Tesco's Virtual Store: From South Korea to the United Kingdom SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Sales & Marketing
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Tesco's Virtual Store: From South Korea to the United Kingdom
After the successful launch of their virtual grocery stores in South Korean metro stations, Tesco UK is trying to determine whether the virtual grocery store concept should be launched in their home market. In order to make this decision, Tesco needs to determine the role of the virtual store(s), the location(s) of the store(s) and the product range. At the same time, Tesco needs to compare the Korean and U.K. markets in order to determine whether the virtual store concept is viable.
Swot Analysis of "Tesco's Virtual Store: From South Korea to the United Kingdom" written by Mark B. Vandenbosch, Alina Nastasoiu includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Virtual Tesco facing as an external strategic factors. Some of the topics covered in Tesco's Virtual Store: From South Korea to the United Kingdom case study are - Strategic Management Strategies, Marketing and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Tesco's Virtual Store: From South Korea to the United Kingdom casestudy better are - – increasing household debt because of falling income levels, central banks are concerned over increasing inflation, cloud computing is disrupting traditional business models, wage bills are increasing, increasing transportation and logistics costs, supply chains are disrupted by pandemic , challanges to central banks by blockchain based private currencies,
there is backlash against globalization, competitive advantages are harder to sustain because of technology dispersion, etc
Introduction to SWOT Analysis of Tesco's Virtual Store: From South Korea to the United Kingdom
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Tesco's Virtual Store: From South Korea to the United Kingdom case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Virtual Tesco, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Virtual Tesco operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Tesco's Virtual Store: From South Korea to the United Kingdom can be done for the following purposes –
1. Strategic planning using facts provided in Tesco's Virtual Store: From South Korea to the United Kingdom case study
2. Improving business portfolio management of Virtual Tesco
3. Assessing feasibility of the new initiative in Sales & Marketing field.
4. Making a Sales & Marketing topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Virtual Tesco
Strengths Tesco's Virtual Store: From South Korea to the United Kingdom | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Virtual Tesco in Tesco's Virtual Store: From South Korea to the United Kingdom Harvard Business Review case study are -
Learning organization
- Virtual Tesco is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Virtual Tesco is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Tesco's Virtual Store: From South Korea to the United Kingdom Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Successful track record of launching new products
– Virtual Tesco has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Virtual Tesco has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Ability to recruit top talent
– Virtual Tesco is one of the leading recruiters in the industry. Managers in the Tesco's Virtual Store: From South Korea to the United Kingdom are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Analytics focus
– Virtual Tesco is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Mark B. Vandenbosch, Alina Nastasoiu can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Diverse revenue streams
– Virtual Tesco is present in almost all the verticals within the industry. This has provided firm in Tesco's Virtual Store: From South Korea to the United Kingdom case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Superior customer experience
– The customer experience strategy of Virtual Tesco in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
High switching costs
– The high switching costs that Virtual Tesco has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
High brand equity
– Virtual Tesco has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Virtual Tesco to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Sustainable margins compare to other players in Sales & Marketing industry
– Tesco's Virtual Store: From South Korea to the United Kingdom firm has clearly differentiated products in the market place. This has enabled Virtual Tesco to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Virtual Tesco to invest into research and development (R&D) and innovation.
Innovation driven organization
– Virtual Tesco is one of the most innovative firm in sector. Manager in Tesco's Virtual Store: From South Korea to the United Kingdom Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Cross disciplinary teams
– Horizontal connected teams at the Virtual Tesco are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Training and development
– Virtual Tesco has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Tesco's Virtual Store: From South Korea to the United Kingdom Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Weaknesses Tesco's Virtual Store: From South Korea to the United Kingdom | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Tesco's Virtual Store: From South Korea to the United Kingdom are -
Lack of clear differentiation of Virtual Tesco products
– To increase the profitability and margins on the products, Virtual Tesco needs to provide more differentiated products than what it is currently offering in the marketplace.
Need for greater diversity
– Virtual Tesco has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Capital Spending Reduction
– Even during the low interest decade, Virtual Tesco has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
High operating costs
– Compare to the competitors, firm in the HBR case study Tesco's Virtual Store: From South Korea to the United Kingdom has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Virtual Tesco 's lucrative customers.
