Threat of Substitutes The threat of substitutes in the grocery retail market is essentially below for food stuffs and from an average up to high for non food items. It means that the buyers can easily be switched from one brand to another. J Sainsbury which has 823 stores and 13. The company is also very successful in terms of customer loyalty due to its loyalty cards system and its general approach to customizing services to the needs of every customer. This gives Tesco a competitive advantage as it produces loyal employees. Advertising Tesco marketing strategy makes an extensive use of print and media advertising systematically as a tested channel to send marketing communicate message to current and potential consumers. It has also provided supermarkets with a new strategic expansion into new markets of banking, pharmacies, etc.
The expansion of new stores by adding space to existing locations has contributed to the growth of Tesco supermarket. Although a potential threat, Tesco should see this technological factor which affects their business environment as a fantastic opportunity. Plug n Pay Service Tesco Malaysia has taken grocery shopping to a different level with the launch of Plug n Pay service in October 2014. This strategy is based on the following principles:. What can Tesco learn from previous business turnarounds?. Furthermore also operates in Asia, stores can be found in China, Malaysia, Japan, Korea, Thailand, and Taiwan Tescoplc. Strategic issues in international retailing.
Business-model which Tesco uses approaches for the Great Britain, instead for other world. The company has a volume market-leading position in both toiletries and healthcare and is number one retailer in the baby goods markets. Tesco also leads the world in online grocery retailing. The company with its strategic planning focuses on every aspect of business i. Tesco launched Green Clubcard Points to incentivize customers shopping with their own bags, introduce degradable carrier bags, promote positive behavior among employees through Energy League competition and a recycling centre to facilitate customers to do their part for the environment.
There are various strategies which need to be implemented at different situations and hence the choice of strategy should be done appropriately. The company was founded by Neenah, Wisconsin in the year 1872. The company must constantly adapt to the fast changing circumstances. Bargaining Power of Buyers: The bargaining power of buyers is high as the customers could easily switch from one product to another as there is not much difference in the prices of the product. This allows it to not only perfect its business model for the region before moving into other areas, but also to limit its exposure to loss in the event that its expansion is unsuccessful.
Basically, the business units emphasis on their product life cycle, competitive advantage and competitive environment Marketing theory, 2013. The scale and size of the supermarket industry is larger and more competitive than ever before, particularly with the expansion of Morrisons, branching out into more and more parts of the country, and the rise of Aldi since the start of the economic downturn. The fifth and last force that affects the competitiveness of Tesco is the threat of substitutes. Tesco has supportive and value-driven organizational culture which reflects how staff behaves inside and outside the company Russell, 2012. Tesco also abides by the laws and regulation of the government of each country in which it is operating and ensure its operations comply with said rules and policies. In order to get the new products the research and development department should be very strong.
It prides itself on providing a great shopping experience for every customer it serves, whether in stores, online or in its many other services. There is no investment required for these instead they generate money which could be used for other units Erickson et al, 2012. The first mistake that the company made at the point of entry is that it increased its exit barriers by aggressively increasing more stores despite the fact that it was making huge losses. It has been innovative and energetic in finding ways to expand, such as making a large-scale move into the convenience-store sector, which the major supermarket chains have traditionally shunned. The demand of the products depends on the social beliefs of the customers and hence the company needs to keep a track of changing attitude. The example of this was when the company has launched its loyalty card and went into banking. It has also enabled the company to control various activities of suppliers and hence ensured timely delivery of stock to all stores.
Other retailing services offered include Tesco Personal Finance. Recently, , community, to the steering wheel report to encourage employees to be excellent citizens in the communities where they work and live. As already discussed, the supermarket environment is a very volatile one. These market imperfections are structural and are as a result of control ownership advantages like proprietary technology, economies of scale, special access to inputs, product differentiation and gathered managerial expertise. The last and fourth method is diversification where new products are being targeted to completely new set of consumers. Competitive positioning reflects the significance of the environment and its analysis in context to business which in turn provides the effective tool to become the market leader.
The cost of training and development for new staff is a burden to Tesco. International Journal of Risk Assessment and Management, 7 8 , 1074-1088. The third strategy is aimed at target market which can be focused either by differentiation or cost leadership. As part of its global commitment, Tesco Malaysia is market leading on tackling climate change agenda around energy saving initiatives, degradable carrier bags and Green Club card Points scheme to encourage customers shopping with their own bags, Tesco also introduced its Green Club card League and Green Club card Champions to promote positive behavior among staff through inter-stores Energy League competitions and opened 6 recycling centers to facilitate customers to do their part for the environment. Financial Performance Tesco's financial performance has demonstrated strong growth over the last seven years, although growth was not as strong as expected last year due to extraordinary charges totalling £35 million, resulting from the 2005 tunnel collapse in Gerrards Cross. In an industry with a typically high staff turnover, these workers offer a higher level of loyalty and therefore represent desirable employees.
Albeit that Tesco has 2,200 stores locally, it is categorised as operating in a globalised environment. By entering into a joint ventures or partnership, in order to gain a larger economy of scale and large market presence, Tesco will draw on the extensive local knowledge and operating expertise of the partner whilst adding its own supply chain, product development and stores operations skills to deliver a better shopping experience to customers. The company should have strategies that fit into the culture of the target market like it did in South Korea. Shahbaz Ansari- abpa40, 500 200603 Word count- 3300 excluding references, appendices, and tables. Ansoff matrix also suggests that if new products are developed for existing markets, then a product development strategy has to be considered by the management level of the company. Sainsbury enters supermarket price battle with £150m warchest to take on traditional rivals and upstarts Lidl and Aldi - and holds dividend for now. These are to be: - wanted and needed around the world - a growing business, full of opportunities - modern, innovative and full of ideas - winners locally whilst applying our skills globally - inspiring, earning trust and loyalty from customers, our employees and communities The vision, mission statement and goals are interrelated and state what an organization is seeking to achieve whereas the strategies and tactics show how it will achieve them.