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

STRATEGIC MANAGEMENT - Assignment ExampleTesco initially had a localized approach as they could perceive benefits in expanding in and around London. However, their policy since the beginning had been pitchers mound it high and sell it cheap (ICMR, 2005) which adversely impacted their brand image. When Britain imposed the Retail Price livelihood 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 then Tesco could offer competitive prices. Cost-leadership system In the early 1990s, the market condition be bad, Tesco faced difficulties such as low population growth, low food price inflation, matured and concentrated supermarket sector in the UK, and strong competition from retailers such as Sainsbury, ASDA, and Safeway (Coriolis, 2004). The companys profit margins were beneath pressure and it remained in 2nd position with Sainsbury leading in market share (ICMR, 2005). In staring(a) markets competitive rivalry increases and the profits diminish as the bells are high. This was when the British economy was polish off by recession and Tesco was in trouble although competitors such as Sainsbury and Marks & Spencers announced videotape earnings. This was the period when Tesco changed its strategy and focused on increasing 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 legion(predicate) of its stores and replaced many with bright 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 sustainab le the strategic position 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 take loyal customers away and lead to a decrease in revenue which is scarce what Tesco suffered with. They also earned a bad reputation in the process, which is when they decided to diversify. Strategy can be formulated at three different levels corporate level, business unit level and the