Strategic management - retail sector (tesco)

Strategic Management

Presented by : Mohd Farid Awang Norhaizum Sahril

Industry : Retail

Synergy

VISION Our vision is for Tesco to be most highly valued by the customers we serve, the communiAes in which we operate, our loyal and commiCed staff and our shareholders; to be a growth company; a modern and innovaAve company and winning locally, applying our skills globally.

TESCO OperaAng Model (TOM)

OBJECTIVE •  COMPETITIVE STRATEGY •  VALUE CHAIN •  MISSION & VISION

SWOT PASTEL KEY SUCCESS FACTOR

ASSIST MACRO ENVIRONMENT

COMPETITION ENVIRONMENT

Q : What is Tesco strategy to build a

sustainable compeAAve advantage?

Cost Leadership DifferenHaHon

TESCO news (IdenHfy AcHon & AcHviHes)

•  PromoAon •  Press release • ObservaAon

Tesco aims to convert all stores to ‘Extra’ format Friday, 21 September 2012

Tesco Stores (M) Sdn Bhd (Tesco) aims to relaunch all of its naHonwide stores with the ‘Extra’ format within a few years, its chief execuHve officer (CEO) Sung Hwan Do said. The “Extra” format, an innovaHve hypermarket format adopted in all Tesco stores worldwide, supports and caters to the wider needs of small businesses apart from our end-‐user customers, offering extra services, choices and faciliHes to Tesco customers. The new concept not only offers new range of products at low prices, but also offers an array of shops and kiosks in the mall area, which includes a new food court, playland, addiAonal automated teller machines, WiFi, mobile and telecommunicaAon shops and an improved car park system. The new flagship Tesco Extra MuHara Damansara, which first opened in 2003, had undergone a five-‐month long renovaHon period to unveil a modernised look, offering a wider variety to customers under one roof.

COLLABORATE WITH INTERNATIONAL PLAYER

The Star Online >

Friday October 5, 2012 Samsung products to be sold at Tesco Extra

SAMSUNG Malaysia Electronics has partnered Tesco to introduce Samsung World shop-‐in-‐shop (SIS) concept retail experience to a hypermarket. Aptly named Samsung World, the partnership culminated in a launch event held at Tesco Extra MuAara Damansara, which was recently refurbished to offer a whole new shopping experience to customers. The strategic collaboraAon with Tesco Stores (Malaysia) Sdn Bhd entails a designated area within Tesco Extra stores that features Samsung’s latest range of innovaAve products. Aimed at providing patrons of Tesco Extra with a different retail experience and a beCer understanding of Samsung’s range of smart living soluAons, Samsung’s trained product experts will also be assigned at Samsung World, facilitaAng consumers and providing insights on the latest Samsung innovaAons, ranging from audio-‐visual products, mobile phones, digital appliances, digital imaging devices and IT products. “In addiAon to designing and manufacturing state-‐of-‐the-‐art products to provide beCer soluAons to consumers’ daily rouAnes, Samsung is also commiCed in ensuring our customers receive the best user experiences, be it ader they have purchased the products or at retail level. Latest offerings: Kwon (led) introducing Samsung’s range of televisions to Do. Latest offerings: Kwon (led) introducing Samsung’s range of televisions to Do. “We are honoured and excited to partner Tesco in providing a brand new retail experience through Samsung World, which will help customers beCer understand Samsung products and how they can enhance users’ lives,” said Samsung Malaysia Electronics managing director Kwon Jae Hoon.

EXPAND MARKET SEGMENT (SMES) & CONVENIENT SHOPPING EXPERIENCE

JOINT VENTURE WITH MALAYSIAN COMPANY

FOCUS ON HOUSE BRAND

STRENGTHEN SUPPLY CHAIN

RM60mio : Fresh Food DistribuAon Centre •  Chilled environment •  Three different temperature zones: -‐26°C for frozen foods; 1°C;

and 12°C for other fresh produce

STRENGTHEN SUPPLY CHAIN

RM300 million Non-‐chilled distribuAon centre

Aggressive markeAng -‐ Direct aCack GIANT

Focus :Lowest Price

BUILD LOYAL CUSTOMER

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PROMOTIONS TESCO STORES OUR BRANDS CLUBCARD

Connect with UsSTORE LOCATOR | CONTACT US

Find your nearest Tesco Stores

Tesco is #1 For Great PricesKUALA LUMPUR, April 24, 2012 – Tesco Stores (Malaysia) Sdn. Bhd. (Tesco Malaysia) today launched its #1 for Great Pricescampaign to help its customers to save more. Customers will see the prices of some 600 essential items throughout Tesco’s 45 storesnationwide with discounts up to 30 percent.

