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Objectives and Strategy

The core purpose of Tesco as laid out in their website is “to create value for our customers to earn their lifetime loyalty” (Tesco Plc, 2008). The company in order to accomplish this core purpose makes all efforts to understand the customers’ needs and be the first one to meet such needs identified by the company. The company follows the strategy of achieving consistent growth within UK by strengthening the core business within the country and driving expansion into new territories.

The strategy, which the company domestically adopts, includes achieving sustainable long-term growth, with expansion of activities into different areas like financial services, non-food and telecoms. The company also expands into new markets like Central Europe and Asia and into the United States also. The diversification strategy of Tesco has been put into action as early as 1997 and this formed the foundation for the success of the company over the period. The company has ventured into new business areas, which have been proved successful and competitive to give the company an enviable position in the UK supermarket industry.

According to Johnson & Scholes, (2002) changes in the business environment may create demand for new products and services at the expense of

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established practices. In the case of Tesco, the company has implemented internal development in line with the extent of diversification. The strong leadership established by Tesco in the food retailing has enabled the company to navigate towards achieving its core purpose of retaining the customer loyalty. The core competence of Tesco in this segment has enabled the company to earn the reputation of the provider of most customized and efficient service based on a good customer relationship management.

One of the critical success factors of Tesco is the strong brand image and the association of the brand with good quality, trustworthy goods that represent excellent value for money to the customers. The company has embarked upon substantial re-engineering of the product and service development processes to result in a better management of product lifecycle and efficient delivery of wide range of products and services to the customers, to enhance and retain their loyalty. The company has engaged in product development with central focus on enhancing core ranges and introducing quality products.

The efforts of the company in improving the customers’ shopping experiences in innovative ways and the efforts in branching out to new lines of business like financial services have added to its strong brand reputation, which the company has used to progress towards achievement of its core purpose. The other factor that had ensured the company to move closer to the core purpose is the support it gained from the adoption of up to date information technology measures adopted by the company.

Since the company found it necessary to innovate at extraordinary speed so that it can improve its competitive strength by continuously improving the products, services and processes, the company had to ensure that it takes advantage of the information technology. For Tesco IT has taken up a central role in the formulation of its business strategies rather than lending a support role as traditionally it had been. The company installed systems that controls and keeps the stock and records and analyses the business transactions to enable the company to assess the change in the customer needs and preferences.

This enabled the company to bring about swift changes in the product and service offerings to the consumers. Technology development though a downstream activity had the ability to provide new innovative product ranges according to changes in customer preferences and needs. The Point of Sales (POS) software technology enabled Tesco to analyse the recorded sales transactions to summarise the changes in the preferences of the customers with respect to various products and bring changes in the development of new and innovative product lines according to the changed needs of the consumers.

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