Tesco Value Chain Essay Example
Tesco Value chain Analysis
The term ‘Value Chain’ was used by Michael Porter in his book "Competitive Advantage: Creating and Sustaining superior Performance" (1985). The value chain analysis describes the activities the organization performs and links them to the organizations competitive position.
According to Lynch (2003), value chain is defined as the links between key value adding activities and their interface with the support activities. Value chain analysis is a means for evaluating the activities within and around an organization, and relating them to an appraisal of the competitive strength of an organization.
The value chain of Tesco has been demonstrated in the following diagram:
Inbound
Logistics
Operations
Outbound
Logistics
Marketing
& Sales
Services
M
A
R
G
I
N
Firm Infrastructure
Human Resource Management
Technology Development
Procurement
Support
Activities
Primary Activities
Tesco Value Chain
Primary Activities
• Inbound Logistics-Tescos leading market position and economies of scale enables get lower costs from its suppliers. This has helped it maintain cost leadership. Steady improvement in order and store processes also help improve the overall effectiveness and efficiency of Tesco’s inbound logistics operations.
• Operations –As evidenced by Tesco’s Steering wheel approach with a focus reduced wastage, consistent delivery of service and no excess in stocks.
• Outbound Logistics –Diverse store formats and its leadership online help Tesco achieve customer exposure and maintain its leadership position.
• Marketing and Sales - Tesco is committed to helping families in these tough times and the Big Price Drop, an investment of more than £500m in lowering prices on everyday products, will continue on into next year (Tesco,2012). Price Campaigns like the Big drop Campaign introduced in 2011 to cut prices across thousands of products, helps in marketing Tesco’s products.
• Service –Commitment
The term ‘Value Chain’ was used by Michael Porter in his book "Competitive Advantage: Creating and Sustaining superior Performance" (1985). The value chain analysis describes the activities the organization performs and links them to the organizations competitive position.
According to Lynch (2003), value chain is defined as the links between key value adding activities and their interface with the support activities. Value chain analysis is a means for evaluating the activities within and around an organization, and relating them to an appraisal of the competitive strength of an organization.
The value chain of Tesco has been demonstrated in the following diagram:
Inbound
Logistics
Operations
Outbound
Logistics
Marketing
& Sales
Services
M
A
R
G
I
N
Firm Infrastructure
Human Resource Management
Technology Development
Procurement
Support
Activities
Primary Activities
Tesco Value Chain
Primary Activities
• Inbound Logistics-Tescos leading market position and economies of scale enables get lower costs from its suppliers. This has helped it maintain cost leadership. Steady improvement in order and store processes also help improve the overall effectiveness and efficiency of Tesco’s inbound logistics operations.
• Operations –As evidenced by Tesco’s Steering wheel approach with a focus reduced wastage, consistent delivery of service and no excess in stocks.
• Outbound Logistics –Diverse store formats and its leadership online help Tesco achieve customer exposure and maintain its leadership position.
• Marketing and Sales - Tesco is committed to helping families in these tough times and the Big Price Drop, an investment of more than £500m in lowering prices on everyday products, will continue on into next year (Tesco,2012). Price Campaigns like the Big drop Campaign introduced in 2011 to cut prices across thousands of products, helps in marketing Tesco’s products.
• Service –Commitment