Critical Analysis of Tesco's Problematic Situation and Opportunity

This article provides a critical analysis of Tesco's problematic situation and opportunity, including lower revenues at a global level and the potential for expanding business outside of the UK and Ireland. It discusses theoretical frameworks such as the Ansoff Matrix and provides evidence of knowledge and understanding of business intelligence systems. The article concludes with recommendations for implementing a business intelligence or analytics system in Tesco.

Assessment

Table of Contents
1. Introduction to the problematic situation or opportunity regarding Tesco..............................1
2. Theoretical frameworks to link problem or opportunity of Tesco..........................................2
3. Evidence of Knowledge and understanding of business intelligence system..........................4
4. Critical analysis and justifications of dashboard solutions to address problematic and
opportunity situation in Tesco.....................................................................................................5
5. Conclusion and Recommendations for implementation of business intelligence or analytics
system in case of Tesco...............................................................................................................5
References........................................................................................................................................6

1. Introduction to the problematic situation or opportunity regarding Tesco
By analysing the revenues data of Tesco it has been analysed that the sales of different
businesses of the organisation is very low at global level. It is very important for the entity to
make efforts so that it can enhance the revenues worldwide (Shin, Kim and Kim, 2020). If it will
not be able to find solution for its problem, then it may result in decreased profits as well as
liquidity because in order to maintain both of them higher sales are required. On the other hand,
the main opportunity for the enterprise is to expand its business outside UK and Ireland because
the market share of it is very low at global level. By paying attention towards this opportunity it
will be able to increase number of customers and market share.
Due to the issue of lower revenues at global level Tesco is facing different challenges and
all of them are listed below:
 As Tesco is facing the issue of lower revenues at global level therefore it is resulting in
the decreased market presence of the entity that leaves negative impact upon business
execution in systematic manner.
 Lower sales at global level is also affecting profitability of the organisation because when
there will be less revenue than it will be very difficult to generate the desired profits.
 The market presence of Tesco is impacted because of lower revenues and sales world-
wide as compared to UK and Ireland. These two regions are domestic markets of the
organisation therefore it is having higher sales here and lower sales at global level.
 When sales of a business are low at global level then it leaves impact upon competitive
advantage which also affects the business in negative way.
In order to deal with all the above described issues Tesco can pay attention towards the
opportunity of expanding business in different locations around the world by using different
types of strategies (Evans and Mason, 2018). These could be launching new products or services
in the market and using innovative marketing techniques to motivate customers to buy the items
that are sold by it. With the help of it, the enterprise will be able to deal with the issue in
systematic manner and carry out operations systematically at domestic as well as global level. It
may pay attention towards all those regions where it has captured less market share.
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2. Theoretical frameworks to link problem or opportunity of Tesco
Tesco is one of the largest global entities which is operating business in different
countries and it is based in United Kingdom. The main problem which is faced by the
organisation is lower revenues at global level. In order to deal with this, issue the enterprise can
pay attention towards expansion of business in those regions where the market share of it is very
low (Rosnizam and et. al., 2020). In order to find appropriate solution for the problematic
situation of lower sales the senior authorities of the entity can use Ansoff Matrix. This theoretical
framework is considered as the most important strategic marketing tool when companies look for
planning and seek opportunities to enhance its market share. It mainly helps in determining
problems and finding solutions for increasing revenue growth for business via product
development in existing market or thriving new markets (Robson and Pitt, 2018). Using this
model, management of Tesco which is currently face problem related to decline in sales at
worldwide level, can thrive new opportunities in following way -
Market Penetration: This strategy is used mainly to increase sales of existing products
within a market, by developing new pricing strategy to attract customers; developing
promotional plans, acquiring competency and more. Whenever a company face problems related
to decrease in sales then, it becomes necessary for its management to penetrate in existing
markets by finding new opportunities of establishment of growth in business (Guo and Wang,
2019). In context with chosen company i.e., as initially it has started business in grocery retailing
sector, but later finding the increasing competition, it has adopted a number of strategies to
penetrate market. It includes launching of Tesco Clubcard points to gain customer loyalty and
become a preferable brand over other retailers among consumers. However, this technique helps
in enhancing its market share in domestic market (UK) and Ireland, with earnings of millions of
revenues. But still, this firm faces declination in sales at international platform China, Czech
Republic, Hungary, Ireland, Asia, Malaysia, Thailand, USA and more (Emlinger and Poncet,
2018). The reason behind this includes that Tesco is not changing fast enough for responding to
the shakeup within grocery and other markets, where it operates business. Along with this,
