Current Corporate Strategy

8/8/2019 Current Corporate Strategy

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Submitted by: Rajvir Kaur

F1002707

Date of Completion: 07-10-2010


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Executive Summary

Tesco PL C was founded by S i Jack Cohen in the year 1920s. s ince the day of es tablishmen t

till 1970s it con tinued to grow even af ter the second wor ld war. Af ter the war it was listed on

London s tock exchange & it continued its grow th through acqu isitions as it acqu ired to

Willianson s tores in 1957, 200 Harrow s tores in 1959, 212 Irw ins ou tlets in 1960, 97 char les

philli ps s tores in 1964 & v ictor va lue cha in of d iscoun t stores in 1968. A t the end, it owned a

cha in of over 800 s tores. it adop ted the "p ile it high and se ll it cheap s trategy dur ing the

1970.cus tomers became more aware of qua lity & cho ice. bu t Tesco fa iled to fu lf il their

needs. I t faced a very nega tive response from cus tomer in ear ly 1980s where the Tesco image

was just abou t to diminish. I t was compe ting exc lusively on pr ice bas is and poor ly

maintained s tores & poor qua lity items inf luenced the nega tive percep tions of Tesco in

cus tomers m ind. Bu t af ter that it recovered itself in 1990s and till now it has ma intained its

image.


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Table of Con tents

1. Strategic Deve lopmen t History of Tesco------------------------------- 4-10

2. Tescos Curren t Strategy-------------------------------------------------- 10-11

3. Strategic Ana lysis---------------------------------------------------------- 11-15

4. Future R ecommenda tion of S trategies---------------------------------- 15-18

5. Conclusion------------------------------------------------------------------ 19

6. R eferences------------------------------------------------------------------ 20


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Strategic Devel op me nt H ist ory of T esc o

Tesco p lc is an UK based interna tiona l grocery and genera l merchand ising re tail company. I t

is the larges t Br itish re tailer and wor lds third larges t grocery re tailer.

In ear ly 90s Tesco aga in faced a severe compe tition from o ther compe titors and a downfa ll in

revenues. When Ian Mac became the CEO of company then Tesco wen t through an image

makeover and acqu ired o ther compan ies.

In ear ly 70s Tesco had acqu ired a lot of o ther re tail compan ies. Bu t it was fa iled to integra te

them accord ing to its strategy of p ile it high se ll it cheap. I t was more concen trating on

pr ice ra ther than qua lity.

Af ter fac ing the prob lems, Tesco s tar ted to c lear its image w ith new s trategy by do ing the

pr ice reduc tion, cen tra lisation of its d istr i bution sys tem and its own labe l for food produc ts.

Tesco launched its own brands for d ifferen t sec tors such as Tesco va lue for low income

cus tomers, Tesco brand for med ium range produc ts. It introduces a spec ial range of

produc ts like Tesco organ ics, Tesco who le food and Tesco k ids. U ltimately it was targe ting

the every sec tor of soc iety.

(www. tescop lc.com/p lc/abou t_ us/tesco _ story)

Tesco has evo lved its strategy by d ividing its stores into 5 ca tegor ies, as men tioned be low,

accord ing to the needs and requ iremen ts of cus tomers :-

Tesc o Extra :- these are the larges t and s tock a ll of the Tescos produc ts w ith free car park

outside town

T esc o Su perstar :- these are s tandard large super marke ts and hav ing sma ller range of

produc ts than Tesco ex tra.

T esc o metr o :- these lies in Extra and Supers tar. These are ma inly loca ted in the city cen tres

on h igh s tree ts.

T esc o express :- these are hav ing everyday essen tials ra ther than the who le range of produc ts

in busy c ity cen tres and on pe trol station.


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One op :- these are the smallest stores many of these have been converted into express.

these stores are having different pricing criterion and later opening hours.

The C Terry Leahy mentioned that Tesco does not want one leader. We want thousand of

leaders who take initiative to execute the strategy.

It adopted the strategy of better for customers, simple for staff and cheaper for operations.

