Terry Leahy - Europe's Most Admired Leader

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Case Details:

Case Code : LDEN036
Case Length : 20 Pages
Period : 1995-2005
Pub Date : 2005
Teaching Note :Not Available
Organization : Tesco
Retail ing
Countries : UK

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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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Getting Awards and Recognition Contd...

Leahy was instrumental in turning Tesco around and making it the largest retailer in the UK with a market share of 29% in the UK grocery market as of January 2005 (Refer to Exhibit I for the market shares of major players in the UK's grocery market). In terms of global rankings by revenues in 2003, Tesco held sixth position, behind Wal-Mart, Carrefour, Home Depot, Metro, and Royal Ahold (Refer to Exhibit II for the top ten players in global retailing). Leahy had expanded Tesco's operations to include a wide range of businesses including finance, clothing, consumer durables, reaching areas which were hitherto not under the purview of food-retailers. Under Leahy's leadership, Tesco's revenues increased from 16.45 billion in the fiscal 1997-98 to 37.07 billion in the fiscal 2004-05.

Leadership and Entrepreneurship Case Studies | Case Study in Management, Operations, Strategies, Leadership and Entrepreneurship, Case Studies

During the same period, Tesco's net income rose from 532 million to 1,366 million (Refer to Table I for Tesco's financial performance under Leahy's leadership and to Exhibit III for key financial statistics of Tesco). Under Leahy, the stock price of Tesco more than doubled from 120 pence7 to 320 pence by June 2005 (Refer to Exhibit IV for Tesco's stock price chart). By mid-2005, Tesco had a workforce of 237,000 in the UK – double the size of the British Army.

Background Note

Tesco was founded by Jack Cohen (Cohen) in 1919 using his bonus received from World War I army service. In 1924, Cohen bought a tea shipment from TE Stockwell. The first three letters of TE Stockwell and the first two letters of Cohen were used to form a brand 'TESCO.' The first Tesco store was opened in 1929 in Edgware, London, and the first supermarket was opened in 1956 in Maldon, Essex. The first superstore was opened in 1968 in Crawley, West Sussex. Till the 1970s, several companies that Tesco had acquired like Victor Value had not been properly integrated. Moreover, Tesco's stores were small and ill-equipped.

Tesco competed only on price and the goods available at its stores were perceived to be of mediocre quality. Customers all over Britain were becoming affluent and were looking not for bargains but for costly luxury merchandise. To meet these changes in demand, Tesco closed down many of its stores to concentrate on larger stores with better facilities. It went in for a revamp of products and started to offer a wider range of goods and also to concentrate on customer service and quality. Tesco began operating petrol pumps in 1974. Even though Tesco went up-market, it tried to retain its image as a company offering competitive prices...


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