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    Managing Innovation in Business

    Purpose of The Report

    The management of the innovation is one of the most critical process which any business can face. The present study is focused on Tesco's approach towards managing and handling the various innovation techniques which will enforce the productivity of their business. Tesco as an leading retail chain in United Kingdom and many other countries applied various innovation strategy in each and every department which they are operating(Ngo and O'Cass, 2013). The innovation strategy helps Tesco in their departure from traditional management principals, practises and processes and try to be bigger and bolder in the innovation.

    There are several important reason for tesco to apply the innovation techniques in their business such as the increasing number of competitor in the sector of grocery retail chain, enhancing the use of the technology in the area of business and so on. The present study is trying to make an effort in understanding the need of the managing innovation in the area of the business. The structure for the study is set out in a way where the innovation strategies adopted by tesco in the past will be discussed and what are the new innovation techniques which tesco is applying will be addressed. By the use of innovation tools and techniques what future can tesco make for themselves will be argued(Cheng Yang and Sheu, 2014).

    The Innovation History of Tesco

    The organization was establish in the year 1919 with a small level and in the year 1929 they opened there first store. The number of stores which tesco is handling in all over the world is 3700 in all across the globe. Tesco use various innovation tools for the keeping their mission statement alive which is keep the loyal customer. Tesco was the first organization in the retail sector which introduced self checkouts so that the customer can make benefit out of it. B y the use of tesco's self check out services customer is able to scan their purchased order easily without any intervention and disturbance. These tills are the useful tool in reducing the waiting time of the customers and also the cost of staff and time give by the employees. These innovation strategies proved very favourable for tesco to attract the customer and profit towards them(Frow, Nenonen and Storbacka, 2015).

    Tesco make so much out of the internet boom as if any customer wants to update themselves with the products of tesco they can use the internet as tesco is providing all the specific information about their product line and services. Apart from the information of the product tesco also offering the information about offers such as menu, voucher, coupons, club card and home services etc. The tesco start the delivery process a long ago before any other retail organization started it as tesco is giving a very easy way to order their product online, the location of the nearest store, guide for the food which they are offering, feedback system, the event which they organizing and many other information also(Wu, Lii and Wang, 2015).

    Tesco also started their services as providing the facility for automated checkout machines for the customers. This innovation make the task easy for the customers by reducing the time which they was spending on the billing procedures. The evaluation of the innovation history of tesco is also enhance the understanding that tesco time to time use various strategies for the sake of improving and progressing of the management of the organization(Lin, McDonough, and Lin, 2013).

    The Existing Innovation Performance and Capabilities

    Tesco is totally surrounded by the competition and in these case there is a strong need by the side of the organization to adopt and implement the innovation techniques in a proper and systematic manner. For the effective management of the innovation strategies tesco requires the skill and the vision as the present scenario is showing the turnaround for the tesco is slow as the return to profit of the tesco in the year 2016 is horrible. Tesco is trying to improving the technological and other innovation strategies by using various management techniques. Currently tesco is moving towards the single online platform for the customers and try to minimize the redundancy from the side of the technology department(Malhotra and Majchrzak, 2014).

    By looking at the present innovation performance and the capabilities of tesco it can be understand that they are good enough in driving change in the innovation procedures across the organization. The tesco picked few areas where they required to drive the innovation procedure and use the maximum skills of the tech people in the organization in order to serve the customer better and improve the operation of the organization.

    There are various new innovation drive by the tesco for the betterment of the organization such as


    The technological tool RFID is considered as the one of the important tool in the area of retail. RFID is the one of the real buzz in the area of technology. Tesco is one among the few organization which are assembled with the technological tool such as RFID. The RFID technique is very useful for the organization in order to making the administrative task completely automated such as the task of stock counting and allowing the staff to more interaction with the customer for increasing their satisfaction level. The RFID initiative is driven by the tesco for the purpose of making the wide target to be as customer focused as much as it can be. AS the reliable system such as RFID is is offering a single view of all the level of the stock at all time. The tesco believes that this technology makes them armed with more knowledge that requires by them(Kindström and Kowalkowski, 2014).

