Supply chain Assignment Example | Topics and Well Written Essays - 3000 words

Supply chain - Assignment Example The success of the company relies on a strategy of volume rather than margin through the reinvestment of productivity gains in the form of lower prices. A special feature of the company is that it does not seem to take the paths agreed by its competitors. In the late 1970s, company undertook a radical revision of the distribution system and 20 years later, it became one of the first profitable company in the field of nutrition (Collinson, 2007). Sir Jack Cohen founded the company in 1929 and named it as Tesco. This acronym combines the letters of the tea supplier and partner (TE Stock well) with those of Sir Cohen. The group opened its first grocery store in the suburbs of London, and it was during the 1930s that it began its growth by adding a hundred outlets, mainly in the British capital. After a visit to the United States, Mr. Cohen returned to England with the aim of importing the model of self-service supermarkets. He developed the formula Tesco â€Å"put products into a high pile and sell low" (Pile it high and sell it cheap). This formula has been the philosophy of the company for several decades. It has gained its success and accomplishments based on this formula in the right way. After World War II, the company continued its growth in the targeted segment of the working class. Through a series of acquisitions, the company had more than 800 outlets by the late 1960s. Moreover, the regulation of time prevented some items to be sold at a loss (in the price agreed with the suppliers) to attract customers in the retail sale. Only large chains were subjected to this regulation that excluded independent stores. To overcome this limitation, the Tesco management decided to launch a system of tradable stamps (trading stamps). The customer who purchases at Tesco can accumulate stamps. When it has a certain number, it can be exchanged against a sum of money or gift product. This system has proved to be very popular and has increased sales. In 1964, regulations o n price controls were abolished and Tesco has launched a strategic price reduction while maintaining its stamp system. Now, Tesco is an international distribution group which represents 14 countries in all. In 2008, its market capitalization was $ 34.84 billion Euros and its turnover reached 80 billion Euros, which placed the group at the forefront in UK and fourth in the world behind Wal-Mart & Carrefour. The headquarters of this global group is located near Chesnutt, London where Sir Terry Leahy is CEO since 1997 (Christmann, 2006). Discussion Internationalisation Internationalisation is the process by which relations over greater distances are contracted, and thus extend over national borders. The parent organisation opens its branches all around the world to increase its level of sales and profitability. This is a result of both globalisation and regionalisation. Organisations tend to gain strong advantages by operating on an international mode. As a result, national governments are bound by their policy to international agreements and developments