Tesco's Strategies and Decision Making Process: A Case Study

This report explores the strategies and decision making process of Tesco, a British multinational retail grocery corporation. It covers the origin of the company, successful strategies, failed strategies, and more. The report concludes that effective strategy and decision making process helps the company to reach the height of success.

Report writing

Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY ..................................................................................................................................1
Origin of company.......................................................................................................................1
Strategies used by companies......................................................................................................2
Strategies that failed for Tesco....................................................................................................4
CONCLUSION ...............................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
An organisation strategy refers to long term plan which allocates how a business plans to
utilise it available resources in order to support enterprise activities. It assists the management as
guidance to achieve organisation goal by effective working as well as increasing overall
productivity. The managers used these strategies by making effective decisions regarding
structure, cultures, methods used in production functions as well as various policies for working
of employees. These decisions helps them to meet their objectives as well as provide base to
develop effective developing plan for next year (Lim, 2021). To define various strategies and
decision making processes which helps the company to achieve success the selected organisation
is Tesco, which is a British multinational retail grocery corporations. It was established in 1919
by Jack Cohen to offers various grocery and home product to people in UK.
This report covers a timeline exploring the strategy, decision making as well as assess the
relative success or failure.
MAIN BODY
Origin of company
Tesco is one of the leading groceries and merchandise retailer headquartered in England.
It has stores in around five countries of Europe and have a market share of around 30%. Tesco
was established in 1919 as a group of market stalls and by 1939, the owner had around 100
Tesco stores over country. The company expand its operations in early 1990s by starting
operations in 11 other countries of World (Tesco, 2022). In early 1960s, Tesco diversified its
area of operations to retailing of books, apparels, electronics, toys etc. to increase its market
share. At time of 1990, Tesco repositioned company's image as downmarket to high volume low
cost retailer which tries to grab attention of wide range of people. In 1993, Tesco launched
“Tesco value” range to attract social groups by making low cost items.
In 1950, the firm saw growth in context to expansion of activities through acquisitions,
by then it had owned 800 stores. Tesco owners purchase various outlets like Williamson's shops,
200 harrow Stores outlets and victor value chain. The firm started to diversify its products range
in 1960s and includes households goods and clothings as well as opened its first petrol station
also. In 2001, Tesco started internet grocery retailing in US and procure 13 HIT market in
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Poland. In 2003 the firm diversify its operations in Japan, Turkey and opened convenience shops
in London.
Illustration 1: Tesco Case Study: How an Online Grocery Goliath Was Born, 2019
(Source: Tesco Case Study: How an Online Grocery Goliath Was Born, 2019)
Strategies used by companies
Tesco is known as largest retailer in United Kingdom where the firm has managed to
make its brand presence in market by implementing various strategies throughout its operations.
Major strategy used by Tesco is to create value to customers and not just promising them cheap
rates and broad range of products. Consumers are loyal to Tesco as the firm offer exceptional
experiences which turns out to be their unique selling point (Minakir, 2018). Continuing
monitoring of marketing mix and identify new line of products to attract more customers results
in great strategy for Tesco. Firm's product strategy is including wide range of products covering
all segments like food, health, books, décor, sports, electronics etc. Company meets various
needs of customers and thus, have been successful in capturing wide area of market. The benefit
Tesco have from its pricing strategy is that it allows it to enjoy economies of scale through
impelling supply chain network and offers commodities at prices lower from its competitors. The
firm's place and distribution strategy is to capture as many nations as it can to increase its
recognition. It has around 7000 stores in more than 15 countries covering big nations like UK,
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Ireland, France, Japan etc. It also has several type of stores namely Tesco Superstore which are
big supermarkets selling grocies as well as non food items, Tesco Metro which are small stores
in city centres and Tesco Express which are even smaller stores offering products with high
margins.
Tesco. 2022
Tesco's promotional strategy is attracting more customers by its low pricing strategy and
it uses print and media advertising to send promotional notifications to its customers. The firm
adopts various promotional strategies including buy one get one free offers and discounts
(Nwanzu and Babalola, 2019). It also provides options of availing clubcards to its loyal
customers so that they can earn extra points on every shopping and claim more discounts.
Tesco's marketing strategies focus on its loyal customer base by positioning brand
effectively in market. The firm provides broad range of products in various market and focus on
