The Use of Technical Rationality in the Tesco Plc Corporate Strategy

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As one of the world’s leading retailers in both the food and non-food markets, with group sales of £62.5billion in 2010, it is clear that Tesco PLC has a successful corporate strategy which has managed to withstand the recent global economic crisis. Tesco defines their long term strategy over the last decade to be delivering strong and consistent growth. The group uses a balanced scorecard to monitor their performance against strategic goals. By assessing the Customers, Operations, People, Finance and Community, the strategic planners at Tesco are able to see what needs to be done and in which areas. Tesco’s overall goal could be summarised as a desire to be as successful in the non-food market as they are in the food market, and this is achieved by creating such good value for customers that their repeat business and loyalty is guaranteed. Tesco use a combination of cost leadership and differentiation to breed this loyalty amongst their customers. There is always price rivalry between the leading supermarket chains with each trying to offer the lowest prices on the most popular goods in order to win business. However it would appear that Tesco are able to retain business even though their prices on many other products remain relatively high, and this is because they reward their customers through their clubcard promotion. Customers earn points for £’s spent and these points can be redeemed against food, fuel and even days out; and this is what sets Tesco apart from the other stores. Their range of products and services is more attractive because the customer feels they are getting something back for spending their money at Tesco. By Stacey’s definition (Stacey, 2007) technical rationality is key in bringing together problem solving and decision making in any strategy. Stacey argues that Technical Rationality is decision making purely based on

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