Introduction
In the world of business today, the demand and supply of goods and services have become increasingly every years. The competition among sellers is very frightened and excited action. According to the current situation, most business opens their business to respond customers’ needs as much as they can. By the way, the popular demand of customers always are the consumers goods, hence, many major businesses tend themselves to open the hypermarket, which provides a large variety of products such as food and non-food products.
Moreover, the consumer’s market power is growing strong and stable because customers’ trends today tend to shift from basic purchases to value-oriented brands and retailers. By the way, their power creates the new perception among sellers that most customer need a low cost of product whereas keeps a high quality. Then, many hypermarkets always compete each other with the reasonable price and high quality. In sum, most of hypermarkets need to adapt their strategies and operations to be compatible with the customer’s trends, needs, and situations.
Moreover, some of famous hypermarkets expand their business to abroad to be their key strategies in order to generate higher sales and profits (Nielsonwire, 2009). As I mentioned above information, Tesco PLC is one of the best examples of hypermarket that has a reputation in selling low cost of products with high quality. The excellent strategies and operation processes they perform in both domestic and global represent the efficient multinational corporations that I would like to present in this paper.
Furthermore, it is the market leader in the UK with stores throughout the UK, Europe, Asia and the US. . It is the largest British retailer by both global sales and domestic market share. According to the survey, Tesco is currently the hird largest global retailer based on revenue, behind Wal-Mart and Carrefour, however, it is the second largest based on profit, ahead of Carrefour. Besides selling consumer’s product, food and drink, Tesco has diversified in many areas, such as clothing, consumer electronics, financial services, telecoms, home, health and car insurance, dental plans, retailing and renting DVDs, CDs, music downloads, Internet services and software. By the way, the principal activity of the group is food retailing, with over 2,300 stores worldwide, of which around 1,780 are in the UK (Just-food, 2009).
Some of the stores worldwide would be in Czech Republic (84), Hungary (101), Poland (280), Republic of Ireland (95), Slovakia (48), Turkey (30), China (47), Japan (109), Malaysia (19), South Korea (91), and Thailand (370). Furthermore, in December 2007, Tesco made its entry into the US market with the opening of Fresh & Easy neighborhood market stores. Then, by March 2008, the company had succeeded in opening 37 stores across South California, Nevada and Arizona, with a further 19 planned for Sacramento. Most importantly, all Tesco stores cover a range of formats, which the main businesses are supermarkets and convenience stores.
The company also operates online grocery retailer Tesco. com, as well as Tesco Personal Finance and Tesco Telecoms to satisfy customer’s needs. According to international expanding, Tesco currently operates in 13 countries and it will possibly expand into further countries. By the way, Tesco’s international expansion strategy is to joint venture with local partners, such as Samsung Group in South Korea (Samsung-Tesco Home plus), and Charoen Pokphand in Thailand (Tesco Lotus) by appointing a very high proportion of local personnel to management positions (Tescopoly, 2009)
Tesco entered Thailand in 1998 and operates through 380 stores as part of a joint venture with Charoen Pokphand and named the operation as Tesco Lotus. This partnership was dissolved in 2003 when Charoen Pokphand sold its shares to Tesco. By the way, Tesco has been expanding rapidly in Thailand. It had 420 stores by August 2007, rising from 219 at the end of the 2005/6 financial years.
Moreover, the stores will vary between different formats. A large number of both hypermarkets and Express format stores are more similar to the UK than Tesco’s other Asian operations are whereas Tesco’s smaller stores compete directly with Thailand’s traditional fresh markets, such as Top’s supermarket. As the varieties of products, Tesco Lotus sells a diverse range of products from value food products to electronics to personal finance services. Also, the company is to improve and develop the go green business to protect the environment.