They aimed at improving its competitive positions in market by becoming more customers

oriented and adopted a policy of differentiation. To make these goals in reality Tesco refined

its mission, value and strategy. Tesco used a steering wheel a simple symbol to

communicate its strategy. Here the symbol represents the four basic areas of focus:-

Financial

Customer

peration and

mployee performance


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With the he l p of this symbo l, every s tore ge ts a check for every mon th where a ll emp loyees

of Tesco ge t feedback on their performances. I t hel ps the company to rema in focused on its

strategy.

The organ isations ma in purpose is to crea te va lue for its cus tomers and to earn their lifetimeloya lty.

B usi ness strategy

"We have con tinued to make s trong progress w ith a ll four par ts of our s trategy.

Par ts are :-

A s trong UK core bus iness

Non-food

R etailing serv ices and

Interna tiona l

By keep ing our focus on trying to improve wha t we do for cus tomers :

mak ing their shopp ing tr i p as easy as poss i ble

cons tantly seek ing to reduce our pr ices to he l p them spend less

offer ing the conven ience of e ither large or sma ll stores

br inging s implicity and va lue to comp licated marke ts"

( h tt p://www.b ized.co.uk/educa tors/16-19/bus iness/s trategy/ac tivity/strategic1.h tm)

Co r po rate strategy

1. An inclusive offer. Th is strategy was used to appea l the upper, med ium and low income

cus tomers in the same s tores. To fu lf il this strategy, it used its own brand produc ts.

2.Tesco uses the c lubcard reward sys tem (f irstly introduced in 1995). W ith the he l p of this

sys tem it ga ined the compe titive edge over o ther compe titors as it was the f irst grocery

company that used this sys tem to co llect the informa tion abou t cus tomer.

( h tt p://www.b ized.co.uk/educa tors/16-19/corpora te/s trategy/ac tivity/strategic1.h tm)

To has a lso s tar ted bus iness in other sec tors. it adop ted the fo llowing strategies:-


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FINAN C E

In f inance sec tor Tesco announced a joint venture w ith R oya l bank of Sco tland. W ith this

par tnersh i p Tesco promo ted the Cred it cards, loans, mor tgages, sav ing accoun ts and

insurances such as car, life home insurances e tc. To become successfu l in this sec tor it adop ted the s trategy to to promo te these ac tivities by leaf lets in Tescos s tores and through its

webs ites. I t made a prof it of 66 m illion for Tesco. I t was a good s tar ting in the sec tors o ther

than re tailing sec tor. I t boos ted the Tesco to take a chance in o ther sec tors as we ll.

To become successfu l in this sec tor it was us ing the key marke ting s trategies such as it was

giving the free c lubcard po ints when you buy a car insurance.

(htt p://bus iness. timeson line.co.uk/ tol/bus iness/ indus try _ sec tors/bank ing _ and _ f inance/ar ticle4

039876.ece)

TELE COM

It star ted its bus iness in Te lecom sec tor. I t prov ides the fac ilit y of ISP ( interne t serv ice

prov ider), mob ile phones and these are adver tised v ia Tesco webs ite and through Tesco

stores.

It star ted to prov ide ISP serv ices in 1998. Ins tead of bu ilding its own telecom ne twork, it

actually adop ted the s trategy of pa ir ing w ith ex isting telecoms.

It launched its mob ile with O2 and Tesco home phone was pa ired w ith cab le and w ireless.

In Augus t 2004 Tesco prov ided its broadband serv ices v ia BT phone lines w ith the

par tnersh i p of NTL.

In January 2006, it launched its interne t phone w ith the he l p of Fresh tel of Aus tra lia.

It gained popu lar ity in mob ile serv ices among cus tomers as the cus tomers were increas ing

day by day s ince the day of launch.

(htt p://www.guard ian.co.uk/bus iness/2009/nov/19/ tesco- telephone-broadband-assau lt)

FU EL

Tesco s tar ted to se ll petrol in 1974 on re tail bas is bu t prob lem arose in 2007 when repor ts

aga inst Tesco had been f iled. Because the pe trol sold by Tesco was no t of good qua lity as it

was con taminated w ith s ilicon. Bu t af ter these happen ings Tesco apo logises in many


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newspapers and prom ised to se ll the good qua lity papers and g iving compensa tion to

cus tomers.

