Tesco Strategy Report
A07-01-0011
Copyright © 2001 Thunderbird, The American Graduate School of International Management. All rights reserved.
This case was prepared by Professor Kannan Ramaswamy, with research assistance by Mr. Gennady Dikalov, MIM
2000, for the purpose of classroom discussion only, and not to indicate either effective or ineffective management.
Tesco, PLC: "From Mouse to House" in Online Grocery Retailing
We have got a two-year lead over our competitors on the Internet and we intend to exploit that.
We are the largest grocery internet retailer in the world.
Mr. Terry Leahy, CEO, Tesco, PLC. April 2000.
It was a bright sunny morning in May 2000 as Mr. Tim Mason, e-commerce Director for Tesco, was driving through the lush English countryside on his way to work at company headquarters in Cheshunt,
Hertfordshire. He was running through alternative scenarios of the competitive battle that was just emerging in online grocery retailing. In April, Mr. Leahy, the CEO, at a meeting of stock analysts had observed that Tesco.com (Tesco's online retailing venture) was two years ahead of its rivals in implementing its online strategy. He was convinced that Tesco.com would clearly be the winner. It would be
Mr. Mason's responsibility to deliver on that promise.
Tesco had grown from stride to stride to become the largest brick and mortar grocery chain in the
U.K. In 1995 it overtook the venerable Sainsbury's, an entrenched leader in the market since the late
1800s. Since then, there had been no looking back for Tesco. For the fiscal year 2000, Tesco reported sales of £18.7 billion and net income of £1 billion, an increase of 11% (Exhibit I). It controlled just over
15% (Sainsbury's 12.5%) of the fragmented grocery industry in the country; although, in densely populated areas in the south and southeast, Tesco and Sainsbury's together held between 45% and 57% of the market. Much of this meteoric growth resulted from a combination of astute real estate planning,
Copyright © 2001 Thunderbird, The American Graduate School of International Management. All rights reserved.
This case was prepared by Professor Kannan Ramaswamy, with research assistance by Mr. Gennady Dikalov, MIM
2000, for the purpose of classroom discussion only, and not to indicate either effective or ineffective management.
Tesco, PLC: "From Mouse to House" in Online Grocery Retailing
We have got a two-year lead over our competitors on the Internet and we intend to exploit that.
We are the largest grocery internet retailer in the world.
Mr. Terry Leahy, CEO, Tesco, PLC. April 2000.
It was a bright sunny morning in May 2000 as Mr. Tim Mason, e-commerce Director for Tesco, was driving through the lush English countryside on his way to work at company headquarters in Cheshunt,
Hertfordshire. He was running through alternative scenarios of the competitive battle that was just emerging in online grocery retailing. In April, Mr. Leahy, the CEO, at a meeting of stock analysts had observed that Tesco.com (Tesco's online retailing venture) was two years ahead of its rivals in implementing its online strategy. He was convinced that Tesco.com would clearly be the winner. It would be
Mr. Mason's responsibility to deliver on that promise.
Tesco had grown from stride to stride to become the largest brick and mortar grocery chain in the
U.K. In 1995 it overtook the venerable Sainsbury's, an entrenched leader in the market since the late
1800s. Since then, there had been no looking back for Tesco. For the fiscal year 2000, Tesco reported sales of £18.7 billion and net income of £1 billion, an increase of 11% (Exhibit I). It controlled just over
15% (Sainsbury's 12.5%) of the fragmented grocery industry in the country; although, in densely populated areas in the south and southeast, Tesco and Sainsbury's together held between 45% and 57% of the market. Much of this meteoric growth resulted from a combination of astute real estate planning,