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    In this report, we examine Tesco’s value chain to try and understand which activities have helped the company maintain market leadership in the UK food retailing since 1995.

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    Tesco Value Chain Case Study


    Key Learning Outcomes

    By the end of the case, students suhould be able to:
    • Apply the value chain to a real world company using the example of Tesco.
    • Understand how to use Tesco’s value chain framework to examine the sources of competitive advantage for Tesco.
    • Understand which value chain activities have helped Tesco maintain market leadership in the UK food retailing industry. While Tesco’s EDLP value proposition isn’t unique within the food retailing industry, the company’s execution of a streamlined supply chain and logistics is comparable to none. You will discover what these are and much more…

     

    1.0 INTRODUCTION


    The value chain refers to a set of activities within an organization, which together help it create or produce a product or service (Grant 2016; Johnson et al. 2017). First developed by Michael Porter, the purpose of the value chain is to help firms identify value adding activities they are undertaking, that either add (or don’t add) value to their product or service. Once disaggregated, such activities can help provide a more precise understanding of all firm activities and the capabilities corresponding to each activity so as to understand where competitive advantage is being derived (Grant 2016).

    According to Porter’s value chain, organizations can only gain a competitive advantage by adding value to their customers. This makes it essential for managers to analyse all the activities undertaken by their organizations and understand ones that add value and those that do not. According to Johnson et al (2017), organizations can use a value chain to understand their strategic position as well as their resources and capabilities. It can also help them evaluate the relative importance of internal activity costs as well identifying how costs can be reduced (Grant 2016). 
    In the following sections, the author will use the value chain analysis to assess and understand sources of value for Tesco.

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