The Impact of IT on Competitive Advantage: A TESCO PLC Report

This report provides a comprehensive analysis of how TESCO PLC, a leading British multinational retailer, leverages Information Technology (IT) to gain a competitive advantage. It begins with an introduction to IT management and TESCO's position in the global market, followed by background information and an overview of its products and services. The report then examines the competitive environment, including an analysis of Porter's Five Forces, highlighting the bargaining power of buyers and competitive rivalry. It delves into TESCO's inbound logistics, operations, and outbound logistics, and identifies two key support activities within Porter's Value Chain: human resource management and technology development. The report also details key value-adding activities and how TESCO could deploy IT to further enhance its operations and customer service. The conclusion summarizes the findings, emphasizing the crucial role of IT in TESCO's continued success in the retail industry.

Managing Information and
Technology

Table of Contents
INTRODUCTION...........................................................................................................................3
BACKGROUND INFORMATION.......................................................................................3
PRODUCTS AND SERVICES..............................................................................................3
COMPETITIVE ENVIRONMENT.................................................................................................4
PORTER’S 5 FORCE ANALYSIS........................................................................................4
ANALYSIS OF INBOUND LOGISTICS, OPERATIONS AND OUTBOUND LOGISTICS.....6
TWO SUPPORT ACTIVITIES IN PORTER'S VALUE CHAIN..................................................7
KEY VALUE ADDING ACTIVITIES WITH JUSTIFICATION.................................................8
Key value added services offered by TESCO to customers...................................................8
BUSINESS COULD DEPLOY INFORMATION TECHNOLOGY (IT) .....................................9
CO NCLUSION.............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Information Technology Management is considered as the administration of all the
information technology resources of a firm are managed in accordance with its needs and
priorities (Cartwright and Cooper, 2012). In the same way, TESCO PLC which is a British
multinational groceries and a retailer as well, which headquartered at Welwyn Garden City,
Hertfordshire, England, United Kingdom. Company is said to be third-largest retailer in all over
the globe, which is specifically measured in gross revenues and the ninth-largest retailer in the
world measured by revenues. Mostly among Europe and Asia are the two continents in which
TESCO PLC performs operations and known as market leader of groceries within United
Kingdom, Thailand, Ireland and Hungary.
This report is going to be enclosed with the role of information technology that has
helped business organisations like TESCO in gaining competitive advantages. Analysis of the
competitive environment, analysis of inbound logistics, operations and outbound logistics. Along
with this, it will also put light on Porter's Value Chain of TESCO PLC and lastly, report will also
show how business could deploy information technology (IT).
BACKGROUND INFORMATION
TESCO was established in 1919 by Jack Cohen as a gathering of market slows down.
The TESCO name previously showed up in 1924, after Cohen bought a shipment of tea from T.
E. Stockwell and joined those initials with the initial two letters of his surname, and the first
Tesco shop opened in 1931 in Burnt Oak, Barnet. His business extended quickly, and by 1939 he
had more than 100 TESCO shops the nation over. Nations served by TESCO stores. Initially a
UK food merchant, TESCO has extended comprehensively since the mid 1990s, with activities
in 11 different nations on the planet. The organization pulled out of the US in 2013, yet starting
at 2018 keeps on observing development somewhere else. Since the 1960s, TESCO has
enhanced into zones, for example, the retailing of books, attire, gadgets, furniture, toys,
petroleum, programming, monetary administrations, telecoms and internet providers (Cresswell,
Bates and Sheikh, 2013).
PRODUCTS AND SERVICES
In present time, TESCO PLC is dealing among grocery, F&F Clothing, TESCO Club
Card, TESCO Bank, TESCO Mobile, Delivery Saver and some other sectors as well. This has

