STRATEGIC MANAGEMENT Assignment Example | Topics and Well Written Essays - 4000 words

STRATEGIC MANAGEMENT - Assignment ExampleTesco initially had a localized start out as they could perceive benefits in expanding in and around London. However, their policy since the beginning had been Pile it high and sell it cheap (ICMR, 2005) which adversely impacted their brand image. When Britain enforce the Retail Price Maintenance Act which prevented the retailers from selling goods below a minimum price, Tesco introduced trading stamps which were given to the customers which could be traded for cash or gifts. This was abolished in 1964 and accordingly Tesco could offer competitive prices. Cost-leadership dodge In the early 1990s, the market condition being bad, Tesco faced difficulties such as low population growth, low nutrient price inflation, matured and saturated supermarket sector in the UK, and strong competition from retailers such as Sainsbury, ASDA, and Safeway (Coriolis, 2004). The companys profit margins were under pressure and it remained in 2nd position with Sa insbury leading in market sh are (ICMR, 2005). In saturated markets competitive rivalry increases and the profits diminish as the costs are high. This was when the British economy was hit by recession and Tesco was in trouble although competitors such as Sainsbury and Marks & Spencers announced record earnings. This was the period when Tesco changed its strategy and focused on change magnitude its market share by selling goods at prices much lower than its competitors. Their strategy was to grow bigger by increasing sales volume through lower prices Source Coriolis (2004). Tesco went in for a major image overhaul and closed down many of its stores and replaced many with burnished and attractive stores (ICMR, 2005). They were focusing on the cost-leadership strategy. In fact, Tesco was the first to introduce the cut-price strategy which led to price war (Yoruk & Radosevic, 2000). According to Porter (1996) strategy rests on unique activities and to be sustainable the strategic posi tion requires trade-off. They did acquire cost-leadership and became the leading retailer in the UK but cost-leadership comes with disadvantages (Porter, 1979). Very low cost can bring in loyal customers away and lead to a decrease in revenue which is exactly what Tesco suffered with. They also earned a bad reputation in the process, which is when they unconquerable to diversify. Strategy can be formulated at three different levels corporate level, business unit level and the