CASE27_TescovsSainsbury's - TESCO VS SAINSBURYS I...

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TESCO VS. SAINSBURY’S I. DISCUSSION QUESTIONS, CASE INTRODUCTION AND KEY POINTS Introduction After operating in the shadow of Sainsbury for the vast majority of the 20 th century, Tesco broke free in the mid-1990’s and grew to become the UK’s dominant general merchandising retail market share leader. Why? What did they do that differentiated them from their competitors in the general merchandising retail industry? Why did Sainsbury lose its edge? What did they do wrong? The case introduces the phenomenon of “schizophrenic” shopping behavior and its effect on the retailing market in the UK. How did/does this behavior affect the shape/competitive make-up of the industry? The case also examines the various innovations and technological developments that have driven the growth and led to changes in the competitive landscape. How did the timing of these developments influence changes in the market? Summary of key learning points and strategic issues 1. What are the major innovations that have been introduced to the retail market? How have they affected the competitive dynamics? 2. What is driving the success of international expansion? Whose model is better? Why? 3. Who are the immediate competitors? Who are the impending competitors? What’s the difference? 4. Identify the difference between growth through acquisition and organic growth? Which companies are leveraging which growth strategies? 5. How will the impending economic downturn affect the market? Discussion Questions 1. Perform a STEEP analysis to understand the general environment facing Tesco & Sainsbury’s. How will the firm be affected by external factors? 2. Use Porter’s Five Forces Model to analyze the global retail food/non-food industry. Given this analysis, is the industry attractive or unattractive? 3. Who are Tesco & Sainsbury’s main competitors? How do they measure up against these competitors? 4. What are Tesco & Sainsbury’s main capabilities? Do they have a core competence? 5. Create a SWOT analysis to understand Tesco & Sainsbury’s strengths and weaknesses. Do they have a sustainable competitive advantage? Is so, what is the source? What about Tesco & Sainsbury’s evolution and current business strategy may pose problems going forward? 6. What is Tesco & Sainsbury’s business-level strategy? Is the strategy appropriate to offset the forces in the industry? Do you recommend any changes and/or foresee any challenges? T E S C O V S . S A I N S B U R Y ’ S | 1
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TESCO VS. SAINSBURY’S II. EXTERNAL ENVIRONMENT ANALYSIS Summarize the external environment, including conditions in the general, industry, and competitor environments. a. The General Environment Definition: The general environment is focused on the future and can be analyzed by considering the STEEP framework: Social/demographic, Technological, Economic, Environmental/geographic and Political/legal/governmental factors at play.
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