Marketing management essay writing online help on: Largest food retailer Tesco
- 1. Introduction
Tesco is one of the largest food retailers situated in United Kingdom (UK). There are approximately, 2, 318 stores operating all across the globe. Tesco is headquartered in Hertfordshire, United Kingdom (UK). In United Kingdom alone the number of stores operating are 1, 878. Tesco is referred to as a wholly owned subsidiary providing online services i.e. Tesco. net & Tescodirect.com. Apart from the online services, there are various offline services offered by the enterprise. One of the leading offline services provided to its clients is the personal finance services.
It has been estimated that, in the end of 2004 Tesco earned revenues up to £33,557 million. A rise of 18.7% has been seen from the previous year’s revenue which was calculated to be £28,280 million. Apart from stores in UK, Tesco marks its presence in the other countries as well such as Asia and Europe. Tesco mainly operates in the UK market & has grasped high market shares by operating under four different banners such as metro, extra, express and superstore. On an average the daily sales of Tesco has been calculated to 40, 000 from clothing, food products & non food products. The own brands of Tesco is approximately 50% of the total sales earned by the enterprise.
Tesco considered as the largest employer of the private sector in the region of UK. It is viewed that the Tesco Company has approximately 360000 workers globally. In UK, stores of the UK vary from small domestic sites of the Tesco Express to the large Tesco superstores and Extras. It is viewed that Tesco operates in almost 12 countries apart from UK, comprising Japan, China and Turkey. The Tesco Company has currently opened the stores in the US. This global expansion is considered as the part of the Tesco strategy to grow and diversify the business. It is viewed that in its non –operations Tesco maintains on strengths and formed as the leader of the market in supermarket sector of the UK.
Apart from the convenience products, Tesco also have has stations located in the various parts of the globe. The organization has become of the largest organization which deals in varied products from food items to non food items such as clothing, gas stations, etc. The organization has become of the largest petrol pumps operating as independent retailers. Some of the other services which are offered by Tesco are personal finance in UK. Tesco personal finance refers to a joint venture (JV) with Royal Bank of Scotland. The approximate customers who are being dealt with Tesco Personal Finance are more than 3.4 million.
The operations of the company i.e. Tesco can be seen in Europe including Poland, Hungary, Slovakia, Republic of Ireland, Czech Republic. Tesco’s Republic of Ireland operates in 82 stores which are situated in the Hungarian market. Tesco operates in other countries such as Taiwan, Malaysia, Asia, Thailand, and South Korea*. The organization operates 64 stores in Thailand & 28 stores in the South Korean Market and apart from these there are three stores situated in Malaysian and Taiwanese market.
Tesco is a well known brand of the food industry in the UK market. In order to earn high levels of success by the enterprise different marketing concepts shall be implemented in order to know more about their internal as well as external environment. In order to know more about the internal environment Tesco shall use SWOT Analysis. This will help the enterprise to know more about their internal strengths & weaknesses and highlight the opportunities and future threats. The external environment for Tesco can be evaluated by implementing PESTEL Analysis, Cost & Benefit analysis, Segmentation, Targeting & Positioning and the five forces porter’s model.
1. SWOT Analysis:
In order to have a detailed analysis of how does the enterprise operate within its internal environment Strength Weakness Opportunities and Threat (SWOT) Analyses shall be conducted. The SWOT Analysis for Tesco is as follows:
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Strengths Þ Tesco has been ranked as the third largest grocery store in United Kingdom. Þ The operation for Tesco is spread all across the globe with approximately 4, 331 stores operating in Asia, USA and Europe. Þ The market share grasped by Tesco in the UK market is 30.7% as compared to its competitors in the year 2010. Þ One of the major strength for Tesco can be seen with regards to its financial performance. Þ Tesco has been referred to as an organization which generates a turnover of £ 54billion. Þ The turnover has shown a major increase of 14.9% as compared to 2008. Þ In the year 2009, the sales for the non food items have been increased by 50% as compared to the previous year. Þ The main aim for Tesco is to charge the products at affordable prices to its customers without compromising upon the quality of the same. Þ Tesco adopts various customer retention strategies with the help of loyalty scheme i.e. “Tesco Club card”. Þ With the help of the data collected from the loyalty scheme will help to practice effective direct marketing as well as promotional techniques. |
Weakness Þ Tesco has not been performing well in the past as compared to its competitors. Many products were recalled by Tesco in the year 2009, this lead to the deterioration of the brand image thereby leading to financial loss to the enterprise. Þ The operations of the enterprise are concentrated in UK & more than 75% of the revenue was generated from the same. Lack of geographical diversification can act as one of the major weakness for Tesco.
