MIT Strategic Analysis of Target Corporation

Assignment One

1. For an Industry of your choice, select and apply appropriate tools and techniques of strategic analysis to examine current trends and issues in the business environment.
2. Based on your analysis, construct optimistic and pessimistic scenarios for the industry in ten years from now. Which scenarios do you consider likely to occur in practice?

INTRODUCTION

Every business is subject to factors that affect its function as a whole. These factors are the ones attributed for the success or even the failure of a business (Oliver 1997). In lieu, there are certain ways or techniques that can be considered in order to emerge and continue to be competitive within the marketplace in terms of marketing. In a profit making business, the business organization obviously has to try and achieve this level of customer satisfaction as a way of staying ahead of the competition and making a profit (Moschis 1994). Considering Target Corp. as one of the leading retail industries in the U.S, it is imperative to identify its weapon in maintaining its competitive edge among other operating business in the same spectrum (see Appendix).

TARGET CORP. PORTER’S 5 FORCES ANALYSIS

Analyzing the external environment of Target Corp. is also a significant part of a business analysis. For this purpose, Porter’s five forces model will be used. Michael Porter and his five forces model concentrates on the threat of entry, power of the buyers, power of the suppliers, threat of substitutes and competitive rivalry (Porter 1980). Below is the application of this business analysis tool to Target Corporation.

Rivalry/Competition

Rivalry and competition is considered as the strongest among all other forces in the model. The strength of rivalry or competition is determined if rivals are aggressively employing various means of overcoming competition as well as means of acquiring bigger sales and stronger market position. In the case of Target Corp., competition is intense. A number of factors that support this judgment such as the presence of several businesses that operates in the retailing industry and targeting similar audience. The main rivals of Target Corp. or even the strongest include Wal-Mart Stores, Inc., The Home Depot, Kroger, Kmart Corp., and Costco Wholesale Corp. All of these competitors produce similar products as well as offer same services to consumers.

To combat competition, Target Corp. ventured in online-based actions using their own website, internet advertising, partnership, and even merger and acquisition. From www.target.com as corporate domain concentrated in e-commerce, the corporation maintains a team called Target.direct who owns and oversees the e-commerce (online marketing) initiatives. Using this as their official corporate website, the corporation’s current position to the online marketplace is comparatively competitive. Its performance specifically to the online marketing is high. Today, research studies ascertained that online shopping was perceived to be more time saving than other traditional approaches of shopping by customers (Saadat and Greer 2003; Dennis and Harris 2002; Smith and Chaffey 2001; Donthu and Garcia 1999). Roberts, Xu and Mettos (2003) extenuated that Internet shopping helps to support the needs of busy working people as it is convenient for them to shop online. As a result of the stiff competition among the retailers in the U.S., Target Corp. implemented several expansions of its store outlets (in Alabama, Arizona, Texas, Ohio, California, etc.) (Target 2006c) and distribution centers (Rialto, California) (Target 2006d) to extend the corporation’s marketing.

Partnership, merging and acquisition are among the strategic actions that the management is taking into practice to fight competition. This is a way to expand their market and distributional coverage. Among the partnership and cooperation engagements that they had are American Online on strategic alliance and Amazon.com in customer service. In June 2000, AOL and Target Corp. rollout marketing campaign and established the multi-year strategic alliance and joint marketing and promotion initiatives. It features a “special edition CD-ROM of the AOL service with co-branded features and packaging” being offered in more than 900 Target Corp. outlets nationwide. In the same manner, AOL members who avail the service in any Target Corp. outlet is entitled to a 10% discount year-round on products bought via target.com (Mark 2000). Further, target.com was made available in the Shop@AOL online shopping destinations and other areas across AOL, AOL.COM, Compuserve, Netscape Netcenter, and AOL Digital City (Mark 2000). While in 2002, Target Corp. created a partnership with Amazon.com in providing order fulfillment and guest services. As of now, Target’s e-commerce site uses Amazon.com’s e-commerce system (‘The Write News’ 2002). The two engaged into business-to-business (B2B) marketing strategy. According to the news releases accessible in their corporate website, the partnership that Target Corp. and Amazon.com had on e-commerce was extended until 2010 (Target 2006e). With the collection of products available in Amazon.com, online marketers can just use the one-click-process to see their preferred items.