helped TESCO in grabbing the 23% market share within Europe and Asia as well. On the other
hand, this business organisation has also started offering customers with online purchasing
option considering a number of vendors within United Kingdom. Major section, which has given
this organisation number of competitive advantages are is grocery business industry. This has
raised ample number of benefits for the business organisation while conducting their operations
in all over the world.
COMPETITIVE ENVIRONMENT
TESCO is one of the famous British Multinational which deals in groceries and other
general merchandising retailer of UK. But, in present time there are ample number of business
organisations like ALDI, LIDL and more are performing operations within the United Kingdom's
business environment.
PORTER’S 5 FORCE ANALYSIS
The porter's five force model helps to understand how five different kind of factors
regarding competition effect TESCO'S working, which is dealing within the retail industry.
Bargaining power of buyers: TESCO provides its buyers with a number of products in
stores as well as online. But in today's scenario there are a number of supermarkets within the
retail industry which are giving a heads on competition to TESCO. So this gives high bargaining
power to buyers of TESCO. Even a little hike in prices might easily result in the customers
moving to competitors. This can be justified with a good example of Big 4 Supermarkets of
United Kingdom (TESCO, Morrisons, ASDA and Sainsbury's), where TESCO's suppliers raised
their supplying cost due to some reasons, which also increased the costing of products and
services offered by them (Desouza and Hensgen, 2015). This is where, if analysed then shift can
be seen of customers towards TESCO's rivals, just because of the hike within cost of products
and services. Away with this, it is said that it is important for TESCO to keep on analysing all
the factors so that right decisions can be taken into consideration. But, if it is analysed then due
to some other companies like Morrisons, Sainsbury's and more has given high range of benefits
to customers in relation to cost, heavy discounts and so on, which significantly raised bargaining
power of customers.
Bargaining power of suppliers: The bargaining power of suppliers of TESCO is really
low. This is because TESCO does not rely upon limited number of suppliers. TESCO deals with

a number of suppliers and also puts in a lot of effort to negotiate with its suppliers. Hence
resulting in no bargaining power left with the supplier. This could be understood with a good
example of TESCO Plc where, this company is already holding a good market in United
Kingdom and among other Asian countries as well, which leads them to reduce the number
suppliers within United Kingdom, and of other nations because, company believes in working
with a few suppliers only who are effective and efficient in nature. These existing suppliers of
TESCO has already covered good number of areas, which reduced the bargaining power of new
suppliers from all over the world. This justification that has been presented above can be taken as
a positive aspect for the business company, which impacted positively upon company's image
within International market (Drucker, 2012).
Threat of new entrants: The industry in which TESCO deals requires huge amount of
initial capital. So TESCO need not worry about the new entries in its industry. Even if they do
the networking channel of TESCO is very huge and complicated. These are the two major factors
which makes the new entrants in the market very rare. Here, what justification that can be given
for Tesco is that, company is already dealing at a huge level as it is coming under the term
named as Big Four Supermarkets. Therefore, it can easily be said that threat from new entrants in
low for Tesco. Including this, if it is analysed on the basis of revenue generated by TESCO Plc,
then it was around £65095.34 Millions in the year of 2019, which is huge in nature and it is
pretty much hard for new entrants to reach to this level in a short span.
Threat of substitute products: When talking about the threat from substitute for TESCO
a dilemma arises and that is due to the large variety of products provided by the company. The
major issue is the company provides products as well as the substitute of those products as well.
So the point of threat from substitute is not taken into consideration for the company. Including
this, it is said that threat of substitute products is low because, TESCO is dealing in supermarket
industry, where it is already offering customers with grocery and other products with marginal
rates, this has helped organisation to lowering down this power of threats from substitute
products or services offered by different local and small business firms (Drucker, 2012).
Competitive Rivalry: TESCO has got some very fierce competitors in its sector. The
competitors invest a lot in advertising and branding of their products. The close price war is also
being faced by TESCO from its major competitors ALDI and LIDL. This has adversely affected
the sales of TESCO. Justification that can be given over here is of big four supermarkets, where

