Strategic

Management
Industry : Retail

Synergy
Presented by : Mohd Farid Awang Norhaizum Sahril

VISION
Our vision is for Tesco to be most highly valued by the customers we serve, the communiAes in which we operate, our loyal and commiCed sta and our shareholders; to be a growth company; a modern and innovaAve company and winning locally, applying our skills globally.

TESCO OperaAng Model (TOM)

OBJECTIVE
COMPETITIVE STRATEGY VALUE CHAIN MISSION & VISION

KEY SUCCESS FACTOR SWOT PASTEL ASSIST MACRO ENVIRONMENT COMPETITION ENVIRONMENT

Q : What is Tesco strategy to build a sustainable compeAAve advantage?

Cost Leadership DierenHaHon

TESCO news (IdenHfy AcHon & AcHviHes) PromoAon Press release ObservaAon

Tesco aims to convert all stores to Extra format

Friday, 21 September 2012

Tesco Stores (M) Sdn Bhd (Tesco) aims to relaunch all of its naHonwide stores with the Extra format within a few years, its chief execuHve ocer (CEO) Sung Hwan Do said.

The Extra format, an innovaHve hypermarket format adopted in all Tesco stores worldwide, supports and caters to the wider needs of small businesses apart from our end-user customers, oering extra services, choices and faciliHes to Tesco customers. The new concept not only oers new range of products at low prices, but also oers an array of shops and kiosks in the mall area, which includes a new food court, playland, addiAonal automated teller machines, WiFi, mobile and telecommunicaAon shops and an improved car park system. The new agship Tesco Extra MuHara Damansara, which rst opened in 2003, had undergone a ve-month long renovaHon period to unveil a modernised look, oering a wider variety to customers under one roof.

COLLABORATE WITH INTERNATIONAL PLAYER

The Star Online >

Friday October 5, 2012

Samsung products to be sold at Tesco Extra SAMSUNG Malaysia Electronics has partnered Tesco to introduce Samsung World shop-in-shop (SIS) concept retail experience to a hypermarket. Aptly named Samsung World, the partnership culminated in a launch event held at Tesco Extra MuAara Damansara, which was recently refurbished to oer a whole new shopping experience to customers. The strategic collaboraAon with Tesco Stores (Malaysia) Sdn Bhd entails a designated area within Tesco Extra stores that features Samsungs latest range of innovaAve products. Aimed at providing patrons of Tesco Extra with a dierent retail experience and a beCer understanding of Samsungs range of smart living soluAons, Samsungs trained product experts will also be assigned at Samsung World, facilitaAng consumers and providing insights on the latest Samsung innovaAons, ranging from audio-visual products, mobile phones, digital appliances, digital imaging devices and IT products. In addiAon to designing and manufacturing state-of-the-art products to provide beCer soluAons to consumers daily rouAnes, Samsung is also commiCed in ensuring our customers receive the best user experiences, be it ader they have purchased the products or at retail level. Latest oerings: Kwon (led) introducing Samsungs range of televisions to Do. Latest oerings: Kwon (led) introducing Samsungs range of televisions to Do. We are honoured and excited to partner Tesco in providing a brand new retail experience through Samsung World, which will help customers beCer understand Samsung products and how they can enhance users lives, said Samsung Malaysia Electronics managing director Kwon Jae Hoon.

EXPAND MARKET SEGMENT (SMES) & CONVENIENT SHOPPING EXPERIENCE

JOINT VENTURE WITH MALAYSIAN COMPANY

FOCUS ON HOUSE BRAND

STRENGTHEN SUPPLY CHAIN

RM60mio : Fresh Food DistribuAon Centre

Chilled environment Three dierent temperature zones: -26C for frozen foods; 1C; and 12C for other fresh produce

STRENGTHEN SUPPLY CHAIN

RM300 million Non-chilled distribuAon centre

BUILD LOYAL CUSTOMER

Aggressive markeAng - Direct aCack GIANT
Focus :Lowest Price

Tesco Stores (Malaysia) Sdn Bhd :: Tesco is #1 For Great Prices

http://www.tesco.com.my/html/press_release_details.aspx?ID=107&PID...

