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Sample Essay on Tesco's Business Strategies

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Sample Essay on Tesco's Business Strategies

Introduction

There has been a significant increase in the number of people across the globe in the past few decades. This has led to an increase in the demand of products and services provided by entrepreneurial organizations. Notably, the increase in demand has forced entrepreneurs to come up with more organizations that have counteracted the increased populations and demand. The United Kingdom, which is ranked among the countries with the best and strongest economies across the world, has not been left behind in this. Around the 1910s, there was a drastic increase in the number of entrepreneurial organizations in the UK. One of the companies that sprang up during the time is the Tesco Company. Though it started as a small retail shop for groceries, Tesco later expanded into a large supermarket and was thereafter ranked among the best companies in UK’s stock exchange market. With this in mind, this paper will carefully examine the Tesco Company in the UK. The company’s strategic purpose, industrial analysis, resources and capabilities and its business and corporate strategies will be analyzed in details.

Strategic Purpose of Tesco

To start with, any organization with the aim of achieving profitability should have a strategic purpose. In fact, most of the successful and profitable global organizations have come up with strategic purposes that have dictated how they are managed and how customers and consumers are attended to. Besides, the loyalty of customers is achieved by the strategic purposes of various organizations. Most entrepreneurial organizations encompass their strategic purposes in their missions and visions, though this is not mandatory. It is worth noting that Tesco Company began as a small retail shop for grocery products, with its founder being Jack Cohen in 1919. At the time, Tesco was a small group of stalls that was meant to serve the local communities in the United Kingdom. The major suppliers to Tesco at the time were mainly small scale farmers based in the UK. Later on, the market stores owned by Tesco expanded rapidly, and by 1939, the company owned over 100 stores in the UK. During its inception, Jack Cohen the founder of the company had in mind that the major strategic purpose of the company was to be a retail shop focusing on grocery. However, years later, the company’s strategic purpose changed as a result of geographical diversification. The element of geographical diversification came about when Tesco opened a good number of stores across the UK and in other neighboring countries. The strategic purpose of the company changed to retail of books, clothes, electronics, petrol, furniture, toys and software. Additionally, Tesco Company embraced the provision of new services such as financial services, telecoms and internet services among others. It should be noted that, the change in its strategic purpose was as a result of two factors: geographic diversification and increase in the number of employees which stood at 597,784 by the year 2013.

Industry Analysis

Considered as one of the most successful retail shops in the UK; Tesco Company has gone through several challenges to attain its present status. Thus, the company’s industrial analysis is worthwhile. To start with, regarding the market overview in the UK, it should be noted that Tesco Company has previously faced  and presently faces stiff competition from close rivals such as Wal-Mart Stores, Inc, J Sainsbury PLC and Carrefour among others. However, Tesco has effectively come up with strategies that have helped it overcome the stiff competition as will be seen later on. Moreover, Tesco Company has several customers within and outside the UK. In fact, research shows that the number of customers and consumers of the company is estimated to be over 6 million. This has enhanced the company’s profitability as most of the customers are loyal and new customers are still targeted by the company. The other important element concerning Tesco’s market overview is the prices of its products. As compared to other rival companies, Tesco has constantly appreciated their customers and consumers by selling their products and services at lower and affordable prices. With most of its products being groceries, the company has sold affordable fruits and vegetables among others. This has been its strongest point and has given it an  upper hand over its closest rivals such as Wal-Mart Stores and Carrefour. Conversely, when attracting customers and consumers, Tesco has often given discounts on some of its products and services as seen during festive seasons as experienced during the Christmas holidays. The images below show the pricing of the company’s products and services.

         

 

It is also worth noting that, since its inception, Tesco Company has recorded huge sales and this has in turn boosted its operating income, which stood at 3.054 billion Euros in the financial year 2013/2014.  The company’s net income, number of employees, and number of customers among others are increasing annually and this clearly illustrates the company’s success. With focus shifting from the professional world to the entrepreneurial world, entrepreneurs concentrate on market place need and whether their products and services will be continuously needed by customers and consumers. When Jack Cohen founded the Tesco Company, this was hi major concern as he began by selling groceries which were greatly needed by the customers and consumers. Though other products and services were added later on, their need and demand among customers was still high.

