Case Study Presentation

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TOPIC
Introduction
Tescopoly in the UK
Internationalizing Tesco
Tescos American Adventure
The Fresh & Easy Concept
The Underlying Relationship Network
The Early Fresh & Easy Results
Dilemmas For Tescos Fresh & Queasy

INTRODUCTION
UKs dominant retailer, taking around 30% of the national grocery market.
Worlds third largest retailer after Wal-Mart and Carrefour.
Overtaken Argos/Homebase to become the largest non-food items retailer.
In 2008 show 53 billion Sales and 2.75 billion Profits.
Up to the mid 2000s companys growth and business performance is

outstanding.
After a decade, Tesco is nearly twice the size of Asda & Sainsbury.
In 2007 Slow down in sales, 1 billion wiped off Tescos market value.
Shares fell 15% in the first quarter of 2008.
Investors were become unhappy when Senior executives were leaving Tesco
and join its rivals.

TESCOPOLY IN THE UK
Become an unpopular company.
In 2008 at the Retail Week (Industry Oscars)

Leader of the Year Sir Terry Leahy (CEO).

Consumers Favorite Retailer.
Anti-Tesco protests for Tesco Express local stores
emergence in suburban areas.
Some 2000 small independent food shops close
every year because of super market competition.
In 2008, Guardian newspaper published articles
against Tesco in paying taxes.

INTERNATIONALIZING TESCO
In 1990s started efforts for internationalization.
It has a portfolio of around 12 different markets, employing

450,000 people with generating international business of 7.6

billion sales and 370 million profit.
About 80% of group capital spent on overseas expansion.
In 2008 UK accounted for 76% of Tesco sales and 78% of profits.
It has 150 stores in Japan out of 50 are Tesco Express outlets.
Operates around 50 hypermarkets in China.
In 2008 Tesco acquired South Korean discount chain for 1
billion, adding 36 stores.
Importance for international success underlines the entry of
Tesco in USA with its Fresh and Easy retail concept.

TESCOS AMERICAN ADVENTURE

USA is a competitive market place.
Tesco committed 1.25 billion over 5 years to its

new Fresh & Easy convenience store format

11.5 million bonus if ventures pay off.
Their goal is to open 200 stores by the end of 20082009 and it could be 1000 stores by 2012.
Initial stores were open in California with plan for
more in Arizona, Nevada and possibly in Mexico.
Its next biggest overseas market is Thailand, where
it took 9 years to open 220 stores.

FRESH & EASY CONCEPT

Based on a small-store format.
Emphasizing low price for high quality and healthy

food.
Developing Market Understanding
50 Executives lived the American Dream for two
weeks.
Fresh & Easys Market Positioning
Between the discount and cut-price supermarkets.

Fresh & Easy Value Proposition

Low cost fresh food.
American store for American customers
Fresh & Easy kitchen
The Underlying Relationship Network
Consumer Relationship
Competitor Relationship
Supplier Relationship
Relationship With Employees And Trade Unions

The Early Fresh & Easy Results

Tim Mason used the break in store openings to

tweak the Fresh & Easy model:

Prices extra-low prices
Promotions discount coupons
Products new fresh food lines were added
Shopping trolleys bigger trolleys
Store design more colors to make stores warmer

Dilemmas For Tescos Fresh & Queasy

The positioning is between the discount supermarket

and upmarket
No record of working with trades unions and local
communities.
Matching the format of California and Arizona, to
Oklahoma, Wisconsin and New York.
How much will it hurt us if it fails? The real damge
would be the impact of of failure on the rest of business.
Incoming CEO would find that the Tesco business
model was broken.