When Jack Cohen started selling groceries from a stall close to London in 1919, he might not
have realized what success story he was about to create (Tesco, 2012). Hard to believe, but
this was the foundation of Tesco as we know it today. Tesco has become one of the leading
food retailers in the world with a revenue of more than 60 billion pounds and a global
workforce of around 490.000 employees in 2011. There have been various factors that have
had major impact on the company including the Second World War as well as the United
Kingdom entering the European Union. These influences can be broken up into social,
economical, legal and political. Additionally there has been another element of Tesco, which
made the company unique and attributed majorly to its success: Its growth strategies. These
will be analyzed with 'Ansoffs Matrix'.
Table of Contents
- Introduction
- Political factors
- Economical factors
- Social factors
- Technological factors
- Legal factors
- Tesco's key to success
Objectives and Key Themes
This text aims to analyze the success story of Tesco, a leading global food retailer. It examines the key factors contributing to Tesco's growth and market dominance, focusing on the interplay of political, economic, social, technological, and legal environments. The analysis uses Ansoff's matrix to illustrate Tesco's strategic growth strategies.
- The impact of macroeconomic factors on Tesco's development.
- Tesco's strategic use of technological advancements to gain a competitive edge.
- The role of changing social structures and consumer behavior in Tesco's success.
- The influence of political and legal environments on Tesco's growth strategies.
- Tesco's application of Ansoff's matrix in its market expansion and product diversification.
Chapter Summaries
Introduction: This introductory section sets the stage by outlining Tesco's remarkable journey from a single grocery stall in 1919 to a global retail giant. It highlights the significant factors that have shaped Tesco's trajectory, including World War II and the UK's entry into the European Union. The introduction emphasizes the importance of Tesco's growth strategies, which will be analyzed using Ansoff's Matrix, as a cornerstone of its success. It succinctly positions the subsequent analysis within the context of Tesco's overarching narrative of growth and global dominance.
Political factors: This chapter explores the significant impact of political factors on Tesco's growth, focusing on the benefits derived from the European Union's free trade area and customs union. The analysis illustrates how Tesco leveraged the EU's open markets to expand across Central Europe, gaining valuable knowledge and operational experience. Further, the chapter discusses the influence of globalization and increased foreign direct investment (FDI) opportunities, notably in China, in fueling Tesco's international expansion and diversification. The chapter concludes by highlighting Tesco's resilience even during the 2010 financial crisis, attributed to its diversified international operations.
Economical factors: This section examines the influence of economic conditions on Tesco's evolution. It details Tesco's ability to navigate both periods of economic hardship, such as the Great Depression and World War II (utilizing a "pile it high, sell it cheap" strategy), and periods of economic growth. During the latter, increasing disposable income and a shift toward convenient shopping allowed Tesco to expand into larger, modern supermarkets, further enhancing sales and profitability. The overall argument highlights Tesco's adaptability and success across varying economic landscapes.
Social factors: This chapter focuses on the social shifts that influenced Tesco's growth, emphasizing the entry of women into the workforce. The increasing employment of women created opportunities for Tesco to utilize "cheap female labour." Furthermore, changing social trends, such as the rise of pre-cooked meals and the "advent of the weekly shop," enabled Tesco to adapt its offerings and strategies to meet evolving consumer demands. The increasing use of cars facilitated the establishment of larger, out-of-town supermarkets, resulting in economies of scale and enhanced profitability.
Technological factors: This section details the profound impact of technological advancements on Tesco's success. Innovations such as shopping carts, self-service stores, price stamps, and electronic point-of-sale systems dramatically reduced costs and improved efficiency. The introduction of the Clubcard loyalty program allowed Tesco to effectively track customer behavior and enhance customer loyalty, thereby driving sales. The launch of "Tesco Online" expanded the company's reach, increasing access to a broader customer base across different geographic locations and demographics.
Legal factors: The chapter examines the impact of the legal environment on Tesco’s operations. The discussion centers around Tesco’s clashes with manufacturers due to price regulations in the 1960s, which led to legal battles eventually resulting in the removal of restrictive price-maintenance laws. This legal victory enabled Tesco to implement its price leadership strategy, leading to significant growth. The chapter also touches upon the shift from a fragmented grocery market to a more consolidated landscape, where Tesco’s economies of scale enabled it to outcompete smaller independent stores and control the supply chain.
