Managing Innovation at Tesco PLC: Future Strategies and Capabilities

This project report provides a detailed analysis of innovation within Tesco PLC, the largest retail sector industry in the UK. The report is divided into three key parts. The first part examines future innovations by Tesco's competitors by 2020 and beyond, and their potential impact on Tesco's performance. The second part focuses on the necessary requirements for innovation within Tesco PLC, emphasizing strategies to gain a competitive advantage, such as online shopping, loyalty programs, self-checkouts, and embedded scanners. The third part summarizes how to build future capabilities for Tesco PLC, considering various factors influencing future innovations and outlining a roadmap for execution. The report highlights Tesco's plans to adopt new technologies like Amazon Dash and BYOD strategies, along with initiatives to reduce carbon impact. The report recommends the implementation of the innovative business plan to develop future innovative capabilities and regularly monitor changes within the organization.

Managing
Innovation in
Business

EXECUTIVE SUMMARY
The project report is mainly emphasising on the innovation as it is important element for
running business operations smoothly in this competitive business environment. This report is
based on Tesco PLC, which is the largest retail sector industry in UK. The following project is
further divided into three parts. In the first part of this project report is has been discussed about
future innovations to be made by competitors of Tesco by 2020 and beyond and also it shows
the effect on the overall performance of Tesco PLC. Whereas, in the second part emphasis is
given to necessary requirements for innovation by Tesco PLC as this will lead the company to
gain competitive advantage and capture huge market share. The various innovative methods
adopted by company are online shopping, loyalty scheme club card, self check outs, and
embedded scanner for quick orders and helps in developing sync with customers. Also, helps the
company to retain customer's for longer time period and enhance their market share.
In the third part of the report, it has been summarised about how to build future
capabilities for Tesco PLC which involves study of numerous factors which will effect the future
innovations of the company. Along with this it is discussed about road map for execution of
innovative business plan. The innovations which are being planned by the managers of Tesco
PLC is concerned with adoption of latest information technology such as to enable them to order
through Amazon Dash which is referred to as one-touch shortcut technology. Also, managers
have formulated strategy related to BYOD which is bring your own device. This will help gather
information by scanning stock labels and know about their availability. Along with this Tesco
PLC future plan for innovation is to reduce the impact of carbon credit because of the
manufacturing process.
As per this report, it is highly recommended to managers of Tesco PLC to put into action
their innovative business plan which will in turn help to develop future innovative capabilities
and also monitor the changes taking place in the business organisation on the regular basis as this
will help to know about the reasons for the success and failure of the plan.

Table of Contents
EXECUTIVE SUMMARY ............................................................................................................2
INTRODUCTION...........................................................................................................................4
MAIN BODY ..................................................................................................................................4
Future of Retail industry 2020 and beyond............................................................................4
Organisations innovation requirement 2020 and beyond ...............................................................5
Future innovative capabilities for the organisation(1500)......................................................7
CONCLUSION..............................................................................................................................10
REFERENCES .............................................................................................................................12

INTRODUCTION
Innovation is known as process of transforming the ideas, thoughts, insights into new and
innovative products. The purpose of this report is create and develop understanding regarding
innovation process with reference to management of business operations of Tesco PLC. The
selected organisation, Tesco PLC., is ranked as third largest grocery and merchandise retail store
at international level being established by Jack Cohen in the year 1919 and situated in Welwyn
Garden City, Hertfordshire, England. It is the retail store capturing around 28.1% of market share
whereas the market share of Sansbury is 16.5% at global level. This report focuses on the
discussion regarding factors which will impact the future of retail sector by 2020 and beyond.
Also, it has been analysed about innovation requirements at Tesco PLC which will help to
overcome with the increased competition in the market along with this has been discussed about
future innovative capabilities for both existing and future business environment of Tesco PLC.
The process of innovation helps to attain strong and good position in this dynamic environment
of business (Aalbers and Dolfsma , 2015). This is very essential factor for every business
organisation as it will foster the business growth by utilising creative thoughts for carrying out
their business operations which will help to gain competitive advantage in the marketplace.
Further this will allow the reader to known about the future position of Tesco PLC at the market.
MAIN BODY
Future of Retail industry 2020 and beyond
The process of innovation is helpful in conducting business operations as it play
important role for maintaining the sustainable growth in the future. In terms of technology and
competition the retail industry of UK is rapidly growing and giving opportunities to the
companies to grow and survive in the market. As there are frequent technological advancements
so in order to survive in the market it is necessary to adopt latest technologies. The retail industry
has gone through significant transformation from the past decades, and still there is continuous
evolution in the retail sector industry (Allen, Adomdza and Meyer, 2015). In 2020 and later their
will be emergence of many technologies that led to the change the way of interaction with their