customers are also making non-food purchases more on the internet to get convenient shopping
and delivery services that leaves Tesco with its too many big stores.
Product Development: It is another major factor for improving and increasing growth of
companies by offering new products within existing markets, despite of penetrate new one. It has
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been identified that Tesco grab opportunities by introducing new products like organic food to
retain competitive position in the market (Firoz and Abinakad, 2016). It also offers a number of
financial services like credit card, loans, mortgages, insurance and more for increasing its market
share. But still sales of Tesco continuously down with 5.7% in Slovakia, 4.9% in Czech
Republic, 5.1% in Thailand and more. Therefore, all these facts indicate market failure strategy
of Tesco to retain overseas customers.
Market Development: This strategy of Ansoff Matrix framework focuses on moving
business into new market with existing products, to earn more revenue by enhancing customer
base over there (Kostovčík, Šrédl and Hommerová, 2019). Therefore, with intention to expand
and move current business operations into new markets, some strategies that Tesco have already
used are product dimension and distribution channels to attract new customers. But due to lack of
pricing strategies is one of the major reason behind declination of sales of respective firm in
overseas market. Evolving in grocery and food market, increasing cost pressures has led Tesco to
face problems related to citing poor customer sentiment (Aswathappa and Dash, 2020). An
increasing competitive market and challenging environment in retail industry, is creating more
difficulties in front of respective firm to gain customer loyalty and maintain its sales. Therefore,
introducing business in less competitive market of international area, might prove beneficial to
sale its existing products over there.
Diversification: This factor of Ansoff model mainly deals with new products to be
introduced in new market by a company for growth and further expansion. This strategy is
mainly used to diversifying the risk by offering multiple products into number of markets.
However, for each and every market, it becomes essential for a company to categories its
customer base for offering products accordingly (Jayaram, Manrai and Manrai, 2015). Tesco that
initially operates business in grocery market, to gain more revenue, it has diversified its business
in many sectors like non-food business such as selling books, wide range of electronics, financial
and rental services, furniture, etc. This would help in mitigating the risk occurred due to loss of
sales in one division. Although, by comparing data of domestic and international market, it has
seen that yet Tesco has diversified business, but still its sales performance is continuously
declining in overseas market (Kourtit and Nijkamp, 2018). Lack of customer retention strategy,
way to grab market attention and more, could be considered as main reasons behind declining of
its sales in foreign market.
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3. Evidence of Knowledge and understanding of business intelligence system
Food &
Beverage
UK & Ireland (In Million) Worldwide ( In
Million)
2016-17 43524 11381
2017-18 44914 11532
2018-19 51643 11180
2019-20 45752 10550
Tesco Bank
UK &
Ireland
Central
Europe Asia Worldwide
2016-17 37189 5268 4447 955
2017-18 37692 5977 5186 1012
2018-19 38656 6343 4947 1047
2019-20 44883 6030 4873 1097
Tesco Grocery Asia UK & Ireland
2015-16 20 46631
2016-17 40 47921
2017-18 106 49342
2018-19 49 50821
2019-20 355 52714
https://www.statista.com/statistics/238678/tesco-plc-group-sales-by-region-2010-2011/
https://www.tescoplc.com/investors/reports-results-and-presentations/financial-performance/
five-year-record/
https://solutions.vwdservices.com/products/documents/289142a0-cc47-4c30-8096-
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4. Critical analysis and justifications of dashboard solutions to address problematic and
opportunity situation in Tesco
5. Conclusion and Recommendations for implementation of business intelligence or analytics
system in case of Tesco
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References
Books and Journals
Rosnizam, M. R. A. B. and et. al., 2020. Market Opportunities and Challenges: A Case Study of
Tesco. Journal of the community development in Asia. 3(2). pp.18-27.
Shin, S., Kim, H. and Kim, W., 2020. Transnational corporations’ localization strategies via
retail attributes: Focus on Chinese market. Journal of Retailing and Consumer Services.
55. p.102088.
Evans, B. and Mason, R., 2018. The lean supply chain: managing the challenge at Tesco. Kogan
Page Publishers.
Robson, K. and Pitt, L., 2018. Tesco in South Korea: Strategic Localization. SAGE Publications:
SAGE Business Cases Originals.
Guo, L. and Wang, Z., 2019. Ratio analysis of J Sainsbury plc financial performance between
2015 and 2018 in comparison with Tesco and Morrisons. American Journal of Industrial
and Business Management. 9(2). pp.325-341.
Emlinger, C. and Poncet, S., 2018. With a little help from my friends: Multinational retailers and
China's consumer market penetration. Journal of International Economics. 112. pp.1-12.
Firoz, N.M. and Abinakad, M., 2016. Food Safety and Ethics in Foreign Markets. Conflict
Resolution & Negotiation Journal. 2016(4).
Kostovčík, T., Šrédl, K. and Hommerová, D., 2019. Competition in the sparkling wine market in
the Czech Republic. International Journal of Wine Business Research.
Aswathappa, K. and Dash, S., 2020. International Human Resource Management|. McGraw-Hill
Education.
Kourtit, K. and Nijkamp, P., 2018. Big data dashboards as smart decision support tools for i-
cities–An experiment on stockholm. Land use policy. 71. pp.24-35.
Jayaram, D., Manrai, A.K. and Manrai, L.A., 2015. Effective use of marketing technology in
Eastern Europe: Web analytics, social media, customer analytics, digital campaigns and
mobile applications. Journal of Economics, Finance and Administrative Science. 20(39).
pp.118-132.
Online
Tesco sales fall across all major markets. 2013. [Online] Available at:<
https://www.theguardian.com/business/2013/dec/04/tesco-sales-fall-major-markets-third-
quarter>.
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