Datuk Sri Ismail Sabri Bin Yaakob, Minister of Domestic Trade, Cooperatives and Consumerism was on hand to launch Tesco’s #1 forGreat Prices campaign and he was accompanied by SungHwan Do, CEO and Vivian Yap, Director of Marketing at Tesco Malaysia.

SungHwan Do, CEO of Tesco said, “At Tesco, our core purpose is to create value for our customers to earn their lifetime loyalty. Asthe No 1 retailer in Malaysia*, we continue to lead with our “#1 for Great Prices” campaign, and helping the customer to save morewith lowest prices on daily essential items. To thank our customers for their support, Tesco has doubled its investment in the #1 forGreat Prices campaign from RM21 mil last year to RM40 mil this year.”

Vivian Yap, Marketing Director of Tesco Malaysia said, “For over 10 years, Tesco has been investing in lowering prices for thecustomers. This year, we have made it even bigger, helping customers to spend less by cutting the prices of over 600 items for thelong term. We are offering these price cuts above our already low prices and while still maintaining the high standards of quality andfreshness our customers have always enjoyed. We also offer a range of Tesco Own Brands such as Tesco Choice that matches theleading brand quality but with 20% lower prices. We have over 4000 lines ranging from food to house hold items and some of the topselling Tesco branded items are Tesco Choice Sweetened Creamer, Tesco Choice Cola 1.5L and Tesco Choice Dishwashing Liquid.”

Customers can look forward to even lower prices than usual for XL sized prawns, vegetables as well as grocery items like milk powder,diapers, detergent and many more. According to Do, “At Tesco, we get to keep our prices low given that we buy our stock in largequantities. We also check on our competitors’ prices for 6,000 items to ensure that we always offer the best price. We will continue todo our part to bring prices down and benefit our loyal customers because we care.”

Just recently, Tesco Malaysia announced that it has delivered yet another strong performance with a sales growth of 12% for financialyear 2011/2012. The double digit sales growth is a clear indication that Tesco is the shopping destination for its great prices, greatquality and great range. Based on an independent customer panel survey conducted by Kantar Worldpanel Malaysia, Tesco is theNumber 1 Retailer in Peninsular Malaysia, based on Market Share Value Sales.

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Tesco Stores (Malaysia) Sdn Bhd :: Tesco is #1 For Great Prices http://www.tesco.com.my/html/press_release_details.aspx?ID=107&PID...

1 of 1 9/18/2012 11:41 PM

TESCO to be the Champion of lowest price retailer



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TUKAR program proven a success!Puchong, Friday, January 27, 2012 – It seemed to be an insurmountable task for single mother Jessica Wong, 42, to transform herseven-year-old traditional kedai runcit into a modern convenience store that is able to appeal to more customers. Nevertheless, thanksto the Government’s TUKAR programme and Tesco Stores (Malaysia) Sdn Bhd (Tesco), Wong’s dream to grow her business becamea reality.

“I have been running my store single-handedly over the years. The store has changed little since the day it opened. I realised I had tomodernise it if I were to make a better life for me and my 14-year-old daughter but I do not have the means nor the know-how to makemy store more modern and appealing. That was why I was immediately drawn to the TUKAR programme when it was announcedalmost a year ago,” explained Wong, the owner of Pasar Mini Harvest Packaging Sdn Bhd.

TUKAR (Transformasi Untuk Kedai Runcit) is one of the Entry Point Projects in the Wholesale and Retail National Key Economic Areaof the Economic Transformation Programme. It involves large multinational retailers such as Tesco helping traditional small retailersmodernised their stores in order to increase sales and be more competitive by streamlining the business processes and exposing themto best practices, enhancing customer service quality, and improving the cost effectiveness of their supply chain.

