Managing Information and Technology: Tesco Case Study

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Managing Information and
Technology
Assessment 1
LSBM100
Company Name – Tesco

Contents
5.1 Tesco Company Introduction....................................................................................................3
Business Strategy of Tesco Company.........................................................................................3
Services and Product of Tesco Company....................................................................................5
5.2 Analyze Competitive Environment...........................................................................................7
Internal and External factor of Competitive Environment..........................................................9
5.3 Porter’s Value Chain of Tesco Company................................................................................11
Strength and Weaknesses of Tesco Company...........................................................................13
The strength of Tesco Company............................................................................................13
Weaknesses of Tesco Company............................................................................................14
5.4 Role of Information Technology in Tesco Company..............................................................15
Deployment of Information Technology in Tesco Company....................................................16
Innovative ideas for improving the Business process and Competitive positioning.................17
References......................................................................................................................................19
List of Figures
Figure 1: Tesco Numbers of Stores.................................................................................................3
Figure 2: Business Strategy of Tesco Company..............................................................................4
Figure 3: Business Strategy 2 of Tesco Company...........................................................................5
Figure 4: Porter’s 5 Forces Rules Model.........................................................................................7
Figure 5: Business analysis of Tesco Company..............................................................................8
Figure 6: Porter 5 Rules analysis for Tesco Company....................................................................9
Figure 7: Effect of Internal and External factors...........................................................................10
Figure 8: Value Chain of the Tesco Company..............................................................................13
Figure 9: Effect of Tesco's Strength..............................................................................................14
Figure 10: Effect of Weakness's Tesco..........................................................................................14
Figure 11: Use of Information Technology...................................................................................15
Figure 12: Use of Electronic Spreadsheets....................................................................................16
Figure 13: Use of database for improving the Business process...................................................18

5.1 Tesco Company Introduction
Tesco was started in 1919 which is one of the biggest retailer chains of United Kingdom
Company and it is positioned at a second position in all over the world after Wal-Mart. The
company’s founder is Mr. Jack Cohen. Tesco Company is doing business in 12 countries and has
50,000 employees. Tesco company was started its business with grocery items to electronics and
clothes items to sports merchandise. Tesco Company was leaded revenue earner in the United
Kingdom according to Forbes magazine 2014. The Tesco Company is also providing telecoms
and financial services along with internet type services. The Tesco Company is listed in FTSE
and LSTC within numbers of 100 top companies for investment. Tesco Company is maintained
strong and good communication relation with customers and focused over the business model. It
is providing the loyalty scheme with the help of club card and Tesco is using the information
system or technology for maintaining the supply chain (Businesscasestudies, 2018).
Figure 1: Tesco Numbers of Stores
Business Strategy of Tesco Company
The business strategy is known as strategy or process which is utilizing for achieving specific or
desire objective of organizations. It is mostly utilizing for making long period business planning.
The business strategy of Tesco Company is defined as cost leadership and provides the “Every
little help” to the customers. It is developing values for earning lifetime loyalty of customers.
The Tesco Company’s business strategy is related to the vision, mission, scope, and environment
of Tesco business organization. Company business strategy is focusing to regain the trust of

stakeholders for maintaining the profit level of the company’s business. Senior management of
the company is also utilizing the following business strategy to maintain the business process of
the company which is providing below:
 The company is focusing on the services, selectively and availability on basis of prices.
 They are also launching the programme for regaining trust in every brand’s aspect.
 They are also decreasing prices of capital expenditure.
 They are expanding their business in India, the Middle East and South East Asia, and
Europe.
 Tesco is analyzing the situation of the organization so; they can easily scan all the
problems and issues within the organization.
 They are making their shopping journey or experience as easy as possible.
 They are introducing or providing value and simplicity for the complex markets
(Research-Methodology, 2016).
Figure 2: Business Strategy of Tesco Company
As the figure is showing the Tesco Company is utilizing different types of factors in their
business strategies such as cost leadership, cost focus, differentiation focus, and focused
differentiation. With the help of this business strategy, they are enhancing the profits of the
company.