Research shows that a good number of products sold by the Tesco Company targets the women who attend to household duties. For instance, the sale of groceries such as vegetables and fruits mostly targets the women who attend to their household duties and responsibilities such as cooking and feeding their families. The company also sells fashionable clothes that target the youths in the UK and in the countries that neighbor the UK. It is worth noting that the company also deals with financial and telecom services and this has targeted customers in financial institutions such as banks. Additionally, the introduction of internet services in the company has expanded the customer base and this has greatly the educational institutions and the communication sectors across the globe.

Industrial analysis also focuses on the competition that an organization faces from its closest rivals. With this in mind, it should be noted that Tesco faces stiff competition from a good number of companies and supermarkets in the US. Some of these as mentioned earlier include Wal-Mart Stores, Inc, J Sainsbury PLC and Carrefour. These are the closest rivals to Tesco given that they sell almost similar products and services to their consumers. Nevertheless, Tesco’s efforts to come up with strategies selling of quality products and services, affordable and cheap prices and the establishment of good rapport with customers and consumers has given it an upper hand over its fiercest rivals such as Wal-Mart stores.

Resources and Capabilities

Resources and capabilities are the platforms of success of organizations. However, questions and debates have come up concerning what the two concepts mean. To start with, resources are defined as the productive assets that any firm or organization possesses or owns. In organizations, resources are always categorized into two: tangible and intangible resources. Tangible resources are often easily identified, observed and can be evaluated in organizations. Intangible resources are described as invisible resources, assets or skills such as technology or reputation of an organization among customers. Conversely, capabilities are defined as what firms and organizations can do to achieve profitability and to overcome fierce competition from close rivals. With these in mind, Tesco Company, just like other companies across the world has resources and capabilities that have made it achieve the long-term success it enjoys. For instance, the tangible resources in Tesco Company include over 3700 stores within the UK and the in the countries neighboring the UK, over 598, 000 employees in all its stores, 60 billion Euro turnover and the 3 billion Euro operating income among others. Notably, Tesco Company also has a good number of intangible resources which include its technological innovations, consumer information, its brand name in the UK, its reputation among customers and its corporate culture. Other major intangible resources include wide knowledge among consumers and the company’s good brand awareness. Just like the tangible resources, the intangible resources of the Tesco Company have given it an added advantage as compared to its close rivals such as Carrefour.

Apart from resources, organization’s capabilities also play integral roles in achieving long-terms success and profitability of organizations. However, it would be important to understand the term organizational capability as used in the entrepreneurial world. Capability is what a company does or needs to do in order to survive in any given industry. Often, capabilities are the major determining factors of organizations’ successes. Notably, Tesco Company has several capabilities. To start with, Tesco has cost efficiency. The company’s management has struggled in one way or another to ensure that the misappropriation of funds is completely done away with. Besides, the company has ensured that all its raw materials are purchased at affordable prices and that profitability is achieved in the long run when the end products and services are sold. Secondly, the other capability of Tesco is that it has a strong bargaining power and this has enabled it to purchase raw materials at lower prices from suppliers. This has also helped the company to enhance cost reduction which has facilitated profitability in the long run. Thirdly, the Tesco Company has divided its labor among its several employees. The impact of this is that consumers and customers have been attended to effectively and efficiently. Fourthly, the other capability of the company is that it has spreads its overheads across UK and in the neighboring countries and this has enabled it capture a wide customer base. The fifth capability of Tesco Company is that it has a better use of equipment and this can be attributed to the training given to the employees and the knowledge and skills among the managers in the various stores of the company. The other capability of the company is that it has technology-driven learning within all its stores. This has enabled it to produce high quality products and services that have attracted the loyalty of the customers.

Business and Corporate Strategies of Tesco Company

It is worth noting that almost all entrepreneurial organizations have business and corporate strategies that have made them achieve their goals of profitability and long-term success. To begin with, a strategy is a plan which sets out how an organization deploys its resources with the aim of achieving its set goals and objectives. In this respect, Tesco’s business and corporate strategies have helped it enjoy its long-term success. Moreover, the strategies have helped it achieve its vision which is:

‘To be the most highly valued business by: the customers we have, the communities in which we operate; our loyal and committed colleagues and of course, our stakeholders.’

Tesco Company has come up with a number of business and corporate strategies which include; to grow the UK core, to be a creator of highly valued brands, to be an outstanding international retailer in stores and online, to grow retail services in all markets, to put responsibilities to the communities served by Tesco at the hearts of its employees, to build a team so that more value is created and to be as strong in everything sold as food is the main focus of the company. These are some of the strategies of that the Tesco company has put in place and that have enabled it have an upper hand over close rivals and also to attract more customers within the UK and in countries outside the UK.

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