/754605/the-tesco-group-three-pillars-creating-value-final.pdf
  • chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://www.tescoplc.com/media/392349/tesco_ar17_6drivers.pdf
  • chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/http://repository.podomorouniversity.ac.id/105/11/31160035_TA_12_BAB2.pdf
  • https://www.mbamanagementmodels.com/the-marketing-mix-the-7-ps/
  • https://www.mbaskool.com/marketing-mix/services/16731-tesco.html
  • https://digitalscholar.in/tesco-digital-marketing-strategies/
  • https://www.ukessays.com/assignments/marketing-strategies-tesco.php
  • https://www.academia.edu/35942535/Digital_Marketing_Plan_of_Tesco_Plc
  • http://digitalmarketingmagazine.co.uk/digital-marketing-features/what-can-you-learn-from-tesco-s-new-marketing-approach
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Tesco Business Strategy

Business strategy.

According to welcome to Tesco plc: our strategy (Anon., 2009), Tesco has adopted a comprehensive business strategy which entails attaining consistent growth and increasing the scale of operation into the international market. The business strategy also entails attaining a competitive edge in terms of human resources. This strategy has enabled the firm to strengthen its core business in its UK domestic market. The rationale behind the firm’s business strategy is to broaden its scope of operation thus attaining its long-term goal. The business strategy also entails establishing diverse customer-oriented businesses in the domestic and foreign market such as non-food, financial services, and telecom according to expanding nature of the market.

Mission statement

The management of Tesco is committed to ensuring that it develops sustainable customer loyalty. To attain this, the management of the firm ensures that all the operations of the firm are focused on satisfying the customer. This enables the firm to deliver value to its customers by understanding them in a better manner. The management is also committed to integrating the concept of innovation in its operation thus diversifying its activities more effectively. In addition, the firm is also committed to ensuring that it has a wide range of human resources and creating a good working environment for its employees to enable them to deliver value to the customers (‘Our values’, 2009, Para. 1).

According to our values (Anon., 2009), Tesco has a number of objectives which include the following;

  • To cope with increasing competition in the market by developing effective competitive strategies based on market variables such as the price.
  • To diversify the operation of the firm into other economic sectors other than sticking to the food products sector.
  • To become the leading firm in the global market.
  • The management of Tesco is committed to increasing the firm’s financial stability by integrating emerging electronic commerce technology in the operation. This will enable the firm to conduct online selling.

Tesco overall human resource strategy

The management of Tesco has formulated a comprehensive human resource strategy. The firm’s overall human resource strategy entails integrating employee training as a part of the organization’s culture. The objective is to attain a competitive edge in its operation. The firm’s human resource strategy revolves around challenging rules that are not in the firm’s human resource policy, work simplification, performance management, and ensuring that all the firm’s employees in all its head offices have the necessary core skills. In addition, the human resource training also considers employees in the lower level (‘Putting store in HR’, 2009, Para. 7).

Ways in which the firm’s human resource practices enable Tesco to attain vertical integration

Tesco undertakes comprehensive recruitment in the process of increasing the size of its human resource. Both internal and external sources of human resources are considered during recruitment to ensure that the firm becomes competitive in relation to human capital. Internal recruitment is aimed at ensuring that the employees are motivated to move up their careers. Internal recruitment is based on the performance of the employees. This ensures the employees become more focused on delivering quality service to the customers. Internal resourcing enables Tesco to incorporate the concept of reward management in its operation. To ensure that internal recruitment is effective, the management has formulated a Talent Plan. The talent plan lists the firm’s employees who are seeking to move for a promotion. According to the recruitment and selection strategy at Tesco (Anon., 2009), if the talent plan does not have the necessary candidate, the vacancy is posted internally for a period of two weeks on the firm’s intranet. Internal recruitment enables the firm’s employees to be loyal to the organization since there are high chances of career development.

The firm also sources its human resource from the external market by posting the vacancy on the internet. In addition, the management also advertises the vacancies through offline mediums, radio and television Comprehensive recruitment and selection enable the firm to deliver services effectively to the customers and also undertake product and service innovation (‘Recruitment and selection strategy at Tesco’, 2009, p.3).

Human resource development

The management of Tesco has formulated an effective employee training program for all its employees. According to the recruitment and selection strategy at Tesco (Anon., 2009), the training program has resulted in effective human resource development and a good working environment. This is due to the fact that the employees decide their training needs which enable them to be in control of their individual career paths. By giving them autonomy to control their career path, employees feel that they are a part of the firm’s overall human resource strategy. The result is that there is an increase in the employees’ level of satisfaction since they feel valued. According to career: our structure (Anon., Para. 4), this culminates into the employees being more committed to the organization thus serving the customers more effectively. Employee training enables the firm to attain its business strategy.

Employee relation, reward and performance

To ensure that the employees are satisfied and productive within the organization, the management of Tesco has developed a good relationship with them both in the domestic and foreign markets. According to Tesco (Anon., Para. 6), this is achieved by developing an employee relations team. The team is charged with the responsibility of developing policies that enable effective management of the firm’s employees. According to Armstrong and Tina (2005, p. 4), reward management should be fair. In addition, Tesco rewards its employees basing on the value that they create for the organization.

Reference list

Armstrong, M& Tina, S. 2005. A handbook of employee reward management and  practice . Web.

Human resource leader. 2009. Putting store in HR . Web.

London Stock Exchange. 2009. Tesco Plc . Web.

The Times 100. 2009. Recruitment and selection strategy at Tesco . Web.

Tesco Plc. 2009. Our values . Web.

Tesco Plc. 2009. Tesco organization structure . Web.

Tesco Plc. 2009. Welcome to Tesco plc: our strategy . Web.

Tesco Plc. 2009. Careers: our structure . Web.

