Tesco Plc. Vision

Company Overview

l Founded in the 1920’s l Primary business is food retailing l 380,000 employees worldwide l Largest employer in the UK with over 250,000 people

l 2500 locations worldwide l Operates in 13 countries and is continually expanding

l Earned 43.1 Billion GBP in group sales for year ending 2006

Tesco’s Activities in the UK

§ Food retailing­ 729 stores § Non­food retailing­ including clothing, electrical, music &books

§ Online retailing § Financial services­ loans, credit cards, insurance

§ Petrol retailing­ 339 petrol stations on Tesco sites, plus 90 Tesco Express stores on site

Selected Leading UK Supermarkets and Superstores by Market Share (%), 2001

Tesco PLC 28 J Sainsbury PLC 21 ASDA Group Ltd 12 Safeway PLC 10 The Big Food Group PLC 6 Somerfield PLC 6 Wm Morrison Supermarkets PLC 5 Marks and Spencer PLC 4 Waitrose Ltd 3 Other 6

Total †100

Tesco: More Than Just a UK Food Retailer § Tesco is now a pan­European, and pan­Asian food retailer.

§ Tesco is no longer competing against just Sainsbury but retailers Wal­Mart, Carrefour, Ahold & Auchan in international markets

§ Tesco has adopted a distinct set of strategies for international expansion

“We must be the best, must set high standards for ourselves. This is difficult when you become number one in the UK.

Tesco’s people are better at the bottom looking up than being on the top. Therefore focusing on world competition sets a new standard and puts us at the bottom again, where we are at our strongest.”

­­Ted Leahy

Competitive Focus

Tesco Plc. Steering Wheel

Tesco Plc. Steering Wheel § Accurate objectives and measures are very important for SW to succeed

§ Employees will treat customers well if they are treated well

§ SW could be correlated to Tesco’s success rather than being its cause

§ Leahy used the SW concept to build employee loyalty and drive customer satisfaction

Tesco Plc. Is Food Retailing Global?

§ Logistics skills offer return to scale § BUT, a lot of food items are local, perishable and heavy § Non­food sales become an important component esp. in

formats like hypermarkets § Experienced companies combine logistics knowledge with local customization (esp. Ahold & Tesco)

§ Tesco encouraged local entrepreneurs to manage operations and focus on customers

§ Ahold bought regional supermarkets and left the “front of the store” as it is, focusing on improving logistics and procurement

Tesco’s Growth Strategy

Tesco continues to pursue a successful growth strategy based on 4 key principles.

1. Maintaining a strong core UK business. 2. Becoming as strong in non­food sales as in food 3. Growing internationally 4 Moving into retailing services such as online

shopping

Source: McKinsey & Co.

Alternate Paths to Global Expansion in Retail

Tesco goes Global § “ We play our international cards as best as possible by focusing on emerging growth markets.We must find the right way to enter.”

§ The Tesco formula of putting customers first and not taking them for granted is retailing at its best, and should work whether it is applied in Budapest or Belfast.

Tesco Goes Global § “The strategy is vintage Tesco; by showing a degree of flexibility, the company can carve out a competitive edge in terms of size, location, and the range of goods on offer.”

§ “The challenge is for Tesco to carry on its original Tesco formula, which has proved to be a winner in the UK and to balance it with enough regional touches to appeal to local communities.

GRDI Rankings ­ 2003

Retail Global Expansion

Note: Applies mainly to food retailing

END