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Contents

Industry Overview1

Company Overview2

Competitors & competitor analysis3

Strategic Groups4

Resource Based View6

Core Competencies5

Activity Based View7

Five Forces Model & Value Net8

Value chain & SWOT Analysis9

Adoption Of Strategies10

Financial analysis & Recommendation11

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Industry Overview U.K

The retail industry employed 2.9 million people, as at the end of September 20.

The retail industry employed 2.9 million people, as at the end of September 20.

The retail sector generates almost 8% of the Gross Domestic Product of the UK.

The retail sector generates almost 8% of the Gross Domestic Product of the UK.

Supermarkets dominate the UK food retail market, with 56.0% of sales.

Supermarkets dominate the UK food retail market, with 56.0% of sales.

11% of all VAT-registered businesses in the UK are retailers. 70% of UK retail is Organized and 30% is Unorganized.

11% of all VAT-registered businesses in the UK are retailers. 70% of UK retail is Organized and 30% is Unorganized.

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Company overview

www.Tesco.com is recognized as the world’s largest online grocer, with a customer base of little less than 1 million and more than 250,000 orders a week.

www.Tesco.com is recognized as the world’s largest online grocer, with a customer base of little less than 1 million and more than 250,000 orders a week.

Tesco is the third-largest retailer in the world next to Wal-Mart, Carrefour and is operating around 2,440 stores and employing over 4,00,000 people

Tesco is the third-largest retailer in the world next to Wal-Mart, Carrefour and is operating around 2,440 stores and employing over 4,00,000 people

Tesco’s market share of UK retailing is 12.5%.Tesco’s market share of UK retailing is 12.5%.

Tesco’s is a United Kingdom based international supermarket chain. It is the largest British retailer both by global sales and by domestic market share. Established in 1924.

Tesco’s is a United Kingdom based international supermarket chain. It is the largest British retailer both by global sales and by domestic market share. Established in 1924.

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Company overview

As of March 2008, Tesco have a store in every postcode of the UK.

As of March 2008, Tesco have a store in every postcode of the UK.

Tesco now controls over 30% of the grocery market in U.K.

Tesco now controls over 30% of the grocery market in U.K.

Tesco has moved into areas such as clothes, consumer electronics, consumer financial services, internet services, consumer telecoms and gas stations.

Tesco has moved into areas such as clothes, consumer electronics, consumer financial services, internet services, consumer telecoms and gas stations.

1960 1970 1980 1960 2000

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Competitors

Safeway plcSomerfieldSPAR Handels-AktiengesellschaftThe Boots Group PLCWm Morrison Supermarkets PLCBooker Cash & Carry LimitedALDI GroupThe Carphone Warehouse Group PLCJohn Lewis Partnership plc

ASDA Group LimitedBP PlcCarrefour S.A.ExxonMobil CorporationThe Big Food Group PlcJ Sainsbury plcMarks and Spencer Group plcRoyal Dutch/Shell GroupSafeway Inc.

Competitors

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Competitor Analysis

SUPERMARKET SHARE Tesco: 30.6% ASDA: 16.6% Sainsbury's: 16.3% Morrison's: 11.1% Somerfield: 5.4 Waitrose: 3.7% Iceland: 1.8%(Source TNS cited by BBC 2006)

Tesco AsdaSainsbury Morrisonssomerfield waitroseIceland

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Positioning of CompetitionsPositioning of Competitions

FoodSpecialists

Food withNon-Food

Non-FoodSpecialists

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Strategic Groups

Sainsbury’s was the UK's biggest grocer until 1995, but was recently relegated to third position behind Tesco and Asda. Despite the fact that company has been struggling lately it is starting to get back on track. Despite predictions that Sainsbury's would regain second position and a narrowing of ASDA's lead in recent months, the latest figures released by Taylor Nelson Sofres show Asda's share as 16.6% compared to Sainsbury's at 16.22%.

Sainsbury’s was the UK's biggest grocer until 1995, but was recently relegated to third position behind Tesco and Asda. Despite the fact that company has been struggling lately it is starting to get back on track. Despite predictions that Sainsbury's would regain second position and a narrowing of ASDA's lead in recent months, the latest figures released by Taylor Nelson Sofres show Asda's share as 16.6% compared to Sainsbury's at 16.22%.

ASDA owned by US corporation Wal-Mart since 1999, is the only supermarket with the potential to become a thorn in the side for Tesco. Wal-Mart is the biggest food chain in the world and has annual sales eight times bigger than Tesco’s. Asda's George range of clothing is the best selling brand in the UK and company is thinking about acquiring Matalan, the giant discount clothing and home furnishing store.

ASDA owned by US corporation Wal-Mart since 1999, is the only supermarket with the potential to become a thorn in the side for Tesco. Wal-Mart is the biggest food chain in the world and has annual sales eight times bigger than Tesco’s. Asda's George range of clothing is the best selling brand in the UK and company is thinking about acquiring Matalan, the giant discount clothing and home furnishing store.

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Core competencies

Environment friendly products.

Customer focused strategy Club card - a loyalty scheme (1995).

Quality products at low price.

Improved Labeling.

