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Management strategic-------Carry out a strategic analysis of the UK grocery market using appropriate strategic management models - Assignment Example

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1. Executive Summary The report aims to carry out a strategic analysis of the UK grocery market with focus on Tesco which is one of the largest players in this segment in UK as well as on a global level. The report gives an overview of the UK grocery market and then moves on to internal and external analysis…
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Management strategic-------Carry out a strategic analysis of the UK grocery market using appropriate strategic management models
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"Management strategic-------Carry out a strategic analysis of the UK grocery market using appropriate strategic management models"

Download file to see previous pages All these analyses have been carried out from the point of view of Tesco. However, references to UK general grocery market have been made times and again when required. The report concludes with the key takeaways from this detailed strategic analysis. 2. Overview of UK Grocery Market Retailing is one of the main contributors to UK economy with over 12% share. This sector acts as a bridge between production and consumption and is also a great generator of employment. In addition to the organized sector, there are a large number of unorganized players who are self-employed. UK grocery market has witnessed changes across both horizontal and vertical dimensions in the past few years. Horizontally, food retailers have ventured into other retail segments such as consumer goods, clothes, services and so on. Vertically, there has been a shift of power in the supply chain from the manufacturers to large organized retailers. This had a huge impact on the dynamics of the industry (Institute of Retail Studies 2003). 3. Internal Analysis of Tesco Tesco is primarily a food retailer with more than 2500 stores across the globe, a majority of which are in UK. The company has lately ventured into other business segments such as financial services, insurance, electrical appliances, telecommunications and insurance (Data Monitor 2004). SWOT analysis can be effectively used to carry out an internal assessment of Tesco. 3.1. Strengths One of Tesco’s biggest strengths is its continuously increasing market share. As of July, 2011, its market share is above 30% (Institute of Grocery Distribution). Tesco has almost doubled its market share in the past 7-8 years speaking high volumes of its growth. This growth has been enabled because of the continuous geographical expansion and opening of new stores. In addition, Tesco has strategically focused on non-food segment of the business and now it contributes very significantly to its revenues. Tesco has realized the importance of web in its marketing. It has one of the biggest online supermarkets in the world. Tesco has a great brand image among its customers. It is known for high quality goods, innovative measures and efficient processes. Tesco’s lead over other players in UK market is huge. This has been made possible due to economies of scale it has gained over the years. 3.2. Weaknesses Tesco’s success story has largely been possible due to the UK market. However, it is susceptible to risk in case of change in government regulations. Tesco has a largely untapped market in emerging economies such as China and India. In addition, Tesco has been very aggressive in its expansion strategy and acquisitions. This has meant taking a large amount of debt affecting its balance sheets. Such a capital structure would work till the going gets good but may backfire in tough times. 3.3. Opportunities Tesco has opportunities from two perspectives. One is the geographical expansion in emerging markets as discussed above. The second opportunity is to make efficient use of its scale and venture into new business segments. The margins in the food industry are declining and it is profitable to consider new avenues. Tesco has already started working on the same with new segments such as skincare (Data Monitor 2004). In this way, it would also be able to realize economies of scope. 3.4. Threats UK grocery market has witnessed a lot of price wars. This has especially occurred due to entry of ...Download file to see next pagesRead More
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History of Tesco Tesco opened its first superstore in 1968 although the brand first appeared in 1924 (Docstoc, 2010). Their initial business level strategy was to focus on market and product development: They could focus on these two core issues as retail sector being in its nascent stage, they could increase their market share at low cost without increasing competitive rivalry.
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