Organization structure of Tesco

  • Store Director
  • Store Manager
  • Personnel Manager
  • Ambient Manager
  • Fresh Manager
  • Non Food Manager
  • Admin/personnel
  • Ambient Team
  • Training Manager
  • Stock Controller
  • Security Manager
  • Counters Manager
  • (Deli, Curry Pot,
  • Bakery Team Leader
  • Restaurant Team
  • Clothing Team
  • Electrical Team
  • Stock Control
  • Security Assistants
  • Customer Service
  • Fresh Assistants
  • Non Food Assistants
  • Support Office

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business strategy assignment tesco

Tesco's 2022 Transformation: How New Strategies and Financial Growth Are Shaping the Future of Retail

Tesco Moves Forward with Redefined Purpose and Strategic Priorities

At A Glance

  • Tesco turned the pages on a new chapter in 2022
  • The three focus areas for Tesco as it moves to this new chapter are understanding its strengths, how the market is changing, and what can be done to improve customers' lives
  • Tesco’s group sales accounted for $65.8 billion, 3% up from $64.1 billion in 2021
  • The strategic priorities for Tesco include 'magnetic value for customers', 'I love my Tesco Clubcard', among others
  • Tesco has increased online sales by $2.8 billion and fulfilled over 1.2 million customer orders per week

Tesco turned the pages on a new chapter in 2022. With new strategic priorities and purpose, Tesco strives to build on its existing work and be even more competitive moving forward. The three focus areas for Tesco as it moves to this new chapter are understanding its strengths, how the market is changing, and what can be done to improve customers' lives.

Tesco's Key Strategic Priorities

Creating magnetic value: tesco's customer-centric business strategy.

One of the strategic priorities for Tesco is to create “magnetic value for customers.” This strategy encompasses creating a combination of quality, price, range, and customer experience. The goal is to offer reliable value that eliminates customers’ need for alternative shopping options while providing positive reasons to shop more with Tesco. Hence, it doesn’t come as a surprise that the company has been voted Britain’s Favorite Supermarket for seven years consecutively by customers.

Leveraging Clubcards: Tesco's Approach to Personalized Shopping

Another one of the strategic priorities revolves around Tesco Clubcards, which can be used to leverage insights to make the customer shopping experience more relevant and personalized. This plays an important role in the retail sector, which is now moving towards automation with AI based personalization . More than 20 million households now own Clubcard, which, when combined with the online grocery business, its nine million regular users, and dunnhumby’s capabilities, allows Tesco to bring additional value and improve loyalty. 

'Save to Invest': Tesco's Strategy for Inflation Offset and Investment

‘Save to invest’ is another one of the key strategic priorities for Tesco. The company aims to be as simple, productive, and agile as possible to offset inflationary pressures and invest in its redefined strategic priorities. “We want to make sure we only spend money where it adds value for customers and, in total, we are aiming for around £1bn [$1.2 billion] of savings across a range of areas over the next three years,” said Murphy. 

business strategy assignment tesco

Tesco's Financial Performance

Tesco’s group sales accounted for $65.8 billion, 3% up from $64.1 billion in 2021. This 3% rise was primarily due to continued growth in the United Kingdom and double-digit growth at Booker. 

Like-for-like sales increased by 8.2% over the previous two years, with growth in both stores and online, as well as in food and non-food categories. Average basket sizes remained higher than pre-pandemic levels across the business, partially offset by lesser shopping trips. 

The adjusting operating margin improved by 94 basis points compared to last year. One of the primary contributors to the U.K.’s strong business growth was high-margin clothing sales, which also included an increase in total price sales to 86% from 77% last year. Tesco’s relentless focus on ensuring customer satisfaction resulted in the company consistently outperforming throughout the year against the market. Tesco’s market share in the U.K. reached its highest level over four years. This increase in market share was both in terms of volume and value, with the former slightly ahead of the latter due to Tesco’s efforts to minimize the impact of inflation as much as possible on its customers. 

 “To be convenient now means serving customers wherever, whenever and however they want to be served. We believe we can do that better than anyone by leveraging our existing reach and strong network,” said Tesco’s Group Chief Executive Officer, Ken Murphy . “We will continue to adapt while at the same time seeking capital-light growth opportunities in the two key growth channels of online and convenience.”

As the pandemic eased and customers chose to return to in-store shopping, online like-for-like sales decreased by 6.5% in the last year. However, the online sales contribution was still nearly 14% throughout the year, with the first quarter observing a peak of 15.5%. Additionally, there has been a 5% increase in online sales contribution compared to the pre-pandemic levels. Tesco has increased online sales by $2.8 billion and fulfilled over 1.2 million customer orders per week, up from 0.7 million pre-pandemic.  

Shalmali Prakash

business strategy assignment tesco

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Strategic Recommendations for Tesco – Analysis

What was Tesco business strategy that made it the #1 retailer in the UK? In this analysis, you will learn about strategy of Tesco, its management plan, and other aspects. Don’t miss the best recommendations for the Tesco company that could lead to the international expansion.

Introduction

  • Industry Overview
  • Tesco Positioning
  • Tesco Business Strategies
  • Recommendations for Tesco

Tesco, Plc is a giant British retailer with a strong presence in two industries, namely, retail and banking. The retail industry covers grocery, Tesco direct, and clothing while the finance segment includes Tesco bank and insurance (Datamonitor 2010). It is headquartered in Hertfordshire in the UK, but has other outlets in Europe and Asia. In Europe, Tesco has a presence in France, Hungary, Poland, Slovenia, Ireland, and the Czech Republic (Datamonitor 2010).

This report analyses Tesco’s retail segment in its primary market of the UK, the competitiveness of the retail industry, its strategic positioning in this market, and potential marketing strategies, using Porter’s five forces analysis and SWOT analysis. Based on the findings, recommendations on the best competitive strategy will be provided.

Competitiveness of the Industry

Tesco’s primary industry is retail, which entails the sale of commodities in small quantities for “consumption by the buyer, not for resale” (Johnson, Scholes & Whittington 2008, p. 17). The retail sector thus occupies a terminal point in the downstream supply chains. The Porter’s five forces analysis applied to Tesco can determine the competitiveness of the industry.