By cons ider ing these fac tors we can conc lude that Tesco was touch ing the g lory of he ights. I t

exper ienced the prof its as fo llows in g iven f ive years as fo llows :-

G r owth of T esc o in market due to give n f act ors


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(htt p://www.b ized.co.uk/educa tors/16-19/bus iness/s trategy/ac tivity/strategic1.h tm)

From the g iven f igures we can conc lude that Tescos turnovers, no. of s tores and se lling

space were increased con tinuous ly in g iven years.

Since the day of es tablishmen t till now Tesco en joyed the success and defea t as we ll. There

are some po ints that made the Tesco to surv ive:-

B ra nd image :- with the evo lution of time Tesco has become Brand now. Companys

popu lar ity was increas ing day by day. I t managed its repu tation w ith cons istent effor ts such

as w ith the ge t cheaper, se ll more vo lume env ironmen t.

As we have seen in prev ious years that it has done the reeng ineer ing of its strategy from time

to time to de liver the w ide range of produc ts to its cus tomers eff iciently. Tescos exper ience

in d ifferen t sec tors such as f inance, telecom and fue l has a lso s treng thened the brand image.

Cop e up w ith I T :- c lub card sys tem and loya lty card sys tem has increased the cus tomer loya lty for Tesco. I t was the f irst to introduce this sys tem. The ex trane t sys tem has changed

the total way to do bus iness in Tesco. I t has brough t the f lexi bilit y, sca labilit y across the

distr i bution channe l. It has a lso fac ilitated the re lationsh i p among the bus iness par tners wh ich

ultimately ac t as a pos itive po int for bus iness. Other techno logica l advances such as se lf


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check ou t mach ines, e lectron ic se lf labe ling e tc a lso enhances the opera tiona l activities of

bus iness.

Su pp lier R elati on s :- For many years Tesco has been the UKs one of the larges t job prov ider

in non governmen t sec tor. I t has ma intained a good re lationsh i p w ith its supp liers. As it is a

ma jor re tailer of grocery w ith a w ide range of produc ts no t only of its own brand name bu t

also of o ther brands. So, Tesco has to work w ith many d ifferen t supp liers around the wor ld.

To ma intain a good re lation w ith supp liers is one of the key issues to be ma intained in

strategy. So to ge t long term benef its from supp liers, it has ma intained a good re lation w ith

supp liers. Be ing an interna tiona l company and hav ing a brand name it is one of the ma in

issues of concern to ma intain its re lationsh i p w ith supp liers to pro tect its image. For that it

conduc ts the supp lier managemen t programs to know abou t the supp liers sa tisfac tion.

Based on a ll these g iven da ta companys curren t strategic s ituation is g iven be low:-

TES CO s curre nt strategy :-

The ma in ob jective of Tesco PL C is to become one of the larges t retailers in the wor ld by

prov iding a ll the necessary things in a good qua lity and a t compe titive pr ices.

(www. tescop lc.com/annua lrepor t10/)

Tesco has four s trategic bus iness un its as fo llows :-

Core UK

Non food

Interna tiona l serv ices and

R etailing serv ices

These cons titute the bas ic bus iness s trategies. I t has adop ted a cons istent strategy of grow th

which ac ts on their core UK bus iness and expand ing into new marke ts.

The curren t strategy that Tesco is fo llowing is the ma in reason beh ind the success of Tesco

PLC. It is four par t strategy and deve loped in the 1997. S ince then it is us ing this strategy in

which it has four ob jectives and these ob jectives rema in same in each year.

These core ob jectives are g iven be low:-


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G row th of UK bus iness

To become wor lds larges t and lead ing bus iness re tailer

To be as s trong in non-food as in food

To deve lop re tailing serv ices i.e. Tesco f inance, Te lecoms.

To pu t the commun ity at the hear t of wha t we do.

(www. tescop lc.com/annua lrepor t10/)

Strategic A nalysis

SW OT

SW OT ana lysis is a tool to ana lyse the companys interna l and ex terna l env ironmen t (C.Claire). on the bas is of these, company dec ides its strategy.

