Essays on Strategies of Tesco PLC Case Study

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The paper 'Strategies of Tesco PLC" is a good example of a business case study. Tesco PLC is the leading food retailer in the United Kingdom with a market share of 30.6%. It has expanded its operations across 14 nations in Europe, North America and Asia (The Telegraph, 7 October 2011). It is the biggest retailer worldwide in terms of revenue earning after Walmart and Carrefour and indeed, the second-biggest in profit terms after Walmart (Nwagbara, 2011, p. 56). According to Nwagbara (2011, p. 56), Tesco’ s commercial portfolio comprises 450 superstores which offer both food and non-food items such as books and DVDs; 170 metro stores which stock an array of food products in towns and city centres; and over 950 express stores offering more than 7,000 food products.

Tesco has also been engaging in online retailing recently through Tesco Direct and Tesco. com. Tesco was founded by Jack Cohen in the year 1919 and established its initial store in 1929 in London (Nwagbara 2011, p. 56). However, the company has progressed to become the leader in the United Kingdom food retailing industry over the decades.

The purpose of this paper is to examine Tesco’ s macro and microenvironment and to determine its competitive position and development over the last few years. The paper also examines the company’ s internal resources and evaluates how they fit into the challenges of its micro and macro environment. Additionally, the opportunities and threats brought about by its environmental conditions are assessed. Finally, the current strategy adopted by this company is evaluated, its viability gauged and recommendations are given. The macro-economic environment Political The main political issues affecting Tesco currently are the changes in the corporate tax rate and the employment law.

The UK government announced in the 2012 budget that it would reduce corporate tax by 1% for two consecutive years (2012 and 2013) from 24% to 22% (HM Treasury, 2012). This will save Tesco a lot of funds and make it more financially stable. Additionally, the government declared that the increases in the national minimum salary in the following years will be below the inflation rate. This implies that the cost of employment will reduce in real terms.

Therefore, Tesco will incur lower costs (in real terms) while recruiting lower-level workers such as checkout attendants (HM Treasury 2012). Economic The major economic matters that affect Tesco currently are high unemployment and price rises in the UK. According to BBC (2012a), the Consumer Price Index (CPI) in the UK has risen and has been fuelled by some of Tesco’ s food products. The impact of this has been a reduction in consumption in the UK market, hence slowing Tesco’ s growth in this country. Additionally, there is a high rate of unemployment in the UK, causing a reduction in aggregate consumption.

This has further restricted the growth of Tesco in the UK (BBC, 2012a). However, this may lead to a reduction in the cost of employment in the future, thereby leading to a positive impact on the retailer. Social The main social issue affecting Tesco currently is the change in consumers’ lifestyle, leading to a change in tastes and preferences. Since 2011, Tesco has recorded a tremendous increase in sales for “ free-from range” products, indicating that there has been a huge change in tastes and preferences and people are opting for healthier lifestyles (Tesco, 2012b).

This has necessitated the need for Tesco to keep track of this change and to take advantage of it. Tesco has responded to this by developing a new product range called “ Clubcard. ” The company needs to continuously engage in market research in order to be always informed about the changes in consumer tastes.

References

BBC 2011 “Tesco to fight dairy price-fixing from OFTA”, viewed 7 January 2013

BBC 2012a “Economy tracker” viewed 7 January 2013

BBC 2012b, “Tesco unveils profit rise and £1bn investment in UK”, viewed 7 January 2013

Grierson, J 2012, “Tesco suppliers in price warning”, The Independent, 26 September 2011, viewed 7 January 2013

HM Treasury 2012 “Budget 2012”, viewed 7 January 2013

Nwagbara, U 2011, “Managing organizational change: leadership, Tesco, and Leahy's resignation”, e-Journal of Organizational Learning and Leadership, Volume 9, No. 1, pp. 56-75.

Ruddick, G 2012, “Tesco recovers UK market share”, The Telegraph, 24 April 2012, viewed 7 January 2013

Tesco 2011b, “Corporate Responsibility Report”, viewed 7 January 2013

Tesco 2012a, “Annual Report 2012”, viewed 7 January 2013

Tesco 2012b, “Our Brands”, viewed 7 January 2013,

The Telegraph, 05 October 2011, “Tesco profits rise as overseas growth offsets sluggish UK”, viewed 7 January 2013

Which 2012 “Grocery prices: What you need to know”, viewed 7 January 2013

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