Tesco Value Chain Analysis 2022
Mariam Peyton is a professional Financial Analyst. She holds a Masters degree in Economics. She specialises in financial analysis and forecasting. Her expertise includes studying the financial performance of companies, markets and entire industries looking for trends, insights and information that can help you glean rich insights for use in academic and market research.
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In this report, we examine Tesco’s value chain to try and understand which activities have helped the company maintain market leadership in the UK food retailing since 1995.
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Tesco Value Chain Case Study
Key Learning Outcomes
By the end of the case, students should be able to:
- Apply the value chain to a real-world company using the example of Tesco.
- Understand how to use Tesco’s value chain framework to examine the sources of competitive advantage for Tesco.
- Understand which value chain activities have helped Tesco maintain market leadership in the UK food retailing industry. While Tesco’s EDLP value proposition isn’t unique within the food retailing industry, the company’s execution of a streamlined supply chain and logistics is comparable to none. You will discover what these are and much more…
1.0 INTRODUCTION
The value chain refers to a set of activities within an organization, which together help it create or produce a product or service (Grant 2016; Johnson et al. 2017). First developed by Michael Porter, the purpose of the value chain is to help firms identify value adding activities they are undertaking, that either add (or don’t add) value to their product or service. Once disaggregated, such activities can help provide a more precise understanding of all firm activities and the capabilities corresponding to each activity so as to understand where competitive advantage is being derived (Grant 2016).
According to Porter’s value chain, organizations can only gain a competitive advantage by adding value to their customers. This makes it essential for managers to analyze all the activities undertaken by their organizations and understand ones that add value and those that do not. According to Johnson et al (2017), organizations can use a value chain to understand their strategic position as well as their resources and capabilities. It can also help them evaluate the relative importance of internal activity costs as well as identifying how costs can be reduced (Grant 2016).
In the following sections, the author will use the value chain analysis to assess and understand sources of value for Tesco.
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