Tesco PLC: Success and Future
Products and Services Offered
Business Expansion
Cultural Dimensions
Location Factors
Tesco's Future (Porter's Competitive Model)
Suppliers' Bargaining power
Buyers' Bargaining Power
Possible Entry of Competitors
Substitutes' Threat
Extent of Rivalry
Tesco PLC is a UK-headquartered general merchandise store, with outlets in eleven other countries. Tesco is the largest of its kind in the United Kingdom, and only second to Wal-Mart, in the world. It began as a small group of stalls in 1919. The name 'Tesco' was, however, only adopted later in 1924; and the first store opened in Middlesex five years later. By mid-1990s, the company had hit the 500 mark in terms of operational stores. This number almost tripled in the following decade, and the chain currently consists 2,500+ branches, spread across twelve countries. Besides being an FTSE 100 component, the company is listed on the LSE, and controls a significant share of the United Kingdom grocery market.
This text explores the operational activities of Tesco. It describes the company's product range and the forms of expansion it has undergone over the years. Additionally, it examines the possible role of cultural policies and location factors in the company's success, and analyses its prospective future growth.
2.1 The Products and Services Offered
Food and groceries are the core retail items in Tesco stores (Yusuf, 2011). However, the company also deals in electronics, game items such as DVDs, toys, and clothing. Tesco electronic products operate under the common brand name technika. These range from the company's own computers, television sets, DVD players, etc. (Tesco, 2013). As a matter of fact, Tesco, in September this year, launched its very own Hudl tablet computer (Cellan-Jones, 2013). The company also stocks exclusive brands of clothing such as F+F, stone bay, etc. (Tesco, 2013). In addition to the range of products available in the Tesco stores, the company deals in additional out-of-store products such as pharmaceutical products, pastries from the Tesco pharmacy and bakery brand images, respectively.
Moreover, Tesco offers a range of services including restaurant, phone shop, and optician services (Google Finance, 2013). Tesco also provides insurance and banking services through the newly-established Tesco Bank (Tesco, 2013).
2.2 Business Expansion
Product differentiation (variation)...
Tesco's expansion can be attributed to both factors. Acquisitions have played a major role in Tesco's expansion, especially within the UK. Product differentiation, on the other hand, causes expansion by inflating the range of products offered. It involves bringing in a variety of new brands, flavors, packaging, etc. (Dlabay & Burrow, 2007). Tesco has witnessed massive growth, which has seen the development of branches scattered in Asia, Europe and America. This international expansion translates to a larger market, and, consequently, to more variations in tastes and preferences. Products need to be varied and new designs brought in, to take care of the increasing variations in tastes and preferences.
Tesco's international expansion takes the circular form of business expansion. First, the expansion is accompanied by a change in the output pattern (product variation), and secondly, because the expansion has resulted in the production of products that are unrelated and totally different (Osborn, 1967). Tesco's expansion has benefited its customers, who now have a wider variety to choose from, and lead to the creation of more opportunities for employment.
2.3 Cultural Dimensions
Culture has to do with the attitudes, values and beliefs shared by a certain group. Culture is, to a large extent, linked to communication. Communication is likely to be easier when people share a common culture. Culture influences business environment in the same way. Businesses can, therefore, only succeed in international markets if they understand, and respond to the variations in culture. Tesco has managed to thrive in international settings, mainly because of its ability to respond to the values and traditions in different nations. This it does, through effective management of organizational culture. Tesco's core aim, for instance, goes beyond just profits (Tesco, 2013). It encompasses the aspect of 'being the best', in order to maintain customer and employee loyalty (Tesco, 2013).
Tesco, therefore, works by understanding the need of a particular community, and then tailoring its activities to respond to that particular need. This recognizes, and appreciates the fact that the needs of one community differ from those of another. This appreciation for cultural diversity explains why Tesco puts more emphasis on green policy in the UK, and in poverty alleviation in China. Tesco's zero-carbon green business strategy in…
