Stratgic Management Analysis For Tesco Supermarket – Coursework Example
STRATEGIC MANAGEMENT ANALYSIS FOR TESCO SUPERMARKET By Strategic Management Analysis for Tesco Supermarket Strategic management forms the backbone of success for each business hence is considered of great importance. However, there are several strategic management approaches that can be employed in a bid to gain competitive advantage and this is dependent on the individual entity. Additionally, the differences in strategic management techniques are dependent on the industry in play. For instance, the strategic management techniques used in the retail industry may differ from those employed in the manufacturing industry. Taking a more specific approach, Tesco Supermarket in the UK can act as a good platform for strategic management analysis by taking a close look at its corporate level strategies. Corporate level strategies can be approached from three dimensions namely vertical integration, horizontal integration, and geographic scope.
Vertical integration involves uptake of the supply chain by the particular company in play. Tesco Supermarket does not really employ the vertical integration strategy especially in relation to food products such as livestock which it mostly buys direct from the farmers. However, this has not hindered its growth and with about 25.8% control of food sales it still has a great competitive advantage over many of its competitors (Hancock, 2000). Horizontal integration involves acquisition of production units for outputs that can be complementary or competitive. Tesco has employed this strategy to increase its presence in the market thereby gaining competitive advantage. For instance in 2010 it acquired 77 outlets from convenience store firm Mills group thereby increasing its number of outlets significantly (Riley, 2010, para. 1). Additionally, Tesco has diversified coming up with seemingly different outlets such as the Tesco Express, Tesco Superstore, Tesco Metro, and Tesco Extra hence penetrating even further into the market (Morris, 2008, p.20). This strategy has arguably played a huge role in expanding Tesco making it a leading retailer in the UK. The geographic scope in strategic management mainly seeks to determine the most favorable areas of operation for a firm. Over the years Tesco has extended its operations to various parts across the UK and other countries as well. Taking a look at the diversified outlets, they seemingly offer differentiated services specific to the areas they are situated. This shows application of the geographic scope in the overall operations of Tesco supermarket. As such Tesco has been able to gain competitive advantage in comparison to other retail outlets in the UK. In relation to the BCG matrix, Tesco can arguably be considered a cash cow with reference to operations in terms of distribution of quality services and products. Additionally, it has integrated use of e-commerce hence assisting in transformation of the market strategies indicating a star. This is supported by the 2012/2013 report that showed Tesco’s revenue to be at £ 43.6bn and a trading profit growth of 8.3%. A look at this results shows that Tesco is growing at a desirable rate hence indicating successful strategic management.
Hancock, S., 2000, The power of the UK supermarkets, Corporate Watch.
Morris, T., 2008, Australasian supermarket industry: Backwater, Behemoth, or Beachhead, Presentation to Future Retail Australasia.
Riley, J., 2010, Growing market share by stealth? Tesco and One Stop, Business studies.