Strategic Management Tesco

Strategic Management Tesco

Contents

Executive Summary        

Introduction        

Tesco Overview        

Competitive Advantages        

Analysis of the Industry        

Porter’s Five Forces        

PESTEL        

Trends        

SWOT        

Internal Analysis of the Firm        

Core Competencies        

VRIN Analysis        

Distinctiveness        

Conclusion        

References        

Executive Summary

Tesco is a leading grocery store in UK and slowly growing internationally. Strategic management for such a growing firm is an important stage for the organization and the decisions taken at this phase will have a huge impact on their expansion plans and overall operation capability in the immediate future. External and Internal analysis with various standard techniques will give boost to the strategic minds of the organization with various factors to make their basis of information. The analysis techniques like Porter’s five factors, PESTEL analysis, VRIN analysis and SWOT analysis provide multiple factors from multiple perspectives to the strategic formation team.

Introduction

This report has been composed with a view of generating clarification of strategic management report on Tesco. It started its existence in 1919 when Jack Cohen started selling surplus groceries from a stall in the East End of London. Mr Cohen did earn a profit of £1 from sales of £4 on his first day. The Tesco brand first appeared five years later in 1924 when he bought a shipment of tea from a Mr T.E Stockwell. The first store came into light in 1929 and the brand continued to rise in North London, Burnt Oak in 1930s with its headquarters and warehouse in North London and in 1932 Tesco became a private limited company. In 1947 Tesco Stores (Holdings) Ltd floated on the stock exchange with a share price of 25p. In this report following analysis will be done (Brian, 2011).

• External analysis which will have PESTEL analysis and Porter’s five forces of power, opportunities and threats about attractiveness.
• Internal analysis which will have resources, competences, skills, value chain which will attached to Core competences. We will also include VRIN analysis and its competitive advantages.

Tesco Overview

Tesco is now second largest profit maker after Walmart in world and third in terms of revenue. Other competitors are Carrefour and the local retail marketers typically in UK itself. It holds over 35% of the market share in the UK where it is definitely the market leader while they have operations in Asia, Europe and other continents in multiple countries. Over 6000 stores in the world and over half a million employees with 65 billion pounds in revenues speak for its sheer size and presence (Tesco, 2013).

Competitive Advantages

Competitive advantage is achievement of superior performance by creating a differentiating strategy in product appeal or brand identity. There is a lot that is going for Tesco, for example their internal communication network such as Listen and Fix Consumer Cost convenience is one of the most highly rated and valued part of their customer service. Innovation is another of the assets where they just keep delivering to satisfy particular customer needs. Large product range to suit the local customer range, 24 hour opening hours, higher prices in London are just some of the things that give Tesco the edge. We will take a deeper look when we go into the analysis of various other factors.

Analysis of the Industry

Industry analysis is meant for organization to identify their position to determine the competitive nature of the market and their position in the race. Let’s take a look at Porter suggestion that the attractiveness of the market can be measure through the long term investment of the firm (Winterman, 2013).

Porter’s Five Forces

Porter’s five forces refer to the investigation of threats of alternatives from other players, buyer power in relation to the retail and grocery purchases, supplier power of the local produce and most important customer power (Hamel, 2002). According to traditional economics principles, competitors presence brings down the profits as presence of other companies would drive the prices of groceries lower. Buyer power is another force what forces the prices to go down and the disciplined approach of supermarkets about the price settings avoid the war on profit. Supplier’s power is directly proportional to the profits and these relations form the backbone of their fresh supplies which in terms of frozen food items forms a great portion of their daily sales. Customer pattern of buying because of multiple factors is also taken into account their strategy and is more store centric for which central strategy seldom affects, but this accounts for an important force in the analysis of the grocery industry (Porter, 1985).