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Strategic Analysis of Tesco

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Induction

Nowadays is a time of strategic success. If companies want to achieve long-term survival and development in a rapidly changing and competitive social and economic environment, they must look at every step taken by the company from a strategic perspective. The key factors for development are to formulate clear development strategies to promote the further development of enterprises and enhance their competitiveness in the industry. Tesco is a leader in the UK retail industry and one of the top three retailers in the world. It was founded in 1924 by Jack Cohen’s first store in northern London, England. In addition to the UK, Tesco also operates in 13 other countries. Below I will analyze its competitive strategy and expansion strategy.

Main body

Firstly, analysis of Tesco’s competition strategy.

Competitor Analysis: Both Wal-Mart and Carrefour have adopted a cost leadership strategy. It has the advantages of economies of scale, know-how, preferential commodity supply prices, lower transaction costs and management fees.

Competitive strategy choices: Tesco’s corporate philosophy is people-oriented “Our success is inseparable from customer support and employee efforts.” Tesco’s core philosophy is to create value for customers and earn their lifetime trust.

Tesco uses a differentiated war, such as store mode (Tesco has developed a range of store models to meet the diverse needs of different customers – Tesco Express, Tesco Metropolitan Stores in Main Commercial Street and Downtown, Tesco Supermarkets and Tesco Supermarkets.), localization (Expanding in partnership with local retailers like building relationships, reducing costs, or procurement centers in many countries provide affordable, affordable products to customers around the world at a lower cost or Tesco has established its own warehouse , fresh distribution center and Hire locals), and Use information management systems to segment the market and provide better services. First, Good at database marketing (dividing customer group categories, product placement), second, Innovative retail services (Tesco.com, “Tesco Bank”, “Tesco Communications”, online delivery service) third, Club Card is Loyalty Program Consumer vouchers (1% of the amount of consumption, every time, Tesco will replace the accumulated bonuses of customers into “consumer vouchers” and mail them to the consumer’s home. Customer database (acquiring customer purchase habit data) The Niche Club (dividing customers into different “niche clubs”, producing different versions of “club card magazines”, posting the most attractive promotional information and other topics of their concern. Some local Tesco chains even Various events were organized locally for members of different clubs.). Apart from,it need Effective cost control asTesco needs to maintain a club with 10 million members, and it is a cash reward as the main reward method, and also provides tailor-made promotions for different “niche club” members. Daily management and marketing communication is very complicated.

For example, Direct mail instead of TV commercials. First of all, Tesco almost never uses mass media such as TV to promote “club cards”. Through investigations, it is found that sending letters directly to customers has a higher rate of information arrival and is more likely to attract the attention of consumers. Moreover, many consumers believe that they regularly receive communication letters from some large companies, so that their social status has been raised. In addition, Cooperate with suppliers to promote. Tesco often works with suppliers to promote the cost of maintaining loyalty programs to suppliers. Compared with Wal-Mart’s forced supplier price reduction promotion, suppliers are basically voluntarily joining hands with Tesco to achieve a win-win situation. Reason: The “Niche Club” database, the content is real and detailed, the promotion is very targeted, the supplier is very willing to participate in such promotions, improve brand awareness and strengthen the relationship with consumers.

Furthermore, the analysis of Tesco expansion strategy. In general, Tesco expansion strategy portfolio include three terms. To begin with, the Geography strategy is weak competition market first layout strategy. In the early 1990s, Tesco had taken the lead in the UK retail industry. So they chose to expand overseas. Emerging markets such as Eastern Europe and Asia, where there is a lack of capable competitors, imply a strong growth trend. Next, Expansion Path is Acquisition and Merger Strategy. The first step was to enter Hungary in 1994, initially buying a 51% stake in the state-owned food chain Global with 43 stores. By 2004, Tesco had become the market leader in Hungary. Tesco’s expansion into Asia began in 1998 when it entered Thailand and acquired Lotus. In 1999, the company entered Korea and cooperated with Samsung to develop supermarket chains. And then Entering mainland China in 2004, Tesco chose Hymall, a supermarket chain controlled by Taiwan’s Top Group, which has 25 stores in mainland China, to operate a 50/50 joint venture. In 2006, it increased its holdings by 40%. Mastered the management rights. Last but not least, the Expansion speed is Steady expansion, and strive to open a Tesco, a successful Tesco. In the international expansion, TESCO generally expands at a relatively stable expansion rate, mainly adopting a joint venture with the host country retail business, and then seeking a controlling stake in the joint venture to achieve full access to the investment host country. While merging local retailers, they also adhere to the principles of localized management. In addition to reforming its original management system, its personnel, supply chain, suppliers and other basic reservations. China has 20,000 employees and only 25 foreign executives.

In conclusion

In conclusion,through the analysis of Tesco’s competitive strategy and expansion strategy, it can be concluded that Tesco’s competitive advantage is more inclined to pay attention to customer satisfaction, and adapt to local business model development as soon as possible, which can have a positive impact on enterprise cost control. At the same time, his expansion is also very planned. From the market, country and speed of his choice, he can find that he tends to choose emerging markets and make a steady expansion by means of shareholding. In other words, Tesco’s future development can continue to maintain low-cost advantages, differentiated advantages, marketing and management strategies, while strengthening the creation of the greenest retailers and strengthening corporate responsibility in the future.

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Strategic Analysis of Tesco. (2019, May 14). GradesFixer. Retrieved October 28, 2021, from https://gradesfixer.com/free-essay-examples/strategic-analysis-of-tesco/
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Strategic Analysis of Tesco. [online]. Available at: <https://gradesfixer.com/free-essay-examples/strategic-analysis-of-tesco/> [Accessed 28 Oct. 2021].
Strategic Analysis of Tesco [Internet]. GradesFixer. 2019 May 14 [cited 2021 Oct 28]. Available from: https://gradesfixer.com/free-essay-examples/strategic-analysis-of-tesco/
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