Tesco's key to success: This chapter analyzes Tesco's growth strategy through the lens of Ansoff's matrix. It highlights how Tesco strategically employed market penetration (expanding existing products in existing markets), product development (adding new products), market development (expanding into new geographic markets), and diversification (expanding into new product categories beyond food). The chapter uses various examples from Tesco’s history to illustrate each of Ansoff’s strategies and how their implementation contributed to Tesco's overall success.
Keywords
Tesco, retail, grocery, growth strategy, Ansoff's matrix, market penetration, product development, market development, diversification, globalization, FDI, technological innovation, Clubcard, European Union, economic factors, social factors, political factors, legal factors.
Tesco's Success Story: Frequently Asked Questions (FAQ)
What is this text about?
This text provides a comprehensive analysis of Tesco's success story, examining the key factors that contributed to its growth and market dominance. It explores the interplay of political, economic, social, technological, and legal factors, using Ansoff's matrix to illustrate Tesco's strategic growth strategies.
What are the main themes covered in this analysis of Tesco's success?
The analysis delves into the impact of macroeconomic factors, Tesco's strategic use of technology, the role of changing social structures and consumer behavior, the influence of political and legal environments, and Tesco's application of Ansoff's matrix in market expansion and product diversification.
What is the structure of the text?
The text is structured into chapters covering an introduction, political factors, economic factors, social factors, technological factors, legal factors, and finally, Tesco's key to success. Each chapter provides a summary of its key findings. A table of contents, objectives, key themes, and keywords are also included.
What role did political factors play in Tesco's growth?
The text highlights the benefits Tesco derived from the European Union's free trade area and customs union, allowing expansion across Central Europe. Globalization and increased foreign direct investment (FDI) opportunities, particularly in China, also fueled Tesco's international expansion. The text also notes Tesco's resilience during the 2010 financial crisis, attributed to its diversified international operations.
How did economic factors influence Tesco's development?
Tesco's ability to navigate both economic hardship (using a "pile it high, sell it cheap" strategy during the Great Depression and WWII) and periods of economic growth is examined. Increasing disposable income and a shift towards convenient shopping during periods of growth allowed Tesco to expand into larger supermarkets, enhancing sales and profitability.
What is the significance of social factors in Tesco's success?
The text emphasizes the impact of women entering the workforce, providing "cheap female labour" for Tesco. Changing social trends, such as the rise of pre-cooked meals and the "advent of the weekly shop," along with increased car ownership (facilitating out-of-town supermarkets), are highlighted as key drivers of Tesco's adaptation and growth.
How did technological advancements contribute to Tesco's success?
Technological innovations like shopping carts, self-service stores, price stamps, electronic point-of-sale systems, and the Clubcard loyalty program are discussed as significant contributors to cost reduction, efficiency improvement, and customer loyalty. The launch of "Tesco Online" expanded the company's reach significantly.
What was the impact of the legal environment on Tesco's operations?
The text details Tesco's legal battles with manufacturers over price regulations in the 1960s, ultimately leading to the removal of restrictive price-maintenance laws. This allowed Tesco to implement its price leadership strategy, fostering significant growth. The shift from a fragmented to a consolidated grocery market, where Tesco's economies of scale gave it an advantage, is also discussed.
How does Ansoff's matrix explain Tesco's growth strategy?
The final chapter analyzes Tesco's growth strategy through the lens of Ansoff's matrix, demonstrating how Tesco strategically used market penetration, product development, market development, and diversification to achieve its success. Specific historical examples illustrate the application of each strategy.
What are the key words associated with this analysis of Tesco?
Key words include Tesco, retail, grocery, growth strategy, Ansoff's matrix, market penetration, product development, market development, diversification, globalization, FDI, technological innovation, Clubcard, European Union, economic factors, social factors, political factors, and legal factors.
- Quote paper
- Chris Obereder (Author), 2012, The Success Story of Tesco, Munich, GRIN Verlag, https://www.grin.com/document/210398
