Strategic Planning- Tesco

In: Business and Management

Submitted By Christina
Words 1908
Pages 8
Strategic Planning: Tesco - Activity
Tesco is a success story - it was the first UK business to make £2 billion in profits when it announced the feat early in 2005. Despite this, the share price fell when its results were announced. Why?

Tesco opened its first store in Edgware, North London in 1929. It gets its name from the combination of the founder of Tesco, Sir Jack Cohen and a partner in a firm of tea suppliers who Cohen worked with, T.E. Stockwell. Since that time, the company has grown and has reflected the changes in retailing. Prior to the Second World War, most grocery stores served customers but self service stores were on their way and, once introduced, allowed stores to grow bigger to become the superstores we know today. The company floated on the stock exchange in 1947 with an initial share price of 25p. Tesco became a familiar name on the high streets of the UK and whilst it was able to take advantage of commercial economies of scale through bulk purchase of supplies, the existence of resale price maintenance restricted the ability of Tesco to be as competitive as trading conditions now allow. The system allowed suppliers to insist that retailers sold their products for a set price. Tesco used other strategies to build customer loyalty including the use of stamps that could be exchanged for cash or goods.

The Tesco strategy up to this time was encapsulated by the title of Cohen's autobiography, 'Pile it high and sell it cheap', but the increasing affluence of customers and the changing needs meant that Tesco altered its approach and moved into opening out of town stores with more attractive interiors. Such refurbishment was also carried out in the existing stores and with the onset of selling petrol at some of its stores it broke the £1 billion turnover level in 1979. The 1980s saw a continuation in the growth of new stores and also the…...

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