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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


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
Tesco Competitive Strategy essay example
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Information System in Tesco
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). Tesco operates 165 International Express stores.
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As a retailer, the stores serve a large number of communities in which customers and staff live and work.] Tesco operates internationally. Every week over 400,000 staff serve over 30 million customers in 13 countries playing an important role in creating employment, fostering skills and generating economic development.
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The total group turnover is over 51 billion pounds and sells products as varied as vegetable, clothes, and computers. It has over 3,700 stores spread over thirteen markets. The largest number of stores is in UK which comes to about 2,100 followed by 814 stores in Asia and 746 stores in Europe.
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Economic Background of Tesco
In 2001 Tesco occupied 15.6% of the UK grocery retail market and was the market leader by 6%. Tesco's enormous share is still growing: by September 2004, it had increased to a massive 28%, around 12% more than its nearest market rival, Asda. If we include Tesco's share of the convenience store market (considered a separate sector by UK competition authorities) in this figure, Tesco could be said to control 34% of the grocery market.
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Tesco Plc in a Social Perspective
Gone were the days when the main concern of the customer is price and quality. In an industry where merchandise displayed on counters is almost treated as homogenous, companies are pressured to differentiate themselves through other means such as value-added services (Kotler 2005).
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All of Tesco
Currently Tesco has a market control of about 30% of the grocery market of the UK, which is a combination of its two most close rivals Sainsbury's and Adsa. In the year 2007 the retail chain announced a profit of more than 2.55 billion sterling pounds. In the past the chain mainly concentrated on food stuff but currently it has diversified its range of products to include consumer electronics, clothes, financial services, internet services, health insurance for customers and other services.
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Strategic planning (TESCO)
This way they can earn the loyalty of the customer while successfully attracting more customers. Tesco's mission statement1 says, "Our core purpose is to create value for customers to earn their lifetime loyalty." value creation for the customer proves to be a competitive weapon to retain the customer.
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Tesco PLC Strategies
On September 30, 2005, the Company entered into an agreement to dispose of its operation in Taiwan to Carrefour as part of a transaction to acquire Carrefour's businesses in the Czech Republic and Slovakia (Company 2007 Report). The company is in simple insurance, telecoms, personal finance and recycling.
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Marketing Strategy of Tesco
To retailers, the internet has provided a venue where they can distribute and market their products to their prospective clients. However, through the course of time, the success of online retailers proved to be a factor of its resources and how it employs these to achieve its specific goals and objectives.
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Tesco Personal Finance
Hall, J., (2009), “Tesco to launch bank branches and current accounts”,, retrieved online, 4th April, 2009, from:
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