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Q2 Tesco Founded in 1919 in London, Tesco plc is a British based international grocery and general merchandising retail chain. With revenues of £60 billion (2009), it is the largest British retailer by both global sales and domestic market share, with profits exceeding £3 billion. With almost 500,000 Employees (2009) and over 4000 stores Tesco is currently the third largest global retailer. Originally specializing in food and drink, it has diversified into areas such as clothing, consumer electronics, financial services, telecoms; home, health and car insurance, Internet services, and software. Tesco’s stores are divided into six formats, differentiated by size and the range of products sold: Tesco Extra stores are larger, mainly out of town hypermarkets that stock nearly all of Tesco's product ranges; Tesco superstores are standard large supermarkets, stocking groceries and a much smaller range of nonfood goods than Extra stores; Tesco Metro stores are sized between Tesco superstores and Tesco Express stores. They are mainly located in city centers and on the high streets of small towns; Tesco Express stores are neighborhood convenience shops, stocking mainly food; One Stop stores are the only category which does not include the word Tesco in its name. These are the very smallest stores. In addition, Tesco has a banking arm called Tesco Personal Finance; operates
as an ISP, mobile phone, home phone and VoIP businesses; sells petrol and diesel at their own petrol stations; and offers a loyalty card scheme to customers. Customers can collect one Clubcard point for every £1 they spend in a Tesco store, Tesco Petrol or Tesco.com. Tesco has operated on the internet since 1994 and was the first retailer in the world to offer a robust home shopping service in 1996. Tesco.com was formally launched in 2000. In common with most other large retailers, Tesco draws goods from suppliers into regional distribution centers, for preparation and onward delivery to stores. Tesco is extending this logistic practice to cover collection from suppliers (factory gate pricing) and the input to suppliers, in a drive to reduce costs and improve reliability. Radio frequency identification (RFID) technology is taking an increasing role in the distribution process. Tesco's international expansion strategy has responded to the need to be sensitive to local expectations in other countries by entering into joint ventures with local partners. Tesco operates in the following markets: China, Czech Republic, Hungary, India, Japan, Malaysia, Poland, Republic of Ireland, Slovakia, South Korea, Thailand, Turkey, UK, and USA. The business is dependent on efficient Information Technology (IT) systems. Any significant failure in the IT processes of their retail operations (e.g. barcode scanning or supply chain logistics) impacts ability to trade. Tesco recognize the essential role that IT plays across the Group in allowing efficient trade and achievement of commercial advantage through implementing IT innovations which improve the shopping trip for customers and make life easier for employees. The company has extensive controls in place to maintain the integrity and efficiency of IT infrastructure and share world-class systems across International operations to ensure consistency of delivery.
Source: Gerald A. Cole & Phil Kelly, 2011

(a) Discuss the nature of Tesco business and the approach that makes Tesco doing well in their business.

(b) Determine a main competitor of Tesco and discuss the Strength, Weaknesses, Opportunities and Threats (SWOT) that Tesco has in comparison to its competitor.

(c) Tesco has expanded their branding with the presence of e-commerce website and m-commerce apps (for example: Tesco Online Malaysia). Explain TWO (2) unique features of the e-commerce that could increase Tesco sales. Relate your answer with the Tesco Mobile Apps and Tesco website presence.

(d) Discuss the TWO (2) initiatives being implemented by Tesco management to improve their customer intimacy and retention by having customer relationship management system in-placed.

(e) Global supply chains typically span greater geographic distances and time differences than domestic supply chains and have participants from a number of different countries.
In the context of Tesco management, headquarter must control and manage Tesco branches worldwide. Indirectly, Tesco needs to have an effective global supply chain management system to ensure the company achieves operational excellence. Elaborate TWO (2) complexities faced in Tesco global supply chains.

Answer 1

Please post remaining questions again for answer, according to HOMEWORKLIB RULES.

a) Tesco is into retailing business which includes grocery, toys, clothing, furniture, financial services, telecom, internet services, etc. Thus, they are much diversified to cater to a larger segment of customers. This makes them the largest British retailer.

Tesco's wide presence across the globe and staying updated with the need has given them this success. Whether it is a robust home shopping service in 1996 or usage RFID for distribution purposes. Their business relies on efficient IT and they understand it well. Thus, they expand according to the local needs of the customer, which may include entering by a joint venture with local partners.

Apart from the product diversification, they have also diversified their stores to cater to needs and availability of it.

Thus, in this way, Tesco has made a mark for themselves in the retailing business

2. There are many competitors of Tesco like ASDA, Sainsbury, Morrison, etc. Here comparison would be to Sainsbury

Tesco's comparison to its competitor

Strength - Tesco is spread across geographies in Europe, Asia, USA, etc, while Sainsbury is mostly confined to Europe

It has the largest market share in the retail business, while Sainsbury stands third.

Weakness - The retail business is getting a lowered margin to maintain its position in the market.

It is failing in its operations in different countries due to high competition like in the US, and Japan when it had to exit in 2012, which is shrinking their revenue and resulting in a loss.

Opportunities - Tesco has diversified into fuel, software, financial services, etc, while Sainsbury is mostly into retail apart from expansion into the property and financial services.

The brand image of Tesco is better than Sainsbury, thus making it easier for them to expand into unchartered territory.

Threat - 1. High competition from Sainsbury, related to promotion and price war has kept the margins low for Tesco.

2. A more innovative approach like coupons based on shopping behavior like Nectar Loyalty Card Scheme is attracting more customers, as offers are personalized.

c) Apps and online presence help to increase the sales of the company as it can now be reached to people in remote areas. With doorstep delivery, and convenience more people would want to try a service. It becomes more useful in places where tech literacy is more like Malaysia

2. It reduces the need to have a huge physical store. This reduces costs. People can order online and dont have to visit the stores. Which can also lead to having a lesser workforce in the store. Thus more overall profit.

d) Tesco's strategy to use technology early on has been an advantage. They can now have customer buying data, through which they can provide better services. This includes coupons, loyalty cards, etc. Using RFID for quick process and transaction

2. Their venture into online shopping like m-commerce, mobile payment has made it hassle-free. Plus, all the information can now be tracked, shared to provide better services to customers.