company's competitors like market share of Morrisons is around 10.14%, Sainsbury's (15.8%),
Asda (15.3%) and Aldi (7%), which declined TESCO's market share. It will be required by
TESCO, to sustain within the market for a longer period of time, and this could be done through
make appropriate decisions right on time (Smith and Wong, 2016).
So the factors which highly affect TESCO are the bargaining power of buyers as well as
the competitive rivalry. Threat of new entrants and bargaining power of supplier are relatively
low for TESCO and the fifth factor that is threat of substitutes is considered to be irrelevant for
this company. These are said to be some of the crucial forces that are carrying low impact but
then it is also needed by TESCO to keep on making right modifications in specified time frame
so that company could gain market share (Galliers and Leidner, 2014).
ANALYSIS OF INBOUND LOGISTICS, OPERATIONS AND OUTBOUND
LOGISTICS
Inbound logistics:
This is being considered as the primal stage of value chain, which consists of different
numbers of opportunities. TESCO needs to have this as the essential appropriation and the
exercises incorporate receipt of products at the stockroom from the providers, inside taking care
of and dispersion to the stores lastly putting the merchandise in plain view at the racks. Quality
control measures are taken at each point to guarantee that the clients get genuine incentive for
cash and the superfluous expenses are not moved to the clients (Rizzo and et. al., 2016).
Operations:
Including this, it is said to be the second step, that is being taken into consideration within
value chain of an organisation (Holtshouse, 2013). Considering this section, it is said that it will
be required by the organisation to keep up functioning of every single resource that is linked
within TESCO. Including this, it is also said that for TESCO it will be required by the
organisation to continuously perform the tasks to conduct the inventory management regularity
in specified time frame, stock management to ensure competitive advantages. Organisation
specifically has taken into consideration of a new approach i.e. to enhance the operations
management where, every single factor develops high differences (Tesco Value Chain Analysis,
2019)
Outbound Logistics:

This is being considered as the delivery department, where customers gets the final
product. TESCO offers convenience to the customers by giving them home delivery. Also efforts
are made to improve trolley space, parking facilities and other tangibles to maximise feel good
for the customers (Major and Savin-Baden, 2012).
TWO SUPPORT ACTIVITIES IN PORTER'S VALUE CHAIN
To make changes in existing products and services as well as offered the more valuable
ones, management of TESCO can use the Porter’s Value Chain method (Hall, Site 1001 Inc,
2016). This technique has been profound in 1985 by Michael Porter, which includes nine major
steps for altering the business activities. Value chain methods include a number of activities like
development of firm’s infrastructure, technology and so on, for improving and enhancing
organisational performance (Marchewka, 2014). As currently TESCO seeks to achieve high
competitive advantages from its major rival companies like Sainsbury's, Morrisons, ALDI and
more, therefore, its management can implement concept of Porter’s value chain in following way
-
(Source: Porter's value chain, 2012)
Two secondary activities of TESCO: Human resource management: This activity considered as the main one, which gives
support to TESCO in providing most effective services to its customers. In this regard,
considering the Porter’s Value Chain, management of TESCO needs to concern more on

developing the workforce, by hiring people of different-different background. This will
bring new talent at workplace and give advantage to develop more unique ideas for
satisfying demands of customers and retain their long-time interests within business
(Mondo and Musungwini, 2019).
 Technology development: For attainment of competitive advantage, it is essential for
every firm to bring latest technology in business, so that quality of services and products
can be improved. For this purpose, TESCO is also seeking to bring new technologies at
its stores to increase shopping experience of customers and exceed their level of
satisfaction. Along with this, it also focuses on introducing new channels of distribution
like selling through intermediaries, value added reseller and more, to reach new
customers and enhance its profitability ratio (Margetts, 2012).
These activities has helped TESCO in sustaining within the market for a longer period of
time. Away with this, it is also needed by this organisation to keep on making appropriate
modifications within different sections so that profitability and productivity could effectively
gets improvised.
KEY VALUE ADDING ACTIVITIES WITH JUSTIFICATION
Value Adding Activities are said to be some of the crucial activities, which plays an
important role for every single business organisation when it comes to adding values on a
particular customer group, segment and so on.
Key value added services offered by TESCO to customers
 If it is talked about TESCO, then this organisation has already developed a portfolio, that
has helped firm in offering clients with high shopping experience, of various store
departments considering different range of plans and segments as well. While most of
Eastern Eastern and European outlets are Supermarkets, TESCO can also create diverse
store types in these business sectors too. This worth included by the uniqueness will in
the long run lead TESCO to order a superior cost for itself (Pearlson, Saunders and
Galletta, 2016).
 High tech- customer service department is also that TESCO has given to their customers
as it would help firm in making direct contacts with clients, and it would also lead firm to