Another fact is Tesco Lotus claims to serve 20 million customers every month and that 97% of its goods are sourced from Thailand (Tescopoly, 2009). Furthermore, the fact of number of Tesco Lotus employees on the end of June 2008 would have about 36,000 employees. According to this number, 32,000 employees are working at stores, 2,300 employees are working at distribution centre, and 1,700 employees are working at head office. Moreover, their main competitors are related with three retail categories including convenience stores, supermarkets and the rapidly disappearing family-run shophouse (Highbeam Research, 2009). As the above information mentioned, I would like to discuss the three significant areas of Tesco Lotus and also give the recommendation to them.
Positioning for greater global competitiveness
Due to Tesco Lotus of Thailand is the main hypermarket of Thai people today, the high quality of products and services are very essential things for them to gain a greater global competitiveness. The availability of products has become the most important factor that can satisfy customer needs when they want to purchase products. Hence, Tesco Lotus focuses on the distribution center to run all processes of delivering and stocking the products.
There are 3 DCs. The first DC located at Wangnoi, was opened in 2006. The second is located at Bangbuathong. And the latest DC is located at Samkok and opened in 2008. Moreover, there is a fresh food distribution center in Wangnoi that opened in 2001 to serve customer needs with high quality fresh foods. This distribution center consists of the temperature control room containing over 100,000 crates a day. In addition, all of fresh food is distributed to other branches by a temperature control truck in order to maintain quality and freshness all the way to the destination (Tesco Lotus, 2009).
Due to the high quality of process, Tesco Lotus Thailand is the one of the most sophisticated and efficiency distribution center in Southeast Asia region that distributes products to Tesco Group worldwide. In Additionally, it helps Thai customers to obtain benefit of this efficient logistic so the product price will be less. Most importantly, with the fast and high quality of process, most competitors have to fade away from the efficient service Tesco Lotus performs. Besides deliveries, Tesco Lotus distribution center also supports the vendors in packaging, price tag, and transportation to meet international standard.
This will helps Thai companies to fulfill the needs of world market. It also expands the capacity in exporting through the Tesco Lotus two-ways strategy. Another benefit of the distribution center is the intelligent management such a products check in-out planning that uses only 2-3 trucks to distribute to branches and pick up products from vendors back to the distribution center. Therefore it will cut the cost of transportation and fewer trucks on the road as a result of decreasing accidents. Hence, this can be the positioning for greater global competitiveness for Tesco Lotus Thailand (Tesco Lotus, 2009).
Besides distribution center, the special services that Tesco Lotus provides to customers are very effective way to gain a global competitive positioning. Tesco Lotus provides many services through retail services and store services. For example, Tesco Lotus provides online top-up, Tesco e top-up, and Tesco e-payment to customers when they need to pay their utilities or top-up the mobile credit. It is very convenient method for customers by asking the cashier to do special services beyond purchase products (Tesco Lotus, 2009).
In my opinion, I believe that there is no others hypermarket provide these kinds of services. Then, Tesco Lotus can stand the effective positioning for greater global competitiveness.
Globalization Strategies
To be the most famous hypermarket today, Tesco Lotus Thailand did many globalization strategies to run the business to be one of the successful company. First of all, Tesco Lotus has developed six alternatives to its giant flagship superstores; hypermarket, Tesco Lotus Value, Talad Lotus, Tesco Lotus Express, Plus Shopping Mall, and Community Mall.
Each place depends on customer’s preferences and style of shoppers (Tesco Lotus, 2009). For hypermarket, it is the biggest store of Tesco Lotus to serve every needs of customers with various of products up to 36,000 items, such as consumer products, fresh foods, hardware and electrical appliances. Also, it provides a parking lot for thousands of cars and hundreds of motorcycles. In some branches, it also provides space for an aerobic activity in the evening everyday. This strategy can attract customer a lot (Tesco Lotus, 2009).
Moreover, besides various products, Tesco Lotus hypermarket also has other services such as shopping carts and baskets, deposit bag, free drinking water, price check points, fitting rooms for men and women, cooking services for fish and seafood, installment purchase, home delivery (for electrical appliance and large size furniture) (Tesco Lotus, 2009). Tesco lotus also provide a special promotion to be their globalization strategy by using the slogan “sell for less” to compete with competitors and to be the leader of hypermarket.
