University of Sunderland Sunderland Business School

Master of Business Administration University of Sunderland, UK

PGBM16 Global Corporate Strategy - Off-Campus -

Individual Assignment Case Study - Strategy Development in the Global Food Retail Supermar et !ndustry

Prepared by Ong Meng Seng !ate submitted 18th, May, 2011 SC" Code 109130288/ 1#$e%utive Summary By the year of 2014, the global food a attracti*e ar!et industry "ill reach #$%9&billion 'otential% (lthough it)s ar!et is one of the ost dyna ics ar!et and

ar!et si+e, but the global food retails

e,tre ely co 'etiti*e industry, the do estic organic business gro"th beco e *ery challenging% -n fact, historically gro"th in the the out 'erfor any global .or'orations "ere ha*ing difficulty to 'erfor i 'ressi*e organic a!es 23s ature ar!et% Since last decade, /al art and 0esco the "orld to' $ global retailers ar!eting strategy in order to ar!et% 1ro

has been e bar! into globali+ation e,'ansion and inno*ation

co 'ared to the other co 'etitors in the global food retails

Mar!eting focus strategies, 3roducts, 3rice, 3eo'le, 3lace, 3ro otion and 3latfor , follo" by the leadershi' anage ent to cor'orate anage ent that has been refined and e,ecuted by leadershi' tea % 0he (c4uisition, Mergers, 5oint 6enture, 7reenfield in*est ent and Strategic (lliances acti*ities has beco e 'art of the critical success factors that deter ine the future gro"th of the

8ni*ersity of Sunderland9 Sunderland Business School co 'any% /al art failure in 7er any ac4uisition caused /al art e,ist their o'eration fro this e,'erience, their future e,'ansion has been established the ris! "ith the integrations 'rocess, in order to 7er any, fro

anage ent strategy together

ini i+e the ris! of going full force, 5oint 6enture and

Strategic (lliances is an alternati*e strategy for /al art and 0esco begin their business in ne" country% 0he treats in the e erging counties included the 'olity and econo ic uncertainty, and the -nternet 0echnology has be changes the "ay of consu er buying habits and "ill be treats to the 'rofitability of the co 'any if they did not a!e the 'roducts infor ation or 'rice infor ation beco e trans'arency, this resulted intensi*e 'rice co 'etition and anage "ell in the o'eration efficiency% 0he .or'orate social res'onsibility co it ent beco e 'art of the 7lobal cor'orate culture that hel' to gain their credibility in the ar!et, /al art)s current 3resident and .hief :,ecuti*e Office, Mi!e ;u!e has good attribute in leadershi' that a!e hi beco e great 7lobal .or'orate strategy leader, his a bition to further dri*e the gro"th of the /al art that ai beco e the greatest .or'oration in ne" era of <=e,t 7eneration /al art> ?e a!e sure they continues to strong hold the co 'any culture of <sa*e 'eo'le oney, so they can li*e better%> as the legacy of Sa /alton

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8ni*ersity of Sunderland9 Sunderland Business School %CO&'#&'

'g

Introdu%tion -n Bear 2009, 0he Sales Ae*enues in 7lobal food retails highs at #4%3billion, the co 'ound annual gro"th rate C.(7AD ar!et hit records aintained at 4%2E to

2%8E since year 2004, the ?y'er ar!ets, Su'er ar!et and Aetails store occu'ied the ar!et share *alue of #2billion e4ual to 42%4E of total global food industry% 0he global food industry gro"ing rate forecasted "ill be continue le*el, by end of the year 2014, the global food 'otential%Csource9 /oo:B, 2011D 0he 7lobal food retails ar!et is one of the ost dyna ics ar!et and aintain at the healthy ar!et industry "ill reach #$%9&billion

e,tre ely co 'etiti*e industry, the do estic organic business gro"th and sustaining 'rofitability beco e *ery challenging% -n fact, historically any global .or'orations "ere ha*ing difficulty to 'erfor ature ar!et, e,ce't those i 'le ented "ith

i 'ressi*e organic gro"th in any

outstanding strategy or in*ented the e,tra@ordinary 'roducts that ha*e been "idely acce'ted by the consu er and hel' to s'ur the organic gro"th% 0hese re'orts "ill 'ro*ide the insight of the analysis, the issue of retailers facing and discuss ho" /al art and 0esco they e bar! into globali+ation e,'ansion and inno*ation ar!eting strategy global food retails a!es the ar!et% 1ro out 'erfor co 'ared to the other co 'etitors in the anage ent to 23s Mar!eting focus strategies, 3roducts, 3rice,

3eo'le, 3lace, 3ro otion and 3latfor , follo" by the leadershi'

cor'orate anage ent that has been refined and e,ecuted by leadershi' tea % 0he (c4uisition, Mergers, 5oint 6enture, 7reenfield in*est ent and Strategic (lliances acti*ities has beco e 'art of the critical success factors that deter ine the future success of the co 'any% 0his re'ort "ill also discuss on /al art)s current 3resident and .hief 37BM12 @ -ndi*idual Ae'ort May 2011 13