maintain the loyalty of customers, through getting feedback from them on services
offered by TESCO. Along with this, it is also said that considering this approach,
 Another value added service, that is being taken into consideration is collaboration of
TESCO with it's suppliers. This has been done through utilising an effective Lean
Thinking approach, which may aid organisation in working smartly when it comes to
enhance the customer experience (Schwalbe, 2015).
 Another crucial value added that has been considered as a plan named as “Our Little
Helps Plan”. Basically, this value added service identified a number of issues along with
the challenges facing the business, communities, customers and outlines our
commitments to help tackle these.
With the help of above mentioned value added services, it can be said that TESCO Plc
would require to make alterations among these value added activities, which would aid the
business organisation to sustain within the market and it will also lead firm to raise competitive
advantages for itself (Hall, Site 1001 Inc, 2019).
BUSINESS COULD DEPLOY INFORMATION TECHNOLOGY (IT)
Considering the above information, it is said that TESCO would easily commute and
execute all the number of plans and procedures that are directly linked with Information
Technology. It is successfully be performed through focusing upon Porter's 5 Forces Analysis is
done through analysing a number of elements which may impact negatively upon TESCO Plc's
performance level. On the other side, there were some of plus points that came in front like,
enhancement of productivity and profitability as well. Including this, if it is talked about Porter's
Value Chain then there are a number of elements that are needed by TESCO to improve, which
would also lead this company to sustain within the market through bringing modifications among
final products and services offered by them (Valacich and Schneider, 2015).
On the other hand, if it is talked about TESCO and XANSA, then these are said to be the
two organisations that has signed a new IT services contract, that has helped in minimising the
different problems through financial terms of the arrangement were not made open. Xansa will
keep on giving an arrangement of administrations through its incorporated conveyance directs in
the UK and in India (Feng and et. al., 2016). Administrations will incorporate application the
board, programming advancement and program and venture the board for a wide scope of
TESCO's IT frameworks covering conveyance, stock recharging, items and valuing through to

day by day rack edge marking. Xansa will likewise bolster the United Kingdom and Republic of
Ireland finance frameworks just as giving general deals data. Along with this, it is also said that
there were a number of cases that came in front, which did not helped company in making
appropriate image in front of the customers (White, 2015). Away with this, it is also said that
Deferred Prosecution Agreement among different subsidiaries as, it will improvise o increase or
to enhance the competition related advantages, it is needed by they should create procedures by
remembering certain political, social, conservative and innovative elements.
These elements can assist them with growing emphatically yet in the event that they are
not actualized properly, at that point this will prompt negative effect. They have to utilize
innovation so they can upgrade their exercises and increment their productivity by furnishing
their client's with number of items that would help company in satisfying needs and requirements
in a short span (Fiorini and Masic, 2017).
CONCLUSION
Considering the above mentioned report, it is being concluded that information
technology could lead a company, organisation. It manages viable use of frameworks and
innovation to upgrade development and productivity of association. Along with this, Porter's five
forces system is utilized to break down challenge inside business and decide force of rivalry. On
the other hand, Porter’s Value Chain method is done to decide various exercises did inside
association. Aside from this inward factors of association are resolved which have positive and
negative effect on association. Moreover outer components are dissected to increase profit
margins in specified time frame. Finally proposal is given regarding innovation which they
should actualize inside their association to additionally improve their efficiency and gainfulness.

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Online
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