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Opportunities Þ The network of Tesco is on rise. Tesco has opened approximately 650 stores in the year 2009 out which 435 stores were located at international places. Þ Wider market presence of Tesco will help the organization to improvise its economy of scale thereby reducing the risk. Þ The popularity of Tesco.com has been increasing at a high pace. Increased popularity will provide Tesco an opportunity to attract more people thereby enhancing the profit levels for the same. Þ One of the major opportunities for Tesco would be expand within the Asian countries such as India. This will help Tesco to strengthen its global market position. Þ Franchise agreement with Tata group will provide one of the largest industrial corporations of India. Þ One of the major opportunities with respect to Tesco can be seen with regards to the maximum level of revenue which is generated from the food segment. |
Threats Þ With the global financial crisis, the UK economy has been contracted by 2.4% in the year 2009. Further, it has been estimated that, the UK economy is likely to contract by 4.2%. Thus, the concentration of Tesco will decrease in case of the financial standings. Þ The decline in the income level & the rise in the levels of unemployment have affected the buying power of the consumers. This will lead to an adverse affect over the sales of the company. Þ There are high levels of competition within the grocery market prevalent in UK economy. Tesco has been referred to as one of the largest as well as oldest grocery shops for the past 15 years. The intense competition from the competitors has acted as one of the major threats for the enterprise as a whole. Some of the main competitors to Tesco are Sainsbury, Morrison, Asda, etc.
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The detailed SWOT Analysis for Tesco has been summarized as follows. They are as under:
1. PESTEL Analysis:
In order to implement the marketing concepts at TESCO, a detailed PESTEL Analysis shall be conducted. This will help the organization to have a fair idea regarding the external factors which might affect the functioning of the same. The five factors which shall be focused are political, economic, social, technological & legal factors. The PESTEL analysis for TESCO has been described as under:
Þ Political: The first factor which shall be focused by TESCO while conducting the PESTEL Analysis is the political aspect.
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Political
Þ China’s accession to the WTO has promoted a free flow of foreign trades by removing all barriers encouraging Western companies, including Tesco, to make way into the world’s most profitable market encompassing over 1.3 billion people (Straits Times, 2010). In 2009 an agreement was signed by Tesco to set up a premeditated series of joint ventures for the development of shopping malls in China. This joint venture included three malls: Anshan, Fushan and Qinhuangdao. Furthermore, 18 new hypermarkets are expected to open in China by 2010 (Tesco, 2009). The growth of Tesco’s international business segment is on the rise and it is predicted to account for one quarter of the company’s profit.
Þ Promotion of free trading blocs by governments to benefit from globalisation has been presented in the literature (Lynch, 2003). Immersion of 10 further countries into the European Union (EU ) took place in 2004 promoting trade between Western and Eastern European countries (BBC, 2009). This has provided Tesco with a platform to expand its retail network across the EU.
Þ Economic: The second factor which shall be focused by TESCO while conducting the PESTEL Analysis is the economic aspect.
o Economic factors would be referred to as one of the major factors for Tesco as it would impact the buying behavior of the customers. In the year, 2008 the economy of UK was under recession which led to a substantial decrease in the interest rates which helped to minimize the further rise in levels of unemployment. It has been seen that, the spending power of the consumers is on rise as they are more confident about the financial position.
o The positive aspect of recession would be that less people will go eat to eat & prefer to eat at home. This will provide Tesco an opportunity to increase its output. Food refers to the last thing which the consumers will cut upon. The percentage rise in the levels of spending of the consumers over the year has increased considerably. The rise has been shown as under:
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