8ni*ersity of Sunderland9 Sunderland Business School :,ecuti*e Office Mi!e ;u!e, his leadershi' in 7lobal .or'orate Strategy and his a bition to further dri*e the gro"th of the co 'any that ai beco e the greatest .or'oration in ne" era of <=e,t 7eneration /al art>%Strategi% of Allian%es, Merger and A%(uisition in )lobal *ood retails industry Since 2001 the to' 10 !ey 'layer in food retail industry "ere /al ar!, (hold and etc Crefer to the a''endi, 1D% &0E of those to' food retailers co 'anies are established fro the 8S( ho e country and the other 30E are fro the :uro'e country% -n recent years their gro"ing trends beca e saturated in de*elo'ed countries due to the 'o'ulation gro"th rate slo" do"n *erses the e erging countriesF refer to Ca''endi, 2D% Shar a C2011D cited the fact that the e erging countries consist the grou'ing of BA-.S CBra+il, Aussia, -ndia, .hina and South (fricaD re'resents about 22 'ercent of "orld)s geogra'hic area, 40 'ercent of the "orld)s 'o'ulation, 0he to' fi*e food retailers are ai ing to be aggressi*ely e,'ands their food retails industry% Aonald, et al% C2000D cited ergers as short ter any co 'anies in the 'ast *ie" ac4uisitions and anageable 'rocess that caused the erger acti*ity% O*er the years, 7: .a'ital ar!et share through Strategic (lliances, Merger and (c4uisition acti*ity into those ne" attracti*e global

deals, often they lac! of

integration failure in the ac4uisition and

Ser*ices) ac4uisition integration 'rocess has been established and "ell enough to be i 'le ent as best 'ractices, the "hole idea is being "ith the G/heel of 1ortuneG odel, itHs di*ides into the four <action stages>, the 3re@ac4uisition, 1oundation@ building, Aa'id integration and (ssi ilation% CAefer to a''endi, 3D /al art for instance, their failure in 7er any ac4uisition caused /al art e,ist their o'eration fro a''roach and fro 7er any, they could ha*e done better if they ha*e such a syste atic anageable 'rocess to run the 7er any ac4uired co 'any, learned

the 're*ious failure, /al art announced in 1eb 200&, they 'urchase of 3$E anage ent strategy that has been i 'le ented together "ith the integrations May 2011 13

interest in Bounteous .o 'any Ii ited C<B.I >D in .hina% Ob*iously this is 'art of the ris! 37BM12 @ -ndi*idual Ae'ort

8ni*ersity of Sunderland9 Sunderland Business School 'rocess, to ini i+e the ris! of going full force, 5oint 6enture is an alternati*e ar!et, today /al ar! ha*e 328

concentric di*ersification strategy for /al art begin in .hina, lately the de*elo' ent hel'ing /al art gaining higher confident in .hina retails foot'rint in o'eration and beca e a !ey 'layer in .hina% -n (ugust 200&, /al art and Bharti :nter'rises established a Joint *enture called Bharti /al art 3ri*ate Ii ited to conduct "holesale cash@and@carry and bac!@end su''ly chain anage ent o'erations in -ndia, the a''roach are begins "ith conser*ati*e due to the concern of uncertainty on -ndia econo ic and buying 'o"er of their 'o'ulation, socially and culturally are also the other concern factors% On 1ebruary 1$, 2010, /al art deMe,ico C</al e,>D co 'leted the ac4uisition of o"nershi' that held by the third 'arties of /al e, as concentration gro"th strategy% =o" /al art run 1&30 store in Me,ico beco e the largest indi*idual grou' o'eration for /al art international

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%8ni*ersity of Sunderland9 Sunderland Business School

2 C8KD announce

-n May 2&, 2010, (S;( the /al art subsidiary in 8nited Kingdo 38$ stores in 8K beco es the

to 'urchase =etto 1oodstores Ii ited% =etto o'erates 193 units, /al art no" ha*e aJor treats to 0esco in the 8K Mar!et'lace% ulti@channel inno*ations strategy li!e

-n year 2011 /al art 8%S% being le*eraging of this strategy "as ai 2011D

Site@to@StoreL, <3ic! 8' 0oday> by Strategic (lliances "ith 1ed@:,, the "hole idea to increase the flo" of inno*ation and fle,ibility that allo" their custo ers to sho' "hen and ho" they "ant% CSource9 /al art (nnual re'ort

0esco e,'ansion 'lan "ere included 7reenfield strategy in the 'ast t"o years, in .hina, 0esco strategy is e,'and into less de*elo'ed second and third tier cities by o'ening hy'er ar!ets in leading sho''ing alls, 0hey had in*ested 1& hy'er ar!ets erger of and 'lan to o'en 23 hy'er ar!ets for the rest of year% -n Korea, through the