By the way, these promotion will be launched in many medias, such as flyers at the customer service center, Tesco Lotus website, press ads in newspaper, and promotion labels on the shelves. These are very powerful tool to generate sales and profits from customers. For Tesco Lotus Value, it is not only a medium size store that is suitable for community in upcountry provinces but also has various products to serve customers. Moreover, Tesco Lotus Value’s store can contain products over 21,500 items, which are similar to hypermarket.
Also, it provides widely parking lot for cars and motorcycles. In addition, Tesco Lotus Value encourages local vendors to open shops inside market in order to support local business as well. By the way, the services and promotions are provided to customer like hypermarket (Tesco Lotus, 2009). For Talad Lotus, it’s a small Tesco Lotus that provides affordable products for daily needs. It represents the original Thai lifestyle that always live near to “Talad” which has every thing from food to daily groceries and locate next to community.
By the way, Talad Lotus has over 4,500 products to serve our customers. Most of products are food and non-food. However, Tesco Lotus still provides customers with the best services and also a special promotion to attract customer. It is a new way for customers who are regular buyers on consumer goods (Tesco Lotus, 2009).
For Tesco Lotus Express, it is a small store open 24 hours a day and emphasize on convenience services, fast and nearby residential areas. The stores are open in Bangkok and big province city. This helps customers can ind everything they want all day and all night. The store contains the product around 2,600 to serve customers. Moreover, At Tesco Lotus Express store, it has an ATM machine to serve customers to make them convenient in using services (Tesco Lotus, 2009). For Plus Shopping Mall, it is a one stop shopping, which customers can have more choices in purchasing. Plus Shopping Mall will provide many zones that respond customer’s needs and satisfactions, such as brand names, gourmets, educations, digital products, and auto zones. This offering can help families spend times together.
This value added services can be one of the globalization strategies to attract customers and increase profits (Tesco Lotus, 2009). Last, Community Mall is one of the location strategies that become a new mall concept to make customer’s satisfaction. In addition, the Community Mall emphasizes easy access at 2-5 minutes driving from home. Also, the mall gives a casual and relaxing feel. Hence, customers can come to do their shopping, relax with a cup of coffee, as well as do their personal business such as make utility payments or mail their letters (Tesco Lotus, 2009).
Besides these alternatives, Tesco Lotus has a go-green project to be its globalization strategies in order to lead the way in energy conservation and environmental management in the retail sector. It will push the solar energy to use in the system and company by launching the innovative design to reduce the heat in the market, the recycled water to reduce the impact on the environment, and the idea to reduce the chemical in painting or sprays used in the market (Tesco Lotus, 2009). I believe that if Tesco Lotus still runs the globalization strategies like these. Its success and power will come easily. However, Tesco Lotus should always concern about keeping the high quality of products and services and also the customer’s satisfaction.
Compliance to government policies
In during of doing a global business, Tesco Lotus needs to adapt their strategies to compatible with government policies and regulations. Moreover, in the highly competitive market and complex business operating environment, Tesco Lotus is committed to do everything right at the first time and every time in every aspect of its business in order to grow and sustain its market leadership.
As the regular regulation, all of the Tesco Lotus products need labels that must be approved by the Thai Food and Drug Administration and affixed to imported food products. Furthermore, Specific information is required to be placed on the label and must be printed in the Thai language. By the way, many multinational retailers in Thailand like Tesco Lotus will be charged for listing fees. Also, imports from non-ASEAN countries like UK are subject to customs, tariffs and a value added tax (VAT) of 7% (Seafood export profiles Thailand, n.).
However, besides the tariffs and labels regulation, governments are still concern about the employee’s policy. According to A UNI Global Union Country Report, it expressed that even though Tesco Lotus will have some basic standards of good employment conduct; the government still has some regulations for it to conduct with employees. Moreover, Thai regulations on health and safety and of Tesco’s own stated and focused policies on employment rights and the treatment of workers.