Porter’s Five Forces Analysis

The Porter’s five forces are useful in evaluating industry structure to determine the “sources of competitive advantage” (Thompson et al. 2012, p. 149). Applying this tool to Tesco will reveal the firm’s competitive position in the industry.

Threat of Substitutes

The grocery retail sector has no direct substitutes for food products. However, organic and other specialty shops can compete with large retailers by offering discounted prices. For non-food segments, such as clothing, the threat of substitutes is high due to the large number of players. Retail segments may also substitute each other, e.g., online stores can replace general stores (Powell 2001). Overall, the threat of substitutes in this industry is not high, which means that Tesco’s can compete effectively in this sector.

Threat of New Entrants

The retail industry requires massive capital investment and resources to create brand equity, conduct market research, and set up convenience stores. The UK retail sector is dominated by four major players, namely, “Tesco, Asda, Sainsbury’s, and Morrisons”, which together control about 80 percent of the market (Retail Economics 2014, p. 4). New firms face the challenge of providing superior quality products at cheap prices to compete with the established retailers with economies of scale advantages and online stores. In addition, according to Thompson et al. (2012), stringent and lengthy registration process for setting up a retailer restricts new entry. For these reasons, the threat of new entrants is small in this industry.

Competitive Rivalry

Competition in the grocery retail segment is stiff. Tesco competes directly for the UK market with big retailers, such as Asda and Morrisons, on prices and product offerings (Brand Finance 2014). In particular, Asda, Sainsbury’s, and Morrisons, with a market share of 17.3%, 16.6%, and 11%, respectively, are the key competitors of Tesco, which controls 28.7% of the market (Wood 2009). The growth in the market share of small players, such as Aldi, is a threat to Tesco’s market dominance. In addition, some retailers, such as Co-op, dominate the rural market. Thus, competitive rivalry is relatively high in the UK retail industry.

Buyer Power

The retailers differentiate themselves on price and product offerings. According to Euromonitor International (2016), the UK consumers consider prices and online retail services when making shopping decisions. The retailers offer standardised products and loyalty programs to consumers. Shoppers can easily change retailers because of low switching costs. However, the large size of the retail market means that the loss of few customers has an almost negligible effect on sales (Datamonitor 2010). In this view, shoppers have a low bargaining power over the big retailers.

Supplier Power

Big retailers, such as Tesco, account for a large percentage of the revenue made by grocery suppliers. In addition, the number of suppliers competing for the retailers is high. Thus, the retailers can switch between suppliers without incurring significant costs (Thompson et al. 2012). This scenario places the supermarkets in a favourable position in negotiating with suppliers for lower prices. However, some providers with strong brands have significant supplier power because the retailers have to offer their products. Thus, supplier power can be considered moderate.

Tesco Strategic Positioning

Evaluating a firm’s strategic position focuses on the external environment, i.e., opportunities and threats, and internal environment, i.e., strengths and weaknesses (Kotler et al. 2013). A SWOT analysis evaluates the internal strengths and weaknesses of a firm as well as the external threats and opportunities.

SWOT Analysis of Tesco

Tesco is a big global brand in the retail industry with a strong presence in Europe and Asia. It owns more than 4,300 stores worldwide, runs online stores, has a strong brand name and streamlines supply chains, and offers wide-ranging customised portfolio that it can leverage on to compete effectively in this sector (Datamonitor 2010). Its dominant position in the UK (28.7% market share), strong growth, and quality standards are a source of competitive strength for the firm (Tesco 2015). Tesco runs a loyalty program dubbed ‘Tesco Clubcard’ for its customer relationship management. It has deployed CRM systems for market research to inform its marketing strategies.

Tesco recorded a loss of £6.38bn in 2015, an indication of declining performance. According to Pearce and Robinson (2012), high recall rate contributes to sales decline and dents the firm’s reputation and quality perceptions. The firm has a strong presence in the UK with minimal operations in other countries. The limited regional diversification is a constraint to Tesco’s global competitiveness and growth. In addition, Tesco has diversified into banking and insurance, a strategy that has reduced its revenue due to huge bad debts and claims (Ma, Ding & Hong 2010). The firm’s limited experience in these areas is a weakness of its diversification efforts.

Opportunities

Tesco has opportunities in regional markets in emerging economies. The firm should consider diversifying into Asian markets, such as India, Malaysia, and Thailand, to spread operational risks and benefit from the economies of scale (Schiraldi, Smith & Takahashi 2012). Online stores, e.g., Tesco.com, provide an opportunity for Tesco to grow its sales, minimise costs, and attract customers beyond its geographical reach. Franchise agreements could also provide overseas expansion opportunities to Tesco. The retailer has franchise agreements with Trent, a conglomerate whose operations are limited to the Indian market (Schiraldi, Smith & Takahashi 2012). Digital entertainment is another attractive sector that Tesco can diversify into through branded tablets and phones.

Direct competitors, such as Asda, and discounters like Aldi pose a significant threat to Tesco’s dominance of the UK retail sector (Bunn & Ellis 2012). International brands, such as Wal-Mart, have made inroads into the UK through partnerships with Asda (Bunn & Ellis 2012). In addition, the increasing preference of out-of-town stores, such as Co-op, may reduce Tesco’s sales because it has its outlets in cities. Economic slowdowns and unemployment may affect the purchasing power of consumers and lead to a reduction in Tesco’s sales. Tesco’s non-food (clothing) segment also faces competition from providers of luxury and fashion products in Europe.

Tesco Potential Business Strategies

Tesco is poised to promote its future competitiveness through diversification and product differentiation strategies. The firm may use its diversified retail strategy to attract more customers to its online stores, physical stores, and digital entertainment segment. The diversification strategy will enable Tesco to overcome the current challenges and risks. According to Kotler et al. (2013), flexibility enables firms to remodel their plans in a way that mitigates the risk of failure.

