Business Innovation Management: A Case Study of Tesco's Strategies

This report provides an in-depth analysis of Tesco's innovation strategies from its inception to recent years, highlighting the company's various approaches to improve overall business growth. It emphasizes the importance of innovation in the ever-changing business environment and how Tesco leverages new ideas and technologies to reduce operating costs, improve online shopping experiences through mobile apps, and minimize environmental pollution. The report also explores Tesco's strategies for achieving new business trends, building strong customer relationships through CRM systems, and delivering high-quality products to meet customer needs. Furthermore, it examines Tesco's innovation history, performance, and capabilities through SWOT and value chain analyses, providing a comprehensive understanding of the retail giant's approach to innovation and its impact on the industry.

Business Managing Innovation
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Executive Summary
The report gives emphasis on the innovation strategy of Tesco from the beginning to recent
years. The company takes various strategies to improve the overall growth of the business.
Therefore, the company has an experienced team, who helps to take innovative ideas and
strategies to run the business of the company effectively and successfully. It is necessary for
every company to acquire latest innovation strategies to fulfil the business objectives. In this ever
changing atmosphere, innovation plays an effective role for the development of the business.
Tesco has used new ideas and strategies to reduce the operating cost of the company. Innovation
is essential to improve store operating model and inbound logistics. Tesco has invented some
new technologies to improve the online shopping. The company has invented some mobile
shopping apps to help the customers in the online shopping.
On the other hand, with the help of latest technology, Tesco is able to reduce the level of
environmental pollution. Therefore, the company uses latest and modern technologies to conduct
innovation process. Besides, Tesco takes new strategies to achieve new business trends, which
help the company to fulfil the latest business goals. On the other hand, innovation helps to
improve the relationship between company and customers. Therefore, Tesco builds CRM system
to build healthy relationship with the customers. The main aim of Tesco is to provide high
quality products to the customers, so that they can satisfy the customers according to their needs
and lifestyles. Innovation is necessary to provide long term value to the customers. This report
discuses the present, past and future innovation strategy of Tesco to understand the situation of
the company. On the other hand, this report also gives focus on the innovation history of Tesco
to analyze the overall innovation strategies of the retail company.
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Table of Contents
Introduction......................................................................................................................................3
The Organization and industry Overview:......................................................................................3
The organization and its Innovation History...............................................................................3
The organization existing Innovation Performance and Capabilities..............................................7
SWOT Analysis...........................................................................................................................7
Value chain analysis....................................................................................................................8
The Industry in 2018......................................................................................................................11
Conclusion.....................................................................................................................................13
Reference list.................................................................................................................................14
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Introduction
In this ever changing situation, every business industry needs use innovative idea to survive in
the present situation. Innovation defines the change, revolution, alteration, transformation and
renovation of the business. Therefore, innovation strategy is necessary for every business
industry to achieve the expected goal. This report gives focus on the innovation strategy of
Tesco. In this era of globalization and digitalization, Tesco takes various innovative strategies to
achieve the highest goal in the business industry. Tesco is one of the leading retail Companies, so
that the company needs to acquire some innovative, up to date strategies and techniques to
maintain the position within the competitive business industry (Cai et al., 2017). The company
has an expert team, who are always busy to invent new ideas, which help the company to hold its
position in the retail industry. On the other hand, the company uses new technology in the
business strategy. The digitalization in grocery industry has come with the help of Tesco. The
company invests more in the IT infrastructure to expand the overall business of the company.
The Organization and industry Overview:
The organization and its Innovation History
Tesco is the leading retail company of the United Kingdom. The Company is considered as the
third largest retailer in the world in the basis of profits and on the other hand, the company is
considered as the ninth largest retailer in the world in the basis of revenues. Tesco has opened
shops in seven countries across Asia and Europe. The company was founded in 1919 as a group
of market stalls by Jack Cohen and it was appeared as Tesco in 1924. The company is renowned
in the market of the UK, Ireland, Hungary and Thailand for the grocery business but the
company also provides services in the industries of clothing, books, electronics, furniture, petrol
and so on. The company gives emphasis on the customers’ needs. Therefore, the company takes
new strategies and ideas to satisfy the customers. The Head of Tesco Labs, Angela Maurer said
that the company was started with two sources of inputs, which are customer needs and future
forces. To fulfil the needs of the customers, the company gives emphasis on the internal
infrastructure of the company. On the other hand, future forces define technical, societal, fashion
and demographic trends, which are necessary to improve the overall growth of the company.
