SWOT Analysis of TESCO

This report examines the Tesco internal and external business environment and its impact on its business. It includes a SWOT analysis of Tesco, highlighting its strengths, weaknesses, opportunities, and threats.

GLOBAL BUSINESS
ENVIRONMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................2
MAIN BODY..................................................................................................................................2
SWOT Analysis of TESCO.........................................................................................................2
Operational Impact Analysis.......................................................................................................3
CONCLUSION................................................................................................................................4
REFERENCES................................................................................................................................5
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INTRODUCTION
Business environment refers to the all the forces or factors internal and external such as
customer expectations, employees, supplier, government, technology, social and economic trends
that directly or indirectly have influence on the organisation.
Tesco is supermarket multinational company having its headquarters in Welwyn Garden City,
England. Primarily the company started dealing in groceries but with the time, company came up
with the various product lines and entered into retail supermarket industry offering clothing,
books, electronics, softwares, furniture etc.
This report examines the Tesco internal and external business environment and its impact on its
business.
MAIN BODY
SWOT Analysis of TESCO
Strengths –
One of the prime strength of Tesco Plc is that the company has the strong leadership
management and because of that company was able to tackle the huge loss caused by the scandal
and come back and again has the majority and leading market share in UK market. Company has
received numerous awards for its excellence in retail industry, customer service and about the
overall shopping experience (Vlados, 2019). Company is considered one the largest retail giant
in the world and can give strong competition to its rivals. Tesco have its presence globally;
across Europe, North America and have good market share in Asia and Ireland. Company is not
just growing globally but also it’s growing by opening the no. of stores in different cities and
locations domestically and has started its business online for the ease of customers. By using the
superior and advanced technology, it provides the features that enhance the customer satisfaction
and also offers the facility of M-commerce. Tesco have the efficient supply chain which helps in
reducing cost and wastage.
Weakness –
Tesco has not been successful in operating its business at some places, company has to exit from
US and Japan markets after surviving to the last because of its failed export operations. One of
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key weakness of the company is that it was found involved in the fraud trial for showing the false
accounting statements and misinterpreting the profits which had a great impact on its image. Due
to Brexit referendum, there was reduction in operating profit and fall in the share price of the
Tesco. Tesco’s profits were profoundly affected because of its high credit card liability and debt.
Company is the market leader in UK and face tough competition, to give tough competition it
uses the low-cost strategy due to which its operating profits are reduced. Tesco did not carry not
sufficient market research and because of which it was not able to perform well with certain
outlets in some countries.
Opportunities –
Tesco has opened some of its operations in developing countries like South Korea, Indonesia and
is receiving good response from those places which means that it have good and profitable
opportunity for the company (Sarsby, 2016). With the help of growing technology, company can
facilitate its existing customers with the easier facilities of payment and features which is simpler
to use. It can also take hep of digital technology to market itself broadly and can gain more
potential customers. Free home deliveries and online shopping has become one of its growing
opportunities. Tesco has currently introduced its new discount stores, Jacks which is showing
significant growth is growing business opportunity and can compete with business like Lidl and
Aldi.
Threats –
Brexit Referendum is one of the greatest threats to Tesco business as the deals will no longer be
with the European Union, now everything will be according to Britain which means chances
with policies and procedures and could cost huge cost as well (Teoli and An, 2019). Some of the
cases which have caused potential threats for the company s its Christmas ad controversy and
was accused of fake farm legal threats which caused serious legal proceeding and impacted the
brand name badly. Company’s growing competition with global supermarkets giants like
Walmart.
Operational Impact Analysis
The following drivers which had a great impact on the Functional areas of Tesco –
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Marketing – The drivers have the positive and negative influence on the marketing of Tesco.
Through the help of social media and digital marketing company is able to influence more
customers and try their best to attract the potential customers. To attract the potential customers,
company always comes up with some innovative strategies such offer/ discount coupons for
online and offline shopping, freebies, win chance to trip and tours which attract the traffic on
social media and company is successfully able to increase its customer base and generate profit.
Tesco’s Christmas Ad controversy, had a negative impact on the company, as the company’s
marketing department did not thought of it would hurt the sentiments of Christians because of
this company’s image was badly impacted and received boycott from people.
Research & Development – This function also had the positive and negative impact the business
of Tesco. Tesco was unable to operate its business in some of the countries and locations because
of its improper research of the culture and understanding what the market and customer needs
are in some countries, because of which it had to bear huge loss (Fatricia, 2017). It would have
been better if the company before entering solely would have done strategic alliance or joint
venture with the company in that country that would have reduced the risk of its operation. The
positive impact is that because of the deep understanding of the British and Ireland Market
Company is successfully running its operations and is the market leader in these countries.
Operations –
With the large customer base and efficient supply chain management, Tesco is able to reduce the
cost and maximise is profit margin in some countries like South Korea, Ireland, UK because in
these countries it have the good relationships with the suppliers that provide the company in lost
cost products and raw material but in some few countries it has failed its operations also because
it was unable to manage its supply chain network efficiently internationally and faced the
competition from their local companies.
CONCLUSION
The following report doe the complete analysis of the internal and external environment of
Tesco’s business and by using the key drivers from the SWOT analysis examines the way in
which the key drivers influence the Tesco’s functional areas
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REFERENCES
Books and journals
Fatricia, R.S., 2017. STRATEGIC ANALYSIS OF TESCO SUPERMARKET. Jurnal
Manajemen Terapan dan Keuangan. 6(2). pp.69-86.
Sarsby, A., 2016. SWOT analysis. Lulu. com.
Teoli, D. and An, J., 2019. SWOT analysis.
Vlados, C., 2019. On a correlative and evolutionary SWOT analysis. Journal of Strategy and
Management.
Online
Author surname, First letter of name., 2020 [Online]. Available through: <online-website-link>
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