Tesco’s decision to close down its Fresh & Easy stores in the US in 2013 was motivated by adverse market changes (Ma, Ding & Hong 2010). With a diversified retail strategy, the company can leverage on well-performing segments to continue operating when other brands are not performing well.

Besides product diversification, Tesco is likely to use geographical diversification to avoid risks inherent in the UK market. This may involve franchise agreements with small players in emerging markets in South East Asia and Latin America. A franchise entry mode centred on quality customer service, fair pricing, good choice selection, and use of local suppliers will enable Tesco to make a successful entry into these markets. Tesco recently contracted Trent to run its franchise in India in a bid to diversify into the India market (Ma, Ding & Hong 2010). Tesco is likely to pursue the same mode to enter other emerging markets.

Tesco may also use a strategic business unit (SBU) to enhance its competitiveness in its product segments. Koen, Bertels, and Elsum (2011) state that a strategic business unit covering a firm’s operations, financial targets, supply chains, and geographic reach, among others can help a firm strengthen its competitiveness in its market segments. Tesco utilises four SBUs, namely, the “UK Core, Tesco International, Non-Food, and Retailing Services” (Wood & McCarthy 2014, p. 134).

The UK Core focuses on the domestic market while Tesco International controls the firm’s overseas operations. The Non-Food segment manages the sale of household items, such as clothing and machinery, while the Retailing unit controls online stores, banking, and insurance (Tesco 2015).

The retailer is likely to pursue the international SBU to maintain flexibility and support foreign operations. Such a strategy includes the creating effective supply chains within the host-country, compliance with regulations, broad product offerings, brand development, and CRM (Lynch 2006). This approach will enable the retailer to tailor its products to the characteristics of the local customers. Tesco entered the US market with the Fresh & Easy brand in a bid to resonate with the local market tastes and culture. The company is increasingly exploring other markets in India and China to benefit from economies of scale.

The SBU structure will give the retailer the flexibility to diversify into non-traditional segments. In particular, Tesco can develop branded gadgets, such as smartphones, that expand its primary services. The retailer can use vertical integration to expand its non-food segment, which includes clothing lines, by collaborating with fashion designers. Tesco will also pursue a custom-tailored marketing strategy when entering new markets.

In entering California, the firm developed a new brand, Fresh & Easy, which reflects the local values and preferences. As Piercy, Cravens, and Lane (2010) put it, the in-city stores offered fresh groceries and organic food that were highly sought-after items in this underserved market. Therefore, the firm is likely to offer custom-tailored products to integrate into the local culture and establish a footprint in the industry.

Strategic Recommendations for Tesco

For Tesco to compete effectively in the global retail industry, an international expansion strategy is recommended. The retailer should look for opportunities for expansion in emerging markets to avoid systemic risks in the domestic market that is increasingly becoming crowded with local and international players, such as Wal-Mart. The expansion strategy should entail five elements. First, the strategy should be flexible to adapt to market changes and meet local customer needs. Second, the product offerings should reflect local tastes and preferences.

As indicated earlier, Tesco’s entry into the US market used the Fresh & Easy brand that resonated with the local tastes and expectations (Rijamampianina, Abratt & February 2003). In this view, Tesco should consider the characteristics of local consumers when developing brands as opposed to offering the same products in all markets.

The third element of the recommended strategy is the use of multiple formats. To compete beyond Tesco’s geographical reach, the firm should use a wide spectrum of outlets, including physical stores and online stores. Tesco utilises a differentiated store format in its UK operations. These include “Express, Metro, Superstore, Extra, and Homeplus” to cater for diverse client needs (Blythman 2012, p. 67). The multi-format approach should be part of the international expansion strategy. Franchise agreements with local players in overseas markets will also boost Tesco’s expansion efforts. In addition, backward integration with local suppliers and financial institutions can help strengthen Tesco’s non-food segment.

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Locus Assignments

Unit 7 Business Strategy Assignment - Tesco PLC

Unit 7 Business Strategy Assignment - Tesco PLC

a) Company Profile, Mission and Vision statement, Goals and objectives, Core Competencies

Company Profile: Tesco Plc was founded by Jack Cohen in the year 1919. It is one of the largest retailers in UK. It has got the highest yearly sales after Wal-Mart and Carrefour. They serve in 14 countries with almost more than 500,000 colleagues. At different locations under its banner they have Tesco superstores, Tesco Express, Tesco Home-plus, Tesco metro etc. Dave Lewis is the current CEO of the company. Mission & Vision Statement: The vision statement of Tesco plc is to be the supreme business environment with the cooperation of the customers whom they serve, the communities where they operate, trustworthy colleagues and the shareholders (Brannen et al, 2013). With this kind of vision they have a very simple mission that they would make only what would be best for all. From both the vision as well as the mission statement it is very clear that they believe in working together and treat others in the same way as they wants to be treated. Goals and Objectives: The goals and objectives of Tesco plc are to be a popular global retailer, to enhance the core business at UK, to be equally strong in non-food items as in food items, to cultivate retailing facilities like Tesco Personal Finance, Telecoms and Tesco.com and to take care of society in which they perform. Core Competencies: Core competency is something which is unique to the company and it can perform the best in that area in comparison to the competitors. The core competency of Tesco plc is the way in which it understands its customers (Erickson et al, 2012). They have a scheme of Club-card reward system which helps them to understand their customers. With the help of the collected information Tesco brings in required changes in the service which add value for the customers.

b)  Analyse the factors that have to be considered to formulate strategic plans. How does the Ansoff’s matrix help your chosen firm to manage the strategic decision to consider strategic plan

All the organization have their own strategic plans, which depends on the type of business and market in which they operate. The strategic planning is usually a long term process which needs to keep in mind about the visions, mission and values of the company too. Hence it is a very complex process and requires a cohesive approach. It is very important to analyse the market properly with the help of various tools like PESTEL , SWOT etc. before going for strategic planning (Teece, 2010).  The results which are expected from the strategic planning at Tesco Plc are as follows:

