Tesco's Value Chain Analysis
Value chain is defined as the special links that exists between the key value adding activities as well as their interfaces with all of the supporting activities (Lynch,2003). The concept of value chain has for along time been implied as a very strategic tool for evaluation purposes and is used for the purpose of distinguishing the various strengths as well as weaknesses that exists within the value chain process as noted by Audrestsch (1995).
CHAIN/NETWORK MAP:
Tesco's cost leadership strategic management initiatives are indicated in its agile and lean inbound logistics functions. According to Abeysinghe (2010), Tesco employs is leading market position as well as economies of scope as its main bargaining powers in order to achieve a relatively lower cost from its numerous suppliers. The other factors is the constant upgrading of the company's ordering system, in-store processes as well as approved vendor lists in order to induce efficiency and effectiveness into its inbound logistics operations at all levels.
Operations management
The company has often been praised for its effective utilization of Information Technology systems in order to facilitate its low cost energy initiative/strategy. Tesco (2010) indicated that the firm invested close to £76 million in the process of streamlining its various operations via its Tesco Digital program, a third generation Enterprise Resource Planning (ERP) solution that its relies on. This saw the company realize a £550 million in crease in profitability in their FY2009 as a result of the introduction of the system. This ERP solution has seen the reduction of stock holdings within Tesco.
Outbound logistics
The company holds key leadership positions in both the online and offline consumer food retail segments. This is attributed to the effective and efficient outbound logistics. According to Mintel (2010), Tesco has managed to develop a wide range of store types and formats that are placed strategically in order to achieve a maximum level of customer exposure. These formats comprise of Express, Superstores, Metro, Homeplus as well as Extra and are segmented in order to serve target population.
Marketing and Sales
The use of Loyalty programs like the Tesco Clubcard is currently being introduced via IT advances which are effective in dissuading the clients from migrating to other retailer/competitors. The company even introduced the Greener Living scheme in order to provide its clients with advice in matters environmental.
Services
The company has for the last few years been pursuing an improved dual strategy of differentiation and cost leadership, a strategy that...
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