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Tesco analysis

Extracts from this document...

Introduction

History Tesco was founded about 1919 by a person call Jack Cohen in London's East End. In this year as well he Jack Cohren started was selling groceries in the markets of the East End. After about 5 years the name TESCO started to appear on labels because Jack Cohen brought a large shipment of tea from a company called T.E. Stockwell. Due to this he put the first two letters of the supplier of tea along with the first two letters of his surname and this spelt out TESCO. The first Tesco store opened in 1929 and now it has 1,800 stores just in the UK and its present felt in 12 countries. Tesco now is the largest British retailer, both by global sales and by domestic market share, and the fourth largest retailer in the world behind Wal-Mart of the United States, Carrefour of France, and The Home Depot of the United States. Tesco used to only sell food but now it has moved into areas such as clothes, consumer electronics, consumer financial services, selling and renting DVDs, compact discs and music downloads, internet service and consumer telecoms. Introduction Tesco over the years is UK's most popular retailer with over 13 million customers a week, number of non - food products/services available has gradually increased, Tesco.com is the world largest home delivery service in the world and it is operating in 12 different countries with further expansion in other countries. The reason for all these success mentioned above is all down to one thing, which is the approach taken by Tesco on customer focused. Tesco is unique in this way because many retailers would tend to focus only on profits. However, Tesco as well as making profits would like to "create value for customers, to earn their lifetime loyalty". ( Tesco Interim report, 2005) This can be seen in Tesco mission statement and the way this is achieved is through corporate strategy. ...read more.

Middle

The main thing is being innovative and looking at how to improve things constantly as well as considering the environment impact of its action. This again will reinforce the competitive position as Porter, 1998 suggested "companies achieve competitive advantage through act of innovation". It is very difficult for a supermarket like Tesco to produce the same success again therefore Tesco must continue to re -invent itself to stay ahead in this market. The Supporting Activities The company's infrastructure is based on decisions of management which help communication and control. Support functions such as accounting, administration, public relation and marketing. There are many people who deal with investigation and sourcing products for example, for non food products there are over 100 people. Tesco "employs over 260,000 people", (Tesco, 2006) which is a huge cost especially in terms of minimum wage. The other costs which are involved are recruitment, training and development. Other things such as planning, public affairs, quality assurance are all time consuming. Technology development is important because it allows Tesco to be able to adapt to its changing environment. Tesco on line shopping is a huge success along with other things like financial service, mobile phone, clothes and electrical goods. Tesco recognizes regional differences when it comes to procurement. They have established dedicated buying teams In the UK. Tesco have also made arrangements not only with large producers or manufacturers of goods, but also individual farmers. Their Fairtrade policy ( Tesco CR , 2006) ensures that the farmers receive a fair price and that consumers pay a fair price. Long term relationships with suppliers are important, with over 1500 suppliers working with Tesco for five years. Tesco works with suppliers and encourages them to develop regional offices in line with Tesco's own distribution centres. In Tecso it can be seen that "the value chain for competing in a particular industry is embedded in larger streams of activities.." ...read more.

Conclusion

Account Watch, Watford :IGD, pp4 Tesco , (2002) Account Watch, Watford :IGD, pp4 Tesco , (2002) Account Watch, Watford :IGD, pp22 Appendix 7 Appendix 4 Tesco plc - Value Chain Analysis - Primary Activities Inbound Logistics - transportation - storage - suppliers - working with suppliers to extend growing seasons - processors - packaging - Lowering warehouse inventories - New stores - collaboration - Regional road shows to promote contacts with potential suppliers Operations - environmental strategy - improving heating and ventilation - exchanging information with suppliers to produce efficiencies - quality products - on time - effective processes - management - cost, quality, speed, dependability, flexibility Outbound Logistics - transportation - storage - suppliers - 30 distribution centres (6 dedicated to non food) - Promoting local produce Marketing & Sales - advertising - public relations - special offers - club cards - presentation of products - store layout and convenience - 100 people dedicated to sourcing non food products Service - customer service - contact centre - legal team - risk assessment to manage labour standards - cost control - listening to customers - responding to customer needs Appendix 5 Tesco plc - Value Chain Analysis - Support Activities Firm Infrastructure - functional departments - accountancy - administration - business relations - research and development - public relations & marketing department Human Resource Management - recruitment - training and development - graduate trainees - no discrimination based on ability - benefits and pension scheme - human rights policy Technological Development - computerization - refrigeration processes - online shopping - innovation and investment in new lines - product safety - health and safety Procurement - buyer power - negotiation skills - bulk purchasing - local suppliers - dedicated buying teams in Scotland, Wales and Northern Ireland - individual farmers - consideration for ethical issues - Leveraging suppliers assets - Long term partnerships - Over 1500 suppliers working with for 5 years or more - Supermarkets Code of Practice - Encouraging suppliers to develop regional offices - Quality control Appendix 6 Tesco plc - PESTLE ANALYSIS Appendix 8 Tesco plc - SWOT Analysis 7 ...read more.

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