STRATEGIC MANAGEMENT

Strategic Growth and Expansion Options for Tesco



Strategic Growth and Expansion Options for Tesco

Introduction

One of the core activity of the business is its expansion and growth, i.e., to increase the business productivity in the overall corporate picture. Business retention and expansion focus on retaining and expanding an existing business in order to maintain the pace of existing global business requirements. Business norm, known as “retention and/or expansion” are a natural part of the corporate economy. For corporate expansion, it is essential to have a strategy or a road map. Growth without a game plan is like driving cross-border without map. A strategic map outlining the business goals, expansion strategy and pre-set milestones can help the company to be on track and measure progress towards a desired goal and preferred vision.

Porter Generic Strategies - Competitive Positioning

Porter Generic Strategy was first introduced by Michael Porter in 1980 in which approach towards competitive advantage is in a significant way. The term generically means universally applicable (Karlof 1993, p. 190). According to Porter (1980), there are three generic strategies to gain or improve the competitive edge of the business over other rivals. These three generic strategies are:

Cost-Leadership: Lowest production and manufacturing cost amongst the rival.

Differentiation: Differentiation in product designed to earn premium

Focus: Serving a narrow target market but with maximum efficiency and effectiveness (Porter 1998, p. 35).

Figure 1.5: Porter's Generic Strategies (Stonehouse et al. 2007, p. 175)

According to Porter, the generic refers to as “systems of classification” into which strategies can be slot as per the firms' requirement. An execution of each strategy requires different components in the forms of resources, managerial styles and organizational arrangements, whereas, it is very rare to execute all three resources in a single organization. Therefore, as a solution, firm should decide and stick to one single strategy to outperform their competitors and deliver higher returns to their shareholders (Karlof 1993, p. 190).

Critical Evaluation of Generic Strategy, Tesco.

For a giant retailer such as Tesco, they should follow one clear strategy in order to gain a competitive advantage as compared to other retailers. The detail analysis of each strategy will help to find out best possible choice for Tesco.

Strategy of Cost Leadership

The strategy of cost leadership is one through which Tesco can strive to have the lowest cost of production in the industry in which it operates in. This means that Tesco can offer its products and services at the lowest price, comparatively. This strategy is based on the fact that Tesco should control their operating and production cost so well that they are able to price their products relatively cheap in their target market, which in turn will generate higher profits for them and thus having a significant competitive advantage.

Strategy of Differentiation

The strategy of differentiation is one through which Tesco can try to offer products and services with unique features valued by their customers. This will help Tesco in increased brand image and loyalty for their offering. It can charge premiums from their customers and thus having a significant ...