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Tesco is #1 For Great Prices

KUALA LUMPUR, April 24, 2012 Tesco Stores (Malaysia) Sdn. Bhd. (Tesco Malaysia) today launched its #1 for Great Prices campaign to help its customers to save more. Customers will see the prices of some 600 essential items throughout Tescos 45 stores nationwide with discounts up to 30 percent. Datuk Sri Ismail Sabri Bin Yaakob, Minister of Domestic Trade, Cooperatives and Consumerism was on hand to launch Tescos #1 for Great Prices campaign and he was accompanied by SungHwan Do, CEO and Vivian Yap, Director of Marketing at Tesco Malaysia. SungHwan Do, CEO of Tesco said, At Tesco, our core purpose is to create value for our customers to earn their lifetime loyalty. As the No 1 retailer in Malaysia*, we continue to lead with our #1 for Great Prices campaign, and helping the customer to save more with lowest prices on daily essential items. To thank our customers for their support, Tesco has doubled its investment in the #1 for Great Prices campaign from RM21 mil last year to RM40 mil this year. Vivian Yap, Marketing Director of Tesco Malaysia said, For over 10 years, Tesco has been investing in lowering prices for the customers. This year, we have made it even bigger, helping customers to spend less by cutting the prices of over 600 items for the long term. We are offering these price cuts above our already low prices and while still maintaining the high standards of quality and freshness our customers have always enjoyed. We also offer a range of Tesco Own Brands such as Tesco Choice that matches the leading brand quality but with 20% lower prices. We have over 4000 lines ranging from food to house hold items and some of the top selling Tesco branded items are Tesco Choice Sweetened Creamer, Tesco Choice Cola 1.5L and Tesco Choice Dishwashing Liquid. Customers can look forward to even lower prices than usual for XL sized prawns, vegetables as well as grocery items like milk powder, diapers, detergent and many more. According to Do, At Tesco, we get to keep our prices low given that we buy our stock in large quantities. We also check on our competitors prices for 6,000 items to ensure that we always offer the best price. We will continue to do our part to bring prices down and benefit our loyal customers because we care. Just recently, Tesco Malaysia announced that it has delivered yet another strong performance with a sales growth of 12% for financial year 2011/2012. The double digit sales growth is a clear indication that Tesco is the shopping destination for its great prices, great quality and great range. Based on an independent customer panel survey conducted by Kantar Worldpanel Malaysia, Tesco is the Number 1 Retailer in Peninsular Malaysia, based on Market Share Value Sales. Back to "Press Release"

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TESCO to be the Champion of lowest price retailer

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BUILD LOYAL CUSTOMER

Tesco Stores (Malaysia) Sdn Bhd :: TUKAR program proven a success!

http://www.tesco.com.my/html/press_release_details.aspx?ID=107&PID...

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TUKAR program proven a success!

Puchong, Friday, January 27, 2012 It seemed to be an insurmountable task for single mother Jessica Wong, 42, to transform her seven-year-old traditional kedai runcit into a modern convenience store that is able to appeal to more customers. Nevertheless, thanks to the Governments TUKAR programme and Tesco Stores (Malaysia) Sdn Bhd (Tesco), Wongs dream to grow her business became a reality.