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The company always chooses best idea and innovation to run the business effectively and
successfully. The innovation team of Tesco is experienced and hard working, so that the team
members are always busy to invent new ideas for the growth of the business. The main objective
of the innovation team is to start from an initial idea to a least feasible product within six weeks.
The innovation team always invents new ideas and techniques to satisfy the customers.
Therefore, the company uses innovation in order to improve the relationship with customers.
Every year Tesco organizes a program, where almost 350 people work as a team to develop the
ideas and business strategies (Coe and Wrigley, 2017).In 1977, the company started the
Operation Checkout price cut plan to increase the sales. In 1979, the sales of the company
reached £1bn because the company adopted some new strategies. Tesco was appeared as a new
structure in the year 1985. In this year, the company starts to use innovative technology to get
more profit. In 1993, the company launches its value range under the “every little helps” strap
line. In the year of 1994, Tesco expands its business as a retail company in the market of China,
Korea and Turkey. The year o9f 1995 is very important in the history of Tesco because in this
year, the company achieved the top slot and appeared as the largest food retailer in Britain.
In 1997, Tesco was successful to open its first Tesco hypermarket in Pitsea, Essex. It is said that
the company has been using modern digital technology since 2000. In 2000, the company
launched Tesco.com to provide online services to the customers. In 2007, Tesco enters in the
market of US and announces to open hundreds of Fresh & Easy stores to provide services to the
customers. On the other hand, the company launched Tesco Bank in the year 2009. In 2018, the
company plans to stop the uses of poly bags in their stores (Petticrew et al., 2017). The company
chooses best innovation procedure to execute the business effectively and successfully. The team
presents the working innovation strategies to the senior executives of the company and the
executives choose most promising and up to date concepts. Thus, it is said that the company uses
innovative ideas and strategies to improve the business. The company uses technology to
improve the innovation strategies from the very past. The company has uses different types of
innovation strategies for different departments so that they can achieve the mutual benefits from
various departments. Tesco expanded its business organically during 1950s and 1960s. The
company acquires innovative ideas to expand its business globally. From the very beginning, the
company invent new strategies to develop the brand value because a strong brand builds a long
term relationship with the customers.
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Tesco provides every product under a particular brand name, so that the customers are conscious
about the brand value. The company uses latest innovation to create reliability and trust about the
brands. On the other hand, the company reduces operating costs to increase the overall profit of
the business. Tesco uses technology to reduce the cost of work force and time (Dewick and
Foster, 2018). Besides, technology helps the company to supply products to the customers easily
and successively. The company has changed the distribution network to supply products and
services more easily. Therefore, the innovation team of the company invents some new strategies
to reduce the operating cost for the further benefits. The company has launched store operating
model to improve the services in their different stores. The company provides customer
satisfaction by reducing cost of the products. The company has invented some policy such as
customer satisfaction policy to survey about the choices and needs of the customers. One of the
most important innovative ideas of the company is to conduct survey to know about the opinion
of the customers on products and services. The company makes survey and then uses innovative
ideas to produce products according the needs of the customers. Tesco has improved an
innovation strategy that is to set a three-year target to generate cash from operation (Dodgson,
2017).
The innovation team of Tesco gives focus on the 4 P’s of innovation that are product, process,
position and paradigm.
Product: The Company gives emphasis to improve the quality of products, so that they use
innovation during production. The company always tries to improve the quality of products to
give satisfaction to the customers. Tesco uses different brand name for their different products to
increase reliability for the customers. The company uses latest innovation to make its products
completely different from the products of other companies. The company takes some
incremental changes to make the products better. On the other hand, the company uses radical
changes to make products completely different so that the customers are easily attracted by the
products. Therefore, the experienced team of Tesco uses latest innovation to provide best quality
products and services to the customers (Morgan et al., 2017).