Pasar Mini Harvest Packaging successfully underwent a two-month transformation exercise led by Tesco. During this period, Tesco’sdedicated TUKAR personnel advised Wong in terms of the shop’s layout, product range, product mix, product schematics and display,and training on modern store operations management.

The re-opened Pasar Mini Harvest Packaging was officiated today by Tan Sri Dato’ Muhyiddin Yassin, Deputy Prime Minister ofMalaysia. Also present were Dato’ Seri Ismail Sabri Yaakob, Minister of Domestic Trade, Cooperatives and Consumerism, andSungHwan Do, Chief Executive Officer of Tesco Malaysia. The revitalised Pasar Mini Harvest features a fresh coat of paint, newsignboard and front façade, a modern store layout, improved lighting, increase staff count, introduction of new services such asphotocopy, ePay for Touch n Go, Astro bills payment counter, mobile money transfer as well as a new cashier counter.

“At the end of the day, it is results that matter. On this score, I am very happy to note that in the first three weeks after I reopened, Irealised a remarkable 15% jump in sales. What’s more, my customers continue to tell me how much they appreciate the new layout,improved convenience and enhanced ambience of my store, especially with a 30% increase in customer traffic. This alone is enoughfor me to encourage my fellow kedai runcit owners to seriously consider participating in the TUKAR programme,” Wong concluded.

To-date, Wong’s store has seen a steady increase of 60% in sales volume.

Tesco Malaysia has transformed 101 stores under the TUKAR Programme in 2011. These stores are located throughout nine states inMalaysia specifically Selangor, Wilayah Persekutuan, Negeri Sembilan, Melaka, Johor, Perak, Penang, Kedah and Pahang. Tescoalso initiated a pilot transformation involving two shops whereby a total of RM150,000 was invested in both transformation.

For more information on the TUKAR Programme, please visit the Ministry of Domestic Trade, Cooperatives and Consumerism websitehttp://www.kpdnkk.gov.my or to email directly to [email protected] for a pre-consultation.


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Tesco Stores (Malaysia) Sdn Bhd :: TUKAR program proven a success! http://www.tesco.com.my/html/press_release_details.aspx?ID=107&PID...

1 of 1 9/18/2012 11:40 PM

TESCO is a strong supporter to Malaysia government iniAaAve

BUILD GOOD RELATIONSHIP WITH GOVERNMENT

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Tesco pledges to plant 500,000 trees in MalaysiaKepong, Friday, January 13, 2012 – Tesco Stores (Malaysia) Sdn Bhd (Tesco) and the Malaysian Timber Industry Board (MTIB)today inked a Memorandum of Understanding (MoU) to mark its partnership for a Greener Earth Tree Planting programme. The MoU, signed by Tesco Malaysia and MTIB is to establish a cooperative effort to plant 500,000 trees throughout the country withinthree years to help meet the country’s target of planting 26 million trees.

According to the MoU, Tesco will spend a total of RM4 million to plant 500,000 ‘vulnerable’ agarwood trees with MTIB’s guidance andexpertise in the area. The programme is part of a bigger Greener Earth initiative by Tesco Malaysia to protect our environment andhelp reduce its carbon footprint and is partly funded by the sale of plastic bags sold on No Plastic Bags Day nationwide.

The MoU was signed by SungHwan Do, Chief Executive Officer of Tesco Malaysia and Dr. Jalaluddin Harun, Director General ofMTIB. The signing ceremony was witnessed by Dato’ Madius Tangau, Chairman of MTIB.

Dato’ Madius Tangau said in his speech that, “A lot of effort on planting of trees have already been initiated by several governmentagencies, as well as the private sector as part of their CSR activities. All these measures contribute to keep at least half of the countryunder forest cover as well as reforested.

“Restoring our earth with trees will create places of beauty and enjoyment; help clean our air and more importantly, it will helpsequester the carbon dioxide that man's industry, power generation, commerce, transport and building releases into the air,” headded.

Dato’ Madius Tangau lauded the partnership, and hoped it becomes the basis and foundation of many more scientific and educationalgreen activities for Malaysians and calls for similar collaborations between the corporate sector and the government in the future.