Figure 3: Business Strategy 2 of Tesco Company
Services and Product of Tesco Company
Tesco Company is providing different types of services and products in the different types of
fields which are providing below:
 The Tesco Company is providing food items, household items, electronics mobile items,
beauty and health items, entertainment items.
 Tesco is setting up an alliance with Scotland’s Royal Bank and providing a different type
of banking services.
 Tesco Company is developing new services and products for selling to existing
customers.
 Tesco Company is also providing retailer services. They are launched “Tesco Telecoms”
which is including Tesco talk, landline, and mobile services.
 Tesco Company is also expanding the selling services over the internet, motor insurance,
travel insurance, and pet insurance.
 Tesco Company is also providing legal services so; visitors can easily search the lawyers
in different areas. They are also providing different types of legal advice and rental
agreements (Corporatewatch, 2018).
To provide such types of products and services, Tesco Company is establishing Tesco extra,
superstore, metro, Tesco express and other things which are providing below the table.

Format Number Total
area (m²)
Total
area (sq.
ft.)
Mean
area
(m²)
Mean
area (sq.
ft.)
Percentage
of space
Tesco Dotcom
only
6 66,519 716,000 11,086 119,333 1.80%
One Stop 780 117,894 1,269,000 151 1,627 3.18%
Tesco Metro 176 185,156 1,993,000 1,052 11,324 5.00%
Tesco Express 1,740 376,629 4,054,000 216 2,330 10.17%
Tesco Superstore 479 1,307,610 14,075,000 2,730 29,384 35.32%
Tesco Extra 252 1,648,842 17,748,000 6,543 70,429 44.53%
Total 3,433 3,702,649 39,855,000 1,079 11,609 100.00%

5.2 Analyze Competitive Environment
In this section, the Tesco Company is analyzing competitive environment for the business which
is done with the help of Porter’s 5 forces analysis. It is containing numbers of external and
internal factors which are creating a competitive environment for the Tesco Company. So,
Porter’s 5 forces are analyzing the erratic and vibrant environment of Tesco Company which is
influencing the performance of the company and company can achieve the strategical type of
success. It is also analyzing the competitive environment for the Tesco Company. Therefore,
Tesco Company was expended its vision and mission after analyzing the competitive
environment for the company.
Porter’s 5 Forces Rules
Porter's 5 forces rules are analyzing the competitive environment and the impact of firm
profitability in the Tesco Company. So these 5 forces rules are given below:
Figure 4: Porter’s 5 Forces Rules Model
 Thread of New Entrants: New entrants are creating the new innovation in the retailer's
company which is putting the pressure on Tesco Company via reducing costs, provides
new value, lower pricing strategy for customers (Fernfortuniversity. 2018).
 Bargaining Power of Suppliers: The Tesco retailer company is buying raw material
through numerous suppliers. So, suppliers can reduce margins of Tesco companies in the
market at the dominant position and power suppliers are using their negotiating strength
for extracting the price of products from the Tesco Company. This factor is impacting
overall profitability of Tesco Company.

 Bargaining Power of Buyers: In present times, buyers are demanding best offers and
they want to purchase best things via paying the minimum cost as possible which is
putting the pressure over the Tesco Company and it is reducing the profitability of Tesco
Company. Therefore, higher bargaining strength of buyers is increasing the offers and
discounts of products and services.
 Threats of Substitute Services or Products
When new services or products will be launched by company and these services and
product’s need is fulfilled by other products. So, this will affect the profitability of Tesco
Company. For example, Food and other types of services are providing by the other
companies at the save prices and offers which is creating the burden over the Tesco
Company.
 Rivalry among Existing companies or competitors
The Five rules of forces analyzing are providing all the details information of the degree
of competition which is faced by Tesco Company. This type of analysis is showing that
the grocery industry is facing high competition with buyers and other competitors which
is influencing and decreasing the overall profitability of Tesco Company. So, Tesco
Company is operating in the highly competitive retailer environments (Fernfortuniversity.
2018).
Figure 5: Business analysis of Tesco Company

Figure 6: Porter 5 Rules analysis for Tesco Company
Internal and External factor of Competitive Environment
Here, numbers factor are available which is creating the competitive environment for the Tesco
Company and this analysis is completed on the basis of Porter’s 5 forces rules.
Internal factors: There are numbers of internals factors which are impacting the growth rate of
the organization.
 Structure: The structure of Tesco Company is highly hierarchical which is containing
numbers of numbers of the store. So, it is difficult to manage all the stores in the proper
and which is impacting objective of Tesco Company.
 System: The chain of Tesco Company’s supermarket is basically depended overspread
and a wide range of systems to approach sustainable operations. If a proper system is not
implemented in the Tesco Company which is reducing the profit of the Company from
2005 to 2007.
 Staff: Tesco Company has 400,000 employees in all over the world which are the main
backbone of the company. If they won’t work in the effective and proper manner so,
Tesco Company can’t get success (Leoisaac, 2018).
External Factors: There are numbers of externals factors which are impacting the growth rate of
the organization and influencing working and goal’s achievement of Tesco Company and it is
also creating the competitive environment for the company.