Media
I have been running my store single-handedly over the years. The store has changed little since the day it opened. I realised I had to modernise it if I were to make a better life for me and my 14-year-old daughter but I do not have the means nor the know-how to make my store more modern and appealing. That was why I was immediately drawn to the TUKAR programme when it was announced almost a year ago, explained Wong, the owner of Pasar Mini Harvest Packaging Sdn Bhd. TUKAR (Transformasi Untuk Kedai Runcit) is one of the Entry Point Projects in the Wholesale and Retail National Key Economic Area of the Economic Transformation Programme. It involves large multinational retailers such as Tesco helping traditional small retailers modernised their stores in order to increase sales and be more competitive by streamlining the business processes and exposing them to best practices, enhancing customer service quality, and improving the cost effectiveness of their supply chain. Pasar Mini Harvest Packaging successfully underwent a two-month transformation exercise led by Tesco. During this period, Tescos dedicated TUKAR personnel advised Wong in terms of the shops layout, product range, product mix, product schematics and display, and training on modern store operations management. The re-opened Pasar Mini Harvest Packaging was officiated today by Tan Sri Dato Muhyiddin Yassin, Deputy Prime Minister of Malaysia. Also present were Dato Seri Ismail Sabri Yaakob, Minister of Domestic Trade, Cooperatives and Consumerism, and SungHwan Do, Chief Executive Officer of Tesco Malaysia. The revitalised Pasar Mini Harvest features a fresh coat of paint, new signboard and front faade, a modern store layout, improved lighting, increase staff count, introduction of new services such as photocopy, ePay for Touch n Go, Astro bills payment counter, mobile money transfer as well as a new cashier counter. At the end of the day, it is results that matter. On this score, I am very happy to note that in the first three weeks after I reopened, I realised a remarkable 15% jump in sales. Whats more, my customers continue to tell me how much they appreciate the new layout, improved convenience and enhanced ambience of my store, especially with a 30% increase in customer traffic. This alone is enough for me to encourage my fellow kedai runcit owners to seriously consider participating in the TUKAR programme, Wong concluded. To-date, Wongs store has seen a steady increase of 60% in sales volume. Tesco Malaysia has transformed 101 stores under the TUKAR Programme in 2011. These stores are located throughout nine states in Malaysia specifically Selangor, Wilayah Persekutuan, Negeri Sembilan, Melaka, Johor, Perak, Penang, Kedah and Pahang. Tesco also initiated a pilot transformation involving two shops whereby a total of RM150,000 was invested in both transformation. For more information on the TUKAR Programme, please visit the Ministry of Domestic Trade, Cooperatives and Consumerism website http://www.kpdnkk.gov.my or to email directly to tukar@my.tesco.com for a pre-consultation. Back to "Press Release"
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TESCO is a strong supporter to Malaysia government iniAaAve

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Tesco Stores (Malaysia) Sdn Bhd :: Tesco pledges to plant 500,000 trees ...

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Tesco pledges to plant 500,000 trees in Malaysia

Kepong, Friday, January 13, 2012 Tesco Stores (Malaysia) Sdn Bhd (Tesco) and the Malaysian Timber Industry Board (MTIB) today inked a Memorandum of Understanding (MoU) to mark its partnership for a Greener Earth Tree Planting programme. The MoU, signed by Tesco Malaysia and MTIB is to establish a cooperative effort to plant 500,000 trees throughout the country within three years to help meet the countrys target of planting 26 million trees. According to the MoU, Tesco will spend a total of RM4 million to plant 500,000 vulnerable agarwood trees with MTIBs guidance and expertise in the area. The programme is part of a bigger Greener Earth initiative by Tesco Malaysia to protect our environment and help reduce its carbon footprint and is partly funded by the sale of plastic bags sold on No Plastic Bags Day nationwide. The MoU was signed by SungHwan Do, Chief Executive Officer of Tesco Malaysia and Dr. Jalaluddin Harun, Director General of MTIB. The signing ceremony was witnessed by Dato Madius Tangau, Chairman of MTIB. Dato Madius Tangau said in his speech that, A lot of effort on planting of trees have already been initiated by several government agencies, as well as the private sector as part of their CSR activities. All these measures contribute to keep at least half of the country under forest cover as well as reforested. Restoring our earth with trees will create places of beauty and enjoyment; help clean our air and more importantly, it will help sequester the carbon dioxide that man's industry, power generation, commerce, transport and building releases into the air, he added. Dato Madius Tangau lauded the partnership, and hoped it becomes the basis and foundation of many more scientific and educational green activities for Malaysians and calls for similar collaborations between the corporate sector and the government in the future. Do said, The Greener Earth Programme is our latest initiative to protect our environment while engaging our customers to do the same. Tesco Malaysia to date has reduced its carbon footprint by 42 per cent since we embarked on our green initiatives in 2008. Every effort such as todays MoU Signing signifies our commitment toward a Greener Earth, bringing us closer to our target of being a carbon neutral business by 2050. Through this programme, Tesco and MTIB will plant 160,000 trees in 2012 and 170,000 in 2013 and 2014 respectively. Do also said that the Greener Earth programme will soon engage Tesco customers more actively to be more involved in reducing their own impact on the environment. The first Greener Earth tree planting activity was held on December 17, 2011 where 450 volunteers from Tesco, MTIB and the public planted over 1000 trees in Taman Wawasan, Putrajaya. Selangor, Johor and Melaka are amongst the states identified as next locations for the Greener Earth tree planting activities in 2012. Apart from tree planting, Tesco has taken many environmental initiatives such as its Green Clubcard Points scheme in June 2008 to encourage and reward customers for their green behaviour by bringing their own reusable carrier bags. Through this scheme, over 10 million Green Clubcard points have been rewarded to 100,000 of its Clubcard members and has helped to reduce more than 81 million carrier bags from going to landfill. All of Tesco stores have also been fit with energy saving lighting, air-conditioning and refrigeration system with a cumulative investment amounting RM43.3 million. Back to "Press Release"