Sa sung .or'oration retail business C?o e'lusD, 0esco gaining the local !no"ledge, culture and understand the Korean buying beha*ior, subse4uently in fiscal year end 2010, 0esco successfully do inates the Korea ar!et and deli*ering e,cellent results, effecti*e anage ent s!ills in their i 'ressi*e success factor "as the synergies fro

the strong Strategy and 3lanning ;i*ision, also by le*eraging the -0 technology to co 'ete "ith other "orld class ri*als such as /al art and .arrefour% CSource9 0esco annual re'ort 2010D
+,- 'reat of ne. #ntrants and Substitutes in t/e )lobali0ation *ood 1etails Mar2et

(rons, et al% C1999D cited that 3orter fi*e forces

odel is the fra e"or! of odel are

analysis for business de*elo' ent by Micheal :% 3orter, then de*elo' into the 'o'ular S/O0 analysis a''roach, Crefer to a''endi,9 4D the 3orter fi*e force ainly concentrated on the threats of ne" entry, the treat of substitute 'roducts or ser*ices, the bargaining 'o"er of custo er and su''lier that influence to co 'etiti*e 37BM12 @ -ndi*idual Ae'ort May 2011 2

ri*alry% /al art and 0esco being to' fi*e global retailers

eans that they are the ar!et

target of co 'etition in local and globally, in 8S /al art ha*e stronger hold in ter business si+e and the stores co*erage around the country, the 'otential of the stores% 1or 0esco, there is a 'ersistent threat of ta!eo*er fro /al art in 8K, "ho has both eans and the addressable si+e attracted ne" entrants as co 'etition treat li!e 0esco 1resh M :asy ar!et leader by ar!et are the oti*e to 'ursue such action, the factors

influencing the li!elihood of the ne" :ntrants in global food retail

.ost, Su''lier, ;istribution, Aegulation and 3roducts% CAefer to a''endi, $D 0he substitutes fro internet on line 'ortal that changing the custo er buying the -nternet 0echnology, custo er get ore aJor substitute treats & eans that

beha*iour, by le*eraging fro

trans'arency of the 'roducts infor ation and 'ricing, this is the to their local stores regardless of /al art or 0esco% 8ni*ersity of Sunderland9 Sunderland Business School

/hile trying to 'enetrate into the ne" country being as global retailer, countries% 0he cost of 'roducing lo"er outsourcing

they are e,'osed to 'olitical 'roble s and the uncertainty at those e erging

any consu er 'roducts tends to ha*e fallen because of

anufacturing costs% Manufacturing cost has fallen "ill lead to

'rice co 'etition% -ntensi*e 'rice co 'etition is a threat that i 'act to the 'rofitability of the co 'any%

+,3 Bargaining Po.er of suppliers and buyers

(ccording (rons, et al% C1999D cited, "hen there is no o'tion or 4uantity de anded is ore than the 4uantity that su''lier are able to su''ly it 'oint% On other hand if the su''ly is ay cause ar!et shortage, su''lier gaining their bargaining 'o"er and reach the e4uilibriu caused the sur'lus of the 'roducts in the 37BM12 @ -ndi*idual Ae'ort ay as! to raise the 'rices until it ore than de ands, it

ar!et, Su''lier loss their bargaining 'o"er, May 2011 &

buyer gaining the bargaining 'o"er and "ill de ands for the chea'er 'rice% ?o"e*er, base on 0esco and /al art ar!et leadershi' they ha*e better 'osition in ter ar!et share and *olu e that attracti*e to bargaining 'o"er by le*eraging on their big

any su''lier, both retailer are able to buy in bul! and gain huge bul! discounts, therefore they able to 'ass on the discounts and 'ricing benefits strategy to custo ers, thus further solidifying their re'utation as a bargain store%
4,- '/e dynami%s impa%t of )lobal *ood 1etails Mar2et

Base to Sarah C2011D in Bloo berg Business"ee!, 0esco -nternational 7rou' :,ecuti*e Officer 3hili' .lar!e co ented in the Bloo berg inter*ie" regards to their issed the ar!et analyst)s ar!et in 8K are slightly disa''ointing and ar!et re ain stagnant 'articularly in 8K, (nnual 1inancial 'erfor ance of full year earnings e,'ectation% ?e clai ed that the do estic "ill re ain GchallengingG, their grocery

des'ite to their 8%S% 1resh M :asy store chain declined and 8K/:uro'e do estics Sales and 3rofit falling res'ecti*ely% 0esco -nternational business seg ent gro"th by 8%8E, Crefer to a''endi, 2D 0herefore 0esco ne" store o'ening 'lan in co ing year "ill be focusing on the international e,'ansion such as .hina and other ne" international ar!et% /al art Stores, -nc, the "orld no% 1 food retailer in their 8S do estic ar!et is

