Tesco Business Strategic Report 第五部分

10.0 Basis of Competition

The following are the reasons as to why customers choose to buy consumer goods from Tesco as opposed to the competitors:

v Well-established and reputable brand

v Wide range of products in a store

v Quality

11.0 Critical success factors

The evaluation of both SWOT and external analysis indicates branding and reputation, IT integration, and supplier management as the critical success factors in the industry. The table below provides a strategic relative analysis of Tesco and its major competitors in the United Kingdom grocery industry . Worth noting, the score has been given to the scale of 0 to 5.

CSF	Tesco	Sainsbury’s	Asda	Safeway
Brand reputation	5	5	4	4
IT integration	5	5	3	4
Supplier management	5	4	3	5
Total	15	14	10	13

The results indicated in the table above show that the major threat is coming from Sainsbury’s, which possesses a sturdy brand name and IT integration. Therefore, Tesco has to work on strengthening its competitive advantage, so as to enhance its critical success factors.

12.0 Tesco’s Strategy evolution

12.1 Generic Strategies

These strategies are attributed to an individual retailer’s response to the market structure. For Tesco to gain a sustainable competitive advantage, it should follow the three generic strategies.

The first generic strategy is the cost leadership strategy, in which Tesco should endeavour to enjoy the lowest possible cost in the entire industry, and consequently offer its products to the market at lower prices. The success of this strategy is based on the company’s ability to control its operating costs effectively so that it can be able to price its products competitively so as to gain higher profit margins and stronger competitive advantage (Fernie 2005, p. 72).

The second generic strategy regards the differentiation strategy, which aims at offering products with exceptional features that add value to customers. The popular approaches of differentiation include technology, the range of product offerings, customer services and special features (Walters & Knee 1999, p. 82). The last strategy is focus strategy, which can either make use of differentiation or cost leadership strategy to pursue a specific market or specific products.

12.2 Global Market Expansion

Market expansion strategy regards market development, in which the company should seek for strategic alliances or joint developments, based on the nature of the market. Notably, strategic alliances and joint development are more advantageous than foreign direct investment in the sense that Tesco can draw extensive local operating expertise and knowledge from its local partners (Geuens, Brengman & SʼJegers 2003, p. 248). Thus, the company should execute market expansion strategy in the feasible emerging markets in Africa, Asia, South America, Middle East and North America.

12.3 Product Development and Diversification

The other strategy to be executed regards product development and diversification. In this regard, Tesco should consistently follow the changing demands of the customers so as to consequently introduce new product lines or improve the existing products for better customer satisfaction. This will require increased attention to R&D and technological innovation (Krafft & Mantrala 2010, p. 94).

13.0 Implementation

13.1 Timeline

Year	2015				2016
	Q1	Q2	Q3	Q4		Q1	Q2	Q3	Q4
Pursue cost leadership	√	√	√	√		√	√	√	√
Pursue product differentiation			√	√		√
Pursue focus strategy through segmentation and positioning	√	√	√
Pursue global market expansion						√	√	√	√
Pursue product diversification			√	√		√

13.2 Issues

The main issues pertaining to the implementation of this strategy include:

Lack of sufficient resources for effective implementation
Poor leadership during the implementation
Restrictions by some governments to execute market expansion
The emergence of the unfavorable economic environment, such as a return of the global recession.

13.3 Performance indicators

The leading performance indicators during and at the end of the implementation process include:

A remarkable increment of market share
A remarkable increment of sales volume and growth rate

Gaining global brand equity

14.0 Conclusion

This strategic analysis report has provided a great insight of Tesco, including a comprehensive internal and external environment analysis with a focus on developing a competitive business strategy. Tesco markets a wide range of food products and has also introduced several non-food product lines, including clothing and financial services. In a rapidly changing market environment that is intensely competitive, the company’s strategic analysis has established that Tesco has to adopt market expansion strategy so as to spread its risks, as well as the product development strategy in an attempt to enhance better customer satisfaction. Tesco also has to execute generic strategies, which include product differentiation, cost leadership, and focus marketing, in order to strengthen its competitive advantage. In addition , the company should consistently adapt to the dynamic market environment during the implementation process. Therefore, the recommended strategy given in this report is subject to adjustments within the implementation process so as to line it up to the changing aspects of the market environment.

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