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Tesco's Group Food

AREC 423 Group Presentation
by

Jiaping Fan

on 17 April 2015

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Transcript of Tesco's Group Food

Competitors
Wal-Mart
Carrefour
Other Large Retailersuihi
Suppliers
Customers
Introducing Buying Specialists
Leveraging Group Scale
Partnering with suppliers
Applying Skill in Sourcing
End-to-End Supply/Demand Planning
Group Food Approaches
Information Sharing
-Suppliers and Producers get information about consumers' demand.
-Tesco gets expertise knowledge about produce and process


Market Power
-Centralizing Sourcing Activity
-End-to-End Supply Chain
-Develop sustainable production and take Corporate Social Responsibility (CSR).
Economics Rationale of Group Food
Leading questions:
INTERNATIONAL SOURCING
Acquired from Tesco annual report, 2011
Group Food division was established in 2010.
Group Sourcing operations headquartered in Hong Kong.
-Better products
-Cheaper costs
-Competitive advantage
-Knowledge sharing
Tesco's Group Food
Tesco's Group Food
Josh Bateman
Jiaping Fan
Debo He
Ming Hong

Develop Sustainable and Responsible (CSR) production
Develop relationship with producers
Develop relationship with suppliers
Future Development of Group Food
Tesco

Largest retailer in the UK

Third largest in the world
Continuing to invest in a strong UK business.
Establishing multichannel leadership in all their markets.
Pursuing disciplined international growth. (Tesco annual report, 2013)
Tesco's Three Strategic Priorities
What is external environment Tesco is facing?
What competencies does Group Food gain for Tesco
How could sustainability and corporate social responsibility (CSR) help Tesco achieve sustainable comparative advantages?
External Environment of Tesco
Consumers are increasingly interested about the methods of food production
Public certification programs such as FairTrade, EcoCert, FSC, and Rainforest Alliance are increasingly popular
Sustainable and Ethical Production
Consumers are demanding safe foods which has led to stringent safety standards
Consumers want to know where their food is coming from
Food Safety
International Sourcing
Standards
Public Standards:
either voluntary or mandatory
Private Standards
: voluntary
Pros:
Controls the quality and safety of products
Provides information
Achieve sustainability goals
Challenges:
Leads to fewer suppliers
Can be costly
Invisible to consumers
Sustainability and Corporate Social Responsibility (CSR)
War-Mart, Carrefour and Nestle, Unilever and Starbucks -- Strategically commit to sustainable sourcing.
Large companies source internationally, sustainability has huge impact on adequate, qualified and stable supply.
Industry-wide involvement leads to pooling of cost
Environment sustainability and CSR result in economic sustainability.
Core Competencies Group Food gain for Tesco
Vertical Boundaries
Relationships with Suppliers
Information sharing
Long-term partnerships
Collaborative innovation teams
Contract with Independents rather than MNC
Create a supplier network beyond TescoLink
Work with suppliers to reach producers
- Individual Farmers

- Farmer Producer Organizations


Relationship with Producers
Sourcing internationally reduces purchasing costs by leveraging scale and expertise.
Working with developing countries presents certain challenges. eg. Tea-Asia, Cocoa and Coffee-Africa
Tesco: strong international sourcing system.
Tesco around the world
Acquire from Tesco annual report, 2010
Source: Company Document
Acquired from Tesco Group Food
Farmer Producer Organizations (FPO)
Benefits for Farmers

- Reduce transaction costs
- Improve local economy
- Shorten the chain of intermediaries
- Professional management

Benefits for Buyers

- Reduce transaction costs
- Reduce relationship-specific investments
i.e. knowledge-transfers about production technologies
- Grater stability in supply

Customer
Competitor
Suppliers
Wal-Mart/Carrefour
Global retailers
Waitrose/Lidl/Sainsbury
Local retailers
General Trends
Increase in market saturation/competition
Ethical and sustainable initiatives
Full transcript