1. Stre ngths

Lea d ing market po siti on

Tesco has ma intained its pos ition as third larges t retailer in the wor ld and ow ing the 4331

stores in Europe, US and As ia. As the recess ion was affec ting the each and every sec tor of

economy bu t Tesco has a lso ma intained its grow th ra te at 14.9% even there was a recess ion

time. Ma intaining this grow th is no t an easy task. W ith the he l p of this Tesco can en ter in

new marke ts.

C ust omer focuse d

Ins tead of adop ting its prev ious s trategies, Tesco now have become more cus tomer or iented.

None o ther than Tesco uses c lubcard sys tem to co llect the informa tion abou t customers. I t

has a lso deve loped a research depar tmen t espec ially for the cus tomers.

For the same purpose it uses the Loya lty card. I t hel ped the Tesco to iden tify the food needs

for Ma lays ia peop le where it offers produc ts a t low pr ices to attrac t peop le.

Tesco has a lso done a survey for peop le who wan t to do shopp ing da ily bu t for sma ll amoun ts

of food. W ith the he l p of this survey Tesco recogn ised the area of these k inds of peop le and

entered into Japan by acqu ir ing the d iscoun t supermarke ts.


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A ffor dable prices

Since the day of es tab lishmen t till now, it never neg lected the Pr ice fac tor. I t always so ld its

produc ts a t affordab le pr ices. In the recess ion per iod Tesco offered its 500 new produc ts a t

low pr ices by keep ing the cus tomers budge t requ iremen ts.

By offer ing low pr ices Tesco has ma intained its pos ition as one of the cheapes t grocery s tore

of UK. By adop ting this concep t it is ga ining the increase in the sa les.

2.W eak nesses

B ra nd image

In 2009 Tesco reca ll sausage and beans from Ire land because those were no t good for the

consump tion. P las tic par ticles were found in them. I t also reca ll the brand nu ts from the Fresh

and Easy s tores in US. Th is incident may prove as a b log on the name of Tesco and cus tomer

may become d isloya l to company. I t indica tes the care lessness of Tesco and causes the poor

brand image.

M arketi ng app r oach

Although the Tesco is hav ing its stores a lmos t every corner of c ity bu t still they are lack ing

beh ind to dom inate the c ity cen tres as it is no t having any s tore in c ity cen tre of M ilton

Keyness. I t gives the oppor tunities to compe titors to en ter into marke t and ge t expans ion.

Diff ere nt diversi f icati on ( A nsoff mod el )

Tesco has done exper imen t in totally d ifferen t indus trys sec tors such as Te lecom, bank ing,

insurance and curren tly in f ilm indus try. Where there is an oppor tunity for Tesco to expand

its bus iness, there it is d iver ting from its bas ic re tailing bus iness. A ll these bus inesses are

hav ing d ifferen t k ind of exper tise requ iremen ts and ac tivities. If these are no t hand led

proper ly then it can crea te a prob lem for Tesco.

Interna tiona l opera tion br ings cu ltura l and language d ifferences wh ich the Tesco is seems

to be hand ling qu ite we ll but in those coun tr ies they are no t marke t leaders and my become

week in this area.


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Depend ability on UK market

Tescos ma in marke t is its domes tic marke t. It earns 70% of revenue from its domes tic

marke t. If it is fa il to perform we ll in UK then more than ha lf of its bus iness w ill go in loss.

3 .Oppo rtu nities

Op ening of n ew st ores

In 2009 Tesco has opened 622 new s tores and among these 435 were interna tiona l stores and

con tinuing to open new s tores in this year as we ll. They have opened more than twice as

many Tesco supermarke ts are open 24 hours a day than po lice s tations. (repor t by da ily

telegraph).

O pen ing of new s tores na tiona lly and interna tiona lly will give a s trong pos ition to Tesco.

G lobal exp ansion

Tesco en try to US and Ind ia shows their s trategy of g loba l expans ion. US is the very large

area as it covers the four time zones. So by cover ing effec tively this area Tesco w ill

exper ience a grea t success and prof it. And inves ting in deve loping coun try like Ind ia wh ich is

one of the fas test grow ing econom ies w ill streng then the Tesco bus iness.

On line f acility

By prov iding the on line fac ility of shopp ing, Tesco has become the UKs larges t online

shopp ing cen tre. Tesco.com and Tesco d irec t are ways to do the on line shopp ing. Th is on line

shopp ing reduces the cos t and offers more compe titive pr ices.

