An Analysis of Tesco's Value Chain, SWOT, and Strategic Response

This essay provides a comprehensive analysis of Tesco, a leading British multinational retailer, focusing on its value chain model and SWOT analysis. The introduction highlights Tesco's global presence and market position. The value chain model section details the primary and support activities, including inbound logistics, operations, outbound logistics, marketing, sales, and service, emphasizing how Tesco identifies and optimizes these activities to create customer value and achieve a competitive advantage. The essay also examines Tesco's response to market dynamics, emphasizing its focus on core principles and inter-departmental relationships. The SWOT analysis assesses Tesco's strengths, such as its market leadership and revenue growth, alongside weaknesses like past operational challenges and pricing strategies. Opportunities, including new ventures and market expansion, are discussed, as well as threats like brand controversies, competitor actions, and economic factors. The reflection section discusses the application of the value chain model and the importance of support activities like HR, technology, and procurement in creating value and supporting Tesco's primary activities. The conclusion summarizes Tesco's market position and competitive challenges.

REFLECTIVE
ACCOUNT ESSAY

Table of Contents
INTRODUCTION...........................................................................................................................3
Value chain model of Tesco-..................................................................................................3
Response of the company.......................................................................................................4
SWOT Analysis of Tesco ......................................................................................................5
Reflection on Value Chain Model..........................................................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
The value chain also known as Porter’s Value Chain Analysis is a business management concept
that was developed by Michael Porter. Value chain is a collection of activities that are performed
by a company to create value for its customers. Value Creation creates added value which leads
to competitive advantage. Ultimately, added value also creates a higher profitability for an
organization. Tesco is a British multinational groceries and general merchandise retailer with
headquarters in Welwyn Garden City, Hertfordshire, England, United Kingdom. It is the third-
largest retailer in the world measured by gross revenues and the ninth-largest retailer in the world
measured by revenues. This report covers issues such as SWOT analysis of the company, Value
chain model of the company.
Value chain model of Tesco-
Value chain model is divided into four steps that needs to be followed.
Identify sub activities for each primary activity-
Tesco identifies those activities which needs to be sort on a primary basis so that they can
work on creating a value for themselves for a specific task. The company divides their category
into three categories. For the marketing and sales of products which are sold online they have
categorised them under direct activities. Activities which the companies does for maintaing the
relationship with customers by the team of marketing and sales they categorise it under indirect
activities. The third category is to proofread the content of advertisements they make so that they
can edit in an appropriate manner it is categorized under the segment of quality assurance.
(Reilly, 2015.)
Identify sub activities for each support activity-
In this area the company is concerned with the activities that support them in the aspect
of human resource management, infrastructure, developing technology so that they can create
value of the activities which are primary for the company. Tesco assure the quality for both the
activities that is direct and indirect. For instance it is difficult to create value for the department
of human resources for the logistics which are inbound and for the objects which relates to the
team of service, sales and marketing. It is not limited to this so that they have to do it for other
aspects also. (White and et.al., 2018. )
Identify Links-

This step takes a lot of time as it takes time for the company to find the links which help
them to create or add value. It is necessary at the stage when the company needs to gain the
competitive advantage in the market. For instance by maintaining the relationship with the
customers it can help Tesco to increase the level of sales and production of the company by
making the investments in those areas which is required.
Look for opportunities or solutions to optimize and create value-
After the stage when Tesco has completed the analysis of value chain model they work
on evaluating those activities for which they believe can be optimized so that they can create the
value for the products. They invest in those areas where quantitative and qualitative measures are
concerned. This will help the company to increase their base of customers, gain competitive
advantage and increase the level of profitability. It will help the company to get better return on
investments. (Mudambi and Puck, 2016.)
Response of the company
The model of the value chain which Tesco uses has helped the company to increase their
operations. It consists of activities which have a drastic effect on the production of the company,
maintenance, sales. Following elements are those which affect the support of the company.
Inbound logistics, production, outbound logistics, marketing and sales and service department
helps the company to increase the level of production as well as these are the ones who get
affected with a slightest hit. These activities are those which help the company to support the
activities which are primary for them as the company has been working on creating the value
which has increased the working and operations of all the level of department. More over the
model of value chain has helped the company to increase the limit of production because of more
demand from the customers and the team of marketing are under the pressure to spread the
awareness and promote the brand so that they can acquire more deals for the company. Sales is
related with the aspects of selling more products to the customers and increase their reach as
much they can. With the help of this model company has been able to focus on the principles
which are central rather than focusing on specific departments and the expenses of the company.
It helps the company to know that how much the interrelation of the link has growth or loss in
the revenue sector of the company. This analysis has helped the company to obtain the
information that whether the sources they are getting valued for their services or suffering from
losses which are in the company.