Process: The process includes all the steps, which are necessary to produce best quality products
or services such as supplying, workflow, hiring people and training. Therefore, Tesco works to
change the way by which the company creates and delivers products. For example, the company
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improves the service system to satisfy the customers. The company has launched various ways to
reach to the customers. Tesco has launched Tesco Extra, which serves products for the customers
of outside the town. Tesco Metro is a super market, which is mostly found in town centre and
near train station. Thus, Tesco Metro provides products for the customers, who live in the cities.
Tesco Express provides products in the busy city centres. On the other hand, Tesco has launched
its online shopping through Tesco.com. The consumers can buy both food and non food products
from the online store of Tesco. Therefore, Tesco has taken various innovative strategies such as
new stock replenishment system to develop the process. (Galloway et al., 2017).
Position: Tesco implements different types of policies to increase the customers for their
products. The company provides seasonal discount to the customers to increase the sales.
Besides, Tesco launches loyalty card to provide customer satisfaction. The company produces
products for all types of customers, so that the company needs to use latest innovation to satisfy
the target audience (Heller, 2017).
Paradigm: Tesco uses innovation to improve the way of business. The company takes the help
of latest technology to improve the way of business, so that the company can achieve profit from
the business.
Therefore, Tesco uses modern and innovative technology from the very beginning to achieve the
highest goal. The company always works to improve the quality of its products. The company
works on the 4p’s of innovation to take new ideas and business strategies.
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Figure 1(Timeline of Tesco) (Walton et al., 2017)
The organization existing Innovation Performance and Capabilities
In this era of digitalization, Tesco uses technology to expand its business globally. The company
has launched some strategies to improve the overall business process of the company. Therefore,
Tesco has invented some new ideas to run the business effectively and successfully in the retail
industry (Jones and Livingstone, 2018).
Multi-Chanel Retailing: Multi-Chanel retailing is considered as the most dominant theme for
the retailers in the 21st century. Tesco has occupied a leading role to capture the facilities of
Multi-Chanel retailing process. Multi-Chanel retailing allows a company to sell its products from
various stores and online service. Tesco has opened various stores to provide products or
services to the customers such as Tesco Metro, Tesco Extra, and One Stop and others. On the
other hand, the company provides services to the customers through online shopping. Tesco
works to improve the online shopping to provide facilities of home shopping to the customers.
The company has launched different mobile apps, which help to conduct online shopping. The
online delivering system of the company is innovative and strategic, so that customers enjoy the
opportunities of free and quick delivery. On the other hand, the company reduces the importance
of hyper market and increases the importance of small stores to supply products to the customers.
The technical team of the company has used innovative tool to improve Tesco.com, so that
customers can get services easily and effectively through online shopping. The company has
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created various shopping apps for the Android, iPhone or iPad. On the other hand, to improve the
quality of online shopping, the company has created its own creation Hudl Tablet. Therefore,
Tesco has used innovation to improve Multi-Chanel retailing process (Li and Nguyen, 2017).
Application for the Tablets and Smartphone: Tesco has invented different ideas and
innovation for their consumers. The British consumers can purchase products from anywhere
through their mobile phones by the help of free Tesco shopping app. The customers are able to
purchase products from the Tesco in any time of the day. The technical team of the Tesco has
used various strategies to make the innovative shopping apps for the customers. Now-a-days,
consumers can purchase thousand of products through online to save their time and cost of
transport. Tesco’s online portal offers everything from food to hardware to sport equipments.
The company takes some strategic business plans to attract customers for the online shopping.
