SWOT Analysis of TESCO in Terms of IS/IT - Case Study Example

Introduction The compulsions of the rapidly transforming societal paradigms and technological advancements are important factors that require more comprehensive and innovative approach to market strategy. Strategic marketing plans are crucial part of promoting products and services of an organization. It is equally important that while planning appropriate market strategy, proper use of SWOT (strengths, weakness, opportunities and threats) analysis is taken up. Awareness of strengths and weaknesses in the company’s resources facilitate and match the opportunities and threats so as to provide a competitive edge to their rivals. SWOT analysis is an important tool to up grade internal strengths of the company to meet the external opportunities and exploit them in a manner that would provide the companies with cutting edge advantage over their rivals. SWOT analysis of Tesco in terms of IS/IT would be evaluated and analyzed for the success of Tesco chain of supermarket. Use of SWOT analysis in market strategy Initially, Tesco with its ‘Pile it high and sell it cheap’ motto, was able to strengthen its market position considerably. The aggressive market strategy, based on acquisition, further took the total number of stores to more than 600 in 1960s and thanks to Cohen, the largest supermarket of Europe came into being in 1961 in Leicester. 1970s and 1980s saw the rapid decline of Tesco primarily because of the low quality product. But under the dynamic leadership of Lord MacLaurin, Tesco underwent tremendous change. He realized early that introducing technology and building committed customer base would accelerate the growth of Tesco manifold. The advancing technology and the advent of computers have greatly influenced the changing paradigms of the business strategies. Leadership within Tesco have realized the vast potential of the emerging new technologies in opening a huge vista of business opportunities that are global in nature but made easily accessible through the new technology like internet and tech gizmos. ‘The Internet with its low-cost entry and ease of use quickly changed how information was exchanged and removed the distance barriers for business partners’ (Gottardi et al. 2004). Tesco has used technology to significantly improve its performance outcome. Leadership initiatives It needs to be realized that ‘strategies rather than operative planning and decision making, became the main factor of managerial leadership’ (Chandler, 1977; Andrews, 1971). At Tesco, managerial leadership or managers were solely responsible to achieving the targeted production and efficient administration through a well defined rational analysis, planning and decision making which distinctly lacked consideration and importance of human interaction in the organizational culture. But in the contemporary times, the equation has tremendously changed and ‘we approach managerial leadership as a relational, ongoing social construction process rather than as a single clear cut phenomenon’ (Sjostrand and Tyrstrup, 2001). Tesco leadership judiciously exploited the different contextual factors vis-à-vis size, technology, environment, diversification and globalization to meet the challenges of the times. Use of technology The technology and e-business played a vital part in rejuvenating the core business activities of Tesco and helped it to rebuild the trust amongst its customers. MacLaurin realized the vast potential of internet early and has been the first business enterprise to introduce e-commerce activity in UK. The interactive communication between the client and the business house has been utilized to develop a professional relationship between the two, that not only provides opportunity to improve and improvise the quality as per customer’s requirement and demand while at the same time, customer gets the best deal because of the competitive nature of internet, as a medium of business promotion technique. Smith P.R. and Chaffey D. (2002) have argued that E-commerce is commonly thought to include e-tailing, online banking and shopping – it involves transactions where buyers buy and shoppers actually shop. Others suggest e-commerce is any transaction such as a support or an online catalogue search. MacLaurin initially introduced technology in two main areas; sales and distribution. When home delivery was introduced via phone, fax and online, the concept was new and radical because firstly the home delivery was a new concept which appealed to the working class as it saved their time. Secondly and the major reason was that the online presence of Tesco gave a radical zing to Tesco’s marketing strategy as internet was rapidly becoming popular. The interactive website of Tesco was a novel thing and initiated the process of customer relationship that later became its core strength. Online presence and E-Commerce ‘E-commerce is an economic solvent. It dissolves old business models and changes the cost structure, and rearranges links among buyers, sellers, and everyone in between. The impact of e-commerce is happening in phases’ (Kalakota, Robinson, 2002). Thus, ecommerce activities are backed by five major factors: aesthetic appeal of the website; the simple and user friendly website; interactive module backed by regular update and prompt response by the firm; high quality product which facilitate trust building; and highly secured online financial transaction. The CEOs of Tesco were highly professional and had the foresight to envisage a highly potential online market which they created by developing a website which was not only aesthetically appealing but efforts were made to make it simple and user friendly so that even a novice could use it without any difficulty. Another important factor which has significant impact on