    Connected Devices

    The grocers division of tesco is dedicated towards the innovation and the procedure which include the customer facing approach. For the betterment of the organization vision tesco is trying to creating a solution for the shoppers that meets with the requirement of the using the multiple connected devise in the single system in short making the organization each and every level more integrated with each other.

    The existing innovation performance and capabilities of tesco leads them towards the innovation of the channel on the digital platform IFTTT which is allows them to connect with the customers by the use of the application. The use of the tool is in a way that if customer will change the profile of the Facebook than automatically the twitter image of the particular customer will also change(Souto , 2015).


    The tesco is also performing various technological innovation for the improvement of their staff role and responsibilities. Bring your own device (BYOD) is leads to use the app on the bar code of the product and attain all the information about the level of the stock and availability of the stock. So this particular technological innovation is helping tesco in the improving the level of adoption.

    Mobile Payments

    The mobile payment innovation is considered as the basic innovation performance by tesco. The mobile payment technique is allowing the customer with the user friendly technique where they can use the mobile as the payment device. Tesco is enhancing the use of the mobile payment technology by allows their customer to pay for their goods and collect the loyalty points faster. The mobile payment app is providing a dashboard where customer can add multiple debit and credit card and use them while making their purchases.

    Tesco is also understand the potential of the use of mobile devices as the development of the smart phones is bringing various opportunities along with it. The tesco also opened discussion with the supplies for the purpose of increasing the potential by providing the advertising capability to the tesco mobile site(Matos and Silvestre, 2013).

    The tesco is also is also holding the innovation corporate programme which provide support to the various external start-up companies and tesco is collaborate with the small number of entrepreneurs. There are mutual benefits as executives of the tesco learn various key trends from the small businessmen and entrepreneurs are also get valuable advice from the experienced managers.

    Macro and Competitive Forces Affecting The Organization

    PESTLE Analysis


    TESCO is the retailing company which is operating worldwide, therefore all the political factors of different country will influence TESCO's performance. The political factors will include tax rates, the legislation act and mainly the stability of the country. Currently, the world is suffering from financial instability, there are many government who are forcing the retail companies to create the employment opportunity. TESCO is doing that, and thus it is helping in the increase in demand of their product.


    The economical factors include the demand, cost, profit and prices. TESCO should be aware of all the policies, whether it is related to taxation or finance. The company is mainly dependent on UK market because UK is having the market shares around 30%. That's TESCO have to make sure that they know all the rules and regulations of UK regarding import and export.


    The current social mood of the consumers is to do one stop shopping and bulk shopping. To keep this in mind, TESCO has increased in number of non food items, which are for sale. They have to provide good quality of food, because the consumers are more aware of their health and issues which are related to health. So TESCO is adapting to such social changes.


    The improvement in technology has many opportunities for TESCO. The online shopping facilities has been improved and the facility of home delivery. TESCO has invested in many energy efficient products, and by this they are completing their aim to reduce carbon emission.


    The policies of the government are having the direct impact on the performance of TESCO. The rule in UK is that, no organization can change the price of their products without informing. So TESCO is facilitating these policies, so that they will gain an competitive advantage over the competitors.

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    TESCO is adapting the process, which are environment friendly and also gives benefits to the society. The main objective of TESCO is to reduce the carbon emission by 50%. they are reducing the waste produced in their stores.

    Porter’s 5 Forces Analysis

    Bargaining power of customers: The market is very competitive and due to the fact that there is the availability of the same product of other brand and the customer's bargain power is high, TESCO have to keep the low prices of the products and very reasonable. So that they can gain advantage and attract the majority of the consumers.

    Bargaining Power of Suppliers

    TESCO's bargaining power with its supplier's is very low and due to this they are facing lots of problems. The competition is also high, so the suppliers is having an advantage over the company. TESCO have to build good and healthy relationship with the suppliers so that they can get the product on a very low price.

