How Tesco Can Address The Problems

 

The biofuel market is a hugely untapped arena in terms of mass production distribution, with drawbacks that are mentioned in section Market Overview. Tesco has the capacity overcome these and the resources to become a hybrid revolutionary / big improver in this market through. It can be a revolutionary in terms of its acquisition of inputs and a big improver in terms of its introduction of biofuels to the mass market through its vast distribution networks.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The company will be able to grow in this market through reducing both the costs and environmental externalities of the production process. It will be preferable when compared to the established competitors, as our production will not require inputs to be grown specifically for the process, and these reduced costs will also add value to the business model.

 

Tesco’s advantage in this market is that our original business is a food retailer. UK law stipulates that food cannot be sold past its use by date7, and with such a high turnover of produce our business generates a lot of waste. Recent surveys have shown that this can be as much as 30,000 tonnes every six months [1]. While this is currently given away to charities such as FareShare, converted into animal feed or incinerated [2], it could instead be very profitable if processed into fuel. Not only would this reduce the firm’s costs in waste disposal, but increase our turnover through biofuel sales at our petrol stations (and further reducing our costs by powering our own delivery vehicles etc.). In addition to this additional waste could be obtained by collecting other retailer’s waste, a tactic which we feel that they will find agreeable as we are also doing them a service.

 

The competitive advantage that we will hold over the current stakeholders in the biofuel industry are lower input costs, giving a larger profit margin or an ability to reduce prices, a more ethically sound environmental stance, as none of the inputs are sourced by reducing food output, and our own established distribution outlets.

 

 

REFERENCE:

[1] http://www.bbc.co.uk/news/uk-24603008

[2] http://www.tescoplc.com/index.asp?pageid=594