  • To ensure an uplift in UK market so that it could be used as a model for global market
  • Perform equally in food as well as non-food market
  • To be the best in other verticals like Tesco Finance, Telecom too
  • Expand business at other locations

Ansoff Matrix is a strategic tool which helps the companies to plan their growth with the help of combination of current as well fresh products in current as well as new market. An Ansoff Matrix is as following: There are four growth strategies given by Ansoff Matrix : Market Penetration: This is used when company wants to increase its’ market share as in this growth is achieved with the help of prevailing products in the prevailing market. Market Development: This is used when prevailing products are used in the fresh market Product Development: The existing customers are targeted with the new product Diversification: When both the market as well as the product is new diversification is used (Ireland et al, 2011)

Ansoff Model for Tesco Plc

For Tesco Plc the following methods would be best:

  • Market Penetration: With the help of market penetration Tesco will be able to ensure an uplift in the UK market, as it wants to make UK as a model for global market.
  • Market Development:  In order to make sure that they get entry into other parts of the country, it is important that they take their existing successful products to the new market and promote them to the target customers. Once they get entry into the new market, they can also promote their other non-food items too.
  • Diversification:  Diversification is the most risky plan but as Tesco wants its Tesco Finance, Telecom etc. to flourish, it is best to enter a new market with the new products.

They want to perform equally well in food as well as non-food products so diversification is the best option.

c) Evaluate the effectiveness of strategic planning techniques to be used when developing strategic business plan.

The various tools that could be used by Tesco for strategic planning could be SWOT analysis and the BCG Matrix (Brannen et al, 2013). With the help of SWOT analysis the company could know about its strength, weakness, opportunities and the threats which plays a significant role in strategic planning. It is one the methods with the help of which Tesco Plc could know the areas on which they have to concentrate and what are the areas which they can use to grow. They could prepare themselves against the threats and could make use of the opportunities in the best possible way.

SWOT Analysis of Tesco Plc

The next method is the BCG Matrix. BCG matrix is the tool for strategic planning which is based on the product life cycle. The main idea behind BCG Matrix is that the various units of the company could be divided into four basic units which are known as following: Cash cows: Cash cows rule the matured market and so they cover the maximum market share but since these are matured they have slow growth. There is no investment required for these instead they generate money which could be used for other units (Erickson et al, 2012). Star: Stars also have huge market cover but they also have a growing industry i.e. they have not reached the maturity stage. They make huge use of all the investment for themselves as they perform in the growing market. With the passage of time when the products get matured, these get converted into cash cows Question Mark (Problem Child):  They occupy small share in the growing market. They use a lot of money but still their success remains a question mark. Dog: Ddogs have small market share in mature industry, they make use of money but they do not grow i.e. they just keep the money which cannot be used anywhere else too. Mostly companies liquefy these units (Teece, 2010).

BCG Matrix for Tesco Plc

Star: The retail industry is the star for Tesco Plc . It has got a high market share and it performs in a high growing market. It is the part of Tesco that gets maximum amount of income, and this is the reason Tesco can plan to invest more here. Cash Cows: Food market of Tesco PLC could be a cash cow as they have a large market share and the products have reached to their maturity point. It is very important for them to bring in some innovation in the products and services to maintain the position. Question mark: It is not a question mark, as there are many units like Tesco financial service, Tesco insurance and the Tesco Mobile which have not reached the maturity (Teece, 2010). Dog : In case if they identify any idle product then could be considered as a dog.

a) Conduct an organizational audit of the chosen business.  How the evaluation of Porter’s five forces model in the perspective of your chosen organization is useful for business environment and strategic positioning.

The organizational audit could be conducted by following two methods. The first one is PESTEL analysis which gives the details of the external factors which could have an impact on the company and the other is Porter’s Five Model which is easy tool to understand that where the control lies in the industry.

PESTEL Analysis of Tesco Plc

Political Factor: Retailing companies perform worldwide and hence they have to take care of political factors as they have a direct impact on the operations of the company. Today most of the countries want that the retailers should get jobs to their people. Tesco is able to fulfil this demand, and it creates a lot of opportunities for the local people due to which they are able to enter new markets worldwide.   Economic Factor: The Company should keep a track of any changes in the taxation or any other such economic factors as they are most likely to influence prices, demand, revenues and expenses (Ireland et al, 2010). Socio-cultural Factor: Tesco realized that the customers in UK market are getting more aware about the health issues and hence they get very particular about the food items, and Tesco shifted its’ focus towards organic food. The demand of the products depends on the social beliefs of the customers and hence the company needs to keep a track of changing attitude. Technological Factor: With the development of technology, Tesco also brought in some significant changes like online shopping and self-service check out points. These changes made shopping mush easier for the customers. Environmental Factor: Today it is very important for the companies to take part in corporate social responsibility and make sure that they provide some benefits to the community. With this point in mind Tesco decided to reduce the carbon imprint by 50% till 2020. It is also minimizing the waste products at its stores (Ireland et al, 2010). Legal Factor: The legislative factors have a direct impact on the companies. For example, the Food Retailing Commission brought in a Code of Practice which introduced ban on many of the practices like altering prices without any prior notification or asking for overheads from supplier. Tesco keep a track of all these issues and make arrangements to deal such situations.

Porter’s 5 Model for Tesco Plc

Threat of substitute products and services: The threat of substitute is usually considered low for food products and average to high for non-food products. The substitutes in food market are small convenience shops or the off licenses shops which are not much threat to super stores like Tesco. Whereas the threat for non-food items like clothing is fairly more. Threat of Entry of New competitors : A lot of investment and time is required to establish the brand name and position in the food market. Hence there is not much threat of new entrants in this field (Ireland et al, 2010). Intensity of Competitive Rivalry: The competitive rivalry is too high in the food market management . There are number of rivals like Asda, Sainsbury, Morrison’s and Waitrose. The competition is based on prices of the products mainly. Hence appropriate discounts at right time could help the company to handle this situation. Bargaining Power of Buyers: The bargaining power of buyers is high as the customers could easily switch from one product to another as there is not much difference in the prices of the product. Bargaining Power of Suppliers: The bargaining power of suppliers is low as they do not want to lose their contracts with these big stores, otherwise would be left with small buyers of food and grocery (Brannen et al, 2013).

b)  Explain the significance of stakeholders’ analysis while formulating new strategy of your chosen business.

