Business Strategy of Tesco Organization-Free-Samples for Students

Question: Discuss about the Business Strategy of Tesco Organization. Answer: About Tesco Organization Tesco Plc is British- based grocery and a retail group and ranks third in terms of profit in the globe. This organization has been selected as it holds the highest rank among the food retailing industry in UK (Johnson 2017). The organizations main purpose is to generate customer value for gaining their loyalty in the lifetime. This entity is selected as it commits in innovating quality products based on the customers preference and money value. Tesco is excellent in the field due to its implementation of marketing strategy. For example, Tescos Clubcard offer rewards system for which customers wants to come back. Current position of Tesco in the market Tesco Plcs strategic capabilities lie in their sturdy financial performance. The companys current sale increases to 49,867 as compared to last year, which amounted to 47,859. The company has gained total revenue of 55,917 in 2017, which is quite high from the year 2016 that accounts to 53,933m. However, the companys profit increased in this year in respect to the previous year. The current market position of Tesco Plc has been analyzed based on their internal conditions. This has been discussed by implementing SWOT framework. SWOT framework includes both the external and internal forces (Russo and Minto 2012). The internal forces involve firms strength and weakness whereas external forces include opportunities and threats. The SWOT framework of Tesco Plc has been discussed below: Strengths of Tesco- The main strength of Tesco lies in their network distribution. The loyalty card of Tesco Plc helps the company in understanding the customers in a better way. The firms brand name facilitates them in expanding their business and attaining customers trust (Santos-Vijande et al. 2012). Owing to this, Tesco Plc hails good progress for increase in sales in 2017. It has created new business methods including opening more stores and online shopping that eased the customers convenience. Weaknesses of Tesco- Tesco Plc key weakness lies in the pricing strategy. They intend to lower product price than its competitors for attracting more customers. In addition, increasing debt of Tesco increases the risk of their liquidity and the decreasing operation efficiency negatively influences their financial performance. Recent statistics highlights that net debt in first quarter in 2017 is 3729m and is predicted that it will cross total net debt of 2016 (5110m). Opportunities of Tesco- As Tesco has diversified in many countries, it has the opportunity in enjoying high rate of growth from other subsidiaries. Owing to high living standards of people, the purchasing power increases and this creates opportunities for expanding their business (Walker and Madsen 2016). Recently, Tesco invested in Blinkbox that facilitates them to expand into digital market. Threats of Tesco- The threat of this entity lies in the prevailing environment of the economy. If the country is suffering from financial crisis, the purchasing power reduces and this lowers the firms profitability level. Moreover, Tesco Plc also faces challenges from other rivalries such as Sainsbury, Morrison in terms of pricing strategy in global arena. About Sainsbury Organization Sainsbury Plc is UKs second largest supermarket chain in UK that holds 16.9% market share value. In this report, Sainsbury is selected due to its expanded ownership structure. Moreover, the various strategies adapted by the company in recent period aids them to attain high market share value and increase profitability. The business strategy of Sainsbury Plc is to target price responsive consumers and deliver products at lower price than its rivals. The initiative for carbon footprint facilitates the farms in working efficiently and is excellent in the field of sustainable farming. This also helps the farms in reducing environmental impact. Current position of Sainsbury in the market Sainsbury implements strategy for long term in order to build sustainable business throughout the year (Scholes 2015). The business strategy mainly focuses on price leadership and delivering quality products to their customers at fair prices. They also implements marketing audit process for improving their position in the current market. The income statement of Sainsbury reveals that its revenue increased by 11.56% from 2016 to 2017 despite fall in income of 19.96%. However, increase in sales from 3.62% to 4.60% led to rise in revenue in 2017. The strategic plan that this entity applies focuses on few areas that includes: Producing quality products at reasonable prices Expanding the development of complementary service. Extending the space of this supermarket This entity tries to change with the advancement of technology. They try to reach out to the customers through online operations. The present market position of Sainsbury has been analyzed with the help of SWOT analysis presented below: Strengths- Sainsbury has diversified its business by presently operating in more than 1200 supermarket and merchandise operation. The companys sustainability plan involves different CSR activities in order to protect environment. However, for making the products eco-friendly, they have implemented various measures including positive waste and carbon water (Verbeke 2013). At present, Sainsbury is implementing new technology for driving sales growth and attain customers loyalty. As a result, the company ranks in second spot due to rise in market share value. Weakness- Their weaknesses lies mainly in the competition from their rivalries such as Tesco, Aldi. It also reflects that they have lack in implementing advertising strategies and distribution mode. As Sainsbury did not attempt to operate in foreign markets, they lack in understanding the trends and environment of other nations (Scholes 2015). At present, Tesco is leading in the competitive market pushing Sainsbury to the second position. Opportunities- Sainsbury strategizes to implement few schemes including nectar card for attaining customers loyalty. Their opportunities lie in collaboration with other retailers for maintaining its presence in the market. Presently, they are trying to differentiate products and widen its business to other nations for overcoming their weakness. Threats- Rising price competition from other rivalries including Tesco, Morrison poses threat to Sainsbury. In addition, advancement of new technology and cyber attacks creates risk for the entity. However, they can lose the entire information database about the customer if security measures are not taken. References Johnson, G., 2017. Exploring strategy: text and cases. Pearson. Russo, M.V. and Minto, A., 2012. Competitive strategy and the environment: A field of inquiry emerges. Santos-Vijande, M.L., Lpez-Snchez, J.. and Trespalacios, J.A., 2012. How organizational learning affects a firm's flexibility, competitive strategy, and performance. Journal of Business Research, 65(8), pp.1079-1089. Scholes, M.S., 2015. Taxes and business strategy. Prentice Hall. Verbeke, A., 2013. International business strategy. Cambridge University Press. Walker, G. and Madsen, T.L., 2016. Modern competitive strategy. McGraw-Hill Education.