Strategic Analysis of Tesco's Online Business Venture: A Case Study

This case study analyzes Tesco's successful online venture, focusing on the strategic approaches that led to its growth and market dominance. The report begins with an executive summary and an introduction to strategic management and diversification, emphasizing the role of the internet in expanding market reach. It then provides background information on Tesco, highlighting its evolution into a global retailer. The core of the study examines Tesco's product range development, improved customer experience online, and the integration of home delivery as key elements of its strategy. It delves into the company's use of customer data, user-friendly website design, and efficient delivery systems. The analysis includes a comparison of Tesco's strategies with an e-business model, covering product innovation, customer relationship management, infrastructure management, and financial aspects. The study concludes by emphasizing Tesco's ability to adapt and diversify, making it a prime example of achieving success through strategic planning and sustainability. References to relevant academic literature are also included.

Running head: CASE STUDY ON TESCO
CASE STUDY ON TESCO
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Executive Summary
The report comprises of two parts. The first part of the report concentrates on the Case study of
the supermarket Tesco and its online venture. The online venture of Tesco was extremely
successful in its initiative and hence, the first part summarizes the various strategic approaches
adopted by the firm in order to gain the success.

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Introduction
Strategic Management often concentrates on the diversification strategy of the consumer
whereby the diversification is based on both product as well as the international level. In the
retail scenario, diversification goes a long way for the firm in to increase its market share and
attract better customers who stay in the organization for a long time (Barney and Hesterly 2015).
The internet is a storehouse of various activities which help the company to utilize
diversification approaches and enables them to have access to those markets, which were
previously unexplored by the given company (Chaffey 2015). This concept was utilized by
Tesco.com and along with it they combined their strength of a strong distribution channel to
conduct both online as well as offline services in order to cater to a larger crowd.
The primary aim of the given case study is to analyze the various diversification
strategies which were adopted by the online giant in order to become successful. In the first
section brief information on the company will be provided which will be followed by the
strategic approaches that were used by the company to make its online venture successful
(Rothaermel 2015). The approach aims to reflect on a proper understanding of the given case
study and show the implementation of the models of e-marketing.
About the company: TESCO
Tesco plc which popularly trades as Tesco is a multinational grocery and general product
merchandize business retailer based in Britain with its headquarters located in Garden city,
Herefordshire in the United Kingdom (Tesco.com 2018). It is one of the largest retailers in the
globe in terms of both revenue and profits. The company was found by Jack Cohen and he

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expanded his business rapidly. The company has diversified technologically and geographically
as well into various arenas like books, clothing, prepaid services, broadband, petrol, electronics,
financial services and others. It has also made its presence online for wider consumer base.
The strategic approaches that have helped tesco.com achieve online success
Product range development
Product development can be referred to as an important tool which can be utilized by any
organization to attain success (Slack 2015). Through the introduction of products and
development of the existing products, an organization can offer its customers what they are
seeking. This opens new opportunities for the firm and gives rise to an atmosphere of innovation
in the organization. Very often for the development, customer information is applied in order to
see to it that customers get attracted easily. The products developed according to the demands of
the consumers tend to strengthen the position of the company.
The company-user approach has been used by the Tesco Company in the given scenario.
Due to the advent of technology, a track can be kept with respect to the needs and requirements
of the consumer. This information which is obtained is then converted into the system and a
database is maintained for the future.
Under Wade-Gery`s leadership, the company made use of the given approach to attract a
larger crowd of customers (Hill, Jones and Schilling 2014). The supermarket brand engaged in
various dummy test approaches in limited markets to observe the success of the program. Only
when this was successful, it launched its online services to various other markets. In the year
2015 itself, the company had successfully engaged in delivering a rough estimate of around
150,000 orders.

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Tesco used the diversification of product strategy to penetrate into different markets and
gained huge shares in the markets of Ireland and the United Kingdom. Unlike its competitors,
Tesco had not restricted itself to providing just grocery to its consumers but also provided much
more services so that the customer would not have to visit any other website than Tesco.com.
The customers could engage in activities like reloading their phones, broadband services and
rental movies. Along with this, they were often inclined to shop for groceries also (Lasserre
2017). Providing a sufficient amount of convenience to the consumers made them popular.
Improved customer experience online
It was during this time that the internet business an e-commerce had started to flourish;
Tesco realized that they had to have a presence online. Internet often provides the firms with
great opportunities to serve as a cheaper alternative for a business distribution channel. Tesco
realized that if it had to have an online presence, then it would be required to have an interface
which was user friendly.
The original store method of shopping made the customer wait before serving them. This
aspect has got totally changed in the online scenario, hereby the customers have become an
important component of the service process and are made to do half of the activities like
selection and check out themselves.
Tesco saw to it that their online website was a place of convenience whereby the
customers are easily entertained and enjoy the shopping experience. This tends to make the
communication process faster and make the customers more interested in adopting the online
way.