facing difficulty situation as "ell% 0heir business has been stagnant for recent years in 8S, sho" in Ca''endi, &D, /al art Stores locations in =orth ( erican are al ost fully co*er e*ery"here but 'enetrated by others retailers, in fiscal 2010/2011 /al art 8S re*enues Just contributed insignificant gro" of 1%1E and 0%1E res'ecti*ely, des'ite 'utting lots of resources and energy into gro"ing 8S ar!et% refer to Ca''endi, 8D, the /al art Bra+il, 8 /al art year 2011 total re*enues gro"th ainly contributed fro 8ni*ersity of Sunderland9 Sunderland Business School

international seg ent by 12E, the highest sales increase contributed fro

.hina and Me,ico o'eration, ob*iously the e*idences sho" the international 37BM12 @ -ndi*idual Ae'ort May 2011 8

e,'ansion and di*ersifies beco e the

ost i 'ortant strategies to gro"th to' line

sales and then sustaining the 'rofitability of co 'any in global food retails Mar!et%

4,3 'es%o innovation strategies in global food retail mar2et,

8nder the leadershi' of 0esco)s .:O Sir 0erry Ieahy, 0esco continue e 'hasis and focus on their long ter -nternational, .o 'hiloso'hy% :,hibit 1%09 0esco Iong 0er Strategy CSource9 0esco 3lc, 2010 annual re'ortD 0he =on@food seg ent focusing on the :lectricals, :ntertain ent, 0oys and .loths, these has beco ing their international success es'ecially in :uro'ean Mar!et, this success odel then du'licating into (sia ar!et% Aetailing Ser*ices basically focusing on the 'latfor s for future gro"th, 'articular on 0esco Ban!, de*elo'ing o"n syste and de*elo'ing 'eo'le ca'abilities in order to achie*e as a full ser*ice retail ban!% 0esco -nternational focus in (sia and :uro'e hel' u' the losses in early 8S start@u', no" the <1resh and M :asy> in 8S being establishes and hel' creating ne" synergy to"ard the gro"th and 'rofitable of the international e,'ansion 'lan% 0esco did not neglected the .or'orate Social Aes'onsibility co fully co itted to the co it ent, they are target, to strategy, each ele ents of strategies sho" in belo" e,hibit 1%0 fra e"or!, re'resented by the =on@food seg ent, retailing Ser*ices, unity, .ore 8K and last but not lease of <:*ery little hel's>

unity as they set three challenging long@ter

achie*e a +ero@carbon business by 20$0, to reduce carbon i 'act of 'roduct in their su''ly chain by 30E in 2020 and to hel' custo er hal*e their o"n carbon foot'rint by 2020% 37BM12 @ -ndi*idual Ae'ort May 2011 9

0he .ore 8K re aining focusing on hel'ing their custo er s'end less by encouraging the <.lubcard> loyalty sche e 'rogra and their core grocery o'erations has been c increased the in*est ent and 8ni*ersity of Sunderland9 Sunderland Business School deli*ered strong and solid 'erfor ance% Iastly, in the <:*ery little hel's> 'hiloso'hy, 0esco Ieadershi' tea continue i 'ro*ing the de*elo' ent of .o 'any 'eo'les and ett and McMei!an C1994D shared that 0esco @ ai to achie*e the 1irst .lass talents by 'ro*iding the ongoing training and de*elo'ing to achie*e first class anage ent, first class ser*ices% ?a .o 'etiti*e Manage ent de*elo' ent 'rogra

Ser*ices and 1irst .lass Manage ent tea , they dra"n u' the <.ritical Success factor> that included the -nno*ation, .once'tual thin!ing, -nfluencing, de*elo' ent of 3eo'le, 0ea "or!, ;ri*e, .usto er focus, .o and ercial a"areness, Aecruit ent and ore 'eo'le@oriented% Selection, 0raining and ;e*elo' ent as a .o 'any culture to stretch their e 'loyees anagers ability to re ain co 'etiti*e "hile beco ing 8nder the <:*ery Iittle hel's> 'hiloso'hy, 0esco cascade do"n <Steering /heel> inno*ation strategy internally Crefer to a''endi, 9D for 0esco Strategy ;iagra s, 0esco o'erate balanced scorecard a''roach to Key 3erfor ance indicators CK3-sD 'erfor ance easure ents is ai anage and to onitor their business by the anage ent easure ent, the obJecti*e of those

