Strategic management of Tesco Essay Example | Topics and Well Written Essays - 4750 words

Strategic management of Tesco - Essay Example Inbound logistics include the receiving, warehousing, and inventory control of input materials. Superior supply chain management has always been Tesco's core strength. Stockholding and distribution costs were minimized by constantly replenishing stocks. The new Tesco stores were built so as to facilitate reconfiguration (for e.g. walls in the warehousing area could dismantled to make for additional selling space) and minimum warehousing space. Operations are the value-creating activities that transform the inputs into the final product. Outbound logistics are the activities required to get the finished product to the customer, including warehousing, order fulfilments, etc. Marketing & Sales are those activities associated with getting buyers to purchase the product, including channel selection, advertising, pricing, etc. Service activities are those that maintain and enhance the product's value including customer support, repair services, etc. The elements of the value chain describe d here have been dealt with in the earlier discussion. 1.2. Antecedents: The first three letters 'Tes' that form the name Tesco come from the founder Jack Cohen's first tea supplier, T. E. Stockwell and the 'co' from his surname - supply chain management has always been prominent in the company's scheme of things. ... They were; direct delivery of the supplier to the retail store; centralised distribution system for ambient goods to be supplied to regional centres, which began in the 1970s but continued to evolve over the years; a composite distribution system developed in 1989 and vertical collaboration in the supply chain to achieve better operational efficiencies. The 'reconfiguration of distribution and operational strategies' helped the company to achieve sustainable competitive advantage. The company's fortunes changed dramatically during the 1992-2002 decade. The top six retailers in the UK up to 2002 were Tesco, Sainsbury's, Gateway (now Somerfield), Argyll (now Safeway), Asda (acquired by Wal-Mart) and Kwik Save. Tesco was far ahead of its competitors in 2002 with sales worth ' 15.6 billion - her nearest rival Sainsbury's had sales of ' 6.4 billion. In 2002 W. M. Morrison arrived as a new entrant to the top six claiming a place above Safeway with sales of ' 3 billion in that year and in the process dislodging Kwik Save. 1.3. Strategic challenges: The strategic issues that the food retailing industry faced in the last decade of the twentieth century were challenging. As all of them offered - more or less - the same goods it was difficult to create a sustainable competitive advantage over an extended period. The differentiator was to be service and to beat competition businesses had to constantly evolve a process of innovation in their service offering. One of the consequences of this evolving process of innovation was to diversify product offerings that made food retailers move into non-food businesses like clothing, electrical goods, petrol, financial products and insurance apart from