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TESCO to prove they concern on Green iniAaAve

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Tesco Stores (Malaysia) Sdn Bhd :: China Gets a Taste of Malaysian Products http://www.tesco.com.my/html/press_release_details.aspx?ID=107&PID...

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China Gets a Taste of Malaysian Products

BEIJING, Sunday, May 8, 2011 What better way to showcase the appeal of Malaysian-made products than by making it available to consumers in the capital of the worlds most populated country and fastest growing economy. In a bid to help enhance the internationalisation of Malaysian products, primarily those produced by home-grown SMEs (small & medium-sized enterprises), Tesco Malaysia launched Taste of Malaysia at Tesco Store Happy Valley, Beijing here today.

Media
Taste of Malaysia will be an international foods section in the hypermarket that solely features Malaysian brands and products, for a two week period beginning today. There will be a total of 91 food and beverage product lines being showcased in the section. 59 are new to the section brought it especially through Tescos Taste of Malaysia programme. This is in addition to the 32 products already listed in Tesco China, paving the way for other Malaysian SME-made products. Some of the leading Malaysian brands being featured include Nona, Alif, Pitaberry, Iceberry, Mascafe, Slera and Pertima, amongst a total of 18 suppliers. The Taste of Malaysia section will be available to Tesco Store Happy Valley shoppers from today. In addition, there will also be promotions for a two week period spearheaded by Tesco to entice consumers to sample Malaysian products YB Dato' Sri Ismail Sabri Bin Yaakob, the Minister of Domestic Trade, Cooperatives and Consumerisme, was at hand to officiate the launch of Taste in Malaysia this afternoon. Also present was Tjeerd Jegen, CEO of Tesco Malaysia and Sophia Zhong, Commercial Director of Tesco China (North). Tjeerd said, Buatan Malaysia or Malaysian-made products are comparable in terms of quality and value for money to some of the worlds leading brands. These products will undergo a promotion period of two weeks to assess customer acceptance of the product and should they meet the Chinese consumers flavour, we will consider supplying these products for the long term. These very brands do well in Malaysia and we believe that they will do just as well here. According to Tjeerd, Tesco Stores Malaysia is happy to help Malaysian brands acquire greater exposure in the international marketplace. Tesco has been growing positively in Malaysia over the last decade. It has been a mutually beneficial relationship and we want to further add value by leveraging on our international presence as one of the largest retailers in the world to help grow Malaysian brands, Tjeerd concluded. The launch of the first Taste of Malaysia this year in China shows the significance of China in the world retail market and for Tesco. China holds great potential and we would like to support our suppliers to tap into this great opportunity, he added. The launch of Taste of Malaysia was followed by a special cooking demonstration conducted by Malaysias very own celebrity chef, Chef Muluk. In addition to showcasing his culinary skills, he also introduced Malaysian delights to curious Chinese shoppers. Most of the ingredients used in Chef Muluks recipes are featured in the Taste of Malaysia section. Back to "Press Release"
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TESCO to prove they could oer beCer market access for their suppliers