Do said, “The Greener Earth Programme is our latest initiative to protect our environment while engaging our customers to do thesame. Tesco Malaysia to date has reduced its carbon footprint by 42 per cent since we embarked on our green initiatives in 2008.Every effort such as today’s MoU Signing signifies our commitment toward a Greener Earth, bringing us closer to our target of being acarbon neutral business by 2050.”

Through this programme, Tesco and MTIB will plant 160,000 trees in 2012 and 170,000 in 2013 and 2014 respectively.

Do also said that the Greener Earth programme will soon engage Tesco customers more actively to be more involved in reducing theirown impact on the environment.”

The first Greener Earth tree planting activity was held on December 17, 2011 where 450 volunteers from Tesco, MTIB and the publicplanted over 1000 trees in Taman Wawasan, Putrajaya. Selangor, Johor and Melaka are amongst the states identified as nextlocations for the Greener Earth tree planting activities in 2012.

Apart from tree planting, Tesco has taken many environmental initiatives such as its Green Clubcard Points scheme in June 2008 toencourage and reward customers for their green behaviour by bringing their own reusable carrier bags. Through this scheme, over 10million Green Clubcard points have been rewarded to 100,000 of its Clubcard members and has helped to reduce more than 81 millioncarrier bags from going to landfill.

All of Tesco stores have also been fit with energy saving lighting, air-conditioning and refrigeration system with a cumulativeinvestment amounting RM43.3 million.


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Tesco Stores (Malaysia) Sdn Bhd :: Tesco pledges to plant 500,000 trees ... http://www.tesco.com.my/html/press_release_details.aspx?ID=107&PID...

1 of 1 9/18/2012 11:42 PM

TESCO to prove they concern on Green iniAaAve

BUILD GOOD RELATIONSHIP WITH GOVERNMENT

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China Gets a Taste of Malaysian ProductsBEIJING, Sunday, May 8, 2011 – What better way to showcase the appeal of Malaysian-made products than by making it available toconsumers in the capital of the world’s most populated country and fastest growing economy. In a bid to help enhance theinternationalisation of Malaysian products, primarily those produced by home-grown SMEs (small & medium-sized enterprises), TescoMalaysia launched Taste of Malaysia at Tesco Store Happy Valley, Beijing here today.

Taste of Malaysia will be an international foods section in the hypermarket that solely features Malaysian brands and products, for atwo week period beginning today. There will be a total of 91 food and beverage product lines being showcased in the section. 59 arenew to the section brought it especially through Tesco’s Taste of Malaysia programme. This is in addition to the 32 products alreadylisted in Tesco China, paving the way for other Malaysian SME-made products. Some of the leading Malaysian brands being featuredinclude Nona, Alif, Pitaberry, Iceberry, Mascafe, Slera and Pertima, amongst a total of 18 suppliers.

The Taste of Malaysia section will be available to Tesco Store Happy Valley shoppers from today. In addition, there will also bepromotions for a two week period spearheaded by Tesco to entice consumers to sample Malaysian products

YB Dato' Sri Ismail Sabri Bin Yaakob, the Minister of Domestic Trade, Cooperatives and Consumerisme, was at hand to officiate thelaunch of Taste in Malaysia this afternoon. Also present was Tjeerd Jegen, CEO of Tesco Malaysia and Sophia Zhong, CommercialDirector of Tesco China (North).

Tjeerd said, “Buatan Malaysia or Malaysian-made products are comparable in terms of quality and value for money to some of theworld’s leading brands. These products will undergo a promotion period of two weeks to assess customer acceptance of the productand should they meet the Chinese consumers flavour, we will consider supplying these products for the long term. These very brandsdo well in Malaysia and we believe that they will do just as well here.”

According to Tjeerd, Tesco Stores Malaysia is happy to help Malaysian brands acquire greater exposure in the internationalmarketplace. “Tesco has been growing positively in Malaysia over the last decade. It has been a mutually beneficial relationship andwe want to further add value by leveraging on our international presence as one of the largest retailers in the world to help growMalaysian brands,” Tjeerd concluded.

The launch of the first Taste of Malaysia this year in China shows the significance of China in the world retail market and for Tesco.China holds great potential and we would like to support our suppliers to tap into this great opportunity, he added.