SWOT Analysis of Tesco
Strength-
Tesco is the leading brand in the market in the industry of grocery and retailers in UK. As
compared to their competitors there sales and revenue are more. Last year their profits seen a
improvement of 28 per cent. Tesco has continued to dominate the market with 27 per cent share
in the market and apart from that the company has gained high level of popularity in the market
of Ireland. In the year 2008 the company had 3,751 stores but now they have 6,966 stores all
over the world. The revenue of the company is increasing on yearly basis because of more stores
they are opening in different markets. The company generates a huge amount of employment in
the country and because of that they have turned out to be the largest employer in private
companies. There are more than 7,43,000 employees in the company. (Johnson and et.al., 2018. )
Weakness-
The export of the company was not strong which resulted in shutting down their
operations in the market of Japan and America. They served in Japan for 9 year and 5 years in
US. The company was charged with hefty fines as they used the strategy of window dressing by
which they showed wrong amount of profits. The operating profit of the company also decreased
by 9 per cent which led to decrease in the prices of shares. It is considered to be the worst result
of the company after the issue of Brexit. The company uses the strategy of low pricing which has
started to decrease their margin of profit. There are some of the stores in some countries where
performance is not good it is because the company didn't conducted the research of the market in
an appropriate manner before entering into it. (Wood, Coe and Wrigley, 2016.)
Opportunities-
Recently company has opened up a new venture by the name Jacks it is a discount store
by the company and it helped them to grow significantly. The company has the opportunity to
compete this new venture with their competitors such as Aldi and Lidi. Tesco has the scope and
opportunity to enter into various markets in order to increase their revenues. They have the scope
to open up in markets such as Turkey, South Korea and Indonesia as it can be profitable areas for
them. Company can come into a partnership or joint venture in those areas where their stores has
not been able to make an impact in an positive manner in the eyes of the people. By coming into
joint venture the company can get the information about the local areas which will help them ti
improvise and serve better. (Jaligot and et.al., 2016. )

Threats-
In the year 2017 Tesco suffered from a controversy on the day of Christmas as they
launched an ad with an inappropriate content which has disrespecting the people and the people
started believing that they are not respecting their culture. Another controversy which has
affected the brand image of the company was the company was accused of mistreating the
customers by offering them fake farm products under the name of Wood side farms and for that
they are still fighting the case in the court. Apart from this Britain no longer comes under
European Union which has affected the cost of trading for the company. Company is facing a lot
of threat from their competitors as they are also operating on a large scale and they are
performing better than Tesco which can reduce the share that the company has in the market.
The economy of UK, the regulations which are imposed by the government, matters which are
related to tax and legal aspects all this puts a threat on the company as it can affect the
operational efficiency of the company. (Gonen and et.al., 2017.)
Reflection on Value Chain Model
Through the whole study I learned that Tesco uses the model of value chain so that they can offer
the products which has more value according to their needs and wants. By adding or creating the
products with value it helps Tesco to gain the competitive advantage over their competitors
which has helped them to generate high amount of productivity and profitability.
I learned that there are four departments which are required to support the activities that Tesco
requires for adding or creating the value by the model of value chain. The four departments are
infrastructure of the firm, management of human resources, development of technology and
procurement. I believe that the activities which are primary for the company Tesco need their
support so that they can create the base of the company. An example of support activity can be
the department of human resources and they help the activities which are primary for the
company and support the aspects of outbound logistics. This concerns the activities such as
outbound logistics. The infrastructure of the firm is concerned with managing the daily
operations in which the company is engaged in. I learned that the activities which helps in
creating the value of the infrastructure of the company is line management, handling of
administration, management of finances for the company. The department of HR of Tesco said
that more the workforce of the company is developed more they will support the activities of the
company. Activities which comes under the working of human resource department are

recruitment of staff, coaching and training of staff, retaining and compensating them with others.
Activities which relate to the department of IT and technology helps the company to develop
their products and services in both the ways that is internal and external. They help the company
to come up with new ways so that they can cope up with the changes of the market. Innovation
and invention of technology, development of the product based on the technology that is
introduced newly into the market, these activities helps in creating the value so that they can
optimize and innovate the product and the department of IT these all are the examples of
development of technology. All the activities which are used for support is relate able to the
procurement so that they can offer quality service to the customers. Procurement is concerned
with entering into different markets, maintaining the relationship with suppliers and negotiate
with them so that they can break the prices of the product, purchasing of the materials from the
suppliers and forming agreements of outsourcing. These are the examples that come under
procurement and I am sure that it helps Tesco to support various types of activities and use the
ones which are primary so that they can create the value, offer them a sustainable amount of
service. (Bammann, 2019. )
CONCLUSION
From the above studies it has been concluded that Tesco is the leading brand in the market as
compared to its competitors though the company is facing a tough competition from them and
because of the controversies they have been or accused of there profits has been decreased which
has also led to decrease the amount of their stock prices. The value chain model helps the
company to support the activities which are primary for them and by creating the value it has
helped the company to gain the competitive advantage in the market which has led to increase
the profits of the company.

REFERENCES
Books and Journal
Bammann, H., 2019. Participatory value chain analysis for improved farmer incomes, employment
opportunities and food security.
Gonen, N., and et.al., 2017. Normal levels of Sox9 expression in the developing mouse testis
depend on the TES/TESCO enhancer, but this does not act alone. PLoS genetics, 13(1),
p.e1006520.
Jaligot, R., and et.al., 2016. Applying value chain analysis to informal sector recycling: A case
study of the Zabaleen. Resources, Conservation and Recycling, 114, pp.80-91.
Johnson, S., and et.al., 2018. Tesco Bank Wellbeing Case Study. In WELL-BEING (pp. 179-188).
Palgrave Macmillan, Cham.
Mudambi, R. and Puck, J., 2016. A global value chain analysis of the ‘regional strategy’perspective.
Journal of Management Studies, 53(6), pp.1076-1093.
Reilly, P., 2015. Every little helps? YouTube, sousveillance and the ‘anti-Tesco’riot in Stokes
Croft. New Media & Society, 17(5), pp.755-771.
White, D.J., and et.al., 2018. The Water-Energy-Food Nexus in East Asia: A tele-connected value
chain analysis using inter-regional input-output analysis. Applied Energy, 210, pp.550-567.
Wood, S., Coe, N.M. and Wrigley, N., 2016. Multi-scalar localization and capability transference:
exploring embeddedness in the Asian retail expansion of Tesco. Regional Studies, 50(3),
pp.475-495.