Report: Applying Blue Ocean Strategy to Tesco's Retail Sector

This report provides a comprehensive analysis of the Blue Ocean Strategy, focusing on its application within Tesco, a major retail firm. The introduction sets the stage by highlighting the strategy's potential for creating competitive advantages in the retail sector. The report then delves into key concepts such as Value Innovation, explaining its role in resource optimization and cost reduction. The Strategy Canvas and Four Action Framework are examined as diagnostic tools for understanding market positions and reconstructing buyer value. The ERRC Grid, Six Path Framework, and the four hurdles to strategy execution are also discussed, offering insights into how companies can differentiate themselves and overcome implementation challenges. The study employs various models to analyze the formulation and execution of the Blue Ocean Strategy within Tesco, ultimately aiming to provide a clear understanding of how the company can capture new demand and generate higher profits. The report concludes by summarizing the key findings and implications of the Blue Ocean Strategy for Tesco and the retail industry.

Blue Ocean Strategy

Table of Contents
INTRODUCTION......................................................................................................................2
Formulation and execution for company...................................................................................2
Value Innovation....................................................................................................................2
Strategy Canvas......................................................................................................................3
Four Action Framework.........................................................................................................3
ERRC Grid.............................................................................................................................4
Six path framework................................................................................................................5
Four Hurdle to Strategy Execution........................................................................................6
CONCLUSION..........................................................................................................................7
REFERENCES...........................................................................................................................8

INTRODUCTION
Blue ocean strategy is work in retail sector and also provide a company new and
higher competitive advantage for the company. The current study is also helps to shed a light
on the strategy and for the Tesco is chosen for this report which is top retail firm in Malaysia
that deals in clothes, groceries, furniture etc. Therefore, this strategy is fit within a company
and also assist to generate higher profit because to stay ahead in the competition. As through
Blue Ocean Strategy company capture new demand by adding new features within its store
which Tesco did. Study will uses different models in order to determine the formulation and
execution for an organization.
Formulation and execution for company
Value Innovation
Value innovation is the principle of Blue Ocean Strategy through which entrepreneur
of a company uses their ideas in an innovative manner so that the resources are unitized in a
proper manner. Also, it is a valuable mindset tool used to understand the competitor’s
pursuits and also focus upon cost saving which in turn leads a business towards success
(Matthyssens, 2019). The concept of value innovation is consider as a cornerstone of market-
creating strategy, due to value of buyer comes from price and that is why, value innovation is
attain when whole system is aligned.
Therefore, it is stated that this model is not used to create a new product and
technology but it assist to improve existing service and lower down the cost of that service
for both customers as well as company. For example, Tesco changes its packaging material

and start uses material which do not cause negative impact upon environment as well as
customers. This in turn leads to attract customers and also enhance the financial performance
of a firm. Hence it is stated that with the help of innovation within a business, company is
able to increase the market share and also assist to create a competitive advantage for them
(Leavy, 2018). That is why, there is a need to offer new and innovative product that assist to
draw attention of many customers towards it.
Strategy Canvas
Another important element which is a diagnostic tool or an action that capture present
and future prospects of a firm. There are two lines of a graph that help to determine the
performance such that horizontal axis capture the range of factor which an industry compete
or like to invest in while vertical axis capture offering level which buyers receive across all.
Thus, with the help of this model, organization see a complete picture like the factors which
affect or contribute the success of a business and the major players who assist to meet the
define aim (Agnihotri, 2016). For example, in Tesco there are different variety of product
available for the firm and while comparing the same with H&M it is analyzed that the
competition of Tesco is high because it offer the range of product in low rates while H&M
offer the clothes are high price with good quality, but people prefer low cost product and this
shows that there is a strong competition between the retail product.
In addition to this, it is also analyzed that there are many factors who contribute to
raise the brand image at international level such that creativity, comply new and advance
technology who assist the firm to meet at different level and this in turn lead a business to
stay ahead in the competition (Woods, 2020). Further, this model help a company to
determine the similarities and differences between the other companies and make an action
accordingly. Hence, this provide a strategy to a company so that they implement the same in
order to get better outcomes.
Four Action Framework
This is basically introduced in order to reconstruct the buyer value element in order to
crafting new value. Under this, four elements are consider that helps to determine whether
company have strong brand image or not. These four element are as mention below:
Create: It means the ideas to create new product in order to generate value and
offered new services within a market. In the same way, Tesco is also uses the same in order
to make sure that new customers are attracted for that, it keep doing survey in order to

