Innovation and Business Survival

This assignment delves into the crucial role of innovation in ensuring a company's continued success within the market. It examines how businesses utilize past innovations to generate new ideas, and how the adoption of new technologies can drive improvements in production, profitability, market growth, and customer loyalty. The importance of innovation for future business strategies is highlighted, particularly in developing and launching successful products. Additionally, it discusses key activities that businesses employ to identify novel products and services.

Managing Innovation in
Business

EXECUTIVE SUMMERY
This project report summarises innovation as the important key factor in the organisation
to run successful business operations in the competitive business environment. In this report, the
chosen company is Tesco Plc, which is UK based retail company which deals in grocery items
and it is the largest retail store of UK. This project is divided into three stages, first one is about
innovation history of retail sector. Second one contain the chosen company's innovation history
and last one is about future innovative capabilities.

Table of Contents
EXECUTIVE SUMMERY .............................................................................................................2
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
1. Organisation and innovation history of retail sector..........................................................1
2. Existing innovation performance & capabilities of Tesco.................................................2
3. Retail Industry 2018...........................................................................................................4
CONCLUSION................................................................................................................................6
REFERENCE...................................................................................................................................7

INTRODUCTION
Purpose of this report is to develop the understanding of innovation in context of Tesco
Plc which have 28.1% market share and it's competitor Sainsbury have 16.5% market share and
ranks as the third largest retailer all over the world. In the end, this report will be change the
reader to identify future perspective of Tesco Plc in the market. Innovation in the business refer
to the change in manufacturing process and create more effective product & ideas (Altuna and
et.al, 2015). It will help the business to innovate something new or improve their existing
product & services. To be understand better, this report chose the Tesco which is UK based retail
sector industry. It deals in Grocery & general merchandise items in the whole world and Tesco is
the third largest retailer company according to gross revenue in all over the world. Structure of
this report divided into three parts, first one include the innovation history of chosen
organisation. Second one contain current innovation performance & capabilities and last part is
all about the whole industry's innovation.
MAIN BODY
1. Organisation and innovation history of retail sector
In the UK's retail sector industry, organisation generate £395 billion in the 2017 through
sales and in the 2018, housed 319000 retail businesses in the UK market. In retail sector sales
generally considered for the consumption of goods not for the further sale. It include the
departmental stores, shops, market stalls, door to door selling, supermarkets & internet retailers.
Tesco, Sainsbury, Walmart (Asda) and Morrisons are major operations supermarket of the UK's
market who compete with each other. These organisations have market share such as 28%, 16%,
15% & 11% respectively and these are mainly focus on specific segment of market. This
industry is majorly affected by consumer behavioural which change according to time &
patterns, online shopping through internet also change economic conditions. Thus, it will effect
customer engagement and retention strategies which adopted by retailers on a regular basis.
These changes and strategies will help the organisation to expand or increase their productivity
as well as profitability (Carayannis, Sindakis and Walter, 2015).
Tesco is British multinational retailer company situated in UK and it is the ninth largest
retailer company is the world on the basis of revenue. It was founded in 1919 by Jack Cohen and
it's first shop opened in the year of 1931 in Burnt Oak, Barnet. Basically Tesco organisation
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globally expended in the year 1990 with operation in 11 countries. Tesco operate almost 7000
stores in the globe and currently in the UK's nation company have approx. 3739 stores. Company
also diversify in the various area such as retailing of books, furniture, toys, petrol financial
services, internet services, telecom etc. Tesco listed on London stock exchange and it has approx
£18.1 billion market capitalization on 2015.
Before 1960 company deals only is household items but after that Tesco start selling
cloths under Delamare brand. In 2001, they start internet sale of grocery item for the consumers
to increase their sales & profitability and it will happen after obtaining 37% market share in the
USA. Online shopping option increase the sale of Tesco and make them popular among the
consumers because they don't need to visit store. In 2007, Tesco launch their new brand in the
USA market which is Fresh-Easy Neighbourhood market and it was the bold step taken by the
