Tesco PLC's Strategic Use of IT for Competitive Advantage and Growth

This report provides a comprehensive analysis of Tesco PLC's use of Information and Communication Technology (ICT) to gain a competitive advantage in the retail industry. It begins with an introduction to Tesco PLC, its business strategy, and the products and services it offers. The report then delves into an analysis of the competitive environment using Porter's Five Forces, evaluating the threats of substitution, new entrants, and the bargaining power of suppliers and buyers, as well as the rivalry among existing firms. The core of the report examines Tesco PLC's value chain, identifying primary activities like operations, marketing, and sales, and supportive activities such as technology development. The report also highlights the strengths and weaknesses of Tesco PLC and reflects on the deployment of IT tools to enhance its competitive position. Overall, the report offers insights into Tesco PLC's strategic approach to leveraging technology for business growth and market leadership.

Managing Information and
Technology

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK...............................................................................................................................................1
Introduction of organisation........................................................................................................1
Business strategy of the company...............................................................................................1
Products and services offered by the business............................................................................2
Analysis of competitive environment for Tesco plc...................................................................2
Two primary and two supportive activities in Porter’s value chain for Tesco plc.....................5
Strength and weaknesses of Tesco plc........................................................................................7
Reflection on the deploying of IT tools within organisation to have competitive advantage.....8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................11

INTRODUCTION
Information and communication technology (ICT) plays a very crucial and significant
role in setting up of the operations within a business in most effective way. This will help in
carrying out the operations and thus will lead the planning of operations accordingly.
Environmental factors also play a significant role in setting up of these ICT operations. The
current report covers the details about the digital technology based operations that are been
carried out at UK based retail enterprise, Tesco PLC.
The report will cover the analysis of the internal and external environmental factors that
impacts the usage of IT tools within the organisation. Besides this, the role of IT tools in
achieving a competitive advantage. Also the strength and weaknesses of the firm is presented
with proper reflection on deploying IT tools and using innovative ideas for improving the
business performance of the organisation and getting advancement over its rivals.
TASK
Introduction of organisation
Tesco PLC is one of the largest retail enterprises in the world, with headquarter located in
Hertfordshire, England. Founded in 1919, currently it operates in about 11 countries, with outlets
in nations of Asia and Europe. The firm is a market leader of retail sector in UK. Tesco is well
known among its customer base for its practice to supply high quality goods or services on a low,
reasonable price. This helps the company to have a high level of customer base and leads to a
decent revenue generation for the organisation. It also helps in carrying out the operations and
setting a proper strategy that will help in expanding the business of the organisation.
Current business strategy of the company
Tesco PLC is known for its strategic and significant development in a consistent and
strategic manner (White, 2015). The extensive marketing and customer oriented operations are
few of the strategic measures that are been undertaken by Tesco plc. to expand its business on
local as well as international grounds. They offer a broad range of products from their portfolio
along with the products and services of other big brands too. This has turned it their stores or
outlet to be “One Stop shop”. Currently, the suitable implementation of generic strategic
measures like cost leadership and placing the high quality goods on comparative low cost are
few of the major steps followed by the selected retail business entity to have a good foot hold in
UK and other countries of its operations (Schwalbe, 2015).
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These strategies not only help Tesco plc. to gain more and more customer base but also
support to have a competitive and cost advantage over its rival firms. The cost leadership
approach or strategy will help business entity to setting standards of the pricing for certain
products while low costing attracts large number of customers, leading to rise in sales and
improving overall performance of the retail enterprises. The usage of digital technologies in
recent time for carrying out the operations has contributed a lot for the proper growth and
development of the organisation.
Products and services offered by the business
Tesco Plc. provides a diverse range of products and services to its customers with products
ranging in groceries, food items, clothing, electronics, toys, books, telecommunication and
financial or banking services. The Tesco club cards and other complimentary services are few of
the features that is been provided by the selected retail enterprise. This diversification enables the
selected retail enterprise to cater a wide variety of customers and paves various sources of
revenue for the firm.
Analysis of competitive environment for Tesco Plc.