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CLEARLY STATED CUSTOMER RIGHT

Shop with condence! We welcome all customers. No membership is required. If you are unsaHsed with your purchase, you may return your purchase(s) together with the original receipt within 7 days from the date of purchase. Return policy does not apply to display items or items from stock clearance promoHons Return policy does not apply to fresh produce, frozen goods, cameras, mobile phones, computer (including peripherals) and undergarments. Tesco Value, Tesco Choice and Tesco Finest products are not to be sold commercially. If you are unsaHsed with the quality of any of our Tesco Value, Tesco Choice or Tesco Finest products, you may return your purchase(s) with the original receipt to us within 28 days from the date of purchase and we will either make a replacement or remit a full refund. Always in stock! Delivery service for your convenience! Free delivery service (up to 30km) is available for electronic goods. A charge of RM2.50/km will be levied beyond the 30th km. Delivery service is oered for goods that have been purchased in bulk by Biz Clubcard members

EXPAND MARKET SEGMENT AcquisiAon of MAKRO Cash & Carry To tap SMEs market FOCUS ON PROFITABLE AREA Exit non-protable market BanAng & Senawang

FOCUS ON HOUSE BRAND Produce more range of House Brand TESCO value aordable range. TESCO choice quality products. TESCO light choice nutriAous low-calorie food. TESCO nest premium ingredients JOINT VENTURE WITH LOCAL PLAYER Equity Partner Sime Darby 70:30

BUILD GOOD RELATIONSHIP WITH GOVERNMENT MOU with Malaysia InternaAonal Timber Board TESCO is one of enabler for TUKAR programme STRENGTHEN SUPPLY CHAIN Established distribuAon centre Simpang Pulai : fresh products Bukit Beruntung : grocery, electronics, high tech and apparel COLLABORATE WITH SAMSUNG

BUILD REPUTATION AMONG SUPPLIER Support local SMEs Bulk purchase for local small retailer Introduce local products to TESCO oversea BUILD LOYAL CUSTOMER Clubcard Campaign for the no 1 of great price retailer Fresh vegetables CLEARLY STATED CUSTOMER RIGHT

WHAT IS TESCO STRATEGY TO BUILD A SUSTAINABLE COMPETITIVE ADVANTAGE?

COLLABORATE WITH SAMSUNG FOCUS ON HOUSE BRAND

TESCO FOCUS ON COST-LEADERSHIP

STRENGTHEN SUPPLY CHAIN Established distribuAon centre Simpang Pulai : fresh products Bukit Beruntung : grocery, electronics, high tech and apparel

BUILD LOYAL CUSTOMER Campaign for the no 1 of great price retailer

MACRO ENVIRONMENT
Industry Growth

Social forces

Government Support & Policies

RETAIL INDUSTRY

Technology

Rules & RegulaHons

GOVERNMENT NURTURE INTERNAL DEMAND

GOVERNMENT FULLY SUPPORT WHOLESALE AND RETAIL GROWTH

" Within the next 10 years, Malaysia government through EPP aimed to carry RM17.4 billion investment in order to contribute RM8.5 billion GNI and create 68,600 jobs by 2020.

REGULATORY POLICIES TO PROMOTE HEALTHY COMPETITION ENVIRONMENT

ONLINE MARKET (LOCAL) OPPORTUNITY

Online purchase & Virtual Store

ONLINE MARKET (GLOBAL) OPPORTUNITY

Online purchase & Virtual Store

CHANGES IN SOCIAL FORCES

Based on 2010 Census, Malaysias total populaHon stood at 28.3 million with a populaHon density of 86 persons per square kilometer. The naHons capital, Kuala Lumpur, has a populaHon of around 1.67 million and a much higher density of 6891 persons per square kilometer. Although East Malaysia makes up 60% of Malaysias landmass, it only accounts for 20% of the countrys populaHon.