to stri!e for efficiency and effecti*eness that can

best ser*e to 0esco custo er and gro"th in sales, sustain 'rofits and returns to the shareholders Crefer to a''endi, 10D% /ith the <7ro" Bigger> inno*ation strategy that 'utted in 'lace Crefer a''endi, 9D, in*esting in future gro"th is the 'ri ary and al"ays at the heart of 0escoHs strategy% 0esco began e,'anding internationally and beca e a to' $ global retailer in the global ar!et since year 2004% Aefer to the Ca''endi, 11D% 0esco has recorded the steady gro"th of 14$E in year 2010 hitting N22%$billion re*enue Crefer to a''endi, 12D% :,hibit 2%0, results sho" 0esco business s'read e*enly into global ar!et, thus "as greatly reduce the ris! of de'endence on one region es'ecially "hen soften in 8K econo ic% 0esco -nternational e,'ansion for at not Just erely in*est in ne" country, 0esco in*est ent strategy included 5oint 6enture C56D, 37BM12 @ -ndi*idual Ae'ort May 2011 10

7reenfield and 1ranchise 'artner% :,hibit 2%09 0esco 7rou' re*enue by region CSource9 0esco 3lc, 2010 annual re'ortD 0he other gro"th engine of 0esco is the .lubcard 'rogra strategy, since .lubcard 3rogra no" ha*e launch in 199$, 0esco no" ha*e 1$ illion acti*e .lubcard holders in 8K, in fact 0esco ore .lubcard holders o*erseas than in 8K% Aefer to Ca''endi, 13D% .lubcard sche e not Just only to re"ards and 'rice reduction for their custo er)s loyalty, but also 'ro*iding *aluable insight that "ill 8ni*ersity of Sunderland9 Sunderland Business School hel' 0esco to understand the consu er beha*iour and res'ond 4uic!ly to "hat custo er "ant and needs% 0esco then co e "ith other ser*ices, such as tesco%co , 0esco ;irect for =on@1ood, 0esco 0eleco s, 0esco Ban!, 0esco 1inest, 0esco Organic and ;unnhu by, and e*en ore define club such as 0esco Kids .lub, 0esco Baby and 0oddler .lub, 0esco ?ealthy li*ing .lub and /orld of /ine .lub to ser*e difference seg ent of custo er% 0esco also i 'le ented 3ri*ate Iabel (rchitecture Strategy in order to address difference 'roduct grou' that cater for custo er needs and relati*ely to the 'rice strategy, 0esco tends to be to ore locali+e their 'roducts and ar!et atch the local cultures, "ith this o*erall differentiation and inno*ation strategy, 10

0esco stand a better chance and co 'etiti*e edge in the global food retails 'lace% CAefer (''endi, 149 0esco 3ri*ate Iabel (rchitecture%D
5,- Mi2e !u2e 6eaders/ip and Management Strategy

Since year 2008 Mi!e ;u!e CMichael 0% ;u!eD selected as successor of Iee Scott, the 3resident

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and .hief :,ecuti*e Officer C.:OD 'osition in /al art% (lthough there "ill be culture that ins'ire fro the founder of /al art, Sa /alton% ?e encourages

any

changes at /al art o'eration, one thing that Mi!e ;u!e ne*er change, the /al art /al art associates to o'erate "ith honesty and integrity, and he e 'hasi+ing res'ect 'eo'le as indi*iduals and stri*e for e,cellence% Most i 'ortantly, ?e "ants to ensure /al art 'eo'le to ser*e their custo er better than e*er before% ?e certainly to aintain the co 'any strategy, by e,ecuting "ell and adhering to their co 'any *alues, he consistently co Sa /alton)s legacy% .olin C2001D cited that in order to ignite the transfor ation fro co 'any, first thing first is to get the right 'eo'le on the busF the good to great anage ent tea s unicate and re@e 'hasis /al art Mission, <sa*e 'eo'le itted to the culture and ission that are oney so they can li*e better>, he is co

"or!ing together "ith Mi!e ;u!e are e,tre ely talented and ca'able 'eo'le that dri*e the co 'any into greatest 'osition% -n Bear 2010, Mi!e ;u!e further enhance the .o 'any strategy of <)ro.t/, 6everage and 1eturns>, Mi!e ;u!e first 'riority is continuing to gro. around the "orld% ?e belie*ed in o'ening ne" stores, entering ne" ar!ets, any o''ortunities to gro" by a!ing ac4uisitions, integrating online

channels, and de*elo'ing ne" inno*ati*e for ats that allo" 'eo'le to e,'erience the /al art brands% 1ollo" by leveraging their scale and best 'ractices to create co 'etiti*e ad*antages% ?e also re ain co and finding additional "ays to benefit fro itted to le*eraging o'erating e,'enses the global e,'ertise, talented associates

that hel' to ensure strong returns to shareholder% (ccording to OHKeefe C2009D, the significant leadershi' beha*iours e,hibited by Mi!e ;u!e is listening to their custo er)s feedbac! and re*i*ed been dro''ed% ?e and a!e cou'les of i 'actful changes 8ni*ersity of Sunderland9 Sunderland Business School and "or! closely "ith the tea 37BM12 @ -ndi*idual Ae'ort to freshen u' their stores May 2011 a!e the any 'roducts that ha*e a!e fe" de%isive decision by le*eraging the custo er feedbac! 1 beco e cleaner and 12