The marketing team of Tesco invents some innovative marketing strategies to capture the eyes of
the customers. For example, the company provides some pictures of products in the online site
like Facebook to grab the attention of the consumers. On the other hand, Tesco has launched
another site named Tesco Real Food, which provides recipes, videos and cooking tips to the
customers. Besides, the customers can get various recipes through Tesco’s free Recipe Text
Service. Therefore, the company has adopted modern and innovative technology to provide
services to the customers through online. The technical team of the company is innovative and
experienced, so that it is possible for the company to use innovation during providing services to
the customers
Click and Collect Drive: The latest strategy of the company is to provide personalize services to
the customers. The company has launched a survey system to know about the preferences and
lifestyles of the customers. Therefore, Tesco provides products according to the lifestyles and
choices of the customers. Tesco has invented Click and Collect grocery service system to save
the time of the customers. The experience team of Tesco is working to improve the online store
of Tesco, so that the cost of delivery is reduced. The customers of Tesco use Click and Collect
services to collect products from any location. At first, customers visit the website of the
company to select items, which they want to purchase and then they go to the stores to pick
products according to their needs (Pantano et al., 2018).
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Efficiency in Supply Chain: Tesco has invested more to build an elastic and vigorous supply
chain to diminish cost and increase profits. Tesco has implemented various new processes and
systems to improve the supply chain. The company mainly focuses on the new, trendy and
cutting age fashion for both men and women. On the other hand, the new strategies and
innovation are the result of the development of Tesco’s online business. Therefore, the company
works to acquire new strategies that are helpful for the effective supply chain system.
Retail Ready Packaging Initiatives: Tesco has improved the packaging system of the products.
Tesco is considered as the inventor of Retail Ready Packaging system. Therefore, the company
works to improve product packaging and replenishment in-store. The replenishment system of
Tesco is controlled by the “Five Easys” such as easy to recognize easy to replenish, easy to open,
easy to shop and easy to collapse. For example, Tesco works closely with the bread suppliers to
use innovative idea to improve the packaging system of the products. The attractive packaging of
a product increases the sale of the products.
New Stock Replenishment Systems: The most attractive innovation of Tesco is to reduce the
wastage of foods. The team works to reduce the level of food waste by inventing new strategies
and ideas. (Crowe, 2017) The company launches a food donation program to feed hungry people
and as well as animals.The company always provides fresh food products for the customers to
maintain their value. The company plans to use Group Ordering System by Oracle to reduce food
waste in the stores. The GOS is used as a sales forecast, which is created on the basis of latest
items movement in stores. Therefore, customers can order food items according to the latest
menu of the stores (Souza-Monteiro and Hooker, 2017).
Use of Innovative and Modern Technology: Tesco has taken the help of green technology to
reduce the emission of carbon and green house gas. Therefore, the company uses technology to
reduce the level of pollution. In this era of digitalization, Tesco uses different technical strategies
to improve the overall business process.
SWOT Analysis
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Strength
Tesco offers a broad and diversified base of customers that include oil and gas companies,
drilling contractors, equipment brokers and so on. Tesco is not dependent on a single sector, so
that the company can relate with customers in different ways. On the other hand, the company
offers strong product portfolio all over the world. The company provides six model systems on
the basis of customers’ demand to tackle competition in the market. The company holds various
patients to develop the technologies for the benefit of company’s core business (Behrens, 2017).
Weakness
Tesco faces various controversies, which violate the patents of the company. On the other hand,
the legal costs of Tesco have increased and it spoils the business and image of the company.
Opportunity
One of the main opportunities of the company is the continuing investing on development and
research. Tesco is considered as a technology based company, which invests continually to
improve and develop its existing technologies. On the other hand, Tesco has invested to improve
strategic acquisitions to increase its process.
Threats
The company faces an uncertainty in the global, economic and political situation. In oil and gas
industry, Tesco faces substantial risk factors during activities like exploration, production and
application.
Value chain analysis
Inbound logistics
The company has designed a thin and dexterous inbound logistic map to control the overall cost
of the company. Tesco has a fundamental bargaining power to acquire low costs from the
suppliers. On the other hand, the company improves seller lists and in-store process to bring
efficiency into the company’s inbound logistics.
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Outbound logistics
Due to its efficient outbound logistics, Tesco holds the leading place in the online and offline
retail sectors. The company improves different formats in their stores to provide better facilities
to the customers.