 Political Factor: Tesco Company is encouraged via China country to invest money in
the China market and China has detached all foreign trade’s barriers. Tesco Company
has entered in the China market and facing and creating competition from and to other
companies in China.
 Economic Factor: Customer’s behavior is directly impacted via economic factors which
are the main concerning reason or issue for Tesco Company and it is decreasing the
profitability of the company.
 Social Factor: The social beliefs of numbers of customers are influencing the Tesco
Company because the young generation is eating very less and they never go to
supermarkets for the purchasing and they are purchasing everything from the online
markets which are creating problems for Tesco Company.
 Legal Factor: Due to legal factor and financial recession, the VAT is increasing up to
20% which is decreasing the demand of non-foods types of segments and items such as
shoes, clothes and etc. which is decreasing the profit of Tesco Company (Leoisaac,
2018).
Figure 7: Effect of Internal and External factors
As graph is showing that Tesco Company is facing a competitive environment and lose profit
due to other companies and internal and external factors.

5.3 Porter’s Value Chain of Tesco Company
The value chain is working as an analytical framework that is utilizing to identify business
activities. So Tesco Company is analyzing the business activities to create competitive
advantages and values for the business. The following figure is describing different types of
primary and supportive activities in the value chain of Tesco Company (Dudovskiy, 2016).
Primary Activities: The primary types of activities are immediately and directly affecting the
value and supply chain of the Tesco Company such as productions of company’s product,
maintenance of products, support and sales of the services and products. The primary activities
are containing different types of elements and factors which are providing below:
 Production or Operation: The production activities are all activities which are
converting services and product’s inputs into semi-finished and finished products. Tesco
Company’s operations are divided into 3 categories which are providing below:
1. Retails: The retail segment is representing the main business area of Tesco Company.
The Tesco company store’s operation is in the following format such as metro,
express, extra, and superstore. Metro stores are containing a wide range of non-food
and food items such as fruits, greetings cards and etc. Express is small size stores
which are providing fresh foods to customers at their workplace and home. It is
designed or created for small shop visiting and top-up purchases. Extra is a large type
store which is providing the clothing, electrical equipment, beauty and health
products, financial and homecare services. Superstore is providing the best quality of
foods and different types of products.

2. Manufacturing: Grocery retailers chain is selling own brand products and services at
the low prices. Recently, Tesco has launched 76 types of farming products in the
seven brands which are allowing to supermarket chains for competing with German
discounters Lidl and Aldi with “farm” brands (Dudovskiy, 2016).
3. Banking: Tesco is setting up an alliance with Scotland’s Royal Bank and providing a
different type of banking services and Tesco bank was generated high profits (194
million) in 2014.
Format Numbe
r
Total
area (m²)
Total
area (sq.
ft.)
Mean
area
(m²)
Mean
area (sq.
ft.)
Percentage
of space
Tesco
Metro
176 185,156 1,993,000 1,052 11,324 5.00%
Tesco
Express
1,740 376,629 4,054,000 216 2,330 10.17%
Tesco
Superstore
479 1,307,610 14,075,000 2,730 29,384 35.32%
Tesco
Extra
252 1,648,842 17,748,000 6,543 70,429 44.53%
 Inbound Logistics: Inbound logistics of Tesco Company is very complex and it is
containing a supply of 100 product categories to numbers of Tesco stores such as 7817 in
all over the world. So, this activity is containing the storing, internal distribution and
receiving the basic ingredients or raw materials of services or products. The relationship
with buyers and suppliers is very essentials or important for creating value with the
company organization.
Support Activities: The supporting activities are assisting the primary activities which are
forming on the basis of Tesco organization or any organization. The dotted lines are representing
the linking between primary activities and support activities which are showing in the figure.
Support activities can be human resource management which is providing support to other
activities i.e. outbound logistics and services (Slideshare, 2018).
 Human Resource Management: Human resource management department of Tesco is
covering training, recruitments, reward structure, and management development of the