Retail sector is one of the fastest growing industries that have seen a tremendous expansion
in operations in recent time. However, it is also one of the most competitive sectors as many
companies are operating in it with many new enterprises emerging gradually. This had lead a
situation of “do or die” for the firms like Tesco plc. The selected retail enterprises is required to
look after the proper planning of these competitive factors and environmental conditions that can
impact their performance. The assessment of the competitive environment for the selected retail
organisation can be performed using Porter’s Five Forces analysis (van der Pas and Walczuch,
2018). This will help the selected retail enterprise to look after the proper evaluation of
competitive factors that can impact or influence the performance of selected retail enterprise. The
assessment of competitive factors for Tesco plc is as follows:
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Figure 1: Porter's Five Forces analysis
(Sources: Dudovisky, 2016)
Threat of substitution (Low): The threat factor of Tesco plc. for being replaced is
comparatively low as the firm is a well-established enterprise in UK market and thus, has a
reputation to provide high quality products and services on a significantly lower price. This helps
the organisation to gain a competitive advantage over its rivals. However, in non-food items, the
fear of getting substituted is quite high as many other firms are providing the similar products
and services on relatively lower price. The inflation rates, conditions of recession and inclination
of buyers towards the discounts and other offers provided by competitors are certain factors that
can lead to Tesco plc. getting substituted within market (Laudon and Laudon, 2015). Hence, the
management of organisation is required to look after this factor to counter the struggle in market.
Besides this, the rapid growth of the e commerce operations and selling mediums has been a
threat for the organisation.
Threat of New entrants (High): The risk of competition from the new entrants within the
market is significantly high for Tesco plc. As many new companies like Asda, Morrison’s etc are
entering in UK’s retail market; this has created a situation of crisis for Tesco plc. The
competitors or rival firms are using cost differentiation strategy to incline the customer base of
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Tesco plc. towards them. Offering high quality food and clothing products on relatively lower
price range will cause the buyer to tilt away from Tesco, impacting its sales and revenue
generation (Bryson, 2017). The small scale retailers can’t be able to meet and challenge Tesco
plc.’s productivity and magnitude of operations. This can act as a hurdle or barrier for a small
level retail enterprise. On the other hand, the major retail enterprises like ASDA and Morrison’s,
with their large scale of operations and ability to meet customer’s needs or demands, possess a
big threat for selected retail business enterprise.
Bargaining power of suppliers (Moderate): The major suppliers of Tesco plc. are the
food and clothing service providers. The selected enterprise is required to maintain good terms
with them. However, proper negotiations can be made and placed between the management of
the organisation and its suppliers that will support selected retail business entity to carry out their
business operations without any restriction or problem. The effective negotiation will cause the
organisation to get the best raw material for its products on relatively lower price. Besides this, it
will also help Tesco plc. to improve its business contacts and helps in improving the effective
revenue generation. The selected retail business enterprise is also required to keep their suppliers
intact and prevent their inclination towards its rival organisation in order to maintain its business
performance and thus, will impact the performance of the organisation (Kmetz, 2018). A good
relation with its suppliers using effective negotiation will assist the selected enterprise to get raw
material in lowest possible price. Proper communication with suppliers can be established using
effective ICT tools.
Bargaining power of buyer (Very high): Buyers or customers are the heart and soul of a
company and hence, their bargaining can influence sales of the organisation to a greater extent.
As many new retail companies are entering within retail sector, they are offering effective
discounts and deals in order to attract larger number of buyers. The differences of similar product
by various retailers will lead a situation of high condition. In such situation, customers of Tesco
plc. are tends to deviate to other retail enterprises offering high quality products and services on
a comparatively lower price. Besides this, the availability of cheaper goods on online shopping
mediums or e-commerce sites will also play a crucial role in impacting bargaining perception of
buyers (Ebenezer, Bath and Pinfield, 2016). The switching of customers from Tesco Plc. to any
other, rival firm will have a negative impact on sales and revenue of retail enterprise. The
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enterprise is required to look after proper planning and screening of its product pricing in order
to avoid inclination of their buyers and reducing their customer base.
