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Tesco Competitive Strategy - Case Study Example

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Tesco Competitive Strategy

echoes that, today the challenges for companies is not just providing high quality product but the ability to provide these products at a lower cost and price (Prahalad & Hamel 1990). These must be incorporated in the company's strategies. Against this background companies are in dear search for different ways and measures to remain competitive and consequently create values for their shareholders. (Hamel & Prahalad, 1994).
Having said this, the paper focuses on TESCO. In section two I will provide an overview of the company, its products, people and resources, part two of the paper looks at its competitive position in line with the five forces model, while part three discusses its competitive advantage, and the last section provides the conclusion and recommendations.
TESCO Plc is an international retailer founded by Jack Cohen in 1919 that has established itself as the largest super store in Europe (Report 2008). According to the company 2008 corporate report and the website, being an international retailer, its principal activities include food retailing, simple travel insurance, personal finance, TELECOM and recycling having over 2,000 stores in the United Kingdom (Company's Review 2008). The company also has stores and retail outlet in other countries like the Republic of Ireland, Hungary, Poland, the Czech Republic, Slovakia, Turkey, Thailand, South Korea, Taiwan, Malaysia, Japan and China (Tesco 2006 Review).

In addition, it operates 165 International Express stores. In addition it operates 39 stores in China, 111 in Japan, 13 in Malaysia, 62 in South Korea, 6 in Taiwan, 219 in Thailand, 35 in Czech Republic, 87 in Hungary, 105 in Poland, 91 in Republic of Ireland, 37 in Slovakia and 8 in Turkey. (Tesco Annual Review, 2008). It therefore operates round the clock which demonstrates its commitment to create customer value which in turn generates superior value for its shareholders. The success of this international giant in the retail sector can be attributed to its aggressive global strategy of geographical diversification, product differentiation, cost focus and it use of umbrella branding. In its attempt to renew the brand and keep it in sync with changing customer tastes, Tesco follows an umbrella strategy including international diversification, providing value to customers, product diversification, innovation, acquisition and umbrella branding. (Tesco Annual Review, 2008).





2.0 Tesco and Porter's Five Forces Framework

Through the below stated framework developed by Michael Porter we will identify the sources of competition in an industry. Here, according to Porter (1990), the sources of competition in an industry such as the grocery sector in the case of Tesco can be easily depicted.





Figure 1: Porters Five Forces Framework adapted from Johnson et al (2007)
Figure 1 above depicts the forces of competition in an industry. According to Porter (1990) enables market analyst and investors to asses the attractiveness and profit potentials likely to be in an industry. Using this framework an analyst gets to identify the sources of competition in an industry or sector (Johnson & Scholes 2005). The basis upon which this framework is built will serve to ...Show more

Summary

Today's businesses are in a phase of increasing complex network of activities, customer's flexibility, market volatility and increase in natural disaster, present day companies have to reformulate their strategies and tactic within their global operations (Cheng Wonglimpiyarat, 2004)…
Author : rosario40
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