Today, Target Corp. is highly competitive and striving to go along with its competitors regardless of external conditions like the world economy. The management continuously create innovative marketing solutions that may be perfect in its online shopping operation. These innovations are always directed to satisfactory, convenient, and customer-oriented service. However, the greatest threat among worldwide retailers today is the action of Wal-Mart to go on organic products (‘Dow Jones Newswires’ 2006). With this introduction, Target and all other retail distributors must take antidotal engagement. Thus, IT solutions are needed so as to alleviate the emerging and following aftermaths.

Entrants

The entrant factor of the model is dependent on the barrier of entry. A barrier to entry pertains to a factor that can lower the market share potential of entrants upon entering a certain industry. Thus, if the barriers of entry are high, the threat on new business entrants is low. Government regulations, trade restrictions and access to distribution channels are some examples of barriers to entry. In the retailing industry, Target Corp. as well as other retailing outlets are protected by a number of barriers to entry, which makes it difficult for new business entrants to rise and compete. One of these important barriers present in Target Corp. is the large capital necessary to operate a retail company with various branches and considerable number of employees. In order to acquire the right workforce, supplies and distribution channels, the starting company must have a high initial capital. This barrier to entry then prevents other firms to compete effectively with other global companies such as Target Corp.

Another barrier is the difficulty of accessing distribution channels abroad. In order to carry out this important aspect of the retailing business, the corporation must have an effective globalization strategy and applies the right international practices. These important strategies on the other hand, take years to develop. Moreover, in order to acquire an international connection with foreign companies, certain requirements like business stability, market and revenue must be met. Thus, not all retailers are able to distribute their products abroad and acquire large international markets.

Buyers

This factor of the five forces model refers to the power of the buyers over the company or manufacturer. The threat derived from the buyers is gained when buyer power is high. In the case of the retailing industry, the buyer power is high. There are a number of factors that support this claim. For instance, buyer power is high as many substitutes are made available to the market. With this source of buyer power, buyers tend to have a greater control over the manufacturers. Target Corp. is considered as the retail store that caters to the younger and more educated and well-off clientele as to compare with its rival. In a survey conducted, Target Corp. shoppers fall on a 46 years old age median, mostly female, have children at home, and attended or completed college (Target 2006a). Thus, the target market is perceived to be sophisticated and posses a strong power.

Suppliers

The power of the supplier is also an important aspect of the five forces model. Similar to buyer power, if the supplier concentration is high, the supplier power cannot be considered as a threat. In Target’s case, prime suppliers are used for its production and increase of product line. Through these suppliers, Target Corp. is able to offer products that are of high standards. Although there are a number of suppliers, a corporation like Target must have an established of high quality chain of suppliers so as not to affect its production. Considering that there are other similar businesses, suppliers will not be greatly affected if they drop a customer. Moreover, the supplies offered by the supplier are diverse; this means, suppliers are able to give supplies to an even greater number of companies or manufacturers. In response to restocking problems attributed to rapid growth, Target in late 1999 realigned its logistics capabilities and began working more closely with vendors to improve inventory flow (Pachuta 1999, B7). However, it should also be considered that Target Corp. can find other suppliers that can provide its supply needs. Thus, the power of the suppliers in the industry is then counterbalanced by the availability of substitutes. With this, the degree of supplier power for Target Corp. is relatively fair.

Substitutes

Substitute pertains to the availability of alternative products in the markets. Naturally, if the degree of substitutes is high, the threat of this factor is high as well. For retail companies, it was mentioned that there a considerable number of competitors operating within this industry. This implies that consumers are exposed to a significant amount of product choices and options. The high rate of substitutes for products is then considered a threat for Target Corp. In addition, there are many major retailers and other global companies operating within the industry, making brand preference and loyalty a matter of concern. However, Target Corp. has certain features that could address the threat on substitutes, namely pricing strategy (the discount department store), more upscale and trend-forward merchandise.

TARGET CORP. SWOT ANALYSIS

In order to determine the different resources and capabilities of Target Corp., a SWOT analysis is appropriate. This specifically analyzes the strengths, weaknesses, opportunities and threats of a corporation.