organisation. Introduction of new brand will become successful or within 10 years company
achieve more then 50% operating space outside it's home country (Van Lancker, Wauters and
Van Huylenbroeck, 2016). After that company launched Tesco Bank in the 2009 for the
expansion of their brand name as well as profitability. In 2013, Tesco purchase cafe chain giraffe
restaurant of £48.6 million and initially it will open within some stores. After that they separately
set Tesco Family Dining Ltd in 2014 as a new department of store and it's called “new food
experience”. On 27th January 2017, Tesco decided to merge with British biggest wholesaler that
is Booker Group for the purpose of creating UK's largest food group.
2. Existing innovation performance & capabilities of Tesco
In the past few year Tesco digitally transformed their customer services, operational
model or business model with the help of huge investment on their website. Company provide
digital experience to their customers and data driven customer loyalty program. Tesco's current
innovation strategy is to use new technology in their production or use at the time of providing
customer devices. Innovation of new technology will increase the consumer's experience and it
will also help to provide better competition for their competitors. There are three existing
innovation adopted by Tesco regarding technology such as:
 Introduce online grocery platform with “click and collect”: In the 2000, online
shopping of grocery is on trend in the UK market. So Tesco grab this opportunity very
quickly and introduce online services to their consumers & home delivery options too. It
will increase the number of customers or online sales by 23% in 2006. This services
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provide the convenience for the consumers and improve profitability of business model
through lower delivery cost.
 Digitalization in store experience: For the improvement of operational model's
efficiency of Tesco organisation. Company invest or transform their stores in the digital
form and use the various machines which save the time as well as money. Such as “Scan
as you shop”, “Self check out station” and electronic shelf edge label. Where consumers
may use this check out function without the help of Tesco's employees. Due to lack of
supervision of employees Tesco bear the approximately £8 million per year (Al‐Khatib
and et.al, 2016).
 Tesco Club-card: It is customer loyalty scheme where each & every consumer have
unique customer ID at every purchase. This activity help the Tesco to merge customer
data at single point when they buy something and create customer lifetime value (CLV)
& loyalty through repeating purchase.
By use of above innovative technology performance of Tesco is increased due to offer
online services like “click and collect” where customer can place online order and then collect
their grocery beg with collaborated point. For the development of this function company have to
spend huge investment to develop online platform. For home delivery option they required
enough labour force & supply chain management. Digitalisation in the store also enhance the
performance of Tesco company through specialized camera or self check out station. It will help
the employee to identify those items or consumer who going to exit without checking of their
item. So basically digitalization reduce the fraud as well as loss which happen because of item
missing from the stores. In addition, club-card help the business to collect consumers data and
unique ID also beneficial for the organisation to know about their customers (Gyrd-Jones and
Kornum, 2013). For example: with the Tesco App company can easy measure their total online
customers and help them to locate their location for the delivery. Use of these technology will
increase the performance in term of productivity as well profitability. So basically use of
Artificial intelligence will improve the production level through performance and develop their
capabilities.
Future innovation performance by Tesco:
 Artificial intelligence: Tesco provide the tough competition in the retail sector to their
competitors such as Asda, Morrisons and Sainsbury's. They planed to launch robot to
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assist consumers in the stores and also for billing counter which reduce the human force
among the stores. It will increase the accuracy or efficiency of Tesco which further helps
in to increase their performance & capabilities and increase the production as well as
profitability (Koen, Bertels and Kleinschmidt, 2014).
 Virtual lockers: It is beneficial for the customers to store their items in the locker and
collect them whenever they want. This facility will be launched by 2020 and it helps the
Tesco to attract more customer with the help of advanced technology. This innovation
will generate more competition in the retail sector by use of digital platform.
Capability of Tesco:
To develop future capabilities Tesco required to change their current operations or
system. Organisation is planning to launch a robot for the assistance of consumers which will
help customers in their shopping and billing. This change is transactional as Tesco is bringing
changes in their process or way of delivering services. There are four factors that helps the retail
giant in developing future innovative capabilities, which are discussed below as:
 Market Knowledge: Knowledge of market is important for the Tesco to identify market