Some of government regulations are to pay a fair wage reflecting the local markets and conditions and offer a highly competitive package of pay and benefits to all our staff. The government and Tesco Lotus agree that the minimum wage should be adequate to provide a decent standard of living for a worker and family. Next is about working hours, the government and Tesco Lotus have policies to treat fairly with employees. For example, working hours won’t be excessive. They also should comply with industry guidelines and national standards where they exist. Also, employment must be freely chosen and overtime shall be voluntary.
Moreover, there will not employ illegal child labors. In addition, all staff is entitled to reasonable rest breaks, access to toilets, rest facilities and potable water at their place of work, and holiday leave in accordance with the legislation of the country where they work. Besides these regulations, the government and Tesco Lotus always concern about the security in the company, such as, a safe equipment, adequate training, safe vehicle movements, fire exits and fire-fighting equipment, and air quality and pest control (A UNI Global Union Country Report, 2009).
These regulations are very essential for Tesco Lotus because human resource is their major factor to run their business. Hence, employees are people who can judge the overall quality of both products and services. By the way, government policies and Tesco Lotus practices should be done regularly and constantly to create the powerful and successful company to access in the global. Recommendation and Conclusion According to the above information, Tesco Lotus performs their management and strategies in order to be the leader of hypermarket in Thailand and internationals.
Positioning for greater global competitiveness, globalization strategies, compliance to government policies are the major areas that prove the efficiency of Tesco Lotus. However, besides the advantages that Tesco Lotus gains from these areas, there are some recommendations I would propose it to do. Firstly, Tesco Lotus should invest more in advertising and public relation. Indeed, Tesco Lotus has already known for Thai people but it still has many main competitors who are becoming to be the leader of hypermarket. Hence, the advertising should be the key to attract customers more.
For instant, it may find many medias to launch the advertising, such as magazines, leaflets, billboards, television, and spots radio. This can make people absorb Tesco Lotus brand everywhere. Next, I would recommend Tesco Lotus to open late in every store in order to respond night-style customers. This helps customers have more choices in their consumptions. However, Tesco Lotus should manage employees effectively by paying them the overtime’s fairness and also giving them the high facility like relaxing room and dining room.
Moreover, the relationship with customers is my major concern to Tesco Lotus, then I would recommend it to have special activities to customers, such as family car rally, New Year party, and funny trip. These are not only keeping the relationship among customers, but there are also keeping the relationship among family members to spend time together. In addition, customer satisfaction is the keys of running Tesco Lotus so I would recommend Tesco Lotus bring some services into their big stores, such as, salons, spas, travel agency, jewelry shop, and beauty clinic to attract more customers.
It is kind of value added services of Tesco lotus. In conclusion, the significant areas and the recommendations I proposed make me believe that Tesco Lotus Thailand now is becoming the most reputation and efficiency hypermarket, which I believe that Tesco Lotus can bring some powerful strategies to other countries in order to make a success and be a leader among competitors.
References
- Nielsonwire. (2009). “Supermarket Guru” Phil Lempert’s 2009 Retail Outlook. Retrieved December 12, 2009, from http://blog. nielsen. om/nielsenwire/consumer/supermarket-guru-phil-lemperts-2009-retail-outlook/
- Just-food. (2009). Background. Retrieved December 12, 2009, from http://www. just-food. com/factsheet. aspx? id=40
- Tescopoly. (2009). Tesco Worldwide. Retrieved December 12, 2009, from http://www. tescopoly. org/index. php? option=com_content=view=595=193
- Tesco Plc. (2009). Tesco Plc-About us. Retrieved December 12, 2009, from http://www. tescoplc. com/plc/about_us/tesco_story/
- Tesco Lotus. (2009). Tesco lotus-About us. Retrieved December 13, 2009, from http://tescolotus. om/left. php? lang=en=corporate_en=profile
- Highbeam research. (2009). Tesco Lotus eyes lucrative wet market niche. Retrieved December 13, 2009, from http://www. highbeam. com/doc/1G1-129514327. html