individuals who are cost conscious. Initially, Tesco positioned as a high volume but low price
retailer but in early 1990s it re-brand as firm which also offers premium range commodities.
Tesco continually expands its line of products to draw in new customers, therefore it launched
new brand of farm fresh items such as beef, pork and fruits (Purohit, Paul and Mishra, 2021).
Rebranding also comprises decreasing prices of products by 15%.
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Tesco's online strategy allows customers to have seamless digital shopping, thus
increasing firm's online sales by 15%. Company's e-commerce strategy puts great emphasis on
providing value as well as convenience to customers, thus fulfilling brand's commitment. The
website of firm is made in such a way that is easy to navigate and is as efficient as in person
purchase. From early 2010, Tesco has enhanced its online business by giving consumers efficient
online shopping experiences. It has launched Click and Collect services which enables customers
to purchase groceries online and collect them from any store of Tesco.
With many strengths gained from adopting various strategies, Tesco has some
weaknesses too (Salmon, 2020). To evaluate certain strengths and weaknesses, SWOT analysis
of Tesco is assessed below:
Strengths Weaknesses
Covers wide area in market.
Diversified in more geographic area and has
robust global presence.
Strong supply chain distributors.
Did not able to make brand popular in big
nations like Japan and US.
Trying to focus on several segments sometimes
results in inefficiencies.
Low prices results in low profits.
Opportunities Threats
Expanding operations in new markets of new
nations.
Collaboration with various other big brands to
attract their customer base as well.
Various supermarkets providing low prices and
more discounts.
More number of competitors like Sainsbury,
Aldi and Walmart.
Strategies that failed for Tesco
With covering wide area market in many countries, Tesco has unable to make its place in
United States. The firm entered US market in 2007 with heavy investment and opened their first
store in Los Angles. The strategists of company even changes firm name to Fresh & Easy to
provide consumers an idea of what is new retailer offering. Tesco invests much time and money
to research about US market. However it failed to apply results of research in practical market
which leads to big gap from target audience. The company should target big American
supermarkets instead of small stores created for people who wants to shop daily products. Thus
Tesco pulled out its stores from America in 2013, costing around 2 billion dollars.
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Tesco's entry in China also resulted in unsuccessful strategy for firm. It entered China
market by purchasing 50% stake in Hymall which is a hypermarket chain. Hymall operated in
prime locations and in high end malls, thus Tesco's strategy was to acquire large market share by
acquisition of Hymall. Strategists of Tesco spend six years on research of tastes and preferences
of Chinese customers. But Tesco. 2022the company failed to focus on cultural differences
between China and West. Customers in China prefers more choices and have immense brand
loyalty. Tesco also failed to procure spaces in prime locations and have small base of suppliers.
It also faced heavy competition from its rivals, impacting market share of Tesco highly. Increase
in inflation rate also resulted in reducing level of spending of Chinese customers.
CONCLUSION
As per above presented information, it is concluded that effective strategy and decision
making process helps the company to reach the hight of success. As well as management make
effective plans by conducting deep research about various aspects such as available of internal
resources like human, financial, technological and marketing or distribution tools to sell better
quality products in order to meet expectations and requirement of customers. Further, they also
conduct research about recent customer and market trends to make effective strategy as per
trends as well as modified their current working policies in order to provide product and services
to large number of customers in target market. They must evaluate their previous strategy and
decision making process of last five years to find out achievement and failure as well as use them
as a base in order to make effective strategy for future growth.
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REFERENCES
Books and Journals:
Lim, W. M., 2021. A marketing mix typology for integrated care: the 10 Ps. Journal of Strategic
Marketing. 29(5). pp.453-469.
Minakir, P. A., 2018. Spatial development strategy: a view from the concepts of spatial
organization in the economy. Spatial Economics= Prostranstvennaya Ekonomika, (4),
pp.8-20.
Nwanzu, C. L. and Babalola, S. S., 2019. Impact of organization ownership and strategy on
organizational sustainable practices. Academy of Strategic Management Journal. 18(5).
pp.1-10.
Purohit, S., Paul, J. and Mishra, R., 2021. Rethinking the bottom of the pyramid: Towards a new
marketing mix. Journal of Retailing and Consumer Services. 58. p.102275.
Salmon, J. W., 2020. The health maintenance organization strategy. In 1 The Corporate
Transformation of Health Care Issues & Directions (pp. 83-96). Routledge.
Sharopatova, A., 2020, October. Forming a development strategy of the information resources in
an agricultural organization. In Proceedings of the 2nd International Scientific
Conference on Innovations in Digital Economy: SPBPU IDE-2020 (pp. 1-6).
Stead, M. and Hastings, G., 2018. Advertising in the social marketing mix: getting the balance
right. In Social Marketing (pp. 29-43). Psychology Press.
Online:
Tesco. 2022 [Online]. Available through: <https://www.tesco.com/>
Tesco Case Study: How an Online Grocery Goliath Was Born, 2019. [Online]. Available
through: <https://blog.contactpigeon.com/tesco-case-study/>
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