the e-commerce activities of the organization is its interactive website that is updated and well maintained. Tesco reasserted its superiority on its business acumen when it relieved its in-house managerial line from the tedious job of updating and maintaining the website and contracted an outside agency to upgrade and maintain a hassle free website that could be easily manipulated and individual features could be added by different unit managers, without heavy technology jargon or complexity. Interwoven’s TeamSite provided the much needed technology support and facilitated the management of ever expanding online operations of Tesco within and outside the UK. TeamSite contributed in three main areas to facilitate Tesco to better supervise their online operations. Templating makes it easier for the Tesco business managers to manage timing, look and feel of online campaigns to attract customers and disseminate information about new product lines and events. Smart context editing ensures that website contents are proof read and approved prior to submitting it for online shoppers. Lastly, the flexible workflow allows managers to control and manage online and offline distribution of work customer channels. During 1996-97 Tesco became the first store in Europe to offer online delivery and took home delivery orders through phone, fax and internet. Technology thus became an integral part of Tesco strategy that was vigorously followed by later CEOs of Tesco. By 2001 Tesco had become one of three leading online stores with more than 50% grocery online sale in UK and today it has around 7,50,000 registered users and processes 70,000 orders a week! It has a huge network in Europe and has made its presence in America by tying up with its leading supermarket chain Safeway. The amazing turnaround by Tesco in late 1990s, to become the largest chain of superstores not only in UK but in Europe, is not only extremely praiseworthy but a very rare feat by any retailer as yet. Customer relationship building through effective IT services Concerted efforts were made by Tesco to get feedback by the online and offline customers and public so that appropriate improvements and improvisation in the site could be made. Tesco went so far as to employ a housewife on its payroll just so that it could get first hand point of view of the changes from a person who represents its customers. Lynn Pullum, the housewife, became the guiding factor for the major changes on the Tesco website which were solely designed to attract more customers to use online shopping. Tesco also used its online customer base to analyze the changing habits of the public and accordingly made changes in its business activities resulting in Tesco diversifying its core business activities to include new areas like insurance, personal finance, petrol pumps with attached Tesco convenient stores in the format of Tesco Express etc. Tesco’s market strategy was totally focused on the needs and requirements of the people and made continuous efforts to update its products line with that of the changing public demands. This was reflected on its continuously changing website which became increasingly people-centric. The huge success of Tesco website could be gauged from the fact that it has maintained its positions of being one of the four major ecommerce sites and the top online grocery store in UK for the last ten years, in a row. Creative approach to trust building Tesco also promoted computer literacy and internet proficiency among the less affluent class with the long term intention of making them their customers. It was in fact a really commendable promotional activity that not only built its image as socially conscious enterprise but drew customers from unexpected quarters like old ladies and other persons who hitherto were afraid to use computers. The most interesting fact of the friendly image that it projected on its online delivery system was the provision of special note that often comprised of demands of the customers that went beyond the core activities of Tesco. Tesco often reaffirmed its people-centric approach by complying with those special requests at relatively low cost and earned its customers long term trust and commitment. Conclusion One can therefore, conclude that it is important to realize that the compulsions of globally competitive business environment is having an effective managerial leadership that encourages innovative business strategies and creative practices to overcome the challenges of fast changing technologies and dynamics of economy. The working within the organizational climate with well defined parameters and values would promote and facilitate the organization to strive for its long term mission with short term goals and objectives. It can thus be concluded that Tesco has successfully incorporated IT/IS in its business strategy to maintain its market position through improved performance outcome. (1651) Reference Andrews, K.R. (1971). The concept of corporate strategy. Homewood, IL. Chandler, AD (1977). The Visible Hand: The Managerial Revolution in American Business. Boston: Harvard Business School Press. Gottardi G., Bolisani, E. and M. Di Biagi. (2004). Electronic commerce and open communities: An assessment of Internet EDI. International Journal of Services Technology and Management. Volume5. pp.151-169. Kalakota R., Robinson M. (2001). E-business: Roadmap for Success 2.0. Addison-Wesley. Smith P.R., Chaffey D. (2002). E-Marketing Excellence. The Heart of e-Business (pp.35-78). Elsevier Butterworth Heinemann. Sjostrand, S and Tyrstrup, M. (2001). Recognized and unrecognized managerial leadership’, in invisible management – The social construction of leadership. S Sjostrand, J Sandberg and M Tyrstrup (eds.). Thomson. pp 1-27. Tesco. Available from: [Accessed 9 January, 2010]. Read More