Stakeholders are the most important and significant part of any company. It is the support of stakeholders due to which the company operates. All the strategies will have a direct impact on the stakeholders and hence it is very important to keep them in consideration while formulating the new strategies. The stakeholders of Tesco Plc are as following: Customers: These are the most important stakeholders. The profit and loss of the company depends on them. Tesco has got a good understanding of its customers and hence they have a good and strong set of customers. Employees: Employees are the lifeline of any organization. Without them it is impossible for any organization to perform (Brannen et al, 2013). Hence it is very important to make sure that employees are happy satisfied in the company. Tesco makes sure that its, employees always get an excellent working environment. Shareholders: The existence of any company is because of its’ shareholders. Shareholders are the people who share the profit as well as the loss of the company. Competitors: Competitors are the stakeholders as the competition in the market motivates to perform better. Hence it is very important to have competitors so that the performance could be enhanced. Competition is said to be the mother of innovation. UK Government: The Government make various policies and rules which needs to be followed by the companies. Also if the company will perform well, they would pay the taxes on time (Erickson et al, 2012).

c) Present a new strategy for the chosen business based on organizational audit and stakeholders analysis

From the above analysis, the new strategy which Tesco should choose and implement is make sure that they continue to diversify but on the other hand they should not lose their focus from the core business. They should try to keep a balance between the new and the existing market and the products. They should also try to get some more interesting method like Club-card reward system in order to increase the customer loyalty towards themselves. There is no doubt that Tesco is doing fairly well in the market, it just has to maintain the same pace and get into new markets with new as well as the existing markets. In order to make sure that similar message is being delivered to the stakeholders of the company, it is very important that the message is being communicated to them in the best possible way (Erickson et al, 2012). When strategy planning is done, it should always have some short term as well as long term targets. Both the long term as well as the short term targets should be communicated to the stakeholders properly.  As mentioned earlier there are number of stakeholders of Tesco Plc, hence the plan should be delivered in a proper way. It should be made as a corporate message so that each and every category of the stakeholders could understand it. In order to do so, a stakeholder mapping is being done which will ensure that all the stakeholders could understand the message properly.

Stakeholder Mapping at Tesco Plc

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a) Evaluate appropriateness of alternative strategies relating to market entry, substantive growth, limited growth or retrenchment of your chosen organization

The possible alternative strategies relating to market energy substantive growth, limited growth or retrenchment for Tesco Plc could be as following: Product Market Mix : According to market growth matrix, the growth of the business depends on whether it plans to sell its prevailing or innovative products in prevailing or innovative market. There are different combinations like market penetration where prevailing products are sold in the prevailing market. In this method the income is increased by endorsing the merchandise or repositioning the product. The second method is market development in which the prevailing set of products are targeted for new customers at new market. The third method is product development, in this method alterations are made in the existing product and are targeted to the prevailing consumers. Usually the prevailing products are being updated or sometimes even substituted with the new product (Casadesus & Ricart, 2010). The last and fourth method is diversification where new products are being targeted to completely new set of consumers. There are mainly two types of diversification, first one is related diversification i.e. the new product developed is from the same field and the second is unrelated diversification where the new product is completely new to the industry. For Tesco Plc a product market mix will be the best option and as mentioned earlier they should try for all the four categories. Synergy: When the combination of two resources produces better results in comparison to individual then it is called as synergy. There are four types of synergies. First is Marketing synergy where the shared marketing services are utilized. Second is operating synergy i.e. well use of operations, wholesale procurement etc. Third is investment synergy where more use of common investment in fixed assets etc. is done (Dawson et al, 2006). The last and fourth one is management synergy i.e. the management skills grown for prevailing operations are transferred to new processes. Tesco Plc should try to combine resources so that they could make best use of it. Divestment strategy: This is the method in which a part of the business is being sold or a particular product is being pulled off the market. This could be done because of limited resources or liquidation. Mergers are also one of the method to increase the market shares and grow geographically. Tesco should try to pull out the products which are not from the core business and hence not performing well (Ellis et al, 2007).

b) Select an appropriate future strategy and justify why you selected that strategy for the chosen business organization

The appropriate future strategies for Tesco would be as following: Total focus on UK retail (Market Penetration): The UK market is the biggest customer hub for Tesco, it has got many loyal customers in this market and hence Tesco must try to make greatest revenues from this market. It is very important that they do not lose their brand loyalty to the UK customers and hence they should make sure that the products are available to them on time. Market penetration is the most important future strategy for Tesco Plc. Diversification: This is one of the other strategy on which Tesco should focus, as it needs to grow its market (Holbeche, 2013). Their objective is to be successful in food as well as non-food items and hence it is very important that they diversify i.e. get into new market with the new products. Divestment : Divestment is one of the other strategy which is very important for Tesco plc, as it is important to pull off the products which are not doing well. It is very important to do so in order to save the cost and spend the same in the areas or the products which are giving good returns.

a) Analyse how you would plan for the implementation of the strategy in the perspective of following issues:

I) the roles and responsibilities for strategy implementation in the chosen organization.