determine the needs of customers which in turn leads a business towards a success (Strauß,
2020). Hence, by creating an opportunity company is able to examine the wants of customers
which in turn help them to sustain the brand image of a firm.
Reduce: it is the dead which reduce any of those factor that are nothing more than a
reason of competition between an industry in order to differentiate between each other.
Further, in this case, price is consider that factor which affect the entire business and the
company offer the same product in low price, so it is makes differentiate between each other.
Tesco may also look to invest into another business i.e. may use diversification strategy so
that these factor may not affect the customer preference.
Eliminate: It is the idea which is used to determine those factor that are consider as
basis of long competition for a company. These help a business to attract range of customers
and also take a business towards a success criteria (Hossain, 2020). For example, low quality
of product and poor innovation style within a business is consider as a factor that affect the
business overall performance. That is why, there is a need to eliminate these factor because it
cause negative impact upon business.
Raise: It refers to those factor which must be raised above an industry standards.
Also, through this company is able to enhance the overall company brand image and these
factors are customer service, quality of product, billing system of Tesco which keep attracting
range of customers. Also, company is able to apply the advance technology which in turn
leads a business towards a success criteria and grab attention of many customers as well.
ERRC Grid
Another model which help to determine the opportunities within a company that helps
to make t different from others. Such that every company have their own USP which makes
them different from another one and also responsible to attract range of customers towards it.
Further, it is work under four different steps which assist to determine the competitive market
and also reach a business towards a success area. Such that as per elimination, company have
to eliminate the low cost product whose quality does not matter and that is why, there is a
need to eliminate the same (Baso, Mursina and Anggriani, 2018). Further, raise the
investment into them means increase the frequency so that more and more customer visit the
place and leave a positive impression upon them as well.
On the other side, create a totally new factors means company should use new and
advance technology factor which in turn leads a business towards positive direction. Also,

this in turn also sustain the brand image into them and also raise the financial performance of
a company as well. For instance it may offer online product selling so that it deal with
international level and also let other know about the company as well (MacKay and et.al.,
2020). So, it can be stated that with the help of this model, company easily manage the things
and also attract range of customers towards it in order to meet the define aim and also
enhance financial performance of a business as well.
Six path framework
Organization has to look at six different path involved in formulating of blue ocean strategy
Path 1: Organization has to make sure that they have to be ready in a way that they
have to dealt with not only organization which is dealing in the same industry. They also has
to dealt with the organization which is dealing in the other industry as well. So the first path
which has to be selected to form a blue ocean strategy is that they have selected the
alternative business as well for the service or product of company (Kock and Moqbel, 2016).
Path 2: Another path which generally used to contribute toward the blue ocean
strategy is that strategic group within the industry which used to use same strategy in the
industry. This group generally includes the hierarchical order based on price and
performance. As a result looking at the strategic group will help Tesco in finding the answer
of question that why buyer used to trade for higher group and also lower group.
Path 3: Third path of ocean strategy pass on the information that who are the buyer in
the industry and buyer group on which industry generally used to focus. So that on the basis
of same organization can build ocean blue strategy on basis of target buyer in the market.
Path 4: This path specify that Tesco should consider looking at different
complementary services and product at the time of making a blue ocean strategy of the
organization. As organization has to make sure that they consider looking at what can happen
before, during and after product is being introduced.
Path 5: Fifth path of the strategy used to specify that for building the ocean strategy
of the company organization has to make sure that they used to consider looking across the
functional and emotional orientation of an industry as well.
Path 6: As in the current scenario all the organization generally used to adopt the
reactive industry but all the organization in the organization has to make sure that they used
to look at the different trend before making blue ocean strategy in the organization
(Thompson and et.al., 2020).

