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IBUS90003 Issues In Managing The Multinationals

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IBUS90003 Issues In Managing The Multinationals

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Course Code: IBUS90003
University: The University Of Melbourne

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Country: Australia

Select an MNE to study. Provide one example of competitive advantage of the MNE and address the following points:
Which of the three sources of competitive advantage (national differences, scale economics, and scope economies) does this example demonstrate? Make sure you include an explanation of why you think so. 
Which of the three strategic objectives (achieving efficiency, managing risks, and innovation, learning, and adaptation) does this example address? Make sure you include an explanation of why you think so. 
Please refrain from choosing an MNE that we have discussed in class
The essay should be clear and concise introductory statement that addresses the issues in the question appropriately. The essay should have a concluding statement that summarises the main messages of the essay

The purpose of this study is that analyze competitive advantage of one of the multinational enterprises in the globe. Competitive advantage signifies the recognition that the enterprise delivers quality goods at lower cost or provides services at higher value than competitors (Amini et al., 2012). The selected MNEs for this study is Tesco Plc that deals in the retail industry in supermarket operation chain across the globe. The study focuses on the main source of competitive advantage for Tesco Plc. The strategic objectives that this enterprise addresses is also highlighted in this study.
About Tesco Plc
Tesco plc is one of the UK- based retailing organization that supplies consumers with groceries and other services. The company has near around 476000 employees and 6553 stores worldwide. The stores of Tesco ranges from Tesco Express, Tesco metro and Tesco petrol stations. The core purpose of Tesco Plc is to offer their customers proper service in order to help them enjoy better way of living (Core Purpose and Values., 2018). The enterprise also believes in providing their consumers with the reward systems to attain their loyalty and trust. Tesco plc’s business strategy is to experiment with different aspects of business and attain competitive advantage over their rivalries.
Example of competitive advantage of Tesco
Tesco introduced 24 hours of shopping experience to their customers and at present it has several of Click and Collect points across the nation. In addition to this, their distribution system also helps Tesco to gain competitive advantage (Schaltegger, Lüdeke-Freund & Hansen, 2012). Even with the advanced supply chain system across the globe, they have the ability to deliver right good to right store at appropriate time in timely and cost –effective manner. This helps the enterprise to sustain the business by integrating diversified and value- oriented approach in retailing.
Source of competitive advantage of Tesco Plc
Tesco has attained bench mark of high profits through proper customer service, high product quality and low product cost. The company’s competitive advantage makes commodity preferable over other products by the customers. One of the major source of competitive advantage of this company is economics of scale owing to its huge scale of business operations (Barney, 2012).  Economies of scale refers to the cost advantages which the companies attain owing to their scale of business operation along with cost per unit of total output declining with increasing scale. As their businesses grow and output increase, they benefits from declining in average production cost. The total cost of producing products increases with rise in output but its cost of manufacturing per unit decreases as output increases. The economies of scale of this company are their capital cost of production, friction loss of industrial equipment and transportation (Urbancova, 2013). Tesco’s source of economies of scale occurs in its possibility of buying various inputs for producing products at low per-unit cost. One way in which this enterprise attains benefit from scale economies is expanding their business by opening new stores across the globe (Finster & Hernke, 2014).  Building large stores also provides them benefit from scale economies as the government provides them huge cash incentives for building new supermarkets.  This company attains competitive advantage from scale economies under numerous categories. One of their internal scale economies is purchasing of inputs. As this enterprise continues to expand their business, they tries to increase their order size for the raw materials. This outcomes in decrease in cost of the component purchased. As a result, the average production cost decreases, which in turn provides Tesco competitive advantage over their rivalries (Mahdi & Almsafir,.2014).
Strategic objectives that Tesco Plc address
Tesco plc strategic drivers mainly sets out plans as well as aspirations that create long term value for their stakeholders. Innovation is one of the strategic objectives that this example addresses (Schubert, Williams & Woelfle, 2013). This strategic objective helps Tesco to attract more customers and satisfy them based on their service and product requirements. By listening to their customers as well as analyzing the trends, the company can drive innovation in the commodities they sell and channels through which they sell these products.  Even their strength of partnerships with their suppliers plays vital role in innovation (Pisano, 2015). Moreover, by building the business together, Tesco provides their suppliers confidence in investing in innovative goods and solutions to benefit their customers.
From the above discussion, it can be concluded that the above source provides edge to this company over the competitors. Effective strategy adopted by managers of the enterprise so helps them to gain competitive advantage over their competitors. This competitive advantage makes their good preferable over the other rivals by their customers. Apart from this, Tesco innovates product after analyzing the market trends and customers purchasing behavior. This in turn aids them to attain sustainable competitive advantage and expand their business across the globe.
Amini, A., Darani, M., Afshani, M., & Amini, Z. (2012). Effectiveness of marketing strategies and corporate image on brand equity as a sustainable competitive advantage. Interdisciplinary Journal of Contemporary Research in Business, 4(2), 192-205.
Barney, J. B. (2012). Purchasing, supply chain management and sustained competitive advantage: The relevance of resource?based theory. Journal of supply chain management, 48(2), 3-6.
Core Purpose and Values. (2018). Retrieved from https://www.tescoplc.com/about-us/core-purpose-and-values/
Finster, M. P., & Hernke, M. T. (2014). Benefits organizations pursue when seeking competitive advantage by improving environmental performance. Journal of Industrial Ecology, 18(5), 652-662.
Mahdi, O. R., & Almsafir, M. K. (2014). The role of strategic leadership in building sustainable competitive advantage in the academic environment. Procedia-Social and Behavioral Sciences, 129, 289-296.
Pisano, G. P. (2015). You need an innovation strategy. Harvard Business Review, 93(6), 44-54.
Schaltegger, S., Lüdeke-Freund, F., & Hansen, E. G. (2012). Business cases for sustainability: the role of business model innovation for corporate sustainability. International Journal of Innovation and Sustainable Development, 6(2), 95-119.
Schubert, P., Williams, S. P., & Woelfle, R. (2013). Sustainable competitive advantage in e-commerce and the role of the enterprise system. In Competition, Strategy, and Modern Enterprise Information Systems (pp. 303-319). IGI Global.
Urbancova, H. (2013). Competitive advantage achievement through innovation and knowledge. Journal of Competitiveness, 5(1).,67-87.

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