brands and also there is emergence of digital revolution in the market. The retail sector industry
is facing cut throat competition as there is significant rise of discounters such as Aldi and Lidl
that has decreased their market share for Tesco PLC by reducing it sales by £15 billion annually.
Also, there is shift of consumer preferences as they now prefer to shop online instead of offline
purchasing and there is change in viewpoints of retail sector towards their customer's. In order to
provide their existing and prospective customer's with unique and innovative shopping
experience the companies are planning to incubate small start-ups which deals in similar market.
Further this leads to build harmonious and good relations with suppliers and retailers at the
marketplace (Archibald and Archibald, 2016). The managers of Tesco PLC is planning to
launch innovative pilot project with the objective to offer products at minimum prices and
rendering social premium to farmers from where the company is getting adequate availability of
resources for their products which helps to fulfil corporate social responsibility. The Tesco PLC
have adopted the technological advancements by formulation of innovative strategies which are
concerned with offering customer's vegan burgers by relaunching the burger so as to focus on
animal protection and healthcare of customer's. A rise in technological developments and
updates forces the managers of Tesco PLC by implementing one-touch shortcut technology as
this will allow customers to know about each and every detail of the product by scanning the
code and also helps to check the availability of the products at the rights time. To increase the
operational efficacy in Tesco PLC there are planning to implement chatbots and robotics
assistance in their stores to assist the customers with proper services and providing them with
complete information. Now as customer's have started expecting immersive experience form the
products, services being provided to them by the company (Biemans, 2018). So Tesco PLC is
planning to launch its new products with Hologram Technology as this allows customer's to have
full view experience with the help of 3D projection of the products. Lastly, now onwards due to
technologies consumers don't want to leave their places to purchase so, if managers of Tesco
PLC want to reach its customers they must focus on enhancing their in-store experiences by
developing own mobile programmes and applications which will also help to reach ample
number of consumers .
Organisations innovation requirement 2020 and beyond
The Tesco PLC captures huge market share in retail sector industry which is highly
specialized in selling groceries and general merchandise with purpose to serve its customer's

everyday by fulfilling their expectations. Their are changes made by managers of Tesco PLC in
their business operations due to technological changes at the market place. It is essential for
company to make innovations in the organisation because of changes in technology as this is
important requirement for the organisation. Their are various innovative approaches and methods
which the managers of Tesco PLC are planning to adopt to carry out their business operations in
order to retain its huge market share and capture new markets, some of them are described
below:-
Artificial intelligence by 2020: Tesco PLC is giving cut throat competition to its
rivalry firms like Morrisons, Sansbury and Asda. Due to technological updates the managers of
Tesco PLC are planning to adopt artificial intelligence techniques with the objective to know
about consumer insights (Chesbrough, 2017). Also, they are planning to launch their own
chatbots and robots which will assist consumers at the time of purchasing, selection and billing
process. In the upcoming years, only that retail sector companies will be successful who will be
using artificial intelligence, chatbots and robotics technology for conducting business operations
smoothly and efficiently. Also, in order to improvise their customer's experience and smooth
conduct of business operations adopted technology will help retail sector to grow and survive in
future.
Bring Your Own Device (BYOD) Strategy: The managers of Tesco PLC are planning
to adopt BYOD strategy in their company premises. This is the requirement of company for
making innovations by using technologies. As now there is advent of e-commerce there is
decrease in sales so in order to survive the retail industries are encouraging the employees to
bring their own devices (BYOD). According to this devices of employees are connected with
server of the company and now sales associates will be able to easily access about product
information and further helps to deliver accurate and correct information to customer's. Also, this
will help sales associates not to render wrong information due to confusion and this arises
because of similarities in products.
Innovative Payments Methods: The managers of Tesco PLC is planning to launch
innovative payment methods such as payment made by face, biometrics till 2020 or beyond,
which allows their customers to make payments by using their mobile phones, or just standing in
front of machine as to make cashless transactions and increase their security. These payment
methods helps the customers to not keep cash every time as their payment can be done either by

