Generally, Tesco has grown as a brand over the years, and has altered its delivery methods in order to complete with other similar brands. Also, Tesco’s long-term corporate strategy is focused on ensuring the company an appeal to multiple market segments, and so diversification of the brand must be considered as it relates to the strategy (Tesco, 2014). This strategy has made it the largest retailer in the world, of its kind. In spite of this success, however, the brand presents a significant weakness, in that it relies, almost exclusively on the UK market to fuel its success (Tesco, 2014). Alteration in strategy should, therefore, be focused on the greater mission and vision of the brand, and put energy into expanding the brand outward, so that it is more reliant on the international market, and less reliant on the currently volatile UK market.
One strategy that could be used is market entry strategy, into new markets (Lymbersky, 2008). Tesco is already known as a serial acquirer, and as such, stands in a good position to further acquire international brands, or use strategies like FDI to enter new markets. Continuing to enter new markets could, over time, create meaningful movement away from UK dependence by generating greater revenues abroad.
A second strategy that could be used is an active substantive growth strategy (Thompson, 2001). Most specifically, Tesco is only beginning to grow, and has shown some strength in, the marketing of non-food products. Tesco could further diversify their offerings, through existing sales channels, in order to increase market shares, or conquer new markets (Silverwood-Cope, 2014).
Finally, a third strategy that could be implemented is a limited growth strategy, which relies on existing processes to continue growth, without undo investment. The brand is already quite large and diversified, and is likely in a position to grow further, within new international markets, over time. As such, TESCO may simply need to wait for those international markets to grow.
LO 3.2
I would conclude that the best strategy for the brand is to use a limited growth strategy. Currently, as a “series acquirer” and with the UK market unstable, making substantial further investments, like acquisitions is not a fiscally responsible option for the brand. Further, diversification into new product lines would require substantial additional overhead. The most conservative approach, which would allow the most recent foreign investments to come to fruition, without further stressing the brand’s resources, or putting existing markets at risk.
LO 4.2
Resources that make this strategy viable include locations in 12 countries around the world, and a dot.com storefront (Rueters, 2011). These various locations can, in keeping with the conservative business strategy selected, be individually grown in order to increase revenue. The brand also has an active discount program designed to attract and retain customers which can be exploited to meet the current strategy direction (Mark, 2009). The company currently holds 30.2% of the market shares in the UK grocery sector, and can use this to solidify diversification into other market segments, or product niches which it has already introduced, without increasing the company’s current holdings (Kamcity, 2012). In essence, the resources needed are the business fronts, man power, inventory, and business structure that the brand already acquired and established, and time to allow those acquisitions, especially as they relate to the foreign market to mature into stable and income producing business fronts, with the goal of growing those international fronts to the point that they provide a balanced cash flow with current UK operations.
References
KamCity. (2012, March 27). UK: Asda’s Market Share At All-Time High; Tesco’s Slips Again. Retrieved 2 13, 2015, from Kamcity.com: http://www.kamcity.com/namnews/mktshare/2012/kantar-march12.htm
Lymbersky, C.: (2008) "Market Entry Strategies", p. 364; Management Laboratory Press, Hamburg
Mark. (2009, January 15). Tesco's Still Pushing Discount Products to Fight Back Competitors. Idealo. Retrieved 2 13, 2015, from http://news.idealo.co.uk/news/4521/tescos-still-pushing-discount-products-to-fight-back-competitors.html
Reuters. (2011, Febuary 16). Tesco to Outpace growth at GLobal Rivals-Study. Reuters. Retrieved 2 13, 2015, from http://www.reuters.com/article/2011/02/17/tesco-igd-idUSLDE71F1LR20110217
Silverwood-Cope, S., (2014). How SEO Helps Tesco to Dominate The Online Groccery Market. Econsultancy. Retrieved from https://econsultancy.com/blog/64841-how-seo-helps-tesco-to-dominate-the-online-grocery-market/
Tesco (2014). Tesco PLC Annual Report and Financial Statement 2014. Retrieved from http://www.tescoplc.com/files/pdf/reports/ar14/download_strategic_report.pdf
Thompson, J.K. (2001). Understanding Corporate Strategy. London: Cengage Learning
