Business-Level and Corporate-Level Strategies - Assignment Example

Business-Level and Corporate-Level Strategies Tony Webb Dr. Linda Harris BUS-499 Business Administration Capstone August, Contents Business-level strategies of Tesco Plc. 3 2. Corporate –level strategies of Tesco Plc. 4 3. Comparative analysis 5 4. Slow and fast cycle markets 7 References 8 1. Business-level strategies of Tesco Plc. Tesco is a grocery and general merchandise based retailer headquartered in the United Kingdom (U.K.) (Tesco, 2014a). The company follows a number of business strategies in order to sustain in the retail market. The principal strategy of Tesco is to provide customers with the best quality of services at the least price, which can help to establish and further enhance relationship with them. Tesco also aims to bring in growth and innovation in business with a wide range of product offering. The retailer adequately invests in the business so as to provide an enriching experience to both online and in-store customers (Tesco, 2014a). Tesco emphasizes on improving the shopping experience of customers so that they are adequately satisfied to make a repeat purchase therein (Tesco, 2014). The retail giant aims to establish a growing business, which is full of opportunities and where the shareholders are willing to invest (Haerifar, 2011). Tesco ensures that prices of the products offered in its stores are stable, logical and competitive. The price promise made by Tesco has remained in place for over a year. The company rightly assures the customers that they would definitely benefit from purchasing fresh foods and branded and own label products that are offered (Tesco, 2014a). There are a number of marketing and branding strategies followed by Tesco. The retail giant provides various schemes to customers with the motive of improving the quality of customer service. The schemes such as, First Class Service Initiative and Loyalty Card, place greater emphasis on the customer delight compared to customer services (Tesco, 2014b). These are the finest customer retention strategies utilized by the company. Giving personalized services in a cost effective manner is the key motive of Tesco in order to attract more consumers. Besides that, Tesco has launched a number of magazines to draw the customers’ attention towards the products offered. The magazines published had a unique combination of advertisements and articles related to the offerings (Tesco, 2014b). These also served as a means of distributing the promotional coupons. Introduction of models such as, “pile it high and sell it cheap”, were also initiated by the retail giant (Tesco, 2014b). The intention of the model was to emphasize on the availability of quality products at competitive prices. The customer retention strategy of Tesco also included ideas like, the trading of stamps. These stamps were given to customers in return for the purchases they make in the stores. The customers who received these stamps were able to redeem them against gift or cash. The success of this strategy had led to abolition of the cumbersome process related to retail price maintenance system (Hensmans, Johnson & Yip, 2013). Club Cards were introduced over a year ago in order to provide greater value to the customers (Tesco, 2014b). It enables customers to take advantage of personalized and differentiated offers. It is the latest addition to the branding strategy that would sustain for a longer period of time. Hence, the services provided by Tesco to all customers are appreciable. The key priority of the retail giant is to deliver the best customer services on each shopping trip. Almost 250000 staff in the United Kingdom is trained to ensure effective customer satisfaction with services delivered (Haerifar, 2011). Therefore, the business strategy of Tesco majorly focuses on customer satisfaction through cost leadership. 2. Corporate –level strategies of Tesco Plc. The corporate level strategy that is implemented by the Tesco management involves diversification, expansion, own brand food promotion, regular technological up-gradation, healthy supplier relation and stakeholder satisfaction (Tesco, 2014a). Tesco is Britain’s leading food retailer with 568 stores throughout Scotland, Wales, Northern Ireland and England. The retailing giant has 43 stores in Hungary, 31 in Poland, 103 in France as well as 13 in Slovakia and Czech Republic (Tesco, 2014a). Tesco has an extensive product range including groceries, consumer goods, telecoms and financial services. Another major strategy utilized for improving the business is the development of new store formats, which has the required capability to attract maximum numbers of customers (Tesco, 2014a). Tesco has invested in a number of existing stores so as to render those more competitive and modify them as per the customers’ changing expectations. The United Kingdom (UK) based company wants to further expand the business and product lines so as to retain the competitive edge (Tesco, 2014). Tesco boasts of the guaranteed low prices for quality offerings made to all consumers. The cost leadership is the most important corporate strategy of Tesco for the purpose of maintaining top position in the retail industry. Tesco gives value to the customers’ money. Besides providing low prices for the products, Tesco also ensures that the customer service in its stores is unique. The company is the leader in delivering world class services to all consumers. The staff present in the stores makes sure that the customers’ issues are solved instantly, which contributes towards enhancing the experience of shopping (Tesco, 2014a). In this regards, customers are guided efficiently by the employees. Increasing customer loyalty is the most vital strategy for Tesco in order to sustain in the market. The customers are provided with the Clubcard, which provides the advantage of special prices and differentiated offers (Tesco, 2014). The products offered by Tesco are of widest possible choice and of best quality. Tesco also promotes own brand products encompassing product categories such as, home, clothing, food, beverage, financial and Tesco mobile services. Technological innovation forms a vital part of Tesco’s expansion strategy. Tesco had developed the first self-service tills in its stores. The usage of cameras for reducing queues was also initiated by the multiproduct retailer (Tesco, 2014). Tesco along with its suppliers works efficiently towards offering the highest quality of products. Keeping healthy terms with the suppliers also forms part of its corporate level strategy. A number of suppliers are chosen, instead of a single one, so as to be able to continue providing products the most competitive price as well as to maintain its bargaining power (Tesco, 2014). 