trend, consumers behaviour or pattern to buy. By use of Club card scheme Tesco may
achieve their objectives by developing strategies for the future innovative capabilities.
Innovative capabilities will help the organisation to grab their potential consumers for the
longer time which increase the productivity, profitability and future demand (Wu, Lii and
Wang, 2015).
 Building Customer profitability: Tesco has been involved with internet services to
enhance customer experience and converted this into profitability. Such as online services
with home delivery options because where customer don't required to visit store it will
save the time and company not charge extra for the delivery of items. It will increase the
capability of organisation by use of various innovation.
3. Retail Industry 2018
Retail sector of UK's market is rapidly growing through use of new technology and
capabilities. It will help the organisations to make them able to survive in the market for the long
term. Sainsbury's, Asda or Morrisons are the biggest competitor of Tesco Plc and these
organisation plan innovative process to achieve high growth and development in the retail sector
(Velu and Stiles, 2013). Below mention picture represent the sale of UK retail sector companies.
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Online sale of Food items was increased by 2.6% and overall sales through online mode in
incensed by 7.6%.
Above represented data will provide the Retail sector's growth in the UK market and it
clearly show that online mode of purchasing will be increase in the by 7.6%.
For the development of new product or services Tesco required to follow such activities which
help the organisation for the successful development. Activities are discussed below:
Idea Generation: Tesco generate the idea to manufacture furniture items for their
consumers because currently it has huge demand.
Market Research: After generating idea company required to identity demand & what
kind of furniture item demanded by the consumers (Möller and Halinen, 2017).
Testing: Organisation need to structure their idea with a detailed thought and analyse the
every aspect of product.
Business Analysis: Tesco identify the cost or profit of the product or it will able to meet
with business objectives or not (Sund and et.al, 2016) .
Product Development: After following above activities business develop the physical
product for the trial.
Market Testing: With the help of marketing strategies such as marketing mix, company
test their product through trial run. It will provide give the overview of consumer's reaction
regarding their product.
Commercializing: If marketing testing is successful for this product then Tesco launch
their product among the general public for it's purchase (Wymbs, 2016).
These activities will help the organisation to successfully develop the new product in the
market. It will represented through Gantt chart and it is shown in the below:
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CONCLUSION
From the above discussion, it has been concluded that innovation is essential for the
organisation to survive in the market. Company develop new ideas with the help of their past
innovation. Use of new technology increase the production, profitability, market growth or
customer loyalty. Use of innovation will increase the performance as well as capabilities of the
organisation. Same as it required for the future strategies for the organisation to successfully
develop their product in the market. Along with this, business follow the some of the key
activities which helps in identification of new product & services.
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REFERENCE
Books & Journal
Altuna, N. and et.al, 2015. Managing social innovation in for-profit organizations: the case of
Intesa Sanpaolo. European Journal of Innovation Management. 18(2). pp.258-280.
Carayannis, E. G., Sindakis, S. and Walter, C., 2015. Business model innovation as lever of
organizational sustainability. The Journal of Technology Transfer. 40(1). pp.85-104.
Van Lancker, J., Wauters, E. and Van Huylenbroeck, G., 2016. Managing innovation in the
bioeconomy: An open innovation perspective. Biomass and Bioenergy. 90. pp.60-69.
Gyrd-Jones, R. I. and Kornum, N., 2013. Managing the co-created brand: Value and cultural
complementarity in online and offline multi‐stakeholder ecosystems. Journal of
Business Research. 66(9). pp.1484-1493.
Koen, P. A., Bertels, H. M. and Kleinschmidt, E., 2014. Managing the front end of innovation—
Part I: Results from a three-year study. Research-Technology Management. 57(2).
pp.34-43.
Velu, C. and Stiles, P., 2013. Managing decision-making and cannibalization for parallel
business models. Long Range Planning. 46(6). pp.443-458.
Möller, K. and Halinen, A., 2017. Managing business and innovation networks—From strategic
nets to business fields and ecosystems. Industrial Marketing Management. 67. pp.5-22.
Wymbs, C., 2016. Managing the innovation process: Infusing data analytics into the
undergraduate business curriculum (lessons learned and next steps). Journal of
Information Systems Education. 27(1). p.61.
Sund, K. J. and et.al, 2016. Managing tensions between new and existing business models. MIT
Slan Management Review. 57(4). p.8.
Wu, L. W., Lii, Y. S. and Wang, C. Y., 2015. Managing innovation through co-production in
interfirm partnering. Journal of Business Research. 68(11). pp.2248-2253.
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