Over the last 11 years, Malaysias populaHon has been growing at a steady rate of 2.0% per annum. The country is experiencing an increase in rural to urban migraHon. The average age of Malaysian populaHon is young at 26 years old and the average life expectancy stands at over 73 years.

INCOME/BUYING POWER
- Malaysia is classied as an
upper-middle income country, and considered as one of the m o s t d e v e l o p e d o f t h e developing countries. The proporHon of middle income households, dened as those earning between RM2,841 and MYR4,025 per month, has increased from 6.5% in 2009 to 9.2% in 2007. - On average, household living in urban areas spent 1.5 Hes more than households living in r u r a l a r e a s . A v e r a g e h o u s e h o l d s p e n d i n g expenditure is stands at RM2190 per month

CONSUMER BEHAVIOR
Average household spending palerns: - Malaysians spend a high percentage of their household income on food, groceries and personal care items, ranking third out of the ten major economies in the Asia- Pacic region (excl.Japan) - According to ACNielsen, Malaysians on average spent MYR505 per month on food and groceries, with just half of hat on fresh food like meat, fruits and vegetables. Lifestyles/Shopping habits: -Malaysias consumer lifestyle has been evolving and changing due in part to rising auence and educaHon levels. -High prole internaHonal retailers and the global mass media have also played a hand in shaping consumer-buying behavior. -Malaysians are becoming more westernized, sophisHcated and cosmopolitan. -Since the emergence of the foreign-owned hypermarkets, Malaysians who lived= in urban have become accustomed to shopping for groceries at hypermarkets and supermarkets. -Meanwhile rural people conHnue to purchase from tradiHonal grocers, convenience stores and mini-marts

TESCO COMPETITION ENVIROMENT

MAJOR RETAIL PLAYERS

Ran king 1 Group Name Dairy Farm Giant Retail Ownership Diary Farm InternaHonal Retail Formats Supermarket/ superstores (54) and hypermarkets (71) Hypermarkets Hypermarkets Supermarkets/ hypermarkets Hypermarkets (10) Emporiums (18) Bazaar (3) Mini Market (54) Convenient store (9) Franchise (6) Number of Stores 125 2011 Net sales na

2 3 4 5

TESCO PLC Carrefour Group Econsave Cash & Carry MYDIN

JV (70% TESCO PLC : 30% Sime Darby) Carrefour Group Econsave Cash & Carry Sdn Bhd Mydin Mohamed Holdings Bhd

46 26 29 100

3.53 billion 1.8 billion 700 million 1.5billion

STRATEGIC MAPPING

High

PRICE/QUALITY

CARREFOUR
ECONSAV E

TESCO
MYDIN

Low

GIANT

Few LocaHons

GEOGRAPHIC COVERAGE

Many LocaHons

 High startup cost Small market

WEAK Threat of New Entrants

IF consumers see little difference between the Price - they will tend to choose on price.

WEAK Bargaining Power Of Suppliers supermarkets dictate the price they pay to the supplier

STRONG Rivalry Among Current CompeAtors

HIGH Bargaining Power of Buyers

WEAK Threat of SubsAtute Products

43

If a single item too expensive in Tesco, buyers will exercise their power and move to Giant which can be easily access Time consuming

Selling similar products Offer similar services

KEY SUCCESS FACTOR

1. INCREASE IN INTERNAL DEMAND 2. GOVERNMENT SUPPORT 3. REGULATORY POLICIES TO PROMOTE HEALTHY COMPETITION ENVIRONMENT 4. HIGH BARGAINING POWER OVER CUSTOMER & SUPPLIER 5. CHANGES IN SOCIAL FORCES 6. GOOD INFRASTUCTURE FOR ONLINE 7. GOOD SUPPLY CHAIN MANAGEMENT (SOFTWARE & HARDWARE)