Strengths

Target Corp. has been known as one of the largest and most competitive retail company in the U.S. It has been depicted as "the discount store with attitude – where department store customers feel very comfortable shopping" (Moore 2000). One of its strength is its ability to anticipate the demands of the customers and its ability to provide upscale, trend-forward, high-quality and innovative products which in return make their customers become loyal of availing all their services and products. It has been able to implement a strategy that suits the needs to provide quality services and continually make the business become a tough competitor among its rival. Furthermore, Target Corp. possesses the sophisticated and able technology that can cater to the fast changing global marketing management trends. It has core competence in its use of information technology that can support its management and marketing operations. E-marketing is a powerful tool used by its management. Its IT supports competent procurement of goods in e-marketing or online shopping aspect. It holds a competitive practice in maintaining its human resources. In addition, of the Target’s strength is its strong environmental commitment. It imposed an environmental management system which includes community consultation, proactive planning, compliance, sustainable development and auditing for continuous development. Target’s strength is also in line with the willingness of the management to adhere to the regulations and policies imposed by the government. Moreover, being open-minded to the suggestions of other helpful groups that know what will be the best for the whole company within the operating area can also be attributed as one of the strengths. The continued focus on controlling costs and increasing efficiency can also be noted as one of Target’s strengths to maintain is annual profit growth. Lastly, its programs and activities that concerns socio-economic and humanitarian development serves as a reinforcing agent that will attract people – regular clientele and new as well – to continue patronizing and emancipating their decision to try their services/products.

Weaknesses

One of the weaknesses of the company is the inability of the management to anticipate price increases which affects their operations. In addition, the company is also lacking the capacity to carefully manage their business because of the large entities and separated units of the business. The company is faced with different unsolved issues because of lack of strategic decision making in several areas of HR like low hourly wage, opposition to labor unions, and its contribution to urban sprawl (Bhatnagar 2005). Due to the extensive coverage of products and services offered, the company may not allocate specific attention in the flexibility of some of its persistent rivals in the market. Considering its IT advantage, Target Corp. may not excel in some areas because of its vast coverage of control.

Opportunities

With the management system of the company and the strengths that it has, Target Corp. has bigger opportunities to still dominate and catch up with the competition in the American retail industry in terms of providing more quality and less price products and services to its clients or even have an opportunity to be the number one retail company in the whole region after its eventual application of its proposed plans in the future. Another opportunity that can be attached to the company is it would gain more customers if the company would be able to determine the latest trends for products to meet the demands of their target market. With the continuous innovation of Target Corp. and the support that it shows to different managerial and environmental, and more importantly societal and humanitarian issues and concerns, the company can gain loyalty from their customers to make them more competitive in the marketplace. The continuous initiatives of the company in diversification of its revenue resources also open new opportunities to make the business become stronger to outgrow all its rival companies. Such opportunities will include e-business development by strategic alliances among global retailers as well as suppliers, leveraging the company’s investment in the World Class Customer Satisfaction Systems, and other business opportunities in both non-core and core areas.

Threats

Operating in the most competitive marketplace especially in the retail industry, Target Corp. is faced with the inevitable threat of stiff competition. For an enterprise to succeed in global competition there is a continuous plan to develop new products with higher quality than its competitors. Kay (1995) analyzes that new product and new business development must be highly effective and efficient, however that alone will not ensure its competitiveness. The expansion of its operations to other areas means adjusting to the trade policies and political problems of the locality. The dynamic needs and demands of customers served to be a challenge to the management. Furthermore, consumer behavior and satisfaction with regards to the product/service procurement is also a risk. If the company will continue to be a vertically integrated corporation, the company may fail in terms of management ability. The division of the company may tend to have internal complexity. In terms of production and manufacturing, Target Corp. may encounter cost inefficiency in its procedures. Large retailers like Target Corp. is faced with the considerable pressure of keeping their prices low due to competition and the demands of price-conscious consumers (Gosman and Kelly 2002). Additionally, fast paced technological advancement may be a threat to Target Corp. as a whole. In terms of the competitors, the company should be able to provide unique and more technologically advanced services to be able to survive in the stiff competition in the U.S. retail industry.

OPTIMISTIC SCENARIOS

At present, Target Corp. continuously develops its traditional core values present in the management. The company’s mission to consistent delivers their “Expect More, Pay Less” promise to the American consumers and the creation a workplace environment that encourages and enhances the individuality of the staff and employees. In ten years span of operation, the company will become one of the most outstanding retail stores in the U.S. if it continuously proliferate its strategic marketing scheme. Target stores will significantly available to every urban area all throughout the region and even the worldwide retailing industry. With its excellent social and environmental strategy, the company will be a role model of environment friendliness and social responsibility.

