1 Using the Ansoff matrix, plot Tesco’s growth over time.

What do you notice about the pattern of expansion? Starting in 1919 when Jack Cohen sold surplus groceries on an East London stall, Tesco has grown to become the UK’s largest grocer with 440,000 employees, 6,800 stores in 10 countries, revenues of £64.5bn and profits of £1.6bn. However, Tesco posted a record-breaking loss of £6.4bn in 2015 and experienced several poor years due to much tougher competition in the supermarket sector. This has caused investors to speculate whether Tesco’s dominance is coming to an end. Is it time for a new strategic direction?

From its humble beginnings, Tesco showed expansionary zeal in the 1950s and 1960s, buying up hundreds of shops from competitors. In 1961 Tesco entered the Guinness Book of Records with the largest store in Europe and soon opened its first superstore in 1968. Shortly afterwards in 1974 Tesco opened its first petrol stations and soon became the UK’s largest independent petrol retailer. Tesco continued to open more stores and in addition took over supermarket rival Hillards for £220m in 1987. By 1995 Tesco overtook Sainsbury’s to become the largest food retailer in the UK, helped by the launch of the Tesco Clubcard.

There then followed a great deal of overseas expansion with shops opened in Hungary (1995), Poland, the Czech Republic and Slovakia (1996), Thailand (1998) and South Korea (1999).

By 2000 Tesco was offering more than just food and petrol, with a wider range of products including clothes, electricals and personal financial products. Further international expansion followed, with stores being opened in Malaysia (2001), Japan and Turkey (2003), China (2004) and in the US (2006)

using the name ‘Fresh and Easy’. However, many of these overseas initiatives did not work out, with closures and sales in Japan, South Korea, Turkey and the USA, and in China the operation became a joint venture with a local partner. Nevertheless in 2008 Tesco managed to complete opening stores in every UK postcode by taking over rivals Somerfield on remote Scottish islands. Tesco then decided to create Tesco’s Bank in a joint venture with the Royal Bank of Scotland in 2009