nicer facilities% C:,hibit 3%0D ?e re@Branding the /al art logo that co e "ith loo! and the "hole /al art e braced into catchy ne" slogan9 GSa*e better%G #$/ibit +,- 7almart8s ne. logo sin%e 9--:

odern

oney% Ii*e

WAL*MART -> Walmart (nother significant decisi*e decision that Mi!e ;u!e did "as to shutdo"n the /al art 7er any, he de onstrates the leadershi' beha*iours by decision in order to sa*e /al art fro
5,3 &e$t-generation 7almart,

a!ing really tough call

the further loss in 7er any o'eration%

-n 1ayette*ille, (r!% 5une 4, 2010% Mi!e ;u!e "al!s into the (nnual shareholders eeting, ?e co e "ith 'assion and a bition to deli*ers on Sa "orld, sharing the ne" strategies of sa*e G=e,t@generation /al artG% ?e and his leadershi' tea Aes'onsibility co has to /alton)s *ision to the a!e sure the co 'any oney and ha*e a better life *ision, called

continued their leadershi' in the social issues as 'art of the .or'orate Social it ent to the "orld, /al ar! "ill recruit ne" talents included the balancing "o en "or!force and benefitsF they "ill continues to de*elo' ne" leaders that talented enough to i 'le ent his *ision% 0he 4
1% 2% 3%

aJor 6ision strategies he laid do"n are9 Beco e a truly global co 'anyF 8nderstand the business challenges that retailers "ill face and sol*e the F 3lay an e*en bigger leadershi' role on social issues that May 2011 atter to our custo ersF 13

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4%

Kee' our culture strong e*ery"here%

Kahney C2009D, cited in the dece'ti*e si 'licity theories use in (''le -nc% as one of the leading consu er electronic co 'any in the /orld, their .:O Ste*e 5obs ne*er interested in a!ing things co 'le,, he "ants their (''le 'roducts are build "ith si 'le ore to"ard the custo er @ centric design, the si 'licity a!e it a!ing (''le so success in their 'roducts sold in "orld"ide% Si ilar the origin *ersion, itHs ore li!e a enhance *ersion% ?e encourages and easy to use 'latfor , strategy has been co 'licated fro

to Mi!e ;u!e G=e,t@generation /al ar!G 6ision strategies, ?e did not

sharing the best 'ractices and le*erage /al artHs global su''ly chain to o*erco e those challenges that retailers is facing globally% 8ni*ersity of Sunderland9 Sunderland Business School Mi!e ;u!e ac!no"ledges the future global 'rice guarantee 'rogra ar!et challenges that i 'act by 12

technology on sho''ing habits, in 'articular of 'rice trans'arency issue% 0he (S;(L is a great e,a 'le of the trans'arency% 0heir focus on the co 'etiti*e 'roducti*ity loo' hel's ensure /al art dri*e e*ery day lo" cost, so they can deli*er e*eryday lo" 'rices across the business% 0o further i 'ro*e this long ter ad*antage, /al art 8%S% is also le*eraging ulti@channel inno*ations strategy li!e

Site@to@StoreL, <3ic! 8' 0oday> and 1ed@:,L Site to Store to allo" their custo ers to sho' "hen and ho" they "ant% ?e "ants to ensure /al art to o'erate at high 'roducti*ity le*el in order for /al art to "in as 'rice leader and deli*er on G:*ery ;ay Io" 3riceG business
;,- Con%lusion

odel e*ery"here%

0he 7lobali+ation trends ha*e been i 'act to the 1ood Aetails industry, the industry beca e ore dyna ic and co 'etiti*e, and the local ature food retails ar!et beco e stagnant and saturated% -n order to further gro"th the co 'any sales re*enues and aintain 'rofitability, /al art and 0esco has been aggressi*ely e,'and their international food retails ar!et by in*est into ne" 7reenfield o'eration, ac4uisition, ergers, as "ell as Strategic (lliances% -n addition, the inno*ation strategy of the /al ar! and 0esco 'articular focused on 23s strategies hel' the beco e the global 0o' 37BM12 @ -ndi*idual Ae'ort May 2011 14

3 food retails brand as ar!et leader, refer Ca''endi, 1$D% 0he .or'orate Social res'onsibility co it ent beco e 'art of the culture in /al ar! and 0esco, they 'roud this achie*e ent and gain credibility for any years% 0hey res'ect indi*iduals, 'ut custo ers first and stri*e for e,cellence in order to "in the future% Mi!e ;u!e as /al art ne" .:O, he has been de onstrates the ability of analy+e issues and a!e the decisi*e decision, ins'ires the tea "ith G=e,t@generation /al ar!G *ision strategies are the essential co 'etency of the leadershi' s!ill fro the .or'orate strategy 'oint of *ie"% ?e consistently co unicates and re@e 'hasis /al art Mission and Sa /alton)s legacy, <sa*e 'eo'le oney, so they can li*e better>, ?e "ant to !ee' this culture strong no atter "hat has been changes, this attributes are the great beha*iors of the cor'orate leader

