Tesco has looked to increasing efficiency and effectiveness. This part of the business continues to grow market share and has provided a channel to sell non-food items and other areas of the business including finance. The own label products have helped strengthen profits for the group, and it broad appeal through good, better, best finest ranges caters for the widest consumer audience.
However, the company has been criticized for its management of suppliers and clashes with the farmers union. The company has a four-pronged strategy: It has a reputation for value, low prices and for being customer focused.
Its brand equity and associations have helped the company to expand into new sectors and markets. Other supermarkets in the United Kingdom have done some of the same things, but Tesco has generally implemented them more effectively, and thus made most profit.
This has enabled the company to keep prices down and supported its low price strategy aimed at the broad consumer market. It is committed to reducing prices for customers and offering the best value. Its strategy of being close to the customer has been assisted in the UK specifically, when Tesco developed different formats for shopping convenience, metro, express, superstores.
The government has also been active in planning restrictions for new store openings. It also has done quite well in non-food sales in Ireland. Tesco rolls out successful UK initiatives in other countries. The market is highly regulated. Tesco sells an expanding range of own-brand non-food products, including non-food Value and Finest ranges.
Consumer data has i shaped product offerings ii ranges iii given Tesco a better understanding of consumer segments and shopping profiles and iv helped marketing to build loyalty and develop promotion offerings that suit target groups.
Tesco has overemployees. It has enabled better I retailer-manufacturer innovation ii shorterning of decision making and greater knowledge sharing. It remains to be seen whether Tesco will be able to maintain this focus now that it is widely perceived as a great corporate success story and the dominant company in the United Kingdom retail market, or if it will succumb to corporate arrogance as sometimes happens to dominant companies.
This level of sophistication has helped Tesco to remain leader within the UK market. Customers are still king. Household budgets may tighten, which could lead to reduced consumer spending. Intense competitive rivalry within the UK retail market is forcing retailers to look at cost savings and ways that they can differentiate from competitors.
If the UK and US enter a recession, this will put added pressure on retailers to keep prices low.
Success in the industry is still dependent on how well the retailer can meet the customer needs. The group has interests in grocery, non-food items, financial services and telecommunications.
Suppliers are internationally sourced, and Tesco gains scale economies from its large buying volumes. The retail market is mature and oligopolistic in its nature, with a few major multiple retailers dominating the market. Cost savings have been sought from the supply chain, through better use of IT, and from policies and management of suppliers to ensure the greatest value to the business and customer.
The organisation has a diversified product portfolio, which includes telecommunications, finance, insurance, which provides cross and up sell opportunities to customers. Price, particularly in the UK has become a dominant feature. It seeks to help customers spend less. It seeks to provide excellent customer service, and ensure high levels of customer satisfaction.
This local approach to marketing appears to be a key driver for success. Growth appears to come from gaining new customers, improving product offerings, and from higher margin items such as clothing, appliances and other non-food offerings.
Tesco has been particularly successful because of its powerful brand. Many retailers have looked overseas to fuel growth. It usually enters into joint ventures with major players in these sectors, contributing its customer base and brand strength to the partnership.
Aggressive overseas expansion has helped to keep profits high. It has been innovative and energetic in finding ways to expand, such as making a large-scale move into the convenience-store sector, which the major supermarket chains have traditionally shunned.Michael Porter has made major contribution to corporate strategy and I will use some models to judge potential of success for Tesco’s existing corporate strategy.
Porters Generic Strategies They outline the three main strategic options available to Tesco to achieve a sustainable competitive advantage. Tesco: Encyclopedia II - Tesco - Corporate strategy Tesco - Corporate strategy Tesco's growth over the last two or three decades has involved a transformation of its strategy and image.
Its initial success was based on the "Pile it high, sell it cheap" approach of the founder Jack Cohen. Tesco: Encyclopedia II – Tesco – Corporate strategy Tesco – Corporate strategy Tesco’s growth over the last two or three decades has involved a transformation of its strategy and image.
Its initial success was based on the “Pile it high, sell it cheap” approach of the founder Jack Cohen. Internationalization is a great strategy for Tesco to take their business in overseas. If Tesco desires to open a new store in Bangladesh they have to follow six principles – customers, shareholders, neighborhood, partners, network quality, and stores.
Its strategy of being close to the customer has been assisted in the UK specifically, when Tesco developed different formats for shopping (convenience, metro, express, superstores).
It has been the best retailer for format delivery and obtaining some of the best retail positions. The strategy framework is the key to assess any business performance. Estimating the risks and the value tradeoffs provides a method to design concrete proposals, which adds value to the proposal and also reduces the overall risk.Download