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INTRODUCTION. Tesco was established by Jack Cohen in 1919, an Paper

Words: 1187, Paragraphs: 35, Pages: 4

Paper type: Essay , Subject: Communication

INTRODUCTION

Tesco was established by Jack Cohen in 1919, an immigrant from Poland to the UK when he started selling the surplus of war groceries. In 1924, he shipped some items from his supplier Thomas Edward Stockwell. Later, he started thinking of branding since the business has started expanding, then he chose the first three letter from his supplier’s names (TES) while he added his own two first letter from his surname (Co).

 

However, Tesco has faced difficult times in the past from the shutdown of stores to sacking staff. This problem was due to the recession in 2008, which drained the earning of shoppers, and affected Tesco immensely. Well, with no choice customers started scouting for retailers that could offer them better deals they could afford due to financial constraints. According to Perepu (2013), customers were able to find Tesco’s competitors that could offer them better deals.  Irrespective of those challenges Tesco was facing, the company strategically started focusing on the international market, leaving its domestic markets for its competitors. Its focus in the international market gave its competitors to serve its domestic customers better and Tesco begins to lose its market shares.  In 1995, Tesco outshined Sainsbury to become the largest retailer in the UK.

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In 2013, Tesco gave an announcement that the company will pull out of US stock market costing the company ?1.2 billion due to challenges the company was going through, but Tesco refused to disclose whom or which company it selling to and at what price. Towards the end of 2013, Tesco started investing in internet business having not considered the challenges the company was going through.

 

 

A LONG-TERM STRATEGIC DEVELOPMENT OF TESCO

OPERATIONS STRATEGY

Tesco mapped out to save a lot from its logistics and distribution cost, enhancing the capacity of stock flows, and at the same time to have a robust supply chain that is efficiency. This strategy saves Tesco time, cost and delivers fresh food. Tesco has also managed to close a few of its distribution stores in the process of cutting cost.

 

INNOVATION STRATEGY

The top-notch PayQwiq digital wallet that was launched has touched every area of shopper’s experience in Tesco by enhancing seamless checkout processes. With the participation of its suppliers, Tesco was able to upgrade its technology to enhance food processing with the aim to improving a healthy lifestyle for shoppers. Few of its partnered suppliers also invested in its technology upgrade.

 

PRICING STRATEGY

In recent times, Tesco has always been proud to offer its shoppers affordable products and services. But according to the PwC report in 2012, pricing does not guarantee customer to patronage, but understanding customers behavior and income are the key factors. Vasquez (2013) also added that Tesco often mount pressure on its suppliers to reduce prices in order to achieve its mission.

 

CHANGES IN STRATEGY

BRANDING STRATEGY

Not long ago, Tesco changed the company handling its promotion and start handling by itself with lots of adjustment in order to get close to shopper’s mind to create a great perception. Tesco re-launched new brands like Food Co & ready meals, and Ivy & Fox homeware. During the launching, Tesco offered promotions by reducing the its prices. According to Neil (2012), customers are willing to pay for premium products that are quality, and not about the low price. This strategy made Tesco to introduce a club card. Interestingly, Sainsbury, which is Telco’s competitor, also introduced a club card. A researcher Mollah (2014) postulated that a loyalty card is not a good strategy for retailers because they all imitate themselves when it comes to scheme packages. While the CEO of Practicology suggested that, customer’s loyalty is more important than any scheme.

 

CHANGE IN LEADERSHIP STYLE AS STRATEGY

The change of leadership in Tesco will continue influencing the strategic goals of the company for a long period. Bringing in Dave Lewis in 2014 as the new Group CEO has strategically changed a lot of things. Along with him, he brought his transformational and entrepreneurial leadership styles and things have been relatively better than before. One of Dave Lewis’s aims as a leader is to make people to have a self of belonging in the company where people’s effort is being appreciated and opinions are welcome. Dave Lewis has also implemented a new strategy called the Kaizen model, which is currently improving the efficiencies and effectiveness in the company.

 

EVALUATING HOW TESCO CHANGES WERE MADE

According to Christine Tacon, which is the Groceries Code Adjudicator (CGA) in The Guardian’s report in 2016 that Tesco has breached the groceries market’s code of conduct for delaying payment to large numbers of suppliers to boost its profits because of the pressure from shoppers and investors. This issue happened between the past CEO’s Philip Clarke and Terry Leahy. But the current leadership Davis Lewis changed the situation and apologized to suppliers for a strong relationship and all the previous payments were made.

 

EVALUATING WHY TESCO CHANGES WERE MADE

Tesco changes were made because the previous CEO’s misused powers by mismanaging the finances of the company. The current leadership Davis Lewis realized that it is high time the company changed its strategies and remain competitive by reorganizing and restructuring how things were done in the past because its relationships with the suppliers have taken a nosedive. Also, the previous leadership deviated from the company’s goal by diversifying and invested in Internet business that the company did not understand irrespective of the financial challenges the company was going through.  According to Armstrong (2009), one thing that is constant in life is change. While Kotter (1990) agreed with Armstrong notion.

TESCO’S CURRENT STRATEGIC SITUATIONS

 

FUNCTIONAL STRATEGY

Tesco was able to build a customer-centric model. The company announced that its targeting 3.5%-4.0% between 2019 and 2020 operating margin by serving customers through different channels and services. Tesco have been able to deliver products to customers shopping from their homes, and to reduce night operations and pay more attention to during the day services. Below is STEEPLE model implemented:

 

SOCIAL FACTOR

Tesco is being structured as a saving cost supermarket that its shoppers ranging from middle class to lower class can afford by creating promotions to reduce prices. Palmer and Hartley (2012) postulated that life expectancy in the UK also contributes immensely to the ways people shops having considered age. According to a research company in the UK IGD (2010), around 86% of people above 65 years of age prefers local food.

 

TECHNOLOGY

According to the statement released by Tesco in 2017, the company announces that it will increase its R&D for technology development with additional ?1.49m. David (1985) suggested that Tesco’s technology should enhance its ease of communication. Meanwhile, Tesco has already installed technologies for scanning, labeling, Point of Sale and a lot more.

 

ECONOMY

 

The EU referendum did not show any negative effect on shoppers in the UK because the spending of shoppers went up a bit in the retail sector. According to the Confederation for British Industry (CBI) in a survey conducted in 2017, 40% of 64 retailers experienced high sales. PwC (2017) added that the growth in the Economic was increased by 1.6%, which encouraged the shoppers spending with 2%. PwC (2017) also added that inflation was predicted to hit 2,8%, which made an impact but the interest rate was reduced while spending increased.

 

About the author

This sample is done by Scarlett with a major in Economics at Northwestern University. All the content of this paper reflects her knowledge and her perspective on INTRODUCTION. Tesco was established by Jack Cohen in 1919, an and should not be considered as the only possible point of view or way of presenting the arguments.

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