PESSIMISTIC SCENARIOS

On the other hand, due to stiff global competition and numerous competitors, Target Corp. is faced with the challenge of staying alive in the market. If the management will not acknowledge human resources issues such as different unsolved issues because of lack of strategic decision making in several areas of HR like low hourly wage, opposition to labor unions, and its contribution to urban sprawl (Bhatnagar 2005), the operations will be affected. The company is also currently lacking the capacity to carefully manage their business because of the large entities and separated units of the business. Thus, the possibility of mismanagement is very high. There is a need of proper segmentation and strategic implementation of marketing and management principles.

SYNTHESIS

With the two scenarios, it could be deemed that either of them is likely to happen. The possibilities are equal in terms of level of probability. This is because the former is the opposite of the latter. The failure of one aspect corresponds to every area affected. However, it is imperative to say that the capability of Target Corp. management in implementing the most appropriate solutions to the managerial and marketing problems holds the future of the business and its underlying operations.

CONCLUSION

In order for the company to maximize its strengths and minimize or totally eliminate its weaknesses – both in the macro and micro set up, the company must be able to use or impose a strategic marketing management system that will help them enhance their operations. In addition, the company must not only focus on its strengths but must try to also pay attention to their weaknesses and find solution to solve such issues and maintain a competitive business operation and performances. All in all, with the given managerial implementation and strategic marketing management, Target’s marketing program will eventually take its highest peak of the corporate success ladder.

APPENDIX

Corporate Background: Target Corporation

Founded on the year 1962 in Minneapolis, MN, Target Corporation is the sixth largest retailer in the United States (Schulz 2005), ranked 27^th on the 2005 Fortune 500, third largest seller of music in the US (NPD 2005), and holds the identity as the retailer who sells more gift cards than any other store in the whole country. As of April 2006, Target Corp. operates 1,418 stores (including 159 SuperTarget stores in 47 states (Yahoo! Finance 2006; Target 2006a). Its wide variety of products ranges from retail goods and groceries, clothing and garments, office and school supplies, automobile and pet supplies, foods and beverages, consumer electronics, house wares and other consumer product line such as furniture and appliances. Under the management of CEO and Chairman Robert Ulrich and other 338, 000 employees, Target Corp. revenue in 2005 is $52.620 billion (Target 2006b).

Based on the dated background of Target Corp., the company started as a discount-store and evolved as a successful retail business through the management’s initiation of industrial innovations. From the store name Goodfellows, a series of company names transpired before the company was finally called Target. From being the Dayton Dry Goods Company in 1903 to Dayton Company in 1910, the company was the first fully enclosed two-level shopping unit and opened the first official “target” discount store in Minnesota in 1962. Five years later, the business offered its stocks to the public, merged with J. L. Hudson Company and started its acquisition strategies to expand the enterprise as Dayton Hudson Corporation. The acquired companies included Mervyn’s, Gemco, and Marshall Field’s. By 2000, the corporation changed its name to Target and operated under Marshall Field’s, Hudson’s and Dayton’s brand names as single store units (Strauss et al. 2000, 5B). In 2004, upon the recommendations of the results of the selling study conducted by Goldman Sachs Group, Target Corporation sold Marshal Field’s and Mervyn’s stores. Other merger and acquisition strategies were considered by the company’s management in the two years that followed. At present, the main headquarter of the corporation is located in Minneapolis near the original Goodfellows store operating its main retail subsidiary, Target Stores, under the banner ‘Target’ along with other subsidiaries of the company namely Target Financial Services, Target Sourcing Services/Associated Merchandising Corporation, Target Commercial Interiors, Target Brands and target.direct (Target 2006a).

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Assignment Two

1. Use appropriate tools of analysis to determine the strategic capability of firm of your choice.
2. Based on your analysis, identify and prioritise key internal strengths and weaknesses.

INTRODUCTION

Success in any company that operates for marketing and profit acquisition lies on the ability of the management in positioning and establishing the products/services being offered. Furthermore, the ability of the company and its management to compete and maintain a competitive edge among its competitor is another basis to say that it is successful. The constant development and innovation on the product line and the growing number of clientele also define the corporate standing of a company.

This paper analyzes the strategic capability of TESCO Malaysia (see Appendix). In analyzing how Tesco, Malaysia is competitive, the study utilized SWOT and value chain analyses for the industry attractiveness as well as the key internal strengths and weaknesses. Practical and strategic recommendations are elicited in relation to some pitfalls observed in the case study.