The launch of Taste of Malaysia was followed by a special cooking demonstration conducted by Malaysia’s very own celebrity chef,Chef Muluk. In addition to showcasing his culinary skills, he also introduced Malaysian delights to curious Chinese shoppers. Most ofthe ingredients used in Chef Muluk’s recipes are featured in the Taste of Malaysia section.


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Tesco Stores (Malaysia) Sdn Bhd :: China Gets a Taste of Malaysian Products http://www.tesco.com.my/html/press_release_details.aspx?ID=107&PID...

1 of 1 9/18/2012 11:43 PM

TESCO to prove they could offer beCer market access for their suppliers

BUILD REPUTATION AMONG SUPPLIER

Shop with confidence! •  We welcome all customers. No membership is required. •  If you are unsaHsfied with your purchase, you may return your purchase(s) together with the original

receipt within 7 days from the date of purchase. •  Return policy does not apply to display items or items from stock clearance promoHons •  Return policy does not apply to fresh produce, frozen goods, cameras, mobile phones, computer

(including peripherals) and undergarments. •  Tesco Value, Tesco Choice and Tesco Finest products are not to be sold commercially. If you are

unsaHsfied with the quality of any of our Tesco Value, Tesco Choice or Tesco Finest products, you may return your purchase(s) with the original receipt to us within 28 days from the date of purchase and we will either make a replacement or remit a full refund.

Always in stock! Delivery service for your convenience! •  Free delivery service (up to 30km) is available for electronic goods. A charge of RM2.50/km will be levied

beyond the 30th km. •  Delivery service is offered for goods that have been purchased in bulk by Biz Clubcard members

CLEARLY STATED CUSTOMER RIGHT

FOCUS ON HOUSE BRAND Produce more range of House Brand •  TESCO value – affordable range. •  TESCO choice – quality products. •  TESCO light choice – nutriAous low-‐calorie

food. •  TESCO finest – premium ingredients FOCUS ON PROFITABLE AREA

Exit non-‐profitable market •  BanAng & Senawang JOINT VENTURE WITH LOCAL

PLAYER Equity Partner – Sime Darby •  70:30

BUILD REPUTATION AMONG SUPPLIER Support local SMEs •  Bulk purchase for local small retailer •  Introduce local products to TESCO

oversea

EXPAND MARKET SEGMENT AcquisiAon of MAKRO Cash & Carry

•  To tap SMEs market

BUILD GOOD RELATIONSHIP WITH GOVERNMENT •  MOU with Malaysia InternaAonal

Timber Board •  TESCO is one of enabler for TUKAR

programme

BUILD LOYAL CUSTOMER •  Clubcard •  Campaign for the no 1 of great price

retailer •  Fresh vegetables

STRENGTHEN SUPPLY CHAIN Established distribuAon centre •  Simpang Pulai : fresh products •  Bukit Beruntung : grocery,

electronics, high tech and apparel

COLLABORATE WITH SAMSUNG CLEARLY STATED CUSTOMER RIGHT

WHAT IS TESCO STRATEGY TO BUILD A SUSTAINABLE COMPETITIVE ADVANTAGE?

TESCO FOCUS ON COST-‐LEADERSHIP

FOCUS ON HOUSE BRAND

BUILD LOYAL CUSTOMER •  Campaign for the no 1 of great price

retailer

STRENGTHEN SUPPLY CHAIN Established distribuAon centre •  Simpang Pulai : fresh products •  Bukit Beruntung : grocery,

electronics, high tech and apparel

COLLABORATE WITH SAMSUNG

Industry Growth

Government Support & Policies

Rules & RegulaHons Technology

Social forces

MACRO ENVIRONMENT

RETAIL INDUSTRY

GOVERNMENT NURTURE INTERNAL DEMAND

GOVERNMENT FULLY SUPPORT WHOLESALE AND RETAIL GROWTH

"  Within the next 10 years, Malaysia government through EPP aimed to carry RM17.4 billion investment in order to contribute RM8.5 billion GNI and create 68,600 jobs by 2020.