Rivalry among existing firm (High): At present in UK’s market, there are four major
retail enterprises, namely Tesco Plc., Sainsbury, Morrison’s and Asda. These firms are
competitive rivals and thus impact business of each other. The performance of Tesco Plc. will be
deeply and significantly be affected by the other three. These firms have affected market share of
firm to greater extent. The rise in their market share has led to significant decreased in revenue
and functionality of organisation. Besides this, it has sharpened rivalry among organisation,
affecting performance and setting up of operations that has created a treat situation for Tesco plc.
(DeLone and McLean, 2016).
Two primary and two supportive activities in Porter’s value chain for Tesco plc.
The Porter’s Value chain model will impact overall setting up of operations that will help
in carrying out of operations and growth measures for organisation. This will help in identifying
the best possible activities or operations that are required to be looked after and managed by
management of Tesco plc. This will help in carrying out operation's by emphasizing on activities
and operations that are been carried out by organisation. It divides operations of an enterprise in
primary and supportive functions which helps in proper planning of services and thus, helps in
meeting operations of the firm. For enterprise, the value chain model will lead to planning of
strategies and carrying out the operations.
The two primary and supportive activities of Tesco plc. as per Porter's Value chain model
are:
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Primary activities:
 Operations: This includes the processing of the raw materials and producing a finished,
operational good or product. It involves the activities like producing goods, packaging,
maintenance of the operations, testing and delivering the finished products (Park and
et.al., 2017). This will help in producing the goods and services which will help the
organisation to carry out the functionality and meeting the demands of the organisation in
most effective way. The selling of the final, finished goods or service will lead the
organisation to have a good revenue generation. Effective digital and IT tools and
services can be placed within the organisation to promote the good growth of the firm.
 Marketing and sales: This is the process of promoting or advertising the finished goods
or services. The management of Tesco plc. will make efforts to increase the awareness
about their products and service among the customers to pursue them for making
purchases (Ståhle, Ahola and Martinsuo, 2019). A good marketing will help the selected
organisation to get an effective rise in the sales, leading to rise in revenue generation and
customer base of Tesco plc. IT supports like digital marketing and social media
marketing tools are been carried out by the organisation to perform this activity.
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Figure 2: Porter's Value chain model
(Source: Value Chain Analysis, 2018)

Advertising, sales force and offers can also be used with IT tools to manage the
marketing process.
Secondary activities:
 Technical development: Tesco plc. will look after the proper assessment of the needs
and demands of the customers using the manual and online mediums to develop suitable
product or services by the firm. Online feedback mediums are been carried out by the
selected retail enterprise that will help in meeting the operational needs of the
organisation and thus will help in proper evaluation of customer's requirements and
developing suitable products or services accordingly (Kolb and et.al., 2015). It will assist
in executing the research and development process causing the digital IT tools line
Customer management system (CMS) or Information management system (IMS).
 Infrastructure development: Tesco plc. sells its products and services through its
outlets. Besides this, online support is also provided to the customers or buyers, help in
the organisation to have an effective connectivity with its buyers. Also, these measures
will help the organisation to lead a positive growth of operations within the firm. Tesco
plc. can look after the proper development and establishing of an effective infrastructure
which will impact the overall operations. Implementing the digital operational
management tool like Enterprise Resource planning (ERP) system that will help in
carrying out the operations and managing different functionalities within the
organisation. It will also help in providing the real time information, helping to develop
suitable strategies for the organisation.
All these models and activities along with the digital tools and services which are been
carried out at the firm will lead the organisation like Tesco plc to take suitable measures that will
help in carrying out the operations that will lead to rise in execution of operations within the firm
(Cushing and Dumbleton, 2017). Other than this, integrated management system tools like SAP,
Odoo, and Oracle data management tools can be used within selected retail enterprise that will
help in carrying the business activities and operations in most effective and suitable manner.
These tools will help the retail organisation to improve its performance and gain a competitive
advantage over its rivals.
Strength and weaknesses of Tesco plc.
Strengths
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 Good customer base as compared to other retail enterprises: Providence of high
quality goods and services on a lower and reasonable price is one of the major reason for
the organisation to have a higher number of customer base and this helps Tesco plc. To
have higher level of revenue generation.