Opportunity

Threat

ASSESSMENT OF INTERNAL FACTORS FOR STRATEGIC ADVANTAGE (ASSIST) (RANKING STRENGTH AND WEAKNESSES)
Value LIST UNDER RESOURCES S2 : Fresh DC S2 DisAncAve S3 : Non-chilled DC CompeHHve S5 : Standard lay-out CompeHHve S6 : Tesco Hypermarkets CompeHHve S3 S7 : House Brand CompeAAve S8 : Tesco Extra S5 DisAncAve S9 : Tesco Clubcard and Biz Clubcard CompeHHve S11 : Tesco VALUE S4 DisAncAve W4 : Low sales volume for Tesco Extra DisHncHve W5 : Small margin DisAncAve W3 W6 : High A&P cost DisHncHve W7 : High capital investment DisAncAve W2 LIST UNDER CAPABILITIES S1 : High bargaining power S1 DisAncAve S4 : The applicaHon of ERP system DisHncHve S10 : Focus on customer service DisHncHve W1 : Certain supplier dictate price W4 DisAncAve W2 : No Online Shopping capability W5 DisAncAve W3 : High bargaining power of retail customer DisAncAve W1

Rareness DisAncAve CompeHHve PotenHal PotenHal PotenAal DisAncAve CompeHHve PotenAal CompeHHve CompeAAve CompeHHve CompeAAve CompeAAve PotenHal CompeHHve PotenAal DisAncAve CompeAAve

Imitability Sustainability CompeAAve PotenAal CompeHHve PotenHal PotenHal PotenHal PotenHal PotenHal PotenAal CompeAAve PotenAal CompeAAve PotenHal PotenHal PotenAal CompeAAve CompeHHve PotenHal CompeAAve DisAncAve CompeHHve PotenHal CompeAAve DisAncAve PotenAal CompeAAve PotenHal PotenHal PotenHal PotenHal PotenAal PotenAal CompeAAve PotenAal CompeAAve DisAncAve

VALUE CHAIN FOR TESCO (BASED ON PORTER ORIGINAL)

W2,W3 DC, FINANCE TRAINING W2 SYSTEM SUPPLIER MGT

L O W M A R G I N

S1,S2,W4 W5

S5,W1 S4

VALUE CHAIN FOR TESCO (BASED ON PORTER ORIGINAL)

W2,W3 DC, FINANCE TRAINING W2 SYSTEM SUPPLIER MGT

L O W M A R G I N

S1 S2,W4 S5,W1 W5 S4

S1 High bargaining power over supplier (capabili8es) S2 Fresh DC (Resources) S3 House Brand (Resources) S4 Tesco VALUE (Resources) S5 Tesco Extra (Resources)

O1 Online shopping O2 Co-operate with Malaysian Government to setup 1 Malaysia Mall O3 Open branch in East Malaysia & East Coast (TESCO EXTRA) O4 Acquire small & medium local retailers O5 More house brand (OEM for 1Malaysia Brand) O6 Form Halal Supermarket

SW O T

W1 High bargaining power of customer (capabili8es) W2 High capital investment (Resources) W3 Small margin (Resources) W4 Certain supplier dictate price (capabili8es) W5 No Online (capabili8es)

T1 T2 T3 T4

Decreasing in Internal Demand 1 Malaysia Mall Merger of current compeHtor Entrance of new player

RECOMMENDATION
(to be compeAAve) COMPETITIVE STRATEGY VALUE CHAIN MISSION & VISION SUSTAINABLE COMPETITIVE ADVANTAGE

COMPETITIVE STRATEGY
Current

Future

Groceries - Online

VALUE CHAIN FOR TESCO

LOWER CAPITAL INVESTMENT REDUCE MAN POWER UPGRADING SYSTEM (ONLINE) DC, STORE TRAINING SYSTEM

SUPPLIER MGT
Sales & Services (TESCO VALUE & TOM)