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8ni*ersity of Sunderland9 Sunderland Business School %Appendi%es Appendi$ 3 'op 3- *ood 1etailers 7orld.ide in 9--3,

12

CSource9 McKinseyM.o 'any, 3reface to the 1ood retail Sector .ases, (nnual Ae'ort% 2003D Appendi$ 9 7orld Population and Current 6evel of Population )ro.t/ 1ate,

37BM12 @ -ndi*idual Ae'ort

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13

CSource9 8nited =ations 3o'ulation ;i*ision% 0he /orld at Si, BillionD

8ni*ersity of Sunderland9 Sunderland Business School

1&

Appendi$ + '/e 7/eel of *ortune- )# Capital Servi%es8 a%(uisition-integration pro%ess

1, 3re@ac4uisition O Begin cultural assess ent O -dentify business/cultural barriers to integration success O Select integration anager O (ssess strengths/"ea!nesses of business and function leaders O ;e*elo' co unication strategy 2% 1oundation Building

1or ally introduce integration anager Orient ne" e,ecuti*es to 7: .a'ital business rhyth s and nonnegotiables O 5ointly for ulate integration 'lan, including 100@day and co unication 'lans O 6isibly in*ol*e senior anage ent 3ro*ide sufficient resources and assign accountabilit y
O O

CSource9 ?ar*ard Business School 3ress9 ?ar*ard Business Ae*ie" on Mergers and (c4uisitions, ;ece ber 2000D

37BM12 @ -ndi*idual Ae'ort

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%Appendi$ 4 Porter8s *ive *or%es Model CSource9 (rons et al ( Kno"ledge Base Ae'resenting 3orterHs 1i*e 1orces Model, Se'9 1999D Appendi$ 5 '/e *a%tors influen%ing t/e li2eli/ood of t/e ne. #ntrants 1etail Mar2et, in )lobal *ood

1& 8ni*ersity of Sunderland9 Sunderland Business School CSource9 Mar!etIine -nternational Ii ited, 1ood Aetail 7lobal -ndustry 7uide, 2009D Appendi$ ; 'es%o Statement, International Our international business as delivered a stron! "erforman#e des"ite many of our mar$ets feelin! t e im"a#t of t e !lobal re#ession% at a !lan#e International *inan%ial

Sales u" &'(%)bn *,*< 12) +%'m s, ft Re!ional resu$s 3 ina 34e# Re"ubli# 5un!ary Malaysia - Re"ubli# o of Ireland Slova$ia Sout 6orea

&.)(m +%/0

@ PQh%

Tur$ey United State Sales ;in#ludin! <AT=

sA#tu al rates 0 (78*7

3onsta nt rates 0 !ro9t 1$30 : : :18%90 030 0 !ro 19 9t (8( ) % ;$%& =0 0 ;0!ro 3 =0 9t $8% 00 ;&%9 =0

Sales 37BM12 @ -ndi*idual Ae'ort ;in#ludin! <AT=

May 2011

RRR ;0-&=0 ;4%0=0 (0.2)% A#tual rates 0 !ro9t &2%&0 ;1&%9= 0

Sales ;in#ludin! <AT=

1&

CSource9 0esco 3lc 2010 (nnual Ae'ort and 1inancial state ent%D

37BM12 @ -ndi*idual Ae'ort

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Appendi$ = Ma>or 1etailers Store 6o%ations in &ort/ Ameri%an,

CSource9 .oriolisresearch9 A:0(-I S83:AM(AK:0 7IOB(I-S(0-O=% /?O S/-==-=7T October, 2001D Appendi$ : 7almart 9-33 *inan%ial result in details,

CSource9 /al art 2011 (nnual Ae'ort%DAppedi$ ? 'es%o Strategy !iagrams 0:S.O S0A(0:7B ;-(7A(MS 0esco e,'lains its gro"th strategy "ith t"o basic diagra s 0esco strategic diagra s Bringing 3rices ;o"n Steering/heel

CSource9 .oliolis Aesearch Itd, 0esco9 ( .ase Study -n Su'er ar!et :,cellence% 5uly 2004D Appendi$ 3- 'es%o Steering 7/eel approa%/ to Key Performan%e indi%ators @KPIsA 6ey "erforman#e indi#ators ;6>Is=*

We operate a balanced scorecard approach to managing the business thatis known internally within the Group as our Steering Wheel. This unites the Group s resources and in particular !ocuses the e!!orts o! our sta!! around our customers" people" operations" !inance and the community. #ts prime !ocus is as a management tool !or the $ompany so that there is appropriate balance in the tradeo!!s that need to be made between the main le%ers o! management &such as operations measures" !inancial measures or deli%ery o! customer metrics.

