Tesco's 'Steering Wheel' - A Tool for Strategic Value Creation and Business Transformation

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Case Details:

Case Code : OPER067
Case Length : 21 Pages
Period : 1990-2007
Organization : Tesco Plc.
Pub Date : 2008
Teaching Note : Available
Countries : UK
Retail

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"Throughout all our businesses across the world we measure our performance through the 'Steering Wheel', whether we work in distribution, the office, or in stores. This helps maintain focus and balance in what counts to run each of our businesses successfully, be it wage costs or whether customers can get everything they want."¹

- Tesco's Vision and Values.

"We manage major change in Tesco through our 'Steering Wheel' measurement system. Our performance against these measures is included in deciding our payments to management."²

- Terry Leahy, CEO, Tesco Plc., in 2007.

"Professor Kaplan was one of the very first people to realize that there is more to running a business than financial metrics and has been very successful at expanding that idea. The success of Sir Terry Leahy at Tesco underlines how effective it can be when rooted in clarity of thought." ³

- David Pendleton, Chairman, Edgecumbe Group⁴ in 2004.

Transformation through Innovation

For the financial year ending February 24, 2007, the UK-based retailer Tesco Plc., one of the largest retailers in the world, reported annual revenues⁵ of £ 46.6 billion⁶, an increase of 10.9% over that of the financial year 2006.

For the financial year 2007, the profit before tax was reported at £ 2.65 billion, an increase of 20.3% over that of the previous financial year. Tesco accounted for £ 1 of every £ 8 spent by shoppers in Britain and the company held a market share of more than 30% in the UK grocery market (Refer to Exhibit I for top 10 grocery retailers in the world in the year 2006).

Tesco's 'Steering Wheel' - A Tool for Strategic Value Creation and Business Transformation - Next Page>>

1] Our Vision and Values, www.tesco-careers.com

2] "Sir Terry Leahy Answered your Questions," www.news.bbc.co.uk, January 19, 2007.

3] Rhys Blakely, "Revealed: The Secret of Tesco's Success," Times Online, October 18, 2004.

4] Edgecumbe Consulting is a UK-based firm of occupational psychologists and HR specialists with a wide range of clients in the corporate and public sector.

5] These results were for 52 weeks ended February 24, 2007, in the UK and the Republic of Ireland and the 60-week period till the end of February in the other countries in which Tesco operated.

6] As of August 24, 2007, 1 £ = US$ 2.003.


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