Tesco is a multinational corporation based in the United Kingdom (UK) specializing in groceries and general merchandise retail sectors. The main units of Tesco’s stores include Express, Metro, and Extra, all of which focus on providing food and non-food products. This company has secured the top spot in the food sector in the UK. In particular, Tesco operates beyond the United Kingdom by having over 54,000 stores in at least 14 countries (Miraldes et al. 2015). E-business is one of the strategies that have led to this company’s remarkable productivity levels. It involves buying and selling goods and services via the Internet. Indeed, the rapid growth of the Internet has increased global consumers’ capacity to access different products and services. Tesco takes advantage of this technology to advertise and supply its diverse commodities through its e-business strategy. Various internal factors such as brand marketing and strategic expansion have played a central role in influencing Tesco’s e-business activities. Nonetheless, this company’s e-business strategies have numerous strengths and weaknesses, which it needs to deal with to optimize its performance and productivity.
Internal Factors Influencing Tesco’s E-business Activities
The brand marketing approach embraced by Tesco is one of the main internal factors accounting for the competitiveness of its e-business activities. As Ahmad, Noor, and Wel (2014) reveal, Tesco has an impressive brand image, which represents its quality and worthy products that meet customers’ needs and expectations. Specifically, it has various store formats, including Metro, Extra, and Express, which facilitate the provision of an array of products to consumers in the UK. In addition, it has various “dark stores”, which ensure that customers can access products and services online. According to Mukerjee (2013), the product and service development aspect of Tesco’s brand marketing processes also incorporates continuous innovation to suit the dynamic needs of different customer segments. According to Clarke, Thompson, and Birkin (2015), Tesco is the largest retailer in the UK and among top retailers globally rallying behind Carrefour and Wal-Mart. Thus, due to its long-term experience in the retail industry and massive operations in approximately 7,800 stores that are spread across 14 nations, including North America, Asia, and Europe, it has managed to deploy Internet-facilitated brand marketing to expand its operations (Yoder, Visich & Rustambekov 2016; Huo & Ouyang 2018). This accomplishment has been possible because of Tesco’s effective customer-driven management approaches.
In addition, Tesco’s leadership is an internal factor that recognizes the enormous potential provided by the Internet in transforming customers’ shopping experiences. For example, using the Internet as an e-business strategy provides a competitive advantage to online retailers. According to Bacanu (2015), the Internet ensures that clients can access services promptly. It also facilitates the gathering of information from customers, especially regarding products and services. Tesco’s transformational leadership has been resourceful in facilitating one-on-one communication with customers through its e-business model, collecting statistical data, promoting goods and services sold by retailers, supporting the online ordering of goods directly from suppliers. In fact, the company’s leadership focuses on ensuring the continuous improvement of its e-business framework with a view to creating a reliable means of interaction among workers, clients, and stakeholders.
Tesco also engages in a strategic expansion that has seen the company become one of the largest retailers in the UK. E-commerce has paved the way for this company to broaden its target markets, reinforce communication channels with customers, and extend retailers’ product lines. Such expansion has been accompanied by reduced costs of running a business because setting up physical stores is not required. It has also enhanced relationships between customers and the organization due to the continued delivery of products and services that match clients’ specifications. As Wood, Coe, and Wrigley (2016) uncover, this company has established an electronic supplier network that streamlines its online inventory management and logistics. Furthermore, Tesco enhances its strategic expansion approach by establishing over 30 distribution centers within the UK. The potential brought about by the Internet has enabled it to widen its business network in other European countries and beyond.
Technology has played a crucial role in fostering Tesco’s e-business and, consequently, its competitiveness in grocery and general merchandise sectors. In this case, continuous innovation stands out as another internal factor that boosts Tesco’s e-business activities. In particular, the deployment of information technology (IT) architecture in various business processes performed by Tesco has paved the way for this company to realize efficient operations (Coe & Lee 2013). The incorporation of a third-generation ERP solution is one of the IT architectural systems that have improved the logistics management element of Tesco’s operations. Moreover, this organization has incorporated technological innovations in areas such as product development, customer relationship management, and online retailing.
The Main Strengths and Weaknesses of Tesco’s E-Business Activities
Tesco is a considerably strong competitor in the grocery and general merchandise sector as denoted by its large market share. Particularly, in addition to boasting a 31.6% share of the grocery market in the UK, it claims the third spot among the biggest retailers on a global scale (Wood, Wrigley & Coe 2016). Tesco’s large market segment is a strong force that boosts its competitiveness because it offers the company the benefit of economies of scale. The company’s online platform, Tesco.com, also enhances this company’s e-business activities by allowing customers from all over the world to purchase its products. Therefore, Tesco’s deployment of technology has helped it to reinforce its competitiveness in the market.
As earlier mentioned, various store formats adopted by Tesco, including Extra, Metro, Express, Superstore, and hypermarkets have played a huge role in strengthening the competitiveness of this multinational corporation (Wood & McCarthy 2014). Specifically, these stores not only offer Tesco the power but also the opportunity to meet the needs and expectations of different target audiences, thereby augmenting their strength at various levels in the retail sector. Moreover, such store formats allow Tesco to offer competitive prices for a wide range of products. For instance, according to Wood and McCarthy (2014), they offer value, discount, and the finest price ranges to customers.
Tesco’s collection of data is also one of the factors that contribute to its competitiveness in the market. According to Felgate and Fearne (2015), the Club-card loyalty scheme allows Tesco to gather transactional data from consumers. Such information is further used to determine customers who can be rewarded because of their allegiance to this company’s products and services. As Saarijärvi, Karjaluoto, and Kuusela (2013) reveal, this online data collection approach has fostered the company’s brand trust as well as prominence. Currently, many customers in the UK associate Tesco with value, quality, and exceptional customer experience. As a result, its continued embracement of e-business strategies is likely to make the company prosper in the future.