    Threat of New Entrant

    This is comparatively low in the retail industry. Because the new brand have to put some significant amount of money in the market if they want to give the competition to the well set brand like TESCO. So in future, such threat of new entry will not be faced by TESCO.

    Threat of Substitutes

    Sometimes, very small stores can create the problem for the organization. Because it is possible that they will fulfill all the demands of the consumers. But it is very rare, because the brand image of TESCO is very high.

    Competitive Rivalry

    TESCO have to be worried about this, because the other companies like Asda, Sainsbury has created very high competition in the retail industry. In order to gain the advantage, TESCO have keep the price as low as possible and quality of the product very high.

    The Future of the Industry 2020 and Beyond

    The retail industry world wide is on the way to the online technology. Customers and consumers have become more use of technology for their benefits. The retail world has to adopt the change which will be the future trend of the retail industry. Retail will embrace the showrooms in the future (Zeyen, Beckmann and Akhavan, 2014). The physical stores will be close down in the future. The future of the store can not been seen in the upcoming year. Transparency in the payment and transaction will be common place.

    The transactions will be conducted through mobiles. Sensor technology will give the great awareness to their customers. Technology will help to develop the relation with the customer for the long term. In the future technology will be assisting the sale. Analytics will become an integral tool in physical store. It has been prove as an powerful tools for the retailers. The beacon technology has been pushing offer and the product suggestions.

    TESCO has planed to increase of their stores and the online availability of the products at the low price (Barley, 2015). They has the planes for the bigger expansion. Future growth must be green growth. The future can be predict but not necessary that it will be the only future. While growing the TESCO will establish a strong record of the biggest retailer is now matching with some even more impressive targets for sustainable growth. They will move to the groundbreaking use of carbon labelling by influencing the customer for the less use of carbon intensive products. They had tackled the climate changes very well then others which helps then to to success in all the seasons.

    Future Innovation Capabilities

    TESCO is UK's largest super market group. Last year the organization faces one of the heavy losses in their market history. But as the time is progressing, the organization is adapting new technology and innovation plans in their manufacturing processes. This will reduce the cost of the product as well as the distribution of the products, at home or at abroad. This will increase the number of customer, because the prices are on the lower side (Ngo and O'Cass, 2013). TESCO is facing some ruthless competition from all the sides, they have decided to manoeuvre the complete manufacturing process, which will require both skills and vision.

    To apply the innovation, the main aim is to collect the information, so that they can build their new plans around that information. The organization is using both primary and secondary sources of collecting the data. This will help them in getting more information so that they can develop more accurate and precise innovation. The main and the most important innovation is the replenishment system application (Awate, Larsen and Mudambi, 2016). This system is applied in all of their stores. This will help in collecting the data of sales from different check points, and then transfer this data to the supply department.

    The supply team will easily get to know that in how much quantity, they need the product in the stores. This will help them in keeping the cost of the product on the lower side as well the keep the availability of the product at all time. This innovation is helping the organization in saving a huge amount of money. Because this will keep an control on the inventory. This particular system replaces the product in the stores very quickly and always fulfills the demands of the consumers. This system is working in all the levels of management.

    This advanced system collects the data from all the stores around the world and then sends this in their main data centre. Another innovation, TESCO is having is their Oracle wear house management system (Du, Leten and Vanhaverbeke, 2014). This is also related to the replenishment application system. This system helps in maintaining the chain management. The production capacity is very smoothly maintained by this system and this will help in maintaining the distribution also. The first time this system was used in South Korea and after the success of this system, this is now applied in all the manufacturing factories of TESCO, which are in UK. This system gives the best solution to the problem of distribution.

    The management of the organization helps all the people in adopting different types of system in maintaining their innovation. The innovation which is used by the organization is very important and also effective. The team always try in getting the maximum output form these new innovation, which is 100%. it is not easy to control and maintain these innovations. The team always analyze and monitor the innovation (Gupta, and Gupta, 2014). TESCO's IT team always try to keep innovating new ideas, so that they can implement those innovation and can maximize their profit.

