Strategy Analysis of Their Children’s Wear Strategic Business Unit
Tesco UK: Strategy Analysis of their Children’s wear strategic business unit
Executive Summary
Tesco is one of the biggest UK supermarket chain operating more than 3000 stores all over this region. It has thrived in the delivery of children wear in the UK market through its brand notably F&F and Cherokee. However, there are third party entities who also sell their outfits through Tesco notably, Gols, Hadleigh London, Kappa, Regatta, Speedo, Sugarpink and Zip Zap. Tesco has ensured that it sells all major key children wear categories through this SBU. This has made the entity renowned in this market niche as a key and reliable retailer of such products, as customers are always assured of high quality products from the SBU. This has been supported by the UK strong political aura, advanced technological platform, increase in the purchasing power of the UK dwellers, low entry by players and low threat from substitute products. However, the high intensity of competition, stringent legal and environmental legislation and high threat of suppliers and buyers has negatively affected the performance in this market niche. The report went further to acknowledge that effective procurement, HR, technological, logistical, marketing, operational and services are the key internal capabilities which have aided this SBU to thrive even more by delivering high quality products in the UK. However, the centralisation of the procurement function and the limited geographical location is still a hindrance to the company’s sustainability. Therefore, in addition to the cost leadership strategy the company is enjoying, the current differentiation strategy must also be improved to ensure that the procurement function has been decentralized, geographical diversification has been achieved and finally, online awareness has been hiked.
Table of Contents
1.0 Introduction
2.0 PESTLE Framework
2.1 Political
2.2 Economic
2.3 Socio-cultural
2.4 Technological
2.5 Legal
2.6 Environmental
3.0 Porter’s Five Forces Analysis
3.1 Bargaining Power of Buyers
3.2 Bargaining Power of Suppliers
3.3 Threat of New Entrants
3.4 Threat of Substitutes
3.5 Competitive Rivalry
4.0 Value Chain Analysis
4.1 Primary Activities
4.2 Secondary Activities
5.0 SWOT analysis
6.0 Major Firm Problems
7.0 Porter’s Generic Strategies Analysis
8.0 Conclusion
9.0 Recommendations
References
Appendices
1.0 Introduction
Tesco is one of the biggest UK supermarket chain operating more than 3000 stores all over this region. The retailer is renowned all over the world and operates in over 12 countries employing over 530,000 staffs (Mintel Company Report, 2015). However, the UK constitutes over 65% of Tesco’s total sales. Under its F&F brand Tesco sells all inclusive clothes for men, women and children operating 60 of such outlets in the 12 countries its present. This franchise accounts for over £ 1 billion of sales in the UK especially through the sale of its clothing line via the online platform which has seen sales grow by 60% in 2013 (Zhao, 2014). This report will however pay more attention to the children wear Strategic Business Unit SBU which sells babywear for boys and girls aged between 0 to 14 years. Tesco sells the children wear under its F&F and Cherokee brands. However, there are third party entities who also sell their outfits through Tesco notably, Gols, Hadleigh London, Kappa, Regatta, Speedo, Sugarpink and Zip Zap (Mintel Company Report, 2015). To this extent, this report aims to perform a thorough analysis of Tesco’s childrenwear business unit while using internal and external environments analytical tools. It will go ahead to evaluate the current strategic sustainability of the business unit using Porter’s 3 generic strategies and finally offer recommendations on how the company can increase its competitive edge.