Tesco Business Strategic Report 第一部分

Executive Summary

This report provides an insight of Tesco, which is a supermarket company, with a keen emphasis on its internal and external environment analysis so as to develop a competitive business strategy. Tesco markets a wide range of food products, more than 40,000 food products to be specific, and has also introduced various non-food product lines, including clothing (Boyle 2007, p. 29). In a rapidly changing market environment that is intensely competitive, 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. Into the bargain, the company should consistently adapt to faster-changing circumstances.  For that reason, the strategy underlined in this report should be subject to adjustment within the implementation process so as to align it to the changing facets of the market environment.

 

Content

1.0  Strategic Analysis……………………………………………..……………………………5

1.1 Company Profile and Market Share……………………….………….………………..5

1.2 Organizational Purpose……………………………………….……….……………….5

1.2.1 Mission statement…………………………………………….………………….5

1.2.2 Vision statement………………………………………………….…….……..…6

1.3 Financial analysis……………………………………………….…………….……….6

1.4 Financial ratios…………………………………………………………….…………..7

2.0 Ansoff Matrix…………………………………………………………………….………..8

2.1 Market penetration……………………………………………………………………8

2.2 New products and services……………………………………………………………8

2.3 Market development………………………………………………………….……….9

2.4 Diversification…………………………………………………………………………9

3.0 BCG Matrix……………………………………………………………….……………….9

3.1 Star…………………………………………………………………………….……..10

3.2 Question mark………………………………………………………………….…….10

3.3 Cash cow…………………………………………………………………….……….10

3.4 Dogs…………………………………………………………………………..………11

4.0 Global Environmental Analysis………………………………….………………..….……11

4.1 PESTEL Analysis…………………………………………………………..………..11

4.1.1 Political factors……………………………………………………..………….11

4.1.2 Economic factors…………………………………………………….….……..12

4.1.3 Socio-cultural factors………………………………………………….….……12

4.1.4 Technological aspects………………………………………………….………13

4.1.5 Environmental factors…………………………………………………….……13

4.1.6 Legislative factors…………………………………………………….………..14

5.0 Internal Environment……………………………………………………………………..14

5.1 SWOT Analysis………………………………………………………………………14

5.1.1 Opportunities………………………………………………………..….………14

5.1.2 Threats……………………………………………………………….………….15

5.1.3 Strengths……………………………………………………………….…….…15

5.1.4 Weaknesses………………………………………………………….………….16

6.0 Industry Attractiveness………………………………………………………….………..16

6.1 The new entrants’ threats………………………………………………….………….16

6.2 Suppliers’ bargaining power………………………………………………………….17

6.3 Customers’ bargaining power…………………………………………….…………..17

6.4 Threats of substitutes…………………………………………………………………18

6.5 Competitor’s bargaining power………………………………………………………18

7.0 Competitive Advantage and Resource Capabilities……………………….….…………..19

8.0 VRIN Framework…………………………………………………………..……………..19

9.0 Value Chain Analysis – Internal resource capabilities…………………….….…………..20

10.0 Basis of Competition……………………………………………………….……………20

11.0 Critical success factors……………………………………………………..……………21

12.0 Tesco’s Strategy evolution………………………………………………….….………..22

12.1 Generic Strategies……………………………………………… .……………….22

12.2 Global Market Expansion………………………………………….…………….22

12.3 Product Development and Diversification…………………………..……………23

13.0Implementation……………………………………………………………..…………23

13.1 Timeline……………………………………………………………………..………23

13.2 Issues………………………………………………………………………….…….23

13.3 Performance indicators……………………………………………………………..24

14.0 Conclusion……………………………………………………..…………….………….24

15.0 References…………………………………………………………………….…………25

16.0 Appendix………………………………………………………………………………..28

 

 

 

1.0 Strategic Analysis

1.1 Company Profile and Market Share

Tesco company is a retailer company that operates within the grocery retailer industry. The company operates stores that offer groceries, food, clothing, among other general merchandise. Tesco also offers retail banking, insurance and financial services. Furthermore, the company is engaged in distribution, data analysis, online entertainment, telecommunication, and property operations. It is a global company with its operations in the UK, India, China, South Korea, Malaysia, Thailand, South Korea, Ireland, Turkey, Hungary, Czech Republic, Slovakia, and Poland. The company serves its customers via its more than 7000 stores, as well as via the internet. Tesco was established in 1919 and has its headquarters in the UK (Boyle 2007, p. 28).

 

1.2 Organizational Purpose

1.2.1 Mission statement:

v  To make what matters better, together.

v  Understand customers

v  Be first to meet their needs

v  Act responsibly for community welfare (Boyle 2007, p. 28)

1.2.2 Vision statement:

v  To become the most highly valued company by the customers, communities, loyal and committed colleagues and the shareholders.

v  The company desire to remain wanted and needed around the world

v  To be a growing business full of opportunities

v  To remain modern, innovative and full of ideas (Boyle 2007, p. 28)

From my point of view, Tesco is increasingly committed to actualizing its mission and vision. This is in the sense that it has been able to consistently meet the customers’ demand, thereby becoming highly valued by its customers and the community at large.

 

1.3 Financial analysis

Period Ending Feb 2014 Feb 2013 Feb 2012 Feb 2011
Total Revenue 63,557,000   63,406,000   63,916,000   60,455,000  
Cost of Revenue 58,813,000 58,596,000 58,519,000 55,330,000
Gross Profit 4,744,000   4,810,000   5,397,000   5,125,000  
Total Operating Expenses 60,576,000 60,151,000 60,113,000 56,988,000
Operating Income or Loss 2,981,000   3,255,000   3,803,000   3,467,000  
Income from Continuing Operations
Earnings Before Interest And Taxes 2,981,000 3,255,000 3,803,000 3,467,000
Interest Expense (447,000) (429,000) (411,000) (465,000)
Income Tax Expense 347,000 529,000 874,000 864,000
Minority Interest 4,000 4,000 (8,000) (16,000)
Net Income From Continuing Ops 1,912,000 1,528,000 3,164,000 2,777,000
Non-recurring Events
Discontinued Operations (942,000) (1,504,000) (350,000) (106,000)
Net Income 974,000   28,000   2,806,000   2,655,000  
Currency in GPBP.

 

1.4 Financial ratios

 

 

 

 

  2011 2012 2013
Earnings per share (EPS) 0.33 0.35 0.32
Gross profit margin 8.47% 8.44% 6.31%
Net profit margin 4.39% 4.39% 4.44%
Current ratio 0.65 0.64 0.66
Quick ratio 0.48 0.45 0.46
Return on assets 8.6% 8.5% 8.7%
Return on equity 0.20 0.19 0.21

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