    The future innovation system is mainly about collecting the information. So they are developing their information technology also. There is an information system, which is containing the information related to the company and its employees. These system team is working with the customers, sales, employees, production, invoice, their payroll, marketing, management and finance. The department who are managing these innovations are very well organized. The system information is very crucial and important in managing the data and also it will helps in making very quick decisions.

    This innovation of information system is basically has three main activities. One is the input, second is processing and the last one is output. These are the things which will be giving the information required by the department. All these new innovation will be completely dependent on the technology. It is not at all possible for any organization to create new innovation without the technology (Dodgson, Gann and Phillips, 2013). All the Oracle and replenishment system are the new innovations, which will be dependent on the technology. Development of information technology has become an integral part of the organization.

    The new development in information technology will help in minute to minute operations and will also helps in making vert quick decisions. In last couple of years, this new technology has increased the economy of the company and it helped in organizing the work very accurately. This will be dependent on mainly three strategy, one is structure, second is technology and the third one is the employees or the people. The structure of these innovations will have the design of the product and the control span as well.

    Technology will be having the processes, methods and various equipments which are used in making the product. The behaviour, expectation and attitude of the people which are involved in the work also plays an important role in the success of these innovations.

    These new innovation is giving the organization huge benefits in gaining the competitive advantages over the other firms. The main strategy of the organization is to supply the quality product and on the lower cost. The services should also be good at a sustainable price. By the help of this new technology, TESCO has started the online business, which will be very helpful in increasing their product sales. This shopping site is very easy and helpful in getting people, what they want at their door steps. TESCO always performs better than its competitors because of the technology and innovations they are using.

    Sometimes, they will not have the access of special sources, than also the common sources are utilized very well by TESCO and they can improve the efficiency and effectiveness of their products (Frow, Nenonen and Storbacka, 2015). This will helps in increasing their growth revenues, product growth and also profitability. This will keep them and their shares of the company on a higher level in the stock market than their competitors.


    From this report, it has been concluded that innovation plays an important role in the success of the organization. In the past time, the organization were not putting their efforts in marketing and new innovations. But as the time passes by, the new innovations will keeps on developing and TESCO has utilized all of them very well. They have implemented them in their plants so that they can reduce the harm on the environment.

    At the same time, the quality of the products can be increases. Such innovative processes are used, which can be very manufacture the product with better accuracy and in more efficient way. These techniques will help the organization in increasing their profitability and their brand image in the market. The performance of these innovation has put a great impact on increasing the production capacity of TESCO. In future also, TESCO is aiming at becoming the best retailing company in the world and with the help of these new innovations, they can achieve it by 2020.


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    • Barley, S. R., 2015. Philip Anderson is the INSEAD alumni fund professor of entrepreneurship at INSEAD in Singa-pore. He is the co-author of Managing Strategic Innovation and Change: A Collection of Readings (with Michael Tushman) published in 2004 and Inside the Kaisha: Demystifying Japanese Business Behavior (with Noboru Yoshimura) published in 1997. Inside the Kaisha was named 1997 Booz Allen Hamilton/Financial Times Global business book of the year for industry analysis/busi.Handbook of Qualitative Organizational Research: Innovative Pathways and Methods.
    • Cheng, C.C., Yang, C.L. and Sheu, C., 2014. The link between eco-innovation and business performance: a Taiwanese industry context.Journal of Cleaner Production.64. pp.81-90.
    • Chesbrough, H., 2013.Open business models: How to thrive in the new innovation landscape. Harvard Business Press.
    • Cui, A.S. and Wu, F., 2016. Utilizing customer knowledge in innovation: antecedents and impact of customer involvement on new product performance.Journal of the Academy of Marketing Science.44(4). pp.516-538.
    • Frow, P., Nenonen, S.. and Storbacka, K., 2015. Managing Co‐creation Design: A Strategic Approach to Innovation.British Journal of Management.26(3). pp.463-483.
    • Kindström, D. and Kowalkowski, C., 2014. Service innovation in product-centric firms: A multidimensional business model perspective.Journal of Business & Industrial Marketing.29(2). pp.96-111.

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