DIVERSIFICATION STRATEGIES

Diversification Strategies



Table of Contents

Introduction3

Tesco Plc3

Core Businesses3

Tesco's Successful Diversification Strategy4

Three reasons for Tesco's Successful Diversification5

Wal-Mart5

Core Businesses5

Wal-Mart's Unsuccessful Diversification6

Three reasons for Wal-Mart's Unsuccessful Diversification7

Recommendations for Borders' Successful Diversification7

References9

Diversification Strategies

Introduction

Use of the Internet for commerce or E-business is a popular topic of research efforts and mass-media press reports. Just as the Internet has changed the way people communicate and share information, shopping activities have also been dramatically affected. Online shopping has been touted by some researchers and the press as the replacement for traditional retailers that sell via physical storefronts. The promise of a new, preferred retail commerce channel is juxtaposed to the reality that in the second decade of use, electronic commerce has been able to achieve less than four percent of total retail sales. This paradox between promise and reality has created a fertile ground for investigation into the motivations and concerns of online shoppers and how E-businesses can allay the fears and concerns of consumers.

In less than two decades Internet has been used as a shopping medium, attitudes, assumptions, and perceptions concerning the viability of online-only storefronts and mixed-channel operations that offer a combination of offline and online capabilities have evolved.

Tesco Plc

Core Businesses

Tesco plc is a grocery and general consumer goods retailer outlet with global reach. Tesco has stores in more than 14 countries of the world. Tesco serves as one of the best examples of brand extension as the company which started off as a UK-based grocery store, moved towards expansion into other countries and then extended its brand into other product categories. Now Tesco is a popular retailer of clothing, electronics, furniture, books, petrol, internet services, financial services, DVD rentals and music services and mobile phones. By using the strategy of the “The Tesco Way” which depicted the extension into the market by adhering to the company's core values, goals and fundamentals. The Tesco way depicts extending its reach into different product category. The chief part of Tesco's extension into other product categories had been the innovative use of technology.

Tesco's brand extension has greatly extended into the other categories and people immediately relate to it because the brand has a strong credibility and image in the marketplace.

Tesco's Successful Diversification Strategy

In today's competitive markets, companies within the same industry are being similar. Therefore there has been great focus in customer loyalty in the retail industry. Globalisation, completion, saturation of markets and rapid developments of information technology and harsh economic conditions have changed the customer's perception and behavior, and created a situation where success is no longer achieved through product price and qualities only. Instead companies build their success on a long term customer relationship.

Therefore, to cater its customer in a more appropriate manner, Tesco decided to take operations online. The bulk of e-commerce activities are concentrated in the manufacturing and wholesale sectors—which is to say business-to-business (B2B) sales. E-commerce can make it easier for businesses to overcome the friction created by physical distance. It provides a cheaper means of communication with workers, suppliers, and customers ...