Tesco’s e-business strategies recognize the input of its most important stakeholders, namely, customers (Ho & Temperley 2013). As a result, the company has developed an Internet-facilitated platform that allows clients to buy goods and services faster. The current framework has simplified the process of buying or looking for available products. Moreover, since Internet connectivity is the only requirement for customers, one can purchase goods and services anywhere in the world regardless of their geographical locations. In particular, buyers visualize the available product features through the company’s website without having to move to Tesco’s physical retail stores. This situation provides a convenient buying experience that has contributed hugely to ensuring long-term customer loyalty (Niranjanamurthy et al. 2013). However, the company’s e-business model also presents some weaknesses.
Tesco has not managed to expand beyond Europe. The company has only established its e-business activities in the UK and other European countries but has not widened its operations in regions, including Asia and America. As such, according to Foster and Noh (2013), Tesco has limited growth of revenues from international operations due to its insignificant presence in markets beyond Europe. This weakness has enabled competitors such as Wal-Mart to thrive at the global level.
Moreover, as Mason and Evans (2015) expose, Tesco’s online inventory management systems are inefficient. Proper inventory management is identified as a crucial factor for not only enhancing the competitive edge of a company but also widening its market share. Tesco’s inventory ratio is considerably lower in comparison to that of competitors such as Morrisons and Sainsbury’s, a situation that indicates the inefficiency level of Tesco’s e-business activities. As such, it is crucial for this organization to deploy e-commerce measures that can create effective inventory management to enhance its competitiveness against rival companies.
Remarkable internal and external factors that influence Tesco’s e-business activities include brand marketing, strategic expansion, technological innovations, political influence, and intensified competition. Its competitiveness, inventive store formats, reinforced brand image, and its use of data demonstrate the company’s strengths. However, its weaknesses include limited operations outside the European market and inefficient inventory management approaches. The consideration of threats such as increased operational costs is also important in enhancing the efficiency of its e-business activities.
Ahmad, A, Noor, S & Wel, C 2014, ‘Factors influencing consumers’ purchase decision of private label brand products’, International Journal of Economic Practices and Theories, vol. 4, no. 2, pp.101-110.
Bacanu, B 2015, ‘The e-commerce as a way to sustain a strategy’, Economic Sciences, vol. 8, no. 1, pp.119-124.
Clarke, G, Thompson, C & Birkin, M 2015, ‘The emerging geography of e-commerce in British retailing,’ Regional Studies, Regional Science, vol. 2, no.1, pp. 371-391.
Coe, N & Lee, Y 2013, ‘‘We’ve learnt how to be local’: the deepening territorial embeddedness of Samsung–Tesco in South Korea’, Journal of Economic Geography, vol. 13, no. 2, pp.327-356.
Felgate, M & Fearne, A 2015, ‘Analysing the impact of supermarket promotions: a case study using Tesco Clubcard data in the UK’, in MC Dato-on (ed.), The sustainable global marketplace: Proceedings of the 2011 academy of marketing science (AMS) annual conference, Springer International Publishing, New York, NY, pp. 471-475.
Foster, MJ & Noh, TJ 2013, ‘Tesco strikes out into Asia’, Frontiers of Business Research in China, vol. 7, no. 2, pp. 289-310.
Ho, CW & Temperley, J 2013, ‘Taiwan: consumers’ reactions to Tesco’s market entry in Taiwan: a comparison with the UK experience’, in S Paliwoda, T Andrews & J Chen (eds), Marketing management in Asia, Routledge, London, pp. 113-131.
Huo, D & Ouyang, R 2018, ‘Internationalisation strategy of the Chinese e-business companies’, Emerging Markets Finance and Trade, vol. 54, no. 3, pp. 801-810.
Mason, R & Evans, B 2015, The lean supply chain: managing the challenge at Tesco, Kogan Page Publishers, London.
Miraldes, T, Azevedo, SG, Charrua-Santos, FB, Mendes, LAF & Matias, JCO 2015, ‘IT applications in logistics and their influence on the competitiveness of companies/supply chains’, Annals of the Alexandru Ioan Cuza University-Economics, vol. 62, no. 1, pp. 121-146.
Mukerjee, K 2013, ‘Customer-oriented organisations: a framework for innovation’, Journal of Business Strategy, vol. 34, no. 3, pp. 49-56.
Niranjanamurthy, M, Kavyashree N, Jagannath, S & Chahar, D 2013, ‘Analysis of e-commerce and m-commerce: advantages, limitations and security issues’, International Journal of Advanced Research in Computer and Communication Engineering, vol. 2, no. 6, pp. 213-225.
Saarijärvi, H, Karjaluoto, H & Kuusela, H 2013, ‘Customer relationship management: the evolving role of customer data’, Marketing intelligence & planning, vol. 31, no. 6, pp. 584-600.
Wood, S & McCarthy, D 2014, ‘The UK food retail ‘race for space’ and market saturation: a contemporary review’, The International Review of Retail, Distribution and Consumer Research, vol. 24, no. 2, pp.121-144.
Wood, S, Coe, NM & Wrigley, N 2016, ‘Multi-scalar localisation and capability transference: exploring embeddedness in the Asian retail expansion of Tesco’, Regional Studies, vol. 50, no. 3, pp. 475-495.
Wood, S, Wrigley, N & Coe, NM 2016, ‘Capital discipline and financial market relations in retail globalisation: insights from the case of Tesco plc’, Journal of Economic Geography, vol. 17, no. 1, pp. 31-57.
Yoder, S, Visich, JK & Rustambekov, E 2016, ‘Lessons learned from international expansion failures and successes’, Business Horizons, vol. 59, no. 2, pp. 233-243.