Operation management
The company improves IT system to develop the low cost leading scheme. Tesco has
implemented innovative digital plan to improve the operation management of the company. The
latest plan of the company is to harmonize the stores effectively to increase the sales.
Selling and gross sales
Tesco has introduced loyalty card scheme like Tesco club with the help of information
technology to provide better customer satisfaction. On the other hand, Tesco has launched
Greener Living Scheme to provide advices to the customers about environmental issues. This
scheme is an innovative idea, which helps to reduce the level of pollution in the society (Heller,
2017).
Service
Tesco is able to provide high grade of value by the help of cost leading scheme. The
management of Tesco conducts a market survey to understand the services of rival companies
like ASDA and Sainsbury to improve its own services.
The Industry in 2018
Tesco is considered as one of the leading retail company of the United Kingdom and therefore
the company uses various strategies and techniques to hold the position in the retail industry.
Tesco has planned to use some new strategies and techniques to improve its business in 2018.
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For example, the technical team of Tesco works to reduce the level of pollution in the society to
decreasing the use of poly bags in their stores. The new trend of the company is to use modern
technology to reduce emission of CO2. The company has stopped the uses of poly bags in 2018
and it is an important step for the company. On the other hand, Tesco provides healthy foods for
the health conscious people to improve its grocery business. For example, Tesco produces
replacement of sugar for the health conscious customers. Being conscious about the latest public
health agenda, the company decides to supply food products for the health conscious customers.
Tesco launches new healthy food brands to satisfy the health conscious customers. The company
uses new ideas to improve the marketing strategies. For instance, the marketing team of Tesco
has taken the help of online sites to improve the marketing strategies. On the other hand, the
marketing team uses social sites such as facebook to conduct online marketing.
The company gives advertisement on the social sites to attract the customers about their
products. The most innovative strategy of the company is to improve the online shopping system
for the customers, so that customers can purchase products from their homes. The company has
launched bonus card and coupon for the customers to give them satisfaction during shopping. On
the other hand, the company decides to organize some programs for the collection of information
about the shopping process of the customers. The company gives emphasis on the data
collection, so that they can produce products according to the choices of the customers.
Therefore, the company will be able to satisfy the needs of the customers according to their
requirements (Sarjana et al., 2018).The company has taken innovative strategies to develop the
brand value of the customers. The company has launched different brands to achieve the
reliability of the customers.
The most recent strategy of the company is to increase online shopping habit among the
customers. Tesco gives various opportunities to the customers in their online shopping.
Therefore, the company decides to reduce the habit of store shopping. On the other hand, Tesco
invents some ideas to help the customers to save their money in their weekly grocery shop. To
develop the weekly shopping process, the company offers various facilities such as weekly point
system to satisfy the customers. The company has planned to develop mobile app technology to
provide easy service to the customers. The company decides to create new apps, which help in
the online shopping. Tesco helps customers to achieve good experiences from the stores during
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shopping. The latest innovation of the company is to use social networking sites for the business
promotion. The company has taken CRM (customer relationship management) strategy to
improve relation with the customers. Tesco offers magazine to the customers in the retail shops
to inform about the latest products and brands. The company decides to launch food magazine,
which will provide recipes of different types of foods. The company offers loyalty card schemes,
which present different schemes for different family members. This loyalty card scheme
provides facilities according to the age groups of the customers. It is said that innovation helps
the company to survive in the competitive atmosphere (Son et al., 2018).
Conclusion
Thus, the report discusses the new innovation strategies of Tesco to achieve the highest position
in the retail industry. Tesco has taken various innovative strategies to run the business effectively
and successfully. The company has taken strategies according to the latest trends of the market.
Innovation is necessary for every company to accomplish necessary changes and development in
the business process. Therefore, Tesco has taken new ideas and strategies to provide services to
the customers according to the modern trend. The company has planned a survey to gather
information about the customers, so that they are able to provide products according to the life
styles of the customers. On the other hand, Tesco is able to understand the latest trends of the
market and they provide services according to the latest trends. Therefore, Tesco has an
experienced team, who are able to implement innovation according to the latest trends.
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