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Tesco understood the problem of time with respect to online shopping and developed a
formula whereby the company converted a time period of 1 hour that would have been applied
by the customer to shop the items to almost half the time (35 minutes). It offered the customers
with easy billing facilities and smart buying options which already took into the customer choice
as a factor and showed products which the customer actually purchases. This formula helped
Tesco.com to increase their revenue and even improve the customer relationship management by
providing value for money to the consumers.
Making home delivery part of Tesco. Com’s DNA
Tesco.com realized that if they aim to develop a successful relationship with their
customers, they would be required to bring the supermarket at their doorstep. Wade-Gery
decided to offer the delivery of the products purchased to the door step of the customers and they
core business functions in order to improve This integrated approach was adapted by Tesco.com
as a business model through which they developed an effective customer relationship
management (Toufaily, Ricard and Perrien 2013). Under the leadership of Wade-Gery, the
delivery service begins at 4am in the morning and the company has set up various delivery points
in order to ensure the effectiveness of the service which is being offered. Amidst this, the
customer has an opportunity to speak to the delivery man in order to keep a track of it.
Hence, it can be stated that these strategies have enabled Tesco.com to gain a competitive
advantage and increase their business.
Tesco.com online success – an e-business model at work

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Figure 1 (source: Park and Jang2013).
Comparison analysis of Tesco with respect to the given model.
Stage 1: Product Innovation
The given stage comprises of innovation in the business, differentiation of services,
respecting customer value. After analyzing the strategies adopted by Tesco to improve the
business, it could be stated that the business was successful in implementing all the aspects of the
given model. It engaged in development of its product which was one of its key success factors
(Wheelen et al. 2017). Tesco also ensured that they incorporate value in the services by offering
much more than just groceries to the given consumers.
Stage 2: Customer Relationship
In the given stage, information gathered from the various sources is assembled and
analyzed in order to provide benefit to the different consumers. The transaction time which was

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reduced for the customers served as an important tool (White et al. 2013). An improved
relationship with the consumers helped the company to a great extent to become popular among
the consumers.
Stage 3: infrastructure management
The given stage makes use of strategies and assets in order to create a large value
network and redefine the consumer boundaries. Tesco utilized this model by acquiring a
maximum number of outlets in Asia, America, England and Ireland (Wang and Zhang 2013).
Through this aspect the company wanted to stay closer to its consumers in order to see to it that
there is no chance of missing out on these consumers.
Stage 4: Financial aspect
Tesco. Com applied a model whereby it reduced the delivery costs and by marketing its
presence online, it was able to reduce infrastructure and personnel costs as well to a great extent.
Hence, from the analysis, it could be stated that Tesco`s online success was based on a
well tested model. The company was able to target its objective accurately and make its
operations grow. Even now, the company continues to expand and diversify its offerings and is
planning to penetrate into new markets.
Conclusion
Hence, from the given analysis it can be stated that the company under the guidance of
Wed-Gery, the company reached to new heights. It made sure that the company had both online
as well as offline presence in order to see to it that the brand name remains in the minds of the
consumers. Tesco.com made use of various business models to improve their share in the

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market. They engaged in successful diversification strategy in order to acquire new customers
and explore new markets. Hence, Tesco.com is a clear example of how to achieve success by
diversification and engage in sustainability.

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References
Barney, J.B. and Hesterly, W., 2015. Strategic management and competitive advantage concepts
and cases. Pearson.
Chaffey, D., 2015. Digital business and E-commerce management. Pearson Education Limited.
Hill, C.W., Jones, G.R. and Schilling, M.A., 2014. Strategic management: theory: an integrated
approach. Cengage Learning.
Lasserre, P., 2017. Global strategic management. Palgrave.
Park, K. and Jang, S.S., 2013. Effects of within-industry diversification and related
diversification strategies on firm performance. International Journal of Hospitality
Management, 34, pp.51-60.
Rothaermel, F.T., 2015. Strategic management. McGraw-Hill Education.
Slack, N., 2015. Operations strategy. John Wiley & Sons, Ltd.
Tesco.com. ,2018. Tesco - Online Groceries, Homeware, Electricals & Clothing. [online]
Available at: https://www.tesco.com/ [Accessed 24 Feb. 2018].
Toufaily, E., Ricard, L. and Perrien, J., 2013. Customer loyalty to a commercial website:
Descriptive meta-analysis of the empirical literature and proposal of an integrative
model. Journal of Business Research, 66(9), pp.1436-1447.

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Wang, J. and Zhang, Y., 2013, July. Opportunity model for e-commerce recommendation: right
product; right time. In Proceedings of the 36th international ACM SIGIR conference on
Research and development in information retrieval (pp. 303-312). ACM.
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