When a company makes diversification that is closely related to the product line, it is called related diversification.
Understand the process of Strategic planning Hence appropriate discounts at right time could help the company to handle this situation. Everything has a time limit. It is the design through which a parent company allows another company to use its trademark in exchange of a specific fees.
These policies of Tesco needs to managed from the finance view point. In the following Paragraphs, the various strategies of Tesco will be classified under the four different types of strategies as proposed by Ansoff.
The firm enjoys several competitive advantages in the competitive industry. Therefore there has been great focus in customer loyalty in the retail industry. In less than two decades Internet has been used as a shopping medium, attitudes, assumptions, and perceptions concerning the viability of online-only storefronts and mixed-channel operations that offer a combination of offline and online capabilities have evolved.
It used to be diversification for Tesco at the beginning because the concern is mainly recognized by groceries not electronic accessories but currently as it already exists for so long we can define it as a market penetration.
Then, the root causes for the deterioration of profit margin in Tesco should also be investigated and solved. Market penetration is mainly defined as an activity of growing the market share of a present product.
Apart from that, not only Tesco has been expanding to new market place, the firm has also been concentrating efforts to venture into market space.
Li et al Social factors — As per the report, most of the customers in the UK has shifted to one-stop shopping due to the changes in the social habits as well as the culture. Its allure has been instrumental in driving expansion: These are the most important stakeholders.
Strategic and competitive analysis: When an organization conduct development over its own organization as the same way it had done at the beginning, it is called organic growth.
Doing business in an ethical way is important condition for every organization. And until that happens, its not going to be able to gain market share. Due to social change, Tesco begin to provide non-food items for customers.
A lot of investment and time is required to establish the brand name and position in the food market. Example the products related to health and beauty. Later, in Part II, SWOT analysis will be applied to investigate both external and internal issues and forces relevant to formulation of strategic directions for Tesco in the future.
Tesco Clubcard and its impact on loyalty. Then, the success of Tesco is also attributed to the strategically located Tesco stores around the world. In fact, the brand extension will actually reinforce what the brand stands for.
Instead companies build their success on a long term customer relationship. risky strategy. Tesco have primarily followed a diversification strategy for growth. Tesco now operate as a bank, it offers insurance, credit cards and loans, restaurants, broadband, mobile phones, garden centres.
This growth strategy is high risk and high cost of failure like alex mentioned before on blinkbox. Ansoff - Download as Powerpoint Presentation .ppt), PDF File .pdf), Text File .txt) or view presentation slides online.
Diversification The large size and financial resources of Tescos means that it has been able to diversify into other products such as Mobile Phones, insurance, petrol, credit cards and banking. In these areas, Tesco has helped to increase competition, provide more choice and help lower prices for consumers.
SIX GUIDELINES FOR WHEN RELATED DIVERSIFICATION MAY BE AN EFFECTIVE STRATEGY ARE AS FOLLOWS. When an organization competes in a no-growth or a slow-growth industry. When adding new, but related, products would significantly enhance the sales of current products.
When new, but related, products could be offered at highly competitive prices.
Tesco also added the mobile business called Tesco Mobile, for this they have used unrelated diversification because they have entered a new market without any skill and knowledge and they have also used brand extension to make their mobile business stand out.
Tesco has invested a lot of money in recent years trying to sell us things other than groceries, we take a look at some of those moves and what's happened to them.Related diversification of tesco