Visualizing strategy
There are four different steps of visualizing strategy
Step 1: Visual Awakening
In the first step of visualizing strategy organization has to compare your business with
the competitor which are present in the market and after that organization has to see where
the strategy need to be change.
Step 2: Visual Exploration
In the second step of visualizing strategy that is Visual exploitation is that they have
to go into the field to explore the six path in creating the blue ocean strategy in the market.
Also this is the stage in which organization has to observe the distinctive advantage of
alternative product and service in the market which has to be offered by the company in the
coming future (Sedmak and et.al., 2019).
Step 3: Visual Strategy Fair
In the third stage, company have to select the best strategy which help them to meet
the define aim and for that they get a feedback from customer as well as competitor in order
to determine their views with regards to the business. As, it is analysed that feedback is
consider the best strategy which in turn leads a business towards success path (Kanter, 2017).
Hence, by developing a fair strategy, company is able to meet the define aim, in the same
way Tesco is also uses the same in order to make sure that the used strategy help to attract
customer or not.
Step 4: Visual Communication
In the fourth stage, the selected strategy is communicate to all the stakeholder of a
company. So, by concerning it with all, company make a final decision and close the gap
which identified that may affect the operational moves. So, through effective communication,
company is able to meet the define aim and also leads a business towards success direction.
Four Hurdle to Strategy Execution
Once a company is developed the blue ocean strategy as a profitable model there are
some challenges which they face in order to affect the overall business and at that time they
uses Four Hurdle to strategy execution which affect the results. Also, the managers faces
many issue and some of them are as mention below:

Cognitive issue: It is analysed that red ocean is not a path to profit of future, and that
is why, there is a need to let employees understand about the need of their customers and
serve them accordingly. Therefore, company have to set up training session in order to let
their employees understand the need of their customers and also meet the same. At every
phase, company have to set up their structure through which they easily meet the define aim
and objectives (Gündüz, 2018). Thus, managers of Tesco have to set their employees so that
they understand the market and work accordingly.
Limited resources: Another hurdle which every company face while using this
strategy such that resources many be human, financial and technological. Though the
financial performance of Tesco is so strong but it does not means that company have a strong
human resources and this may affect the result in opposite manner as well. In this modern era,
every company needs to be stay ahead and this is possible when it uses modern technology
within a business and keep attracting range of employees as well (Levenson, 2018). Even,
quoted firm have a strong employees and keep complying with advance technology in order
to make sure that it have a brand image at international level.
Motivation: If employees are not motivated, then they do not help a company to attain
the define aim. Therefore proper motivation strategies must be applied which in turn leads a
business towards a right direction. Normally, there are some issues in top companies and they
do not consider their employees as an important part and that is why, it becomes a hurdle for
strategy execution. But in the case of Tesco, it uses different strategies for motivating

employees such that offer incentive and reward system in the form of monetary and non-
monetary form which help to encourage employees to meet the define aim.
Politics: It is another and most common hurdle which affect the entire results such
that in every top companies politics ruin the brand image and both type of politics exist
within a company. In the same way, positive and negative politics is also exist within Tesco
which affect the results (Verma and Sharma, 2016). Though negative politics creates wrong
impact upon employees while positive politics provide s right direction to them which in turn
leads a business in right direction. So, employees and managers should be aware about the
opposition from a powerful vested interest and this in turn helps to attain the define aim.
CONCLUSION
By summing up above report it has been concluded that blue ocean strategy assist the
business to meet the define aim and also determine the strategy which is used in order to lead
a business towards a success direction. Such that study showed that with the help of Blue
Ocean strategy model, company determine the competitive advantage and examine the factor
who contribute to the success and failure of a business. Thus, study also concluded that there
are different models which assist a business to understand and differentiate the business from
other and also meet its own define aim as well.

REFERENCES
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