#t there!ore enables the business to be operated and monitored on a balanced basis with due regard to the needs o! all stakeholders. 'or the owners o! the business" it is simply based around the philosophy that i! we look a!ter customers and sta!! well and operate e!!iciently and e!!ecti%ely then shareholders interests will always be best ser%ed by the ine%itable outputs o! those & growth

in sales" pro!its and returns.

CSource9 0esco 3lc 2010 (nnual Ae'ortD8ni*ersity of Sunderland9 Sunderland Business School Appendi$ 33 'op *ive )lobal 1etailers

21

CSource9 .oliolis Aesearch Itd, 0esco9 ( .ase Study -n Su'er ar!et :,cellence% 5uly 2004D Appendi$ 39 'es%o Pl% )roup sales 1evenues from 9--; - 9-3?rou" sales &bn

CSource9 0esco 3lc 2010 (nnual Ae'ortDAppendi$ 3+ 'es%o Club%ard loyalty S%/eme progrom, 288/ 288. 288* 288( 28'8 CSource9 0esco 3lc 2010 (nnual Ae'ort

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DAppendi$ 34 'es%o Private 6abel Ar%/ite%ture, The Top () *ost +aluable Global ,etail -rands ().) Appendi$ 35 '/e 'op 9- most valuable )lobal 1etail Brands 9-3-,

en%es (non, 2004%

1efer

CSource9 .oliolis Aesearch Itd, 0esco9 ( .ase Study -n Su'er ar!et :,cellence% 5uly 2004D

CSource9 Kantar Aetail9 0he 0o' 20 Most 6aluable 7lobal Aetail Brands 2010D 37BM12 @ -ndi*idual Ae'ort May 2011 22

.or'orate /atch9 0esco ( .or'orate 3rofile% UOnlineV (*ailable at9 Whtt'9//archi*e%cor'orate"atch%org/'rofiles/tesco/tesco1%ht PU(ccessed 11th, May, 2011V
2%0

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3orterHs 1i*e 1orces Model, =etherlands9 :ras us 8ni*ersity Aotterda , UOnlineV (*ailable at9 Whtt'9//'ublishing%eur%nl/ir/re'ub/asset/&$3/eur@fe"@cs@99@02%'dfP U(ccessed 1$th, May, 2011V Bossidy, I% .haran, A% Burc!, .%, n%d% :,ecution9 0he ;isci'line of 7etting 0hings ;one% =e" Bor!9 .ro"n Business% UOnlineV (*ailable at9Whtt'9//"""%altfeldinc%co /'dfs/e,ecution%'dfP
3%

U(ccessed 13 th, May, 2011V .oriolisAesearch%, 2001% Aetail Su'er ar!et 7lobali+ation9 /ho S"inningT UOnlineV (*ailable at9Whtt'9//"""%coriolisresearch%co /'dfs/coriolis retail su'er ar!et globali+ation%'dfP
4%

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$% 2%

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?a ett, S% McMei!an, K%, 1994% 0esco@.o 'etiti*e Manage ent ;e*elo' ent9 M.B 8ni*ersity 3ress, '%4@2% UOnlineV <(*ailable through9> Whtt'9//"""%e eraldinsight%co /Journals%ht TissnX09$3@ 3230M*olu eX&MissueX2MarticleidX881822Msho"X'dfP U(ccessed 11th, May, 2011V
&%

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8%

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9%

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May, 2011V OHKeefe, B%, 2009% .== Money9 Meet the .:O of the biggest co 'any on earth9 1ull *ersion% UOnlineV (*ailable at9 Whtt'9// oney%cnn%co /2010/09/0&/ne"s/co 'anies/ i!e du!e "al art full%fortune/inde,%ht P U(ccessed 9th, May, 2011
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V8ni*ersity of Sunderland9 Sunderland Business School

11%

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Aesearch and Mar!ets%, 2009% 7lobal 0o' 10 1ood Aetailers Y -ndustry, 1inancial and S/O0 (nalysis UOnlineV (*ailable at9 Whtt'9//"""%researchand ar!ets%co /re'orts/1088194/globalZto'Z10ZfoodZretailersZindustryZfinanc ialP U(ccessed 13 th May 2011V Aonald =% et al%, 2000% ?ar*ard Business Ae*ie" on Mergers and (c4uisitions9 Ma!ing the ;eal Aeal @ ?o" 7: .a'ital -ntegrates (c4uisitions% Ue@boo!V Boston, M(9?ar*ard Business School 3ublishing .or'oration% UOnlineV (*ailable at9
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1&%

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20%

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