Discussion - Competitive Analysis

This case study is a bit personal as I was an avid shopper of Tesco while living in the UK. Tesco PLC is the world’s third-largest retailer but, as the Opening Case makes clear, past success is no guarantee of future success. In 2012 it experienced its first profit decline in almost two decades. In 2013 it closed its Fresh & Easy stores in the U.S., wrote down the value of its global operations by $3.5 billion, and experienced declining revenue in its home market (from which approx. two-thirds of sales and profits come). Part of the reason for the revenue issues comes from declining customer perceptions of Tesco’s quality, prices, promotions, and overall value. In response, Tesco is adding more and better-trained staff, refurbishing stores, and revamping product lines and prices. The Opening Case illustrates some concepts introduced in Chapter 5. For example, the response actions noted directly above are considered to be tactical actions, while opening Fresh & Easy stores in the U.S. is considered a strategic action. While the Fresh & Easy action seems reasonable, Tesco introduced the concept without a good understanding of U.S. consumers. As the company continues to try to reposition itself in the industry it is taking addition strategic actions including investing and/or partnering with Harris & Hoole (coffee), Euphorium (bakery), and Gireaffe (restaurant chain).

Hitt, M.A., Ireland, R.D., & Hoskisson, R.E. (2015). Strategic management: Competitiveness & globalization (11th ed). Stamford, CT: Cengage

This opening clearly case illustrates the transitory nature of competitive advantage and how tactical and strategic actions are necessary to produce above-average returns.  

1. Class, identify some actions that companies have taken to improve performance? Were these actions are strategic or tactical?

I think it’s safe to say that no matter what market your organization belongs to there will be some level of competitive rivalry. This is a natural state of the business landscape. I think to my own organization who close watches the actions of other big box retailers to key a constant eye on what is happening. Sometimes we attempt to model the private sector I, in concept of course, and other times we ignore the market condition since it’s not feasible for my organization. As Hitt tells us, a competitive rivalry exists when firms jockey with one another to pursue an advantageous market position. When one or more firms competing in an industry feels pressure to act or perceives an opportunity to improve their competitive position, competitive rivalry occurs as various firms initiate a series of actions and responses.

Research findings showing that intensified rivalry within an industry results in decreased average profitability for firms competing in it and supports the importance of understanding these effects. For me this makes perfect sense as the intense rivalry can lead to oversaturation of the market.

Hitt, M.A., Ireland, R.D., & Hoskisson, R.E. (2015). Strategic management: Competitiveness & globalization (11th ed). Stamford, CT: Cengage.

2. How does your own organization response to the competitive market? WowBaby Store

.