4.T hreats

R ecessi on

As like o ther econom ies UK is still f ighting for the comp lete recovery from recess ion. Due to

this recess ion cus tomers has become more aware to spend their money. They don t wan t to

spend their va luab le money on unnecessary things. So it affec ts the revenues of company.


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Co mpetiti on in do mestic and inter nati on al gr ocery market

It is fac ing the severe compe tition from its domes tic r iva ls such as Sa insbury and Morr isons.

Tesco has ga ined 16.1% marke t share in 2008 and 16.8% in 2009. Whereas Sa insbury has go t 14.8% in 2008 and 16.1% in 2009.

It is fac ing more compe tition a t interna tiona l level rather than UK. Excep t UK it is no t of the

lead ing grocery company in As ia or US. In fac t, it is compe ting w ith the USs Wa l-Mar t

which is a t the top pos ition in wor ld in grocery marke t to es tablish its bus iness.

(htt p://www.oppapers.com/essays/Swo t-Ana lysis-Tesco-P lc/60872)

PES TLE

Pes tle ana lysis are used to ana lyse the ex terna l environmen t more deep ly.( C.Claires)

Po litical F act ors

Tesco is expand ing its bus iness g loba lly. So the a ll loca l, na tiona l and interna tiona l fac tors

are affec ting the tesco bus iness. Elections in UK and the new governmen t in UK may impose

the d ifferen t terms and cond itions to do the bus iness. S imilar ly to do the bus iness overseas it

has to fu lf il the requ iremen ts of that coun trys governmen t.

Ec ono mic F act ors

It is still f ighting w ith the wors t affec ts of recess ion. R ecess ion has inf luenced the purchas ing

power of consumers Wh ich resu lts in the less revenue for the Tesco. I t acts as a cons tra int

for Tescos s trategy.

Social f act ors

It includes the soc ial cond iti ons, a ttitudes, be liefs, taste etc. Of consumer. Un like in Japan

where peop le wan t to buy sma ll amoun t of food bu t everyday, peop le in UK are preferr ing to purchase in just one time. They are mov ing towards one s top shopp ing because they ge t

discoun ts or rewards.

Because of the busy schedu le peop le prefer to have ready mea l . so Tesco more concen trates

on these foods.


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Tech no logical f act ors

Tesco has a lways managed w ith latest techno logy no t only in its paper work bu t also

prac tically such as e lectron ic she lf labe lling, se lf check ou ts mach ines.

Tesco.com is ano ther examp le of its latest techno logy and one of the ma jor e lemen t of itsstrategy.

E nvir on me ntal f act ors

Like o ther indus tr ies, Tesco is a lso trying to m inimize carbon em iss ion and was te as much as

poss i ble. it has launched severa l programs for env ironmen t pro tection such as G reen c lub

card po ints, go ing green maga zine, Tesco&you together.com.

Legal f act ors

Tesco has been affec ted by legislation. Any changes in laws or governmen t policies

inf luences the opera tion of Tesco wh ich is ref lected in its strategy. The pr icing po licies,

emp loymen t law, m inimum wage legislation and work ing time legislation, a ll these lega l

fac tors have affec t on the Tesco bus iness.

(www. 321books.co.uk 08/01/2010)

F uture R ecomme nd ati on s of Strategies for T esc o

as exp lained above in g iven two sec tions that how Tesco has surv ived in domes tic and

interna tiona l grocery marke t. No t only in food sec tor bu t also in o ther sec tors such as

f inanc ial serv ices, telecom and even in f ilm indus try. A ll these sec tors are totally d ifferen t

from Tescos grocery re tailing bus iness. I t has ga ined exper ience no t only in these sec tors bu t

also became successfu l in terms of cus tomer sa tisfac tion and companys prof it. Af ter

cons ider ing the ana lysis of Tesco in prev ious years company may choose the d ifferen t

strategies to expand its bus iness.