REGULATORY POLICIES TO PROMOTE HEALTHY COMPETITION ENVIRONMENT

ONLINE MARKET (LOCAL) OPPORTUNITY

Online purchase & Virtual Store

ONLINE MARKET (GLOBAL) OPPORTUNITY

Online purchase & Virtual Store

CHANGES IN SOCIAL FORCES

•  Based on 2010 Census, Malaysia’s total populaHon stood at 28.3 million with a populaHon density of 86 persons per square kilometer. The naHon’s capital, Kuala Lumpur, has a populaHon of around 1.67 million and a much higher density of 6891 persons per square kilometer. Although East Malaysia makes up 60% of Malaysia’s landmass, it only accounts for 20% of the country’s populaHon.

•  Over the last 11 years, Malaysia’s populaHon has been growing at a steady rate of 2.0% per annum. The country is experiencing an increase in rural to urban migraHon. The average age of Malaysian populaHon is young at 26 years old and the average life expectancy stands at over 73 years.

INCOME/BUYING POWER

-‐ Malaysia is classified as an upper-‐middle income country, and considered as one of the most developed of the developing countries. The proporHon of middle income households, defined as those earning between RM2,841 and MYR4,025 per month, has increased from 6.5% in 2009 to 9.2% in 2007. -‐ On average, household living in urban areas spent 1.5 Hes more than households living in r u r a l a r e a s . A v e r a g e h o u s e h o l d s p e n d i n g expenditure is stands at RM2190 per month

CONSUMER BEHAVIOR Average household spending palerns: -‐ Malaysians spend a high percentage of their household income on food, groceries and personal care items, ranking third out of the ten major economies in the Asia-‐Pacific region (excl.Japan) -‐ According to ACNielsen, Malaysians on average spent MYR505 per month on food and groceries, with just half of hat on fresh food like meat, fruits and vegetables. Lifestyles/Shopping habits: -‐ Malaysia’s consumer lifestyle has been evolving and changing due in part to rising affluence and educaHon levels. -‐ High profile internaHonal retailers and the global mass media have also played a hand in shaping consumer-‐buying behavior. -‐ Malaysians are becoming more westernized, sophisHcated and cosmopolitan. -‐ Since the emergence of the foreign-‐owned hypermarkets, Malaysians who lived= in urban have become accustomed to shopping for groceries at hypermarkets and supermarkets. -‐ Meanwhile rural people conHnue to purchase from tradiHonal grocers, convenience stores and mini-‐marts

TESCO COMPETITION ENVIROMENT

MAJOR RETAIL PLAYERS

Ranking

Group Name Ownership Retail Formats Number of Stores

2011 Net sales

1 Dairy Farm Giant Retail Diary Farm InternaHonal

Supermarket/superstores (54) and hypermarkets (71)

125 na

2 TESCO PLC JV (70% TESCO PLC : 30% Sime Darby)

Hypermarkets 46 3.53 billion

3 Carrefour Group Carrefour Group Hypermarkets 26 1.8 billion

4 Econsave Cash & Carry Econsave Cash & Carry Sdn Bhd

Supermarkets/hypermarkets

29 700 million

5 MYDIN Mydin Mohamed Holdings Bhd

Hypermarkets (10) Emporiums (18) Bazaar (3) Mini Market (54) Convenient store (9) Franchise (6)

100 1.5billion

STRATEGIC MAPPING

Low

Many LocaHons

GIANT

TESCO MYDIN

CARREFOUR ECONSAV

E

Few LocaHons

High

GEOGRAPHIC COVERAGE

PRICE/QUAL

ITY

43

STRONG Rivalry Among Current CompeAtors

HIGH Bargaining Power of Buyers

WEAK Threat of New Entrants

WEAK Threat of SubsAtute Products

WEAK Bargaining Power Of Suppliers

supermarkets dictate the price they pay to the

supplier

•  High startup cost •  Small market

•  If a single item too expensive in Tesco, buyers will exercise their power and move to Giant which can be easily access

•  Time consuming

•  Selling similar products •  Offer similar services

IF consumers see little difference between the Price - they will tend to choose on price.