After planning, implementation of the strategies is the next most important factor. Proper implementation of the strategies is the key success factor for any organization. Implementation is the process in which all the available resources are being put together in a way that they perform to bring success (Ndungu, 2011). The most important role in successful implementation of the strategies is played by the management. It is management’s duty that all the resources are being allocated properly. Also management needs to make sure that sufficient amount of human resource is available to implement the strategies. The management also needs to make sure that an appropriate strategy is being chosen at the right time. There are various strategies which need to be implemented at different situations and hence the choice of strategy should be done appropriately. As mentioned earlier, Tesco gives a lot of importance to its stakeholders and hence the stakeholders should be given importance while making any decision. They should be involved in the process of taking decision (Sarraf & Ellis, 2006). The management should also make sure that the employees get a good working environment so that they can give their performance. In order to maintain the customer loyalty Tesco plc had got many innovative ideas like Club-reward point card system. The management should also make sure that the employees in the company are trained enough to accept any changes. For example, in case if any mergers or acquisitions happen, the total working structure changes, but the employees must co-operate and understand that any step taken will be in their favour too.

ii) Identify and evaluate resource requirements to implement a new strategy for the chosen organization

The success of any strategy depends on the fact that the various resources available are utilized properly. The different types of resource required to implement new strategy for Tesco Plc are financial resources, physical resources, human resources, technological resources. As mentioned earlier in this essay that the company would go for product development and diversification strategy (Ioana et al, 2009). In order to get the new products the research and development department should be very strong. Hence, most of the resources like investment, human resource etc. should be used for R&D. The employees capable enough to bring in positive changes in the product should be recruited. Sometime the changes in packaging and labelling also do wonders for the product. Hence the new employees should be able to understand this fact. They should be given the freedom from the company to do their experiments and come up with great inventions.

b) Evaluate the contribution of SMART targets to the achievement of the strategy implementation of the chosen organization

A SMART target plays a very crucial role in any organization. If the target is SMART then it will be much easier for the employees to achieve it. The SMART target means: Specific: It is much easier to understand and achieve a specific target instead of general targets. In a specific target almost all the important points like people involved, estimated time, location etc. are specified (Woods, 2007). Measurable: There must be a proper guidelines for the measurement of the completion of the target. It should be in a way such that even the progress of the plan could also be measured. Attainable: The targets should be feasible in nature. The goals must be set according to the capacity of the employees, availability of the resources and time etc. The employees must feel that the target could be achieved then only they will work towards it otherwise they will leave it simply if seems to be impossible to achieve. Relevant: Again the target should be realistic in nature. One must not decide the targets just for the sake of name, it should be as per the capacity and willingness to perform to achieve the target. Timely: There should always be set time to achieve a particular time. If there will be no time limit, the employees will not understand the importance of the work (Sarraf & Ellis, 2006). Tesco Plc always makes sure that all the set targets are SMART so that the employees could understand them easily and give their best performance to achieve them on time.

Brannen, M. Y., Moore, F., & Mughan, T. (2013, September). Strategic ethnography and reinvigorating Tesco Plc: Leveraging inside/out bicultural bridging in multicultural teams. In Ethnographic Praxis in Industry Conference Proceedings (Vol. 2013, No. 1, pp. 282-299) Casadesus-Masanell, R., & Ricart, J. E. (2010). From strategy to business models and onto tactics. Long range planning, 43(2), 195-215. Dawson, J., Larke, R., & Mukoyama, M. (Eds.). (2006). Strategic issues in international retailing. Routledge Ellis-Chadwick, F., Doherty, N. F., & Anastasakis, L. (2007). E-strategy in the UK retail grocery sector: a resource-based analysis. Managing Service Quality, 17(6), 702-727. Erickson, T. J., Magee, J. F., Roussel, P. A., & Saad, K. N. (2012). Managing technology as a business strategy. Image Holbeche, L. (2013). Aligning human resources and business strategy. Routledge Ioana, A., Mirea, V., & Balescu, C. (2009). Analysis of service quality management in the materials industry using the BCG matrix method. Amfiteatru. Econ, 11(26), 270-276 Ireland, R. D., Hoskisson, R., & Hitt, M. (2011). Understanding business strategy concepts plus. Cengage Learning Ndungu, K. (2011). Analysis of TESCO Sarraf, Q., & Ellis, G. (2006). Business rules in retail: The Tesco. Com story. Business Rules Journal, 7(6). Teece, D. J. (2010). Business models, business strategy and innovation. Long range planning, 43(2), 172-194 Woods, M. (2007). Linking risk management to strategic controls: a case study of Tesco plc. International Journal of Risk Assessment and Management, 7(8), 1074-1088.

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Business Strategy Assignment on the Company Vision and Goals of Tesco

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Presentation, examination, analysis of elements, here and now and long haul targets, conclusion and proposals, mission, vision and destinations of tesco, individuals associated with arranging process, center level, lower level, long haul target of tesco, proper planning for the arranging, techniques of strategic arranging.

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Business Strategy TESCO - Assignment

Added on   2021-02-22

   Added on  2021-02-22

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BUSINESS STRATEGY INTRODUCTION 3 P1. Framework for macro-environment analysis 6 P3. Business strategy lg ...

Strategic management plan for tesco: analysis of macro and micro environment, competitive advantage, and strategic directions lg ..., impact of macro and micro factors on business objectives and decision-making lg ..., macro environmental analysis of tesco through pestle analysis lg ..., impact and influence of macro environment on h&m's strategies lg ..., impact of macro environment on h&m's business strategy lg ....

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  1. Assignment on: Business strategy. A scenario on Tesco Company

    Business strategy is the process of identifying vision, mission and objectives of the organization and developing plans and policies to achieve these objectives. It is a vital element of an organization because without a business plan the organization cannot run its business successfully.

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    The details given here include Tesco's customer centric approach based on business policy, its position in the current globalised world, its SWOT analysis and 5 Porter's Industrial analysis and e-business strategy. Tesco has led the UK grocery retail sector with the simple philosophy that is continuous improvisation in customer service.

  3. Assignment on Strategic Business Management and Planning in Tesco

    This Assignment focuses on Business Strategic Management and Planning in Tesco, one of the giant grocery shops in the UK. The first part depicts the mission and vision statement of the Tesco and also highlights the ethical, cultural, environmental and social perspectives of Tesco.