Aligning sales with marketing
– It come across in the case study Tesco's Virtual Store: From South Korea to the United Kingdom that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Tesco's Virtual Store: From South Korea to the United Kingdom can leverage the sales team experience to cultivate customer relationships as Virtual Tesco is planning to shift buying processes online.
High bargaining power of channel partners
– Because of the regulatory requirements, Mark B. Vandenbosch, Alina Nastasoiu suggests that, Virtual Tesco is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Products dominated business model
– Even though Virtual Tesco has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Tesco's Virtual Store: From South Korea to the United Kingdom should strive to include more intangible value offerings along with its core products and services.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Tesco's Virtual Store: From South Korea to the United Kingdom, is just above the industry average. Virtual Tesco needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Increasing silos among functional specialists
– The organizational structure of Virtual Tesco is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. Virtual Tesco needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Virtual Tesco to focus more on services rather than just following the product oriented approach.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Virtual Tesco supply chain. Even after few cautionary changes mentioned in the HBR case study - Tesco's Virtual Store: From South Korea to the United Kingdom, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Virtual Tesco vulnerable to further global disruptions in South East Asia.
Interest costs
– Compare to the competition, Virtual Tesco has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Opportunities Tesco's Virtual Store: From South Korea to the United Kingdom | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Tesco's Virtual Store: From South Korea to the United Kingdom are -
Loyalty marketing
– Virtual Tesco has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Building a culture of innovation
– managers at Virtual Tesco can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Sales & Marketing segment.
Better consumer reach
– The expansion of the 5G network will help Virtual Tesco to increase its market reach. Virtual Tesco will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Using analytics as competitive advantage
– Virtual Tesco has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Tesco's Virtual Store: From South Korea to the United Kingdom - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Virtual Tesco to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Virtual Tesco is facing challenges because of the dominance of functional experts in the organization. Tesco's Virtual Store: From South Korea to the United Kingdom case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Virtual Tesco can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Tesco's Virtual Store: From South Korea to the United Kingdom, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Virtual Tesco to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Virtual Tesco to hire the very best people irrespective of their geographical location.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Sales & Marketing industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Virtual Tesco can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Virtual Tesco can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Leveraging digital technologies
– Virtual Tesco can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Buying journey improvements
– Virtual Tesco can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Tesco's Virtual Store: From South Korea to the United Kingdom suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Virtual Tesco can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Manufacturing automation
– Virtual Tesco can use the latest technology developments to improve its manufacturing and designing process in Sales & Marketing segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Learning at scale
– Online learning technologies has now opened space for Virtual Tesco to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Threats Tesco's Virtual Store: From South Korea to the United Kingdom External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Tesco's Virtual Store: From South Korea to the United Kingdom are -
Environmental challenges
– Virtual Tesco needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Virtual Tesco can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Consumer confidence and its impact on Virtual Tesco demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Virtual Tesco in the Sales & Marketing sector and impact the bottomline of the organization.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Virtual Tesco with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Shortening product life cycle
– it is one of the major threat that Virtual Tesco is facing in Sales & Marketing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Virtual Tesco will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Regulatory challenges
– Virtual Tesco needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Sales & Marketing industry regulations.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Tesco's Virtual Store: From South Korea to the United Kingdom, Virtual Tesco may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Sales & Marketing .
Stagnating economy with rate increase
– Virtual Tesco can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
High dependence on third party suppliers
– Virtual Tesco high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Easy access to finance
– Easy access to finance in Sales & Marketing field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Virtual Tesco can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Weighted SWOT Analysis of Tesco's Virtual Store: From South Korea to the United Kingdom Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Tesco's Virtual Store: From South Korea to the United Kingdom needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Tesco's Virtual Store: From South Korea to the United Kingdom is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Tesco's Virtual Store: From South Korea to the United Kingdom is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Tesco's Virtual Store: From South Korea to the United Kingdom is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Virtual Tesco needs to make to build a sustainable competitive advantage.