SWOT ANALYSIS

STRENGTHS	WEAKNESSES
1. Wide knowledge of retail industry 2. Competent top management and rank & file for operation and maintenance 3. Existing customer base 4. Financial investment backing. 5. Strong IT returns through internet shopping	1. Low supervision on international market 2. High turnover of employee 3. Require local partner
OPPORTUNITIES	THREATS
1. Expansion of target market 2. Healthy market environment 3. Increasing detraction of small retail businesses in Malaysia	1. Economic restructuring 2. Intensified competition 3. Government regulation

VALUE CHAIN MANAGEMENT ANALYSIS

Firms respond to conditions in their marketplaces by modifying their competencies such as internal capabilities and linkages with suppliers and associates and the ways in which they position themselves in relation to their competitors specifically their strategic direction (Beyers and Lindahl 1999). The value chain also is useful in retailing decision-making. Understanding the linkages between activities can lead to more optimal make–or–buy decisions that can result in either a cost advantage or a differentiation advantage. The goal of these activities is to create value that exceeds the cost of providing the product or service, thus generating a profit (Del Vecchio 2000). In the case of Tesco, the entire operation of the business should be examined and evaluated in order to determine the service delivery processes that strengthen as well as weaken the business. This will result to managerial options to eliminate the liabilities that detract the business or the need to developed and intensify some aspects of the operations.

Meanwhile, Hardy and Clegg (1996) believe that modern organizations passed by the guild structures and as organizations grew larger, skills become increasingly fragmented and specialized and positions become more functionally differentiated. Stakeholders are defined as the individuals or organizations which can either gain or lose from the success or failure of a system (Boutelle 2004). Cohen and Moore (2000) said balance between enhanced company processes and renewed objectives should be critically appraised in order to ensure the success of the company. As such, stakeholder analysis reminds management that it is important to evaluate the interests of the individuals or organizations who can influence or can be affected by the activities of the company.

For Tesco, the management should be able to take means of identifying of the stakeholders, the priorities of the stakeholders; understanding of the stakeholders’ perspectives and incorporating the stakeholders’ perspectives to the future plans of the company. Moreover, the company should cultivate growing consumer markets to promote growth and development of the business organization. This will address the expansion possibilities of the organization to serve not only the locale consumers but also provide services to a larger customer base. As such international relations and the overall business practices and trends all over the world should be investigated so as to make sound decisions that will realize the goals of the company. Furthermore, the company should continue cultivating community relations and environmental efforts to increase market visibility and improve brand strength such as community programs that will advertise the humanitarian causes of the company, charity and scholarship programs, and advertising messages that translates the environmental concerns.

Service delivery is an interactive and dynamic process that from the consumer's point of view is much more than a passive exchange of money for a particular service. Characteristics of services (e.g., intangibility, heterogeneity, simultaneity, and perishability) often require customers to be actively involved in helping to create the service value – either by serving themselves or by cooperating and often working collaboratively with service personnel. In high-contact systems customers can influence the time of demand, the exact nature of the service, and the quality of service (Chase 1978 cited in Culp 2001; Lovelock and Young 1979 cited in Thompson and Strickland 2003). If consumers somehow become better customers – that is, more knowledgeable, participative, or productive – the quality of the service experience will likely be enhanced for the customer and the organization (Bowers, Martin and Luker 1990 cited in Hackl and Westlund 2000; Jacobs, et al. 1998). In this regard, the company needs to strengthen relationship with suppliers and increase market share. This effort will result to parallel business interests that will contribute to the company as well as the suppliers’ business objectives. Contract agreements and other business transactions should present advantages and benefits for both parties. Efficient delivery of products and services through premeditated and tactical supply chain management initiatives should be prioritized.

As the nature of financial management, finance managers face a wide array of challenges, opportunities and options for him or her to enhance the investing and financing activities of the organization as well as the inherent risks and circumstances of the decisions that will be made. The challenge now for companies is to explore the options and take advantage of the opportunities while taking caution in managing the risks (Macmenamin 1999). Tesco needs to keep operational expenses within budget to be able to devote the necessary financial resources to both exploration and marketing activities of the company. Financial management decisions that will supply for the internal and external business operations of the corporation should be closely monitored to be able to control the flow of cash. Investing on profit-generating projects as well as training-specific programs for the human resources of the company will ensure extended success.

