Case Study

Tesco: Delivering the goods (B)

7 pages
October 2008
Reference: IMD-3-1956

By the end of 2005, Tesco had achieved such a hold over UK retailing that the giant was looking to some like a monster. Tesco’s very success made it a growing target for attacks from a wide range of pressure groups. These included farmers, small businesses and environmental campaigners who decided to join forces to form the Tescopoly alliance (slogan: Every Little Hurts) in order to highlight the environmental and social impact of the chain. including direct competitors, for the regulatory authorities to curb Tesco’s dominance, prompting a lengthy inquiry into grocery retailing by the Competition Commission. These two major threats to Tesco’s supremacy came on top of other challenges such as the loss of a few rising stars to competitors and the dangers of losing its competitive edge, its customer focus or its pursuit of innovation in a context where it was so utterly dominant. Case B explores Tesco’s response to these various challenges, which centered around the launch of a massive Community Plan and its decision to enter the notoriously difficult US market to take on Wal-Mart on its home turf.

Learning Objective

The B Case is not meant to be used as a stand-alone case, but rather as a handout half-way through the session in order to re-energize the class: to reflect on what could cause Tesco to derail – and how it actually responded. Case B shows that Tesco did not content itself with neutralizing the emerging challenges; it used them to turn itself into an even more robust business – to launch a potential “transformational” incursion into the US, to drive innovation and to renew its commitment to listening to customers. In particular, Case B can generate a rich discussion on how Tesco – which, until 2005, had lagged behind its rivals on issues of Corporate Social Responsibility – used the threat of the Tescopoly Alliance, not just to catch up with its rivals, but to leapfrog them. It also shows how the managerial levers were realigned to support the new community and environmental commitment.

Keywords
Leading Change, Retail, Alignment, Facing Reality, Customer Focus
Settings
Tesco
2006-2007
Type
Published Sources
Copyright
© 2008
Available Languages
English
Related material
Teaching note
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