Tesco Business Strategic Report 第四部分

Tesco Business Strategic Report 第四部分

6.0 Industry Attractiveness

6.1 The new entrants’ threats

The grocery market of the UK, which forms the pertinent market for Tesco, is mainly dominated by a small number of competitors, primarily Tesco, Safeway,   Sainsbury’s, and Asda, which possess a total market share of 70%, while small chains like Waitrose, Budgens, and Somerfield, share the remaining 30% (Zentes, Morschett & Schramm-Klein 2011, p. 181). Most grocery markets have been transformed into a supermarket dominated businesses in the recent years.

The large supermarket chains have increasingly built their power as a result of operating efficiency, marketing mix strategies, and a one-stop shop. This powerful force has a great impact to limiting small retailers to enter into the market. In consequence, new companies focusing on entering the grocery market face strong entry barriers as they lack sufficient resources to compete with the highly developed supply chains. Large companies like Tesco take advantage of its advanced technology, product differentiation and economies of scale that scare away small retailers.

 

6.2 Suppliers’ bargaining power

The power of suppliers in the industry can easily be influenced by large grocery chains. Stores like Asda and Tesco are able to easily negotiate better prices from the suppliers, which small retail chains are not able to match.

Additionally, the local suppliers are also vulnerable to the threat of the increasing ability of established retailers to source their supplies from foreign countries at cheaper prices. For that reason, suppliers tend to have a weaker bargaining power (Zentes, Morschett & Schramm-Klein, 2011, p. 179).

 

6.3 Customers’ bargaining power

Theoretically, the more products become undifferentiated or standardised, the lower the  cost of switching, which makes the bargaining power among its customers stronger (Morschett, Swoboda & Schramm-Klein 2006, p. 285). To neutralise the bargaining power among customers within a competitive market, Tesco offers its customers with loyalty cards in order to enhance customer retention.

Tesco has also been very committed towards meeting customer needs, ensuring lower prices, customising services, as well as offer  a constant flow of in-store promotion campaigns and better choices. As a result, Tesco is able to control and retain its customer base.

 

6.4 Threats of substitutes

The availability of substitute or alternative products can significantly decrease demand for a certain product since there is a customer switching threat. This threat can also be heightened by new trends, for instance, small chains of expediency stores are increasingly emerging in the market. Another threat that faces Tesco is that Sainsbury and Asda are trying to acquire the existing small scale retail stores and opening Express or Metro stores in town centres  (Myer 2010, p.2).

 

6.5 Competitor’s bargaining power

The grocery industry has experienced a very remarkable growth in terms of the market size and dominance of the bigger players. It is now characterised  by increased retail concentration, greater storage size, as well as the use of an array of formats. Essentially, the industry’s purchasing power is concentrated by a small figure of retail buyers.

Large retail chains like Tesco are obtaining large quantities of consumer information in order to enhance better customer relationship management, even as they operate in a mature market where growth is complex. The highly competitive retail environment has fostered an accelerated development level, resulting in a situation where grocery retailers have to be innovative to build and maintain market share (Woods 2007, p. 1076). Such innovation can be evidenced in Tesco’s developments in trading formats as a response to the changes in consumer behaviour. The dominant competitors in the market are competing through price and value.

 

7.0 Competitive Advantage and Resource Capabilities

Tesco has always remained focused on giving attention on competencies that can strengthen its competitive advantage. The central area of Tesco’s core competence is creating value to its products and services through innovation, as well as promoting its brand equity.

In this regard, Tesco has been able to pursue its competencies through providing prospective access to a broad variety of markets, make a substantial contribution to enhancing better customer satisfaction, as well as fasten product differentiation. In doing so, the company is able to introduce new first-rate quality products, serve the market in a unique way, provide good corporate reputation, as well as strengthen its competitive advantage (Ryle 2013, p. 89).

 

8.0 VRIN Framework

Resource	Valuable	Rare	Hard to Imitate	Non-substitutable	Implications
Capitals	√				Competitive parity
Stock market attractiveness	√				Short-term competitive advantage
Global operations	√				Short-term competitive advantage
Stores worldwide	√	√	√	√	Sustained competitive advantage
Valuable and wider portfolio	√	√			Short-term competitive advantage
Brand value	√	√	√	√	Sustained competitive advantage
Value chain	√	√	√	√	Sustained competitive advantage
Skilled employees	√	√	√	√	Sustained competitive advantage

 

Although Tesco has several sustained competitive advantages, it still need to improve on various competitive parity and some temporary competitive advantage it is experiencing to enable it compete strongly in the industry.

 

9.0 Value Chain Analysis – Internal resource capabilities

The value chain comprises of the inbound logistics, operations, outbound logistics, marketing and sales, as well as support activities such as the company infrastructure, human resource management, and technology development. In regard to inbound logistics, Tesco tries to uphold the level of customer variety in stores, while improving the effectiveness of its distribution coordination.

Through applying quality control procedures, it offers an excellent opportunity of promoting high quality for better customer satisfaction. Worth noting, the operations element of Tesco’s activities is service oriented. Tesco ensures it opens its stores every day, according to its trading hours, keeps up the shelves and stock appropriately. To enhance its competitive advantage, Tesco should consider  expanding further through increasing its operating hours where law does not restrict.

In regard to outbound logistics, Tescos add value to customers through its home delivery services, swift service delivery, as well as improving parking facilities, customer attendant staff, and trolley collectors to gain competitive advantage. Regarding marketing and sales, Tesco is very committed to carrying out sales promotions and adverting its products so as to attract increased sales.

Concerning the support activities, the company has a very steady and developed infrastructure, and it has increasingly advanced its technology to enhance efficiency. The company also invests a lot in human resource management and development so as to promote quality service delivery and talent retention    (Clarke, Bennison & Guy 1994, p. 17).

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