Tesco Malaysia should enhance marketing campaigns and take advantage of company control over the Asian retail industry competition. It should initiate efforts to come up with sound advertising and promotional strategies that will bring the people closer. Lastly, there is a need to improve technological innovations to increase efficiency as well as quality of the service. This includes investments on machineries and equipment that will necessitate the increased and efficient operation of the business organization’s management system. Financial assistance on human resources particularly to knowledgeable and skilled individuals should be accorded in order to improve the overall business operation as well as the engineering, monitoring, and control aspects of the business.

KEY INTERNAL STRENGTHS AND WEAKNESSES

Hessan & Whitely (1996) emphasized the idea to take advantage of the competitive situation not just by being better in how that product gets sold, serviced, and marketed at the customer interface. It requires that companies create breakthroughs in how they interact with customers, and design a way of interacting that makes an indelible impression on customers, one that so utterly distinguishes them from others that it becomes a brand in itself (p. 14). Tesco’s marketing communication made its first step through founder Jack Cohen’s slogan “pile 'em high, sell 'em cheap”. This was not the case after 1977 when the company decided to appeal to a different market armed with higher prices and higher quality products (Tesco 2005).

More than just a Grocery. Tesco is undoubtedly a whole mall in itself. Everything is literally found in one roof. No longer limited to grocery items, it offers services that would allow a customer to avail of everything in one stop. Besides the extra selling of books, CDs, digital music, videos, flowers, games, gardening, gas, holidays and flights, they also provide financial services (e.g. credit cards, loans, mortgages, savings) insurance services (e.g. car, home, life, travel) telecoms services (e.g. Internet, home and mobile phone) and healthy living services (through its Tesco eDiets and healthy living club). Tesco has developed various kinds of Tesco stores ranging from Tesco Extra, Metro Tesco and Tesco Express in its continuing quest to properly address the needs of their various customers when and where they want it (Tesco 2005). Since Tesco is considered a one stop shop retail outlet, it can be assumed that it caters to every market segment in the country.

Clubcard: Every Little Helps. Discount and club cards have been a strategy to developed similar loyalty schemes in order to identify and stimulate brand awareness. Attached to Tesco’s name is its Clubcard feature. Presenting a Clubcard during purchases would accumulate points that in turn can be used as vouchers (once the points collected are one hundred fifty (150) in-store or online, Clubcard deals or AirMiles. Tesco markets this feature as a “shop now and get your money back” mechanism. One Clubcard point is spent in One pound. In fact Tesco’s success should be attributed to this invention. Clubcard functioned more than just a pure customer service and benefit program to Tesco. It also allowed Tesco to know its customers and strike to their interests and products using card data (Humby & Hunt, 2003). Clubcard is so attached and linked to Tesco that Tesco’s motto takes from it which is “Every Little Helps” (Tesco 2005).

Cause Related Marketing. At present, health issues around the world are increasing and have become more pressing, and Tesco should continue to join the government, hospitals and institutions in promoting awareness to the people. In 2001, the Alzheimer's Society and Alzheimer Scotland were Tesco Charities of the year. Cystic Fibrosis was the Tesco Charity of the year for 2002. In addition, Tesco is the national sponsor for Race for Life, in aid of the Imperial Cancer Research Fund where over 250,000 women have participated in raising more than £15m (BITC 2003). In 2003, Tesco can get actively involved by sponsoring symposiums, talks, and seminars on health issues, with more focus on prevention of illnesses and other conditions. At the same time, Tesco can introduce and promote the fresh and nutritious food they can offer to the customers, and highlight the importance of good health in mind and body. Vitamins, food supplements and other medicines can be introduced as an addition to Tesco’s food and non-food lines. This strategy can greatly help millions of people by promoting awareness, and make them feel that their well-being is important and considered at Tesco’s. This, in turn, will gain their trust and lifetime loyalty, the core purposes of Tesco, while providing the essentials for good health all in one place (BITC 2003).

On the other hand, enhancing quality and efficiency enhancement should be given enough amount of attention. As these two aspects seems to be predominant pitfalls in the organization’s operations.