3. Comparative analysis Tesco is facing strong competition from a number of competitors such as, Sainsbury, Asda, Waitrose and Morrison. The strongest among them is Sainsbury. The business and corporate level strategy framed by Sainsbury is robust and competitive (J Sainsbury plc, 2014). Sainsbury greatly emphasizes on expansion, diversification and development of several quality products, but not on cost leadership (J Sainsbury plc, 2014a). The detailed comparison of the business strategies pertaining to Tesco and Sainsbury is presented below. Increase in the number of stores- At present, Sainsbury has a chain of 611 convenience stores and 592 supermarkets (J Sainsbury plc, 2014a). It aims to increase the portfolio of stores through introduction of new supermarkets and addition of space in existing and new convenience stores (J Sainsbury plc, 2014). The retailer annually adds to the present number of supermarkets and convenience stores. Sainsbury targets to have a 5% gross space growth each year (J Sainsbury plc, 2014a). The business strategy of Tesco also involves expansion. Tesco gives huge competition to Sainsbury and its number of stores and supermarkets is higher than the latter. Tesco operates in 12 countries and has 6784 stores worldwide, which is increasing over time (Tesco, 2014). The management of the company intends to diversify and further expand the business so as to sustain in the retail market. Development of new business- Sainsbury focuses considerably on diversification, which is an important long-term strategy. Sainsbury functions in a variety of business, which includes pharmacy, fuel, café, entertainment, energy, garments and banks (J Sainsbury plc, 2014). Extending into different sectors to retain its competitiveness is the primary aim of the second largest supermarket in the UK, Tesco (Henry, 2011). The online and entertainment market of the company is also growing rapidly. Tesco has a business strategy that aims at diversification in various sectors. Tesco deals in a number of products. Tesco engages in a number of businesses, including garments, beauty salons, petrol stations, telecommunication, photo processing, coffee shop, film making and gold exchange. The number of businesses that Tesco controls is far more than that of Sainsbury. Tesco is, therefore, diversifying successfully in several sectors. Cost structure – Sainsbury does not set the lowest possible prices for its product lines. In the recent past, prices of the products offered by the retailer have increased by 5.2 percent (Ruddick, 2013). The rise in the product prices was mainly related to the fact that Sainsbury wanted to focus on own brand products in order to surpass competitors such as, Tesco (J Sainsbury plc, 2014). Furthermore, the management perceived that the goods offered can create the right amount of value for all consumers. Following the price hike, there was a fall in the sales growth by 2.1 percent (Ruddick, 2013). On the other hand, Tesco has maintained the price promise made for all its products. Over past few years, Tesco had brought in a slight increase in the product prices. Tesco follows the cost leadership strategy stringently in order to remain at the peak position in the retail industry (Tesco, 2014). Supplier relations- Sainsbury suffers from poor supplier relationship. The retailer receives 10 genuine complaints from the suppliers annually. Prices of the products purchased from the suppliers are extensively dictated by the company, which has resulted in increasing number of complaints made every year (Hall, 2007). The management of Sainsbury had failed to take effective measures for resolving the issue. Likewise, Tesco also receives complaints from the suppliers, but the count is comparatively lower. Tesco ensures that a healthy relation is strategically maintained with the suppliers, which largely helps to increase swiftness of the business operations and profit margin through bargaining. As a result, Tesco has a more competitive business and corporate level strategy in comparison with Sainsbury. 4. Slow and fast cycle markets The success of Tesco does not differ in the slow cycle markets as noticed for companies such as, Sainsbury, Asda, and Waitrose, given that the products offered can be easily imitated. Tesco does not enjoy a monopoly position in the retail market. Tesco has a number of competitors who are found to sell similar products (Haerifar, 2011). Then again, success of Tesco appears to vary in the fast cycle markets, where it has several competitive advantages over the competitors such as, Sainsbury. The most vital amongst them is the business strategy of cost leadership. The corporate level strategy of Tesco also differs from that of the opponents in fast cycle markets as it aims to diversify the business and the product range in an effective manner (Haerifar, 2011). References Haerifar, P. (2011). Performance management in Tesco. Ravensburg: GRIN Verlag. Hall, T. (2007). Suppliers suffer from supermarket price cuts. The Telegraph. Retrieved from: http://www.telegraph.co.uk/news/uknews/1561357/Suppliers-suffer-from-supermarket-price-cuts.html Henry, A. (2011). Understanding strategic management. Oxford: Oxford University Press. Hensmans, H., Johnson, G., & Yip, G. (2013). Strategic transformation: Changing while winning. Basingstoke: Palgrave Macmillan. J Sainsbury plc. (2014). About Us. Retrieved from: http://www.j-sainsbury.co.uk/about-us/business-strategy-objectives/ J Sainsbury plc. (2014a). Home. Retrieved from: http://www.j-sainsbury.co.uk// Ruddick, G. (2013). Sainsburys prices rising. The Telegraph. Retrieved from: http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/10226971/Sainsburys-prices-rising-at-more-than-twice-the-rate-of-Tesco-according-to-industry-data.html Tesco. (2014). Tesco and Society. Retrieved from: http://www.tescoplc.com/index.asp?pageid=654 Tesco. (2014a). About Us. Retrieved from: http://www.tescoplc.com/index.asp?pageid=6 Tesco. (2014b). Corporate Strategy. Retrieved from: http://www.tesco.com/investorInformation/report97/review/page1.html Read More