Strategic Analysis: Competitive Advantages of Tesco Plc (Essay)

This essay analyzes the competitive advantages of Tesco Plc, a major UK-based multinational enterprise in the retail industry. The study identifies economies of scale as a primary source of Tesco's competitive edge, particularly in its ability to offer low-cost goods and services through its extensive global operations and supply chain. The essay delves into how Tesco achieves this through its large-scale operations, purchasing power, and distribution systems. Furthermore, the essay explores the strategic objectives that Tesco addresses, highlighting innovation as a key driver. The company's ability to adapt to market trends, satisfy customer demands, and foster partnerships with suppliers are also discussed. The essay concludes that Tesco's focus on economies of scale and innovation enables it to maintain a sustainable competitive advantage within the global retail market. The essay also references various academic sources to support its claims and provide a comprehensive analysis of Tesco's strategic approach.

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Name of the Student
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Author’s Note

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Introduction
The purpose of this study is that analyze competitive advantage of one of the
multinational enterprises in the globe. Competitive advantage signifies the recognition that the
enterprise delivers quality goods at lower cost or provides services at higher value than
competitors (Amini et al., 2012). The selected MNEs for this study is Tesco Plc that deals in the
retail industry in supermarket operation chain across the globe. The study focuses on the main
source of competitive advantage for Tesco Plc. The strategic objectives that this enterprise
addresses is also highlighted in this study.
About Tesco Plc
Tesco plc is one of the UK- based retailing organization that supplies consumers with
groceries and other services. The company has near around 476000 employees and 6553 stores
worldwide. The stores of Tesco ranges from Tesco Express, Tesco metro and Tesco petrol
stations. The core purpose of Tesco Plc is to offer their customers proper service in order to help
them enjoy better way of living (Core Purpose and Values., 2018). The enterprise also believes
in providing their consumers with the reward systems to attain their loyalty and trust. Tesco plc’s
business strategy is to experiment with different aspects of business and attain competitive
advantage over their rivalries.
Example of competitive advantage of Tesco
Tesco introduced 24 hours of shopping experience to their customers and at present it has
several of Click and Collect points across the nation. In addition to this, their distribution system
also helps Tesco to gain competitive advantage (Schaltegger, Lüdeke-Freund & Hansen, 2012).
Even with the advanced supply chain system across the globe, they have the ability to deliver

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right good to right store at appropriate time in timely and cost –effective manner. This helps the
enterprise to sustain the business by integrating diversified and value- oriented approach in
retailing.
Source of competitive advantage of Tesco Plc
Tesco has attained bench mark of high profits through proper customer service, high
product quality and low product cost. The company’s competitive advantage makes commodity
preferable over other products by the customers. One of the major source of competitive
advantage of this company is economics of scale owing to its huge scale of business operations
(Barney, 2012). Economies of scale refers to the cost advantages which the companies attain
owing to their scale of business operation along with cost per unit of total output declining with
increasing scale. As their businesses grow and output increase, they benefits from declining in
average production cost. The total cost of producing products increases with rise in output but its
cost of manufacturing per unit decreases as output increases. The economies of scale of this
company are their capital cost of production, friction loss of industrial equipment and
transportation (Urbancova, 2013). Tesco’s source of economies of scale occurs in its possibility
of buying various inputs for producing products at low per-unit cost. One way in which this
enterprise attains benefit from scale economies is expanding their business by opening new
stores across the globe (Finster & Hernke, 2014). Building large stores also provides them
benefit from scale economies as the government provides them huge cash incentives for building
new supermarkets. This company attains competitive advantage from scale economies under
numerous categories. One of their internal scale economies is purchasing of inputs. As this
enterprise continues to expand their business, they tries to increase their order size for the raw
materials. This outcomes in decrease in cost of the component purchased. As a result, the

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average production cost decreases, which in turn provides Tesco competitive advantage over
their rivalries (Mahdi & Almsafir,.2014).
Strategic objectives that Tesco Plc address
Tesco plc strategic drivers mainly sets out plans as well as aspirations that create long
term value for their stakeholders. Innovation is one of the strategic objectives that this example
addresses (Schubert, Williams & Woelfle, 2013). This strategic objective helps Tesco to attract
more customers and satisfy them based on their service and product requirements. By listening to
their customers as well as analyzing the trends, the company can drive innovation in the
commodities they sell and channels through which they sell these products. Even their strength
of partnerships with their suppliers plays vital role in innovation (Pisano, 2015). Moreover, by
building the business together, Tesco provides their suppliers confidence in investing in
innovative goods and solutions to benefit their customers.
Conclusion
From the above discussion, it can be concluded that the above source provides edge to
this company over the competitors. Effective strategy adopted by managers of the enterprise so
helps them to gain competitive advantage over their competitors. This competitive advantage
makes their good preferable over the other rivals by their customers. Apart from this, Tesco
innovates product after analyzing the market trends and customers purchasing behavior. This in
turn aids them to attain sustainable competitive advantage and expand their business across the
globe.

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References
Amini, A., Darani, M., Afshani, M., & Amini, Z. (2012). Effectiveness of marketing strategies
and corporate image on brand equity as a sustainable competitive advantage.
Interdisciplinary Journal of Contemporary Research in Business, 4(2), 192-205.
Barney, J. B. (2012). Purchasing, supply chain management and sustained competitive
advantage: The relevance of resource‐based theory. Journal of supply chain management,
48(2), 3-6.
Core Purpose and Values. (2018). Retrieved from https://www.tescoplc.com/about-us/core-
purpose-and-values/
Finster, M. P., & Hernke, M. T. (2014). Benefits organizations pursue when seeking competitive
advantage by improving environmental performance. Journal of Industrial Ecology,
18(5), 652-662.
Mahdi, O. R., & Almsafir, M. K. (2014). The role of strategic leadership in building sustainable
competitive advantage in the academic environment. Procedia-Social and Behavioral
Sciences, 129, 289-296.
Pisano, G. P. (2015). You need an innovation strategy. Harvard Business Review, 93(6), 44-54.
Schaltegger, S., Lüdeke-Freund, F., & Hansen, E. G. (2012). Business cases for sustainability:
the role of business model innovation for corporate sustainability. International Journal of
Innovation and Sustainable Development, 6(2), 95-119.

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Schubert, P., Williams, S. P., & Woelfle, R. (2013). Sustainable competitive advantage in e-
commerce and the role of the enterprise system. In Competition, Strategy, and Modern
Enterprise Information Systems (pp. 303-319). IGI Global.
Urbancova, H. (2013). Competitive advantage achievement through innovation and knowledge.
Journal of Competitiveness, 5(1).,67-87.