scanning of their face or biometrics (Clegg, Kornberger and Pitsis2015). Also, this innovation
will lead to carry out business operations smoothly and efficaciously. This is important for
company to adopt innovative payment options for customer's as now they are tech savvy and
technology advanced so don't prefer to keep cash with themselves.
Future innovative capabilities for the organisation(1500)
Tesco PLC is growing rapidly in the market besides cut throat competition in the business
environment. With respect to this, there is increase in growth because of adoption of technology
which leads to changing behavioural patterns of customer's. Thus, it is important for Tesco PLC
to develop their future capabilities for innovation which will further assist to accomplish future
aims and objectives (de Zubielqui, Jones and Statsenko, 2016). To develop future innovative
capabilities it is necessary to make changes in its current operating structure and system. Tesco
PLC is planning to launch chatbots and artificial intelligence to help customer's while shopping
and making payments. These changes are transactional in nature as Tesco is making changes in
their way of rendering services or process. Their are four factors which will help Tesco PLC to
develop their future innovative capabilities which are briefly discussed below:-
(a) Market Knowledge:
It is important to have complete market knowledge for Tesco PLC as this helps to
identify the market conditions and behavioural patterns of consumers in order to attain their aims
and objectives by formulating plans to develop future innovative capabilities. This will assist the
organisation to make effective innovative capabilities according to future demand of their
prospective consumers which leads to enhanced productivity for long term (Dodgson, 2018). For
example, the marketplace of retail sector of UK has gone through increasing kinship among
customer's healthy eating habits, for this Tesco has initiated the utilisation of 16 million loyalty
club card scheme so as to influence the preference of their customer's. This data is utilised to
create “healthcare score” for baskets sold as this helps to understand the buying behaviour on
continuous basis.
(b) Customer connectivity:
For building future innovative capabilities it is necessary to consider this factor because
without this future innovations will not be beneficial for their customer's. This is very important
factor which helps managers of Tesco PLC to develop future innovative capabilities. This largest
retail sector company purpose is to build connectivity with their customer's not only at the time

of rendering services but also at various levels of life. To accomplish this factor the company
launched 'Little Helps Program' which will assist consumers to make rational choices while
buying products this is done by showcasing their products which are low in calories, fat, salt and
sugar in 'little stores' at minimum prices to target those customer's having Diabetes, Cancer and
many other diseases.
(c) Agility and adaptability:
Tesco PLC has always remain agile and quick in adapting and implementing changes in
the internal structure on regular basis. As the retail industry has entered the phase of chatbots and
artificial intelligence the need for versatile stores arises (Evans and Mason, 2018). With
reference to Tesco PLC, has launched an online platform “touch and order” which enables the
customer's to go through each and every detail for the product as this provides customer's
convenience at the time of shopping. Along with this, company has adopted methods for
combining efficiencies of Hadoop and Teradata in their information systems which helps to
develop models and plans for business so as to ensure that products fulfil expectations of their
consumers and reduces wastage.
(d) Building Customer profitability:
As Tesco PLC is involved in internet of things for increasing experiences of their
customer's as this helps to increase profits. Currently, the company has started adopting
automatic techniques by developing web platforms like IFTT “If this. Then that”. It is the
technique where customer's are allowed to access commands which provides solution if similar
problem arises (Ferreira, , and et. al., 2015).
Road map for innovations presented by Tesco:
Tesco PLC is very much known according to historical developments which provides
assistance to attain competitive position in the market. For making improvements in their
services the company have done many innovations in its business operations. Following is the
road map which is related to innovations being made from past to near future.
 2010- 2020:- due to increase in competition level Tesco PLC have majorly worked
towards making changes for shopping experience of their customer's and this could be
done by conducting proper market research by taking the help of Research &
Development as this will help to ascertain the changes that managers of company will