Self-Checkout

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International– No. of Countries 12– No. of Stores 440– No. of DC’s 20– No. of Staff 1,40,000– Turnover £7.5 Billion

UK– No. of Stores 2000– No. of DC’s 28– No. of Staff 270,000– Turnover £29.5 Billion

Resource Based View

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Resource based view

Store types:ExpressMetroSuperstoreExtraTesco.com

Store offerings:Food RetailNon-Food RetailPetrol StationsHome Living Range

Personal Finance:InsuranceSavings AccountsPersonal LoansSecure Investment BondsOnline Mortgage Finder

199419921970 19971994

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Resource Based View

Overall Profit £2.0 Billion (1st time for a British Retailer) 04/05.

Tesco sells approximately 40,000 food products in its superstores, as well as clothing and other non-food lines.

The company’s own-label products are at three levels value, normal and finest. Own brand accounts for approximately 50% of sales.

Tesco does business with nearly 2,000 own-brand primary suppliers in 98 countries.

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Private labels

Ellen Wesley A trademark for the women who know what they want.

Daniel Moore A successful man trademark

James Be Yourself

Mirage A trademark to fascinate you

4Future A new fashion line for boys from 3 up to 12.

Miss M Sports fashion and stylish girl clothing.

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Activity Based View

Every Little helps.

Providing Low Prices Everyday.

Reducing the lead time in the supply chain

Online Service

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Rivalry Among Competitors

(High)

Bargaining Power of Buyers(Medium)

Threat of New Entrants

(Medium)

Threat of Substitute Products

(Low)

Bargaining PowerOf Suppliers

(Low)

Five forces Model of competition

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Five forces Model of competition

Threats Of New Entrants Competitive Rivalry is considered a high threat and are

people like Amazon and Asda including other supermarkets and non-food retailers who are involved in the same concept. IF consumers see little difference between the product and that of the competition then they will tend to choose on price.

Bargaining Power of Suppliers- There is little threat as often large supermarkets dictate the

price they pay to the supplier. If the supplier does not agree to Tesco’s price then the supplier will be left with no retailer.

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Five forces Model of competition

Threats of New Entrants- Tesco, Asda, Sainsbury and other supermarket chains put

up considerable barriers to entry. Anyone starting up a new supermarket chain has barriers imposed on them, implicitly or explicitly, by the existing supermarkets.

Bargaining Power of Buyer- Buyer power also acts to force prices down. If beans are

too expensive in Tesco, buyers will exercise their power and move to Sainsbury. Tesco including other supermarkets have a disciplined approach to prices setting. This approach stops them from destroying each other in a profit war.

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Five forces Model of competition

Threat of Substitute Products- Tesco competition from other supermarkets which can

provide substitute goods drives the prices of both companies down; therefore substitute is seen as a Low threat.

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Tesco Complementors

Suppliers

Buyers

Competitors

Value net

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Porter’s Generic Value Chain

21

MA

RG

INM

AR

GIN

PRIMARY ACTIVITIES

SUPPORT ACTIVITIES

TECHNOLOGY DEVELOPMENT

FIRM INFRASTRUCTURE

HUMAN RESOURCE MANAGEMENT

PROCUREMENT

INBOUND LOGISTICS

OPERATIONS OUTBOUND LOGISTICS

MARKETING & SALES

SERVICE

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SWOT Analysis

StrengthsIncreasing market share

Insurance

Tesco online

Brand value

UK market leadership reinforced

WeaknessReliance upon the UK market

Debt reduction

Signs point to serial acquisitions

OpportunitiesNon-food retail

Health and beauty

Further international growth

ThreatsUK structural change could spark a price war

Overseas returns could fall

Wal-Mart/Asda challenge

International expansion

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Sustaining superior performance

Imitation

Slack

Substitution

Hold Up

Added ValueAppropriate Value

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Adoption of Strategies

In 1995, Tesco launched the Club card Loyalty scheme.

With www.tesco.com company emphasized on E-commerce.

In 2000, company tied up with a Safeway Inc to launch an online grocery shopping services

Recycling of bags

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Adoption of Strategies

Supermarket superpower, you have to be everywhere

To be a supermarket Superpower you have to sell to everybody

To be a supermarket superpower, Thou shall sell everything

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Financial Analysis

2007 2006 Increase

£m £m %

Revenue (sales excluding VAT) 22,631 20,735 9.1

Gross profit 1,614 1,439 12.2

Operating profit 1,309 1,101 18.9

Profit before tax 1,289 1,092 18.0

Profit for the period 938 791 18.6

Attributable to:

Equity holders of the parent 936 788 15.8

Minority interests 2 3

Income Statement

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Tesco Balance sheet

2007 2006 Inc/Dec

£m £m %

Fixed assets

Investments in subsidiaries and Joint ventures 7,382 9,805 24.7

Current assets

Derivative financial instruments 70 –

Debtors 4,857 2,702 44.36

Current asset investments 90 150 40.00

Creditors (2,644) (2,720) 2.79

Net current assets 2,373 132 94.43

Total assets less current liabilities 9,755 9,937 1.83

Creditors (3,608) (4,037) 10.63

Net assets 6,147 5,900 4.02

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Balance Sheet continued….

Capital and reserves

Called up share capital 395 389 1.52

Share premium account 3,988 3,704 7.12

Profit and loss reserve 1,764 1,807 2.38

Total equity 6,147 5,900 4.02

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Recommendations

Slow down its expansion plans and concentrate on refitting existing stores.

Merging or forming a strategic alliance with another company is a great way to improve their services and overcome some of their weaknesses.

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Bibliography

www.wikipedia.com

www.tescocorporate.com

www.tesco.com

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