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Lossing of Ground in Domestic Market by Tesco

   

Added on  2020-02-05

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LOSSING OF GROUND INDOMESTIC MARKET BYTESCO
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TABLE OF CONTENTSINTRODUCTION ..........................................................................................................................3Aims & objectives ..........................................................................................................................3Literature review..............................................................................................................................4Research methodology.....................................................................................................................7Findings ...........................................................................................................................................8The main objective of research is to find out the those factors due to which firm performancebecome poor...........................................................................................................................8The second main objective of research is to identify the solutions that can be adopted toimprove firm profitability.....................................................................................................10Evaluation and analysis .................................................................................................................11Conclusion.....................................................................................................................................12Recommendation ..........................................................................................................................13REFERENCES..............................................................................................................................15
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INTRODUCTION Tesco is one of the largest retail player in the UK market. It is operating in number ofnations of the world and having more then 6000 stores with workforce of more then 5,00,000employees. From past few years firm is facing problems in its business and consistent erosion ofprofitability is the one of the main issue that Tesco is facing in its business. If there will be slowgrowth rate of revenue then it is not a big issue but in case of Tesco revenue is fallingconsistently in comparison to previous years. There are many rival firms of Tesco like Lidl, Aldi,Sainsbury, Asda and Morrison. These retail firms are giving tough competition to Tescoespecially two German retail firms Lidl and Aldi. The common strategy that is followed by mostof retail firms in the UK is that they are offering products at low price. But there is difference inprices at which firms are selling there products. This is the reason due to which retail firms areearning low margin in there business. This cut throat competition strongly affects profitability ofTesco. Earning of low margin in business and strong competition are the one of most importantfactors that are playing key role in low profitability of the business. Although, Tesco marketshare today also is very high in the UK retail industry in comparison to its competitors. But ifsame situation will exist in upcoming years then Tesco will loose its ground in the market. Thus,the main question that arises is that what are the factors due to which Tesco is not able to earnsufficient profit in its business. The second main question that arises is that what steps Tescomust take in order to improve its condition.Aims & objectives Aims and objectives of research are given below.AimsThe main aim of the research is to identify the reasons that are responsible for decline inthe firm profitability.ObjectivesThe main objective of research is to find out the those factors due to which firmperformance become poor.The second main objective of research is to identify the solutions that can be adopted toimprove firm profitability.Justification for aim and objectives
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The main aim of the research is to identify the factors that are responsible for decline in the firmprofitability. This aim is determined because in past years due to strong competition firm loss itsground in the market which is main subject of the research study. In order to achieve this aimobjectives are prepared. There are two main objectives answers of which will help in achievingaim of the research. The first objective is to identify the overall factors that are responsible forpoor performance of Tesco in its business. In line to this second objective is prepared underwhich solutions will be identify to solve problems that are faced by Tesco in its business. Thisobjective will also help in achieving the aim of the research. Literature reviewRetail industry is one largest business domain in the UK in which there are few largeretail firms that have entire control on the industry. According to Ashworth, (2012) in past yearscompetition between retail firms increased to great extent. There is competition in every industrybecause every firm wants to expand its business at fast pace. But there are some boundarieswithin which firms operate in order to give competition to the competitive firms. In retailindustry of the UK this does not happened because firms use pricing strategy as weapon toincrease there market share in the industry. When one firm reduce its product price itsprofitability increases and by looking at this scenario other retail firms also reduce there productprice. Further, in order to improve position in the industry firm reduce its product price. Againother competitive firm reduce there products price. All these things give birth to never endingfierce competition among the firms. Due to consistent reduction in product price firms earn lowmargin in there business and face lots of problems in there business.Williams, and Connell, (2010 ) claims that in order to survive in the market most of theretail firms take some specific steps so that costing can be reduced. But this does not reduceproblems of the firm. Results are in front of the firms stakeholders that profitability of Tescoreduce to great extent and in case of Morrison and Sainsbury revenue is earned in specific rangefor last five years. In case of Morrison it is observed that revenue is in range of 16,000-17000 inall years that comes in between 2011-2015. Similarly, in case of Sainsbury revenue is earned inrange of 23300-23500 in all years that comes in 2011-2015. This clearly reflects that due to lowmargin earning either firms are earning same range of revenue in all financial years or thereprofitability declined in comparison to past years. This is clearly indicating that steps that aretaken by retail firms to improve there condition are ineffective and companies are not deriving
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