make to fulfil customer's need and expectations. After successful conduct of research
Tesco PLC started to plan for implementing robotics for carrying out operations which
would further help to deliver products and services to the consumers.
In year 2017, Tesco completed its first operation with the help of robotics technology and
chatbots. This innovation is implemented by managers of Tesco PLC after proper market
research related to market demand and competition level with the study of technological factors.
After this only the robots were put into action for knowing and understanding its reliability at
market place.
 2020 and beyond:- The long term goal of Tesco PLC is to achieve zero carbon footprint
with respect to emissions of CO2 by the year 2050 which is made under the Pairs climate
arrangement by fulfilling all the necessary SBT standards. Along with this, they are
planning to produce more of vegan based meat products especially burgers and also
planned to offer organic food products to their customers as there are more customer's
with vegan eating habits (Frow, and et. al., 2015).
Innovational chart of Tesco:
Innovation Starting date Finish date
Robot as delivery option 2015 2017
Robot assistance 2018 2020
Vegan Burger Launch 2019 2019
Relaunch of Beyond burger 2019 2019
Carbon Footprint 2020 20
It can be recommended to Tesco PLC that they should use predictive analysis to know
about the needs of customer's and also helps to implement chatbots technology which will help
to enhance the overall performance. This will help the managers to identify behavioural patterns
of consumers and also helps in overcoming competition. The main reason behind the
development of future innovative capabilities is the rapid increase in level of competition.
Thus, it is essential to utilise the market knowledge and build alternative business models to
monitor on a regular basis their adequate resources and prepare its employees for achieving their

goals and objectives. This will help a organisation for identification of effective business
strategy both internally and externally (Goffin,and Mitchell, 2016).
Change model:
It is important for organisation to adopt change model as this will help to implement
changes properly and effectively as this is supported by framework of company which helps to
implement the operations effectively. For the successful implementation of Tesco PLC have
adopted PDCA model which is Plan-Do-Check-Act which is concerned with giving emphasis on
performing actions in planned and informative manner which leads to attain positive results. For
instance, to execute artificial intelligence with robot and chatbots assistance, Tesco PLC is
required to perform market analysis to know about gaps and formulate strategies for overcoming
theses gaps (Möller and Halinen, 2017). As the robots and chatbots will help customers in
selection of products as per needs and also help them at the time of billing process. This is part of
“DO” phase prototype. This model is selected by Tesco PLC as this helps to know about the
durability, reliability and feasibility of the model. Finally, in the 'Act' stage, the changes which
are to be made are rectified as the chatbots will help to make the rectifications. In order to make
and execute innovation than the above discusses stages are implemented by the innovation team
of Tesco PLC. For proper implementation of this model the managers of Tesco PLC will adopt
situational leadership approach as this will help to overcome the various issues faced at the time
of execution of this model (Morabito, 2015). Also, this situational leadership approach helps to
keep motivation level of employees high towards their work as this helps to maintain work
commitment of employees.
CONCLUSION
From the above summarised report, it can be concluded that innovation is very important
factor which which helps to enhance the overall growth and development of the business
organisation. So, to remain competitive in the market it is necessary to adopt innovative practices
and strategies to deal with dynamic business environment. Further to capture the retail industries
on regular basis than it is crucial for managers to be technologically advanced. In addition to this,

Tesco PLC is planning to launch one-touch shortcut technology where customers will be
allowed to make payments and order on one click with the help of Amazon Dash app. Also,
planning to adopt the BYOD which is concerned with knowing about the availability and
information by scanning the codes on products by 2020 and beyond. Further this will aid
managers of Tesco PLC to identify about the behavioural patterns of prospective customer's and
help in adding value to their services and products being offered. Also, their must be proper
market analysis and research as the environment is very much complex and changing so which
will help to know about the innovation requirements in future by business organisation. It is also
important to make evaluations of the various factors such as legal, economical and operational
which might effect innovation capabilities of Tesco PLC. Along with this is essential for
managers and leaders of the company to keep motivating employees on continuous basis which
will help to accomplish their goals and targets as this will help to develop innovative capabilities
for future. In order to carry business operations smoothly and efficaciously there are number of
factors which will assist the organisation to bring innovation and formulate innovative
capabilities.

REFERENCES
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