KEY SUCCESS FACTOR 1. INCREASE IN INTERNAL DEMAND

2. GOVERNMENT SUPPORT

3. REGULATORY POLICIES TO PROMOTE HEALTHY COMPETITION ENVIRONMENT

6. GOOD INFRASTUCTURE FOR ONLINE

5. CHANGES IN SOCIAL FORCES

7. GOOD SUPPLY CHAIN MANAGEMENT (SOFTWARE & HARDWARE)

4. HIGH BARGAINING POWER OVER CUSTOMER & SUPPLIER

Opportunity Threat

Value Rareness Imitability Sustainability LIST UNDER RESOURCES S2 : Fresh DC DisAncAve DisAncAve CompeAAve PotenAal S3 : Non-‐chilled DC CompeHHve CompeHHve CompeHHve PotenHal S5 : Standard lay-‐out CompeHHve PotenHal PotenHal PotenHal S6 : Tesco Hypermarkets CompeHHve PotenHal PotenHal PotenHal S7 : House Brand CompeAAve PotenAal PotenAal CompeAAve S8 : Tesco Extra DisAncAve DisAncAve PotenAal CompeAAve S9 : Tesco Clubcard and Biz Clubcard CompeHHve CompeHHve PotenHal PotenHal S11 : Tesco VALUE DisAncAve PotenAal PotenAal CompeAAve W4 : Low sales volume for Tesco Extra DisHncHve CompeHHve CompeHHve PotenHal W5 : Small margin DisAncAve CompeAAve CompeAAve DisAncAve W6 : High A&P cost DisHncHve CompeHHve CompeHHve PotenHal W7 : High capital investment DisAncAve CompeAAve CompeAAve DisAncAve LIST UNDER CAPABILITIES S1 : High bargaining power DisAncAve CompeAAve PotenAal CompeAAve S4 : The applicaHon of ERP system DisHncHve PotenHal PotenHal PotenHal S10 : Focus on customer service DisHncHve CompeHHve PotenHal PotenHal W1 : Certain supplier dictate price DisAncAve PotenAal PotenAal PotenAal W2 : No Online Shopping capability DisAncAve DisAncAve CompeAAve PotenAal W3 : High bargaining power of retail customer DisAncAve CompeAAve CompeAAve DisAncAve

ASSESSMENT OF INTERNAL FACTORS FOR STRATEGIC ADVANTAGE (ASSIST) (RANKING STRENGTH AND WEAKNESSES)

S3

S1

S5

S4

S2

W5

W2

W4

W3

W1

S1,S2,W4

W5

S5,W1

S4

VALUE CHAIN FOR TESCO (BASED ON PORTER ORIGINAL)

W2,W3

W2

SUPPLIER MGT

SYSTEM

TRAINING

DC, FINANCE

LOW MARGIN

S1

S5,W1 S4

VALUE CHAIN FOR TESCO (BASED ON PORTER ORIGINAL)

W2,W3

W2

SUPPLIER MGT

SYSTEM

TRAINING

DC, FINANCE

LOW MARGIN

W5 S2,W4

S1 High bargaining power over supplier (capabili8es)

S2 Fresh DC (Resources) S3 House Brand (Resources) S4 Tesco VALUE (Resources) S5 Tesco Extra (Resources)

W1 High bargaining power of customer (capabili8es)

W2 High capital investment (Resources) W3 Small margin (Resources) W4 Certain supplier dictate price

(capabili8es) W5 No Online (capabili8es)

S O

W T

O1 Online shopping O2 Co-‐operate with Malaysian Government

to setup 1 Malaysia Mall O3 Open branch in East Malaysia & East

Coast (TESCO EXTRA) O4 Acquire small & medium local retailers O5 More house brand (OEM for 1Malaysia

Brand) O6 Form Halal Supermarket

T1 Decreasing in Internal Demand T2 1 Malaysia Mall T3 Merger of current compeHtor T4 Entrance of new player

RECOMMENDATION (to be compeAAve)

•  COMPETITIVE STRATEGY •  VALUE CHAIN •  MISSION & VISION

SUSTAINABLE COMPETITIVE ADVANTAGE

COMPETITIVE STRATEGY

Groceries -‐ Online

Current

Future

VALUE CHAIN FOR TESCO

SUPPLIER MGT

SYSTEM

TRAINING

DC, STORE

LOW MARGIN

INVENTORY PURCHASE

DISTRIBUTION CENTRE

TESCO WHOLSALE, TESCO EXTRA

Sales & Services

(TESCO VALUE & TOM)

