Tesco report - Essay Example

Indeed, Porter’s five forces model becomes highly relevant part of that dynamic strategic initiative which helps the companies to meet the challenges of changing times. Five force analysis In the contemporary business, the creative input and innovative approach greatly facilitates in providing the goods and services with unique differentiating elements so as to gain leverage in the industry. Tesco’s five forces analysis become crucial elements of competitive advantage and can be broadly described as: industry rivalry; bargaining power of suppliers; bargaining power of buyers; competition from substitute; and threat of entry (Porter, 1980).

The industry rivalry amongst the supermarket chain is important criteria for introducing cutting edge differentiating element in the products to gain leverage. Tesco’s major rivals in the industry are Sainsbury, Morrison, Wal-Mart, Asda etc. in UK. Grant (2007) asserts that identification and analysis of changing preferences of the people is important factor for firms to maintain their market position. Tesco’s major strategic win has been its people centric policies. It continuously strives to customize its products as per the changing requirements of the people.

At the same time, the various outlets have also introduced local products to cater to the local demand. Thus, Tesco has become the first food chain that has adopted global values in its operation and values. Tesco has greatly expanded its business formats and product line and provides quality and customized products at relatively low cost. It therefore, has been able to bargain with its customers. The quality and creative input within the product gives huge advantage to the suppliers and puts one in a bargaining position.

The bargaining power of buyers is also reduced when there is short supply of quality goods which have great demand. In the case of Tesco, the buyers increasingly prefer them because of their quality products which are distinctly differentiated from their rival through variety, customization and personalized customer service. In the age of technology, the competition from substitute become highly likely and the company needs to adopt innovative approach to its marketing. Tesco has judiciously exploited technology to initiate e-commerce activities and home delivery system.

It has also adapted dynamic strategies which facilitate customized products and services. It also thrives in introducing elements of surprise within the products as well within the marketing of the products and services. Interestingly the threat from new entrants is one of the most significant factors which necessitate flexibility in strategic decisions and innovation. Globalization has hugely facilitated openings for new entrants. The entry of foreign supermarket chain like Lidl of Germany in UK, has further stiffened the competition and gives more power to the customers.

Thus, speed and flexibility in introducing new products become highly essential for the existing firms and must be incorporated within their core strategy. Tesco’s strategy is focused on the needs and requirements of the people and makes continuous efforts to update its products line with that of the changing public demands. The threat is also considerably reduced because it is able to satisfy its customers by having different types of stores like Express, Metro etc which cater to different customer segment and provide huge product line