Enhancing Quality. Everyday, top managers of Tesco stores gather for an hour-and-a-half customer advocacy meeting to pore over that week's performance statistics. What makes this unusual is that every performance measure under scrutiny relates to customer satisfaction, and this meeting is the most important one on the corporate schedule. The vice presidents discuss several measures, including on-time delivery (OTD), product returns and their causes, and abandonment rates for calls to Tesco’s toll-free number. But the company was already expending a disproportionate effort on getting production to match demand. The business was transformed into a "made-to-order" manufacturing operation with three- to four-day cycle times. The results are apparent. No failure in customer service is easier to identify, measure, and compare.

Satisfaction occurs when the product has been able to meet or exceed the conceived expectations that the customer has (Padilla 1996). Furthermore, customer satisfaction may also be considered as the measure of the high degree of quality of the product (Jacobs et al. 1998). As the customers demand for higher standards, any shortcomings on the part of the companies to deliver would jeopardize the life of their respective company. Hence, it is really important for companies to not only maintain and protect these intangible assets. It is also a must that they increase these assets for future benefits (Sercovich 2003). According to the study of Jacobs and colleagues (1998), relationship with customers should not be regarded as a single transaction, rather, a long-term. Customer satisfaction is considered a must for customer retention and loyalty, and undoubtedly helps in realizing economic goals like profitability, market share, return on investment and other corporate target (Reichheld 1996; Hackl and Westlund 2000). The management must be highly concerned with their customers’ welfare and satisfaction as this is one of the secret principles on being the leader in their area of industry.

Efficiency Enhancement. Tesco always put their efforts to do things “better, simpler and cheaper,” for their customers and employees. They usually enhance not by focusing on big aspects of the business, but by providing small enhancements. In customer welfare, consumer feedback system must be reinforced. The resolution of customer complaints and problems is a key for companies to be able to maintain the loyalty of their dissatisfied customers. Dissatisfied customers are more likely to tell people about their experience than satisfied customers are (Ganey and Hall 1997). After finding out the problems from the viewpoint of the customers, Tesco should undertake actions that would not only address the complaints of the customers but as well as actions that would lead to organizational improvements.

In implementing marketing strategies, there is a need for continuing optimization – the ability to assess a myriad of possibilities in order to find the best one or near best one (Hoctor andThierauf 2003). In cooperation with the other elements of marketing and business management, strategies must be evaluated and improved. In building the impression of people about the company, Tesco must reach out to a broader target market and must project an image relevant to every members of the society. Its corporate social responsibility must be defined.

In the management of Tesco, leadership and administration of the company must be a supplemental mechanism in the workforce. Human resources management improvements must be considered to fully utilize human asset. With the growing market and competitive edge of Sunbeam, its workforce also plays a significant role in materializing defined objectives and achieving success.

CONCLUSION

Today, most companies like Tesco Malaysia find it impossible to create any kind of sustainable competitive advantage based on product alone. It is common knowledge that every one of the successful companies sought and found a precise understanding of how it could create a customer-centered competitive advantage. Thus, there are numerous aspects that every management should tackle. In Tesco Malaysia, the key internal strengths are the appropriate and effective marketing strategies used. On the other hand, the flaws of the marketing strategies implemented by the company serve as its major internal setback. Then again, the continuous effort of every company likes Tesco Malaysia to improve its operational standards is the ultimate solution to emerging conditions brought about by different occurrences such as stiff competition, globalization, technological innovations and others.

APPENDIX

Overview of the Organization

Tesco opened their first Hypermarket in 2002 at Puchong, Malaysia. Then launched two more stores with Sime Darby Netwrok Corporation. Currently, Tesco, Malaysia profit is increasing and continuously gaining more than $31 million per year. The suppliers of Tesco, are mostly from Malaysia; these suppliers understand the needs of the Malaysian consumers. Since the expansion is very fast in Malaysia, there will come a time that the supply chain of Tesco, Malaysia will be regional. Tesco, Malaysia manages 16 stores and provides work for 240,000 individuals worldwide. Over the precedent five years, the corporation has extended from its conventional Malaysian supermarket foundation into new nations, merchandise and services, as well as a chief non-food business, individual investment and internet shopping. The ever-increasing degree and internationalization of its sales and purchasing processes constructs a noteworthy involvement to its competence and productivity, as it make progress towards its long-standing goal of becoming a truly global retailer (Altabet, 1998). In this apparently vast scope of Tesco in terms of human resource, it is important to have a strong leadership to apply an equally competent human resource scheme for its whole workforce.

Source: www.tescomy.com 2006

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