OPERATIONAL MANAGEMENT ISSUES

Operational Management Issues - An Analysis of Tesco

Operational Management Issues - An Analysis of Tesco

Introduction

Brief Company Background

In today's world where entrepreneurship and owning your own business is considered as the latest fashion to acquire wealth and status we see a lot of new businesses launching every month and every year but only few of them are able to maintain their position in the cutthroat competition and rivalry (Orgel, 2008). Maintenance of the success of the business totally depends on the strategies a business owner adopts to operate it and strategies are the nub that decides the success or failure of an organization.

Tesco came into existence in 1919. It was Jack Cohen's idea that gave rise to such a huge and gigantic organization. Tesco is involved in grocery and general merchandising retailing. Tesco is considered on number three largest retailer in the world if we gauge its position in terms of revenue. First store of Tesco started its operation in 1929 (Hutchins, 2005). Tesco is one of the companies that are listed in London Stock Exchange.

Tesco is the only U.K. food retailer with an international growth platform. In contrast to more-challenging domestic markets, international markets are a bigger revenue pool, and offer more promising growth prospects as they are growing faster and are more fragmented with fewer scale competitors. In international markets, local scale is a key driver of operating margin. Tesco is one of the few companies that appear to have incorporated this insight in to its international strategy (Zwiebach, 2008). Tesco has followed a steady expansion path, entering relatively few countries, but building scale in those where it has entered. As a result, operating margins in international markets have rapidly matched those enjoyed in the U.K. market.

Tesco has a strong brand value. It is the value of the brand of Tesco that enables it to gain competitive advantage over others. Tesco has maintained its brand value by providing customers to indulge in some extra ordinary shopping experience. Moreover, Tesco has maintained its name in retaining customer satisfaction by providing affordable products. With this immense success, that Tesco had achieved over the period of time, it has clear prospects to expand itself in the international market, and they are actually expanding into the international market (Shannon, 2011). They have coherent strategies develop that guides them about how to enter a new marker in a geographical location. Before entering into any new market they research properly that the market is substantial enough or not, the new prospect market should give rise to the overall growth of Tesco. These strategies of Tesco reveal preparation of Tesco before entering into a new market. Good organizations that want to expand its businesses into the international market should adopt the strategy of Tesco.

The concerns around Tesco's prospects in the United Kingdom have been overplayed, and its international prospects underappreciated. In spite of superior strategy, execution, economics and prospects, Tesco trades at attractive multiples relative to its ...