 High level of brand equity and customer loyalty: As Tesco is operating since a long
time and has a good customer base, it has improved the organisations brand equity and
loyalty of customers towards the retail company.
Weaknesses
 Failing of subsidiaries: In the recent time, some subsidiaries have not performed well,
leading to decrease in revenue of the firm. Management of Tesco is required to track
down and handle these operations in order to sustain the performance of the organisation.
 Using older systems and processes: Tesco plc. still uses the manual inventory
management in many of its outlets making it susceptible to errors and glitches. Proper IT
tools and IMS system can be used y store keepers at their outlets to handle the operation
related to logistics and inventory.
Reflection on the deploying of IT tools within organisation to have competitive advantage
Based on the assessment of different internal and external environmental factors and the
evaluation of suitable IT tools for the execution of operations, I can say that the management of
IT tools will help in carrying out of the operations within Tesco Plc. This will help the firm to
improve their functionality, identify risk factors, customer requirements and scope of
improvement (Oseni and et.al., 2016). Using the suitable IT tools like ERP module, Supply chain
monitoring system or material requirement tools can be used that will help in improving the
overall functionality of the organisation in most effective and suitable way. A wide range of
software's and online tools can be utilized by the organisation in order to improve the
performance of the firm. This will help in carrying the operations which will help in setting up of
the operations.
I can strongly say that a wide range of software's and digital tools can be incorporated
within the organisation that will help in improving the performance of an organisation. Some
major IT tools that can be adopted and implemented by Tesco plc. are:
Customer relationship management (CRM) system: This IT tools helps and organisation to
set a proper communication channel that will help the firm to improve the connectivity with their
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buyers. This will help Tesco plc. to identify the needs of their customers and develop suitable
products accordingly. Besides this, it will help in handling customer's feedback and queries
which will help in improving performance of the firm. It leads to improvement in customer’s
satisfaction level and supports selected retail firm to have a competitive advantage over its rivals
(Pérez-Aróstegui, Bustinza-Sánchez and Barrales-Molina, 2015).
Inventory management system (IMS): Also known as the “logistics system”, it will help in
keeping the check on the stocks and utilization of raw material and the finished goods that are
been delivered to various outlets. It can be combined with supply chain management system in
order to keep a check over the demands and delivering of the goods, this system supports the
gaining of a good idea about the units of a product been sold in real time to increase or control
the production process by the organisation and gain suitable competitive advancement.
Enterprise resource planning system (ERP): This is an advance system that helps
management of Tesco plc. to monitor its various resources, facilitates their allocation and
carrying out suitable communication related to it. This will help in keeping a check on the
operations that are been carried out with effective assessment of the amount of resources and
roles allocated to employees in different departments of the organisation or retail outlet. It will
also help in connecting one retail outlet with another, improving overall performance and having
a competitive advantage over its rivals.
Transaction processing system (TPS): This is used to manage all the financial operations that
are been carried out within the firm. The billing and accounts management system can be
classified into it. It supports to monitor the monetary operations of the organisation, tracking
down the expenses and gains obtained and mitigating the useless expenses that will impact the
setting up of the performance measure within organisation leading to contending advantages over
its rival and competitive firms (Saban, Mawhinney and Drake, 2017).
All these systems will help in carrying out of the operations and setting up of the
operations which will help in planning the operations within the firm. I personally prefer the
CRM and ERP system to be incorporated within Tesco Plc. in order to enhance their
functionality and have a competitive advantage over its competitor or rival firms in retail sector.
CONCLUSION
On the basis of the evaluation and assessment that is been carried out this can be said that
IT tools plays a very crucial role in managing the operations and functionality of the firm will
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help in carrying out the business operations and other facilities within the organisation. The
selected retail enterprise will see through the proper assessment of the operations and action
plans that will help in improving the organisation's performance and gain a competitive
advantage of the rival firms. The external forces that can influence management of operations
using suitable IT tools.
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Online
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<https://www.business-to-you.com/value-chain/>
Dudovskiy, J., 2016. Porter’s Five Forces Analysis. [Online] Available Through:
<https://research-methodology.net/hilton-porters-five-forces-analysis/>
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