Tesco case (2005)

Résumé du document

The growth of Tesco has been surprising: the company announced a forecast of $1.4 billion in annual profits in 2001, and the sales volume in the first semester of this year reached $16.8 billion. Its current market share in the UK is strong: it is now 25%, contrary to 14% in 1997, and has overcome its competitors. In the domestic market, a good marketing policy can explain these good results. The strength of Tesco is not only real within the UK, but also globally. As domestic opportunities have become rare, Tesco began its global expansion like the other giants of the retail industry: the firm conquered Central Europe and Asia rapidly, and gained an important market share thanks to an efficient strategy. 37% of the company's physical floor space is located abroad, and its goal is to reach 50% by 2003. The key to success for Tesco lies in its "global strategy", which combines local responsiveness and global management in many fields.

Extraits

[...] Treasury Tesco earnings per share rose by 11% in 2001, especially thanks to a clear cost-control strategy. The UK retailer's strategy allows it to save money in many fields, despite the high costs of local adaptation. Tesco only takes calculated risks when approaching a new market: for example, the firm closely studied the characteristics of South Korea before launching its online delivery service, and saw the great opportunities this country represents. The company also makes efforts to avoid any waste of money. [...]

[...] It is thanks to a good marketing strategy and a lot of effort that the retailer succeeded in overcoming its competitors. The firm tried to establish real differentiation from its competitors, and has been successful. First of all, Tesco's policy is to fit consumers' needs, and to look for what they really want. That is why the company conducted surveys to know the desires of its current customers, and of potential buyers. Thanks to this survey, the retailer discovered what people really wanted from a retailer: low prices, good service level and a large range of products. [...]

[...] As the current economic context is not favourable, Tesco has to be aware that any move can be risky. It has to clearly identify the strengths of the market, and see if the current global management scheme can be applied without damage: it has to be sure that local people will be ready to follow these global guidelines and that there will be no misunderstandings. Bibliography Scoring Points: How Tesco Is Winning Customer Loyalty, Clive Humby, Terry Hunt, Tim Phillips, Kogan Page, 2003. [...]

[...] Specialists even announce potential failures in foreign activities' profitability to the firm. Furthermore, competition in developing countries has become fierce, which will increase Tesco's difficulties in the future. That is why the retailer would also like to conquer more mature markets, such as Japan or the USA. This new move in Tesco's strategy could really threaten its current good results. These markets are indeed saturated, and the competition is fierce, particularly with Wal-Mart in the USA. Tesco does not own a specific enough point of differentiation to conquer these markets easily. [...]

[...] The global expansion of Tesco is particularly fast and efficient. The good position of the firm in each market where it is established proves that the followed strategy has been successful. Many reasons can explain this success, and these are outlined below a. Ability to reach the good markets Tesco managed to find the good markets to develop, and used a country- screening approach to know where it can be successful and which markets' approaches would be failures. The company tried to enter France in 1993, and rapidly discovered that the market was not the one to conquer for the retailer. [...]