  4. Unit 7 Business Strategy Assignment

    Business strategy is the long term action plan of any organization generated to achieve a set of goals or objectives. In other words, is generally a document which coherent the direction a business will seek and the measures it will take in order to fulfill the goals.

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    Tesco Business Model is based on various verticals Tesco has deep-rooted its businesses in the European market so well, it's difficult to miss out on the Tesco hoarding anywhere. Its Businesses and subsidiaries are: By Author A glimpse into the Complex Supply Chain

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    Tesco Business Model Explained - How It Works Strategy Pillars Customers Products Channels Tesco's Six Strategic Drivers Strong Brand Reputation Lowered Operation Costs Cash-Generating Operations Boosted Profit Margins Property-Related Maximized Value Focus on Innovation Tesco Stakeholders Customer Segments Marketing Strategy Marketing Mix Products

  7. Business Strategy Assignment Solved

    INTRODUCTIONBusiness Strategy refers to an accumulation of all the actions as well as decisions takenby an organisation to effectively attain all the business objectives which helps an organisation ineffectively and essentially gain a competitive and sustainable position in the market.

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    Business Strategy Assignment - Tesco plc Found this document preview useful? Upgrade now for complete access to all the study materials you've viewed and more. Buy Unlocks Find a suitable subscription plan Free Plan Upload two past papers, study material or assignments Homework Help Get Answers in few hours Business Strategy Assignment - Tesco plc

  9. PDF The six strategic drivers.

    Cash is the lifeblood of our business, and we have set a three-year target to generate £9bn of cumulative retail cash from operations. Tesco PLC Annual Report and Financial Statements 2017 7 ... The six strategic driverscontinued 10 Tesco LC nnual Report and Financial Statements 2017.

  10. Tesco Business Strategy

    Tesco Business Strategy Topic: Business Strategy Words: 1127 Pages: 3 Business strategy According to welcome to Tesco plc: our strategy (Anon., 2009), Tesco has adopted a comprehensive business strategy which entails attaining consistent growth and increasing the scale of operation into the international market.

  11. Unit 7 Business Strategy Assignment TESCO.docx

    BUSINESS LB5230. Unit 7 Business Strategy Assignment - Tesco PLC Course BTEC Higher National Diploma in Business Unit Number and Title Unit 7 Business Strategy QFC Level Level 5 TASK 1 a) Company Profile, Mission and Vision statement, Goals and objectives, Core Competencies Company Profile: Tesco Plc was founded by Jack Cohen in the year 1919.

  12. Tesco's New Chapter in 2022: Strategic Priorities and Purpose

    Shalmali Prakash. Senior Analyst. Tesco turned the pages on a new chapter in 2022. With new strategic priorities and purpose, Tesco strives to build on its existing work and be even more competitive moving forward. Tesco's group sales accounted for $65.8 billion, 3% up from $64.1 billion in 2021.

  13. Strategic Recommendations for Tesco

    This report analyses Tesco's retail segment in its primary market of the UK, the competitiveness of the retail industry, its strategic positioning in this market, and potential marketing strategies, using Porter's five forces analysis and SWOT analysis. Based on the findings, recommendations on the best competitive strategy will be provided.

  14. Unit 7 Business Strategy

    fTask 4.1 Based on Task 3, assess the roles and responsibilities of. personnel in charge of implementing the strategy. For the strategy implementation to be successful Tesco will need a capable and experienced leader. that will be able to control, inspire, lead and delegate a team in achieving the objectives.

  15. Copy of

    D. One example of Tesco responding to changes in the market is the changes in the company following the threatening growth of Aldi and Lidl. Aldi and Lidl in 2018 were continuing to take Tesco's customers and market share, Tesco knew this was a threat so responded by opening a new no-frills discount brand, Jack's.

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    Tesco's strategy included elements of flexibility, local operations including customers, cultures, supply chains and regulations in order to meet the needs of the local market. The business strategy Tescos have is to expand into different acquisitions of new stores, retail services, and meeting customers wants and needs.

  18. Unit 7 Business Strategy Assignment

    Unit 7 Business Strategy Assignment - Tesco PLC a) Company Profile, Mission and Vision statement, Goals and objectives, Core Competencies Company Profile: Tesco Plc was founded by Jack Cohen in the year 1919. It is one of the largest retailers in UK. It has got the highest yearly sales after Wal-Mart and Carrefour.

  19. Business Strategy Assignment on the Company Vision and Goals of Tesco

    Business procedures are figured to accomplish vision, mission, destinations, objectives and targets of the firm by making compelling utilization of center capabilities, vital reasoning and arranging framework Reason: this assignment has been attempted keeping in mind the end goal to think about mission, vision of Tesco, examination of variables ...

  20. Assignment on Strategic Business Management and Planning in Tesco

    This Assignment focuses on Business Strategic Management and Planning in Tesco, one of the giant grocery shops in the UK. The first part depicts the mission and vision statement of the Tesco and also highlights the ethical, cultural, environmental and social perspectives of Tesco. In the second part of this assignment, the Business Environment ...

  21. Business Strategy TESCO

    This assignment on Business strategy. Macro environmental analysis. Internal Analysis. This report is conducted upon TESCO. Ask a question from expert. Ask now. Study. Writing. Homework Help. Blog; Subscription Sign In. Business Strategy TESCO - Assignment. 17 Pages 4908 Words 55 Views Added on 2021-02-22. Business Strategy TESCO - Assignment

  22. Exploring Business

    Tesco is an organisation within the private sector meaning they are a part of the economy that are not under direct influence of the government. As Tesco PLC (public limited company) are a private sector organisation they have multiple shareholders and are not involved with or have any ownership through the government.

  23. BTEC Assignment Unit 1 Exploring Business

    Survival - Tesco like any other company needs to provide and make profit to survive in the competitive market. Tesco objectives are set so that they can be achieved over a long period of time. How the structure allows to achieve these aims and objectives: Strategic preparation starts from the desired end to the present status and works backwards.