It can adop t any of the gener ic s trategy that was recommended by the Por ter. ( C. Claires) :-

Co st lea dershi p :- by adop ting the cos t leadersh i p, Tesco w ill charge the lowes t pr ice for its

produc ts. I t is recommended because Tesco has con trolled their interna l opera tions very

effec tively and so they can se t a pr ice of their produc ts compe titively. a cons tant use of this

strategy may cause a prob lem. cus tomer may become consc ious abou t the qua lity of produc t


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that Tesco offers. They m ight think that if the company is prov iding goods a t cheaper pr ices

then def initely there w ill be some comprom ise in qua lity of produc t.

Diff ere ntiati on :- if the Tesco adop ts the d ifferen tiation s trategy then it will have to add more

unique benef its to the produc ts that are hard to imitate. I t will give the compe titive advan tage

to Tesco. By hav ing produc ts of top c lass qua lity it will crea te a d ifferen t percep tion of

Tescos brand image in the m ind of cus tomers. Here cus tomer w ill become more loya l to

Tesco. Wha t the range of produc ts is be ing offered, wha t techno logy is be ing used and

cus tomer serv ices are used to implemen t the d ifferen tiation po licy. I t will give the new face

to Tesco wor ldwide.

F ocus :- it is a s trategy where company can adop t any of the above s trategies bu t aimed for

spec if ic narrow marke t rather than serv ing the who le segmen ts, Tesco can offer its produc ts

to a spec if ic and conf ined marke t while targe ting that marke t it can use the any of the cos t leadersh i p or d ifferen tiation po licy.

It may con tinue w ith po licy of j oint ventures in coun try and wor ldwide. The benef its of joint

ven tures are as fo llows :-

It is acqua inted w ith loca l marke ts:- Tesco knows its loca l marke ts and it is no t hard to work

in these marke ts. By hav ing a par tnersh i p w ith o ther company, it will also let other company

to know abou t the marke t and v ice versa. So, be ing a par tner it wou ld no t be d iff icult for bo th

par ties to do bus iness.

Ava ilab ilit y of ready marke t- as men tioned above Tesco s tar ted the f inanc ial serv ices w ith

the he l p of R oya l Bank of Sco tland and ga ined a huge prof it. Here, Tesco en tered into a lready

well estab lished marke t and it requ ires less effor ts to do bus iness ra ther than en ter ing into

new marke t.

R esource u tilisation:- bo th par ties share their resources. I t can overcome the prob lem of

scarce resources.

Emerg ing s trong marke ts :- Star ting bus iness in rap idly deve loping coun tr ies is a good op tion

for Tesco to fac ilitate its expans ion s trategy. Mos t of these coun tr ies are hav ing a huge

popu lation and Tesco is serv ing the bas ic needs of peop le. So New As ian marke ts are


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show ing an increase in consumers expenses. these new emerg ing marke ts are a lso h igh

oppor tunity marke ts. it will prove as a s trong cus tomer base for Tesco.

The success of joint ven tures/par tnersh i p depends upon the three cr iter ia of sus tainab ility,

accep tability and feas i bility. Sus tainab ilit y refers to whe ther a s trategy g ives answer to

ques tion in wh ich env ironmen t it opera ting. The accep tabilit y refers to the re turn from

strategy, r isk involved and s takeho lders response. Feas i bilit y refers to whe ther the company

is hav ing adequa te resources and compe tence or no t. (C.Claires)

Tesco can adop t the global exp ansion po licy . As men tioned in above sec tions that Tescos

main a im is to expand its bus iness wor ldwide. concen trating on d ifferen t indus trys sec tors

such as insurance, telecom e tc. Where there are d ifferen t manager ial sk ills, d ifferen t exper tise

and d ifferen t labour force requ ired, there inves ting in these sec tors w ill crea te a prob lem. I t

shou ld concen trate on its grocery re tailing bus iness wor ldwide.

Tesco is a lready a UKs larges t grocery re tailer. Now, it shou ld concen trate more on the

expans ion of bus iness wor ldwide.US marke t is a good op tion for Tesco to expand its bus iness

in grocery re tail bus iness as it is a very huge area w ith huge popu lation. To es tab lish a

bus iness in U.S f irst Tesco does a research of consumer behav iour in dep th and broader.

Actually the da ta acqu ired by the c lub card is the ma in fac tor in dec iding the s trategies such

as its open ing hours, produc ts to produce, its promo tion e tc. The coun tr ies where there is noany c lub card sys tem, the Tesco w ill send its execu tives to live there w ith cus tomers to ge t

the informa tion abou t them. In Tesco every execu tive does a junior job in s tore for one week

every year.