LOWER CAPITAL INVESTMENT

REDUCE MAN POWER

UPGRADING SYSTEM (ONLINE)

VISION & MISSION

NEW VISION Dedicated to deliver fresh and quality groceries at the lowest price to all over Malaysia NEW MISSION Offer customer a whole new shopping experience for a quality products at lower price

SUSTAINABLE COMPETITIVE ADVANTAGE

Ø Focus low-‐cost strategy within a narrow buyer segment (market niche) – Focus on suplying Fresh & Quality groceries (make use of Chilled-‐DC in Simpang Pulai). Target market : family

Ø Introduce ONLINE shopping

WAY FORWARD "   Malaysian saw the growth of the large format retail sub-‐sector

today; 121 hypermarkets, 113 superstores and 133 departments stores run by local and foreign operators, bringing beler quality, wider choice, lower product cost, greater product availability and new retailing technology and skills.

"   Within the next 10 years, Malaysia government through EPP aimed to carry RM17.4 billion investment in order to contribute RM8.5 billion GNI and create 68,600 jobs by 2020.

"   TESCO sHll have the opportunity to re-‐strategize their business in Malaysia

ATTACHMENTS

Value Rareness Imitability Sustainability LIST UNDER RESOURCES S2 : Fresh DC DisAncAve DisAncAve CompeAAve PotenAal S3 : Non-‐chilled DC CompeHHve CompeHHve CompeHHve PotenHal S5 : Standard lay-‐out CompeHHve PotenHal PotenHal PotenHal S6 : Tesco Hypermarkets CompeHHve PotenHal PotenHal PotenHal S7 : House Brand CompeAAve PotenAal PotenAal CompeAAve S8 : Tesco Extra DisAncAve DisAncAve PotenAal CompeAAve S9 : Tesco Clubcard and Biz Clubcard CompeHHve CompeHHve PotenHal PotenHal S11 : Tesco VALUE DisAncAve PotenAal PotenAal CompeAAve W4 : Low sales volume for Tesco Extra DisHncHve CompeHHve CompeHHve PotenHal W5 : Small margin DisAncAve CompeAAve CompeAAve DisAncAve W6 : High A&P cost DisHncHve CompeHHve CompeHHve PotenHal W7 : High capital investment DisAncAve CompeAAve CompeAAve DisAncAve LIST UNDER CAPABILITIES S1 : High bargaining power DisAncAve CompeAAve PotenAal CompeAAve S4 : The applicaHon of ERP system DisHncHve PotenHal PotenHal PotenHal S10 : Focus on customer service DisHncHve CompeHHve PotenHal PotenHal W1 : Nestle high bargaining power DisAncAve PotenAal PotenAal PotenAal W2 : No Online Shopping capability DisAncAve DisAncAve CompeAAve PotenAal W3 : High bargaining power of retail customer DisAncAve CompeAAve CompeAAve DisAncAve

ASSESSMENT OF INTERNAL FACTORS FOR STRATEGIC ADVANTAGE (ASSIST) (RANKING STRENGTH AND WEAKNESSES)

S3

S1

S5

S4

S2

W5

W2

W4

W3

W1

Tesco to JV with local retailer to form a Halal Supermarket and expand to Islamic Countries

Budget 2013

OPPORTUNITY

THREAT 1MALAYSIA MALL

MAJOR RETAIL PLAYERS

Ranking

Group Name Ownership Retail Formats Number of Stores

2011 Net sales

1 Dairy Farm Giant Retail Diary Farm InternaHonal

Supermarket/superstores (54) and hypermarkets (71)

125 na

2 TESCO PLC JV (70% TESCO PLC : 30% Sime Darby)

Hypermarkets 46 3.53 billion

3 Carrefour Group Carrefour Group Hypermarkets 13 na

4 Econsave Cash & Carry Econsave Cash & Carry Sdn Bhd

Supermarkets/hypermarkets

29 700 million

5 MYDIN Mydin Mohamed Holdings Bhd

Hypermarkets (10) Emporiums (18) Bazaar (3) Mini Market (54) Convenient store (9) Franchise (6)

100 1.5billion

Education

Strategic management - retail sector (tesco)