IT Strategy - TESCO
IT Strategy - TESCO
IT Strategy - TESCO
• Tesco’s version of
the Balance Score
Card
• Helps to stay
focused on strategy
Industry Analysis: Porter’s Five Forces
Threat of New
Entrants (Medium)
Threat of Substitutes
(Low)
Porter’s Five Forces Analysis
• Threat of New Entrants (medium) – Very difficult for a new entrant to make huge
investment in sales and distribution system, operating efficiency, advance use of
technology. difficult to achieve economies of scale and product differentiation
• Bargaining Powers of Suppliers (low) – Suppliers fear losing big business, Intense
competition in the industry
• Rivalry among Competitors (high) - Intense competition - similar strategy adopted by all
major players. Market has become matured and flat
SWOT Analysis
STRENGTHS WEAKNESS
• High Brand Value • Highly dependent on UK market;
• Tesco Online : Tesco.com biggest online around 75% of revenue from UK
supermarket • Serial acquisitions can lead to problem-
• High, consistent growth and ROI both financial and cultural
• Increasing market share : Tesco's current • Debt ratio at record level, credit rating
market share is 30.7% in UK at risk, backlash from fund holders
• Highly efficient operating system • Heavy dependency on road transport for
• Advance technologies in use distribution: oil prices rising
• Customer base in 12 countries
OPPORTUNIES THREATS
• Growth in non-food retail using existing • Intense competition, less differentiation,
infrastructure low profit margin
• Take advantage of its online services to • Recession leading to fall in
venture into new services international revenue
• New market exploration, further • Close competition between ASDA(a
international expansion Wal-Mart buy-out) and Tesco
• International expansion leading to
heavy investments; debt is rising
Value Chain Management Analysis
FIRM INFRASTRUCTURE
Planning and control functions required to manage financial aspects. Profit protection departments,
workforce to upgrade anti-fraud software to reduce internal theft.
Environment
Community
Healthy Choices
Our People
Goal 5. (Contd..)
Strategy Tactical Strategy Processes
Innovative ways of •Reducing emissions in both •Use the existing vehicles more
reducing distribution existing and new alternate low efficiently, new technology, to
carbon emissions emission distribution modes reduce transportation distance
itself
Help increase efficiency of •Bring more shopping options to •Source variety of goods
local markets customers according to local needs
Improve the supply chain's •Help suppliers improve •Conduct surveys to assess the
sustainability processes needs of suppliers and their
•Participate in forums for satisfaction levels
exchange of information
Providing adequate •Proper system for accurate •Specify special contents and
nutrition facts on products labelling of nutrition’s of side effects
products
Enable employees to grow •Arrange for training programs •Customer service training and
with the company •Substantial employee benefits health and safety trainings
•Long term reward plans
Integrated Process Flow Diagram:
Domestic Operations
Integrated Process Flow Diagram:
International Operations
Factors Affecting Integration of IT Systems
• Flexible Approach: Dynamic product mix and forecasting activity levels
• Transparency between supplier systems and Tesco’s supply chain management
systems.
• Integration of Order Management System of food items and non-food items
• Different regulations in different countries.
• Integration of orders from different channels- at stores, online or by phone.
• Different store formats
• Secure and robust system for making payments.
• Reliable System and should be available 24x7.
• Different type of views to be maintained for suppliers, partners, vendors and company
itself.
• Different supply chain for food items and non-food items
• Centralized Database
IT Strategy Implementation
Stakeholders and Objectives
• Customers
• Employees
• Community
• Suppliers
• Technology Service Providers
• Third Party Service Providers – Payment
Gateway Service Providers etc.
• Investors
• Management
Critical Success Factors
• Alignment with Business Strategy
• Simple and Easy to Use
• Repeatable
• Acceptable Solutions
• Trustworthy Solutions
• Speed and Timely Delivery
• Flexible
• Scalable
• Stability
Communication Protocol &
Rewards and Recognitions
Tesco Culture
Improving Understanding of
Good Practices
Addressing HR Challenges
• Identifying HR Challenges
• Change Management Team
• Training Programs
• Transparency in communications
• Listening to stakeholders
• Rewards and Recognition like Best Employee Award
Implementing Change
Define
Identify Metrics
Set up the Assess Evaluate Drive the
the for
Process Readiness Risks Change
Players Evaluatio
n
Benefits
Customer
Customer
Finance
Finance Community
Community
Every
Little
Helps
People
People Operations
Operations
Benefits (Contd..)
Customer Community People
• Earn Lifetime • Image • Increase in
Loyalty Enhancement productivity and
• Reduced Waiting • Builds Trust efficiency
Time • Healthy Work
Environment
Operations Finance
• Consistent Delivery • Increased Sales
• Reduced Overhead • Increased Profits
Costs • Reduced Costs
• Time Savings
Metrics for ROI Calculation
• Sales
• Return on Sales
Merchandising • Market Share
• Average Inventory
• Forecast Accuracy
• Transportation cost
• Inventory Accuracy
Distribution • Inventory Days of Supply
• Inventory Turns
Metrics for ROI Calculation (Contd..)
• Revenue
• Sales
Marketing •
•
Margin
% New Customers Per Year
• % Revenue Growth from Existing Customers
Merchandise/
Warehouse Store Range &
Assortment
Management Ordering Space
Planning
Infrastructure in a Box
Operational Framework, Systems Management and Security Supporting Infrastructure
Tesco-In-A-Box: The Architecture
Other IT Applications
RFID : Radio Frequency Identification – Ability to tag and track items
Implications for Tesco:
• Improve customer availability
• Reduced product pricing
• Improved service
I Don’t Queue: Thermal sensors and queuing algorithms developed and implemented in
Tesco stores, determines number of tills to be opened based on number of entries and
exits of customer at a time.
Other IT Applications (Contd..)
• Self-service checkout - Automated Checkout Machine from PSI is
easy to use, customer friendly, offers retailers both conveyor-based
and scan and bag self checkout solutions, designed to fit all retail
store formats and sizes