INVENTORY PURCHASE

DISTRIBUTION CENTRE

TESCO WHOLSALE, TESCO EXTRA

L O W M A R G I N

VISION & MISSION

NEW VISION Dedicated to deliver fresh and quality groceries at the lowest price to all over Malaysia NEW MISSION Oer customer a whole new shopping experience for a quality products at lower price

SUSTAINABLE COMPETITIVE ADVANTAGE

Focus low-cost strategy within a narrow buyer segment (market niche) Focus on suplying Fresh & Quality groceries (make use of Chilled-DC in Simpang Pulai). Target market : family Introduce ONLINE shopping

WAY FORWARD
" Malaysian saw the growth of the large format retail sub-sector today; 121 hypermarkets, 113 superstores and 133 departments stores run by local and foreign operators, bringing beler quality, wider choice, lower product cost, greater product availability and new retailing technology and skills. " Within the next 10 years, Malaysia government through EPP aimed to carry RM17.4 billion investment in order to contribute RM8.5 billion GNI and create 68,600 jobs by 2020. " TESCO sHll have the opportunity to re-strategize their business in Malaysia

ATTACHMENTS

ASSESSMENT OF INTERNAL FACTORS FOR STRATEGIC ADVANTAGE (ASSIST) (RANKING STRENGTH AND WEAKNESSES)
Value LIST UNDER RESOURCES S2 : Fresh DC S2 DisAncAve S3 : Non-chilled DC CompeHHve S5 : Standard lay-out CompeHHve S6 : Tesco Hypermarkets CompeHHve S3 S7 : House Brand CompeAAve S8 : Tesco Extra S5 DisAncAve S9 : Tesco Clubcard and Biz Clubcard CompeHHve S11 : Tesco VALUE S4 DisAncAve W4 : Low sales volume for Tesco Extra DisHncHve W5 : Small margin DisAncAve W3 W6 : High A&P cost DisHncHve W7 : High capital investment DisAncAve W2 LIST UNDER CAPABILITIES S1 : High bargaining power S1 DisAncAve S4 : The applicaHon of ERP system DisHncHve S10 : Focus on customer service DisHncHve W1 : Nestle high bargaining power W4 DisAncAve W2 : No Online Shopping capability W5 DisAncAve W3 : High bargaining power of retail customer DisAncAve W1

Rareness DisAncAve CompeHHve PotenHal PotenHal PotenAal DisAncAve CompeHHve PotenAal CompeHHve CompeAAve CompeHHve CompeAAve CompeAAve PotenHal CompeHHve PotenAal DisAncAve CompeAAve

Imitability Sustainability CompeAAve PotenAal CompeHHve PotenHal PotenHal PotenHal PotenHal PotenHal PotenAal CompeAAve PotenAal CompeAAve PotenHal PotenHal PotenAal CompeAAve CompeHHve PotenHal CompeAAve DisAncAve CompeHHve PotenHal CompeAAve DisAncAve PotenAal CompeAAve PotenHal PotenHal PotenHal PotenHal PotenAal PotenAal CompeAAve PotenAal CompeAAve DisAncAve

OPPORTUNITY

Budget 2013
Tesco to JV with local retailer to form a Halal Supermarket and expand to Islamic Countries

THREAT
1MALAYSIA MALL

MAJOR RETAIL PLAYERS

Ran king 1 Group Name Dairy Farm Giant Retail Ownership Diary Farm InternaHonal Retail Formats Supermarket/ superstores (54) and hypermarkets (71) Hypermarkets Hypermarkets Supermarkets/ hypermarkets Hypermarkets (10) Emporiums (18) Bazaar (3) Mini Market (54) Convenient store (9) Franchise (6) Number of Stores 125 2011 Net sales na

2 3 4 5

TESCO PLC Carrefour Group Econsave Cash & Carry MYDIN

JV (70% TESCO PLC : 30% Sime Darby) Carrefour Group Econsave Cash & Carry Sdn Bhd Mydin Mohamed Holdings Bhd

46 13 29 100

3.53 billion na 700 million 1.5billion