Tesco Managing Capabilities Essay Example | Topics and Well Written Essays - 3750 words

Tesco Managing Capabilities - Essay Example Tesco was founded by Jack Cohen in 1919. It is listed on the London Stock Exchange and also is the component of FTSE100 Index. The company experienced a market capitalization of about  £24.4 billion by 15 January 2012. According to a retail analyst it has been revealed that Tesco is the most successful retail business round the globe. According to Tesco’s strategy the company uses its own brand products. The innovative technology usage has been Tesco’s core part for its expansion strategy (Wrigley, 2000). The Company is listed on London Stock Exchange with the symbol of TSCO. Tesco represents in UK the largest food and drink retail sector industry. It provides employment to more than three million people in manufacturing, retailing and primary production. Tesco’s largest market is in UK and the company banners under four main things that are Extra, Metro, Superstore and Express. Almost 40,000 food items and products and also the non food lines and the clothing are sold by the company. The annual sales in 2011/12 for Tesco were  £65.17bn. Out of this figure  £42.8bn were produced from UK and showed a rise of 5% and the online sales of UK rose by 10% in this time period. 3.0 Importance of capabilities and how they contribute to competitive advantage at Tesco. 3.1 Capabilities, Strategy, Competitive Advantage and RBV The competitive rivalry forces have lessened the margins of profit for the supermarket chains and also the suppliers. Famous loyalty card of Tesco known as Clubcard remains the mainly booming strategy for customer retention that considerably raises Tesco’s profitability. To retain the customer base Tesco meets the customer needs, customizes the service, ensures lower prices, helps in making better choices, continuous flow of in-store promotions. In grocery industry the substitute of need and the product for product concept is very common (Ritz, 2005). An accelerated development level has been fostered by this highly competitive market, this results in a situation for innovation for UK grocery retailers in order to maintaining and building market share. Innovation like this can be seen in the development of a range of trading formats, in reply to transformation in consumer behavior. The main market leaders respond by focusing again on the value and price, while also reinforcing the elements of value addition of the services they 3.2 3.2 Tesco Competitive Advantage As Tesco is giant retailer, so in order to get a sustainable competitive advantage they must follow any one of the three generic strategies mentioned ahead. Cost leadership is the first strategy that Tesco can use to get the lowest of all the costs in the same industry (Palmer, 2004). Cost leadership strategy is likely to be