Second, af ter ge tting the informa tion, Tesco performs the rad ica l surgery to the bus iness p lan.

It adop ts the s trategies accord ing to coun tr ies. For instance, in Tha iland it has ma intained its

shops in a ser ies of marke t stalls. In China, live f ish is offered for sa le. In Sou th Korea, a

huge Tesco s tore is like a depar tmen tal store than trad itiona l supermarke t.

Third, Tesco prefers to recru it loca ls.

Fina lly, and mos t impor tantly for U.S marke t, Tesco can focus on market lea dershi p

strategy . Mos t of the supermarke ts wor ldwide uses the d iscoun t strategy to a ttrac t disloya l

peop le. Bu t the cons tant use of this strategy may cause the comp lications because if the

cus tomer w ill demand h igh pr iced items then company w ill go in loss.


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88% of Tesco revenues comes from its loya l cus tomers. Us ing the da ta co llected from c lub

card, the company uses this informa tion to re tain its loya l cus tomer ra ther than a ttrac ting new

cus tomer. Th is strategy says no to supp liers. Who offers promo tions as Tesco thinks it

will prove bad for the long term loya lty.

In the far eas t, Tesco has g iven a ttention to ra ise the s tandards in store. I t uses its da ta

collection abou t cus tomers to ref ine the qua lity of produc t existing produc t range and

introduc ing new produc t.

In UK it uses the forma l loya l program whereas in Sou th Korea and Ire land it uses the

discoun ts and promo tions po licy to ga in cus tomer loya lty con tinuing w ith po licy w ill be a

good cho ice for Tesco.

US marke t will prove as a toughes t j ob for the Tesco where it will face its c loses t r ivals.

Here, Tesco w ill not change its strategy of reward ing the behav iour it seeks, wh ile the

appearance of s tores may change.

(htt p://b log.penn live.com/shop talkmarke ting/s trategy/)

Here in the case of expans ion of bus iness wor ldwide crea tes the changes in bus iness

env ironmen t as we ll. It may requ ire the deve lopmen t of new produc t and serv ices. Accord ing

to Ansoffs ma tr ix if company wan ts to launch new produc t it has to cons ider the pr od uct

devel op me nt strategy . The d ivers if ication and expans ion of produc t shou ld be accord ing tothe corpora te strategy of Tesco. To launch a new produc t, it is requ ired that company shou ld

have proper cus tomer informa tion of targe ted marke t. Here, joint ventures and c lub card

sys tem of Tesco w ill hel p to know abou t loca l marke ts in o ther coun tr ies. it is a lso

recommended to do a deep research in consumer sec tor and it may cause the add itiona l

expenses.


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Con clusi on

R ather than concen trating just on its domes tic marke t it shou ld a lso concen trate on

interna tiona l marke ts. New expans ion s trategies shou ld be used. As the Tesco has a lways

done cope up w ith changes by formu lating the new s trategies time to time in rap idly chang ing

env ironmen t so I t shou ld con tinue this reeng ineer ing of s trategies to ma intain its pos ition in

marke t.


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R ef ere nces

1. C. Claire(2008) , Unders tand ing S trategic Managemen t, 2 nd Ed, Pearson Educa tion.

2. www. tesco.com

3. www. tescop lc.com/p lc/abou t_ us/tesco _ story

4. htt p://www.b ized.co.uk/educa tors/16-19/bus iness/s trategy/ac tivity/strategic1.h tm

5. htt p://bus iness. timeson line.co.uk/ tol/bus iness/ indus try _ sec tors/bank ing _ and _ f inance/a

r ticle4039876.ece

6. htt p://www.guard ian.co.uk/bus iness/2009/nov/19/ tesco- telephone-broadband-assau lt

7. www. tescop lc.com/annua lrepor t10/

8. htt p://www.oppapers.com/essays/Swo t-Ana lysis-Tesco-P lc/60872

9. htt p://www. 321books.co.uk 08/01/2010

10. htt p://blog.penn live.com/shop talkmarke ting/s trategy/

Documents

Current Corporate Strategy