Business Report: Performance Evaluation of Tesco in the UK Market

This report provides a comprehensive analysis of Tesco's performance within the UK supermarket sector. It begins by examining current market trends, including the rise of discount stores and the impact of e-commerce. The report then delves into Tesco's performance since 2015, highlighting key ...Read More

Performance
Evaluation of Tesco
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Author note

Current trends in the supermarket
sector
 The supermarket chain Tesco is based in United kingdom (UK).
 As of 2018, the supermarket sector of the UK is dominated by
four company such as Sansbury’s, Tesco, Morrisons and Asda.
 However, discount stores gained significance over
supermarket chains from 2016 (Ismail 2017).
 Thus, it led to price war between two players in the
supermarket sector.
 one of the biggest players in the supermarket sector is the e-
commerce.

Tesco performance since October
2015
• As of 2015, the market capitalization of the company was 18.1 billion
pound.
• However, Tesco recorded loss of 4.6 billion pound in 2015 (Haddock-
Millar and Rigby 2015).
• In 2015, the company sold its on-demand video services Blinkbox.
• In 2016, Tesco sold its holding in Lazada Group and left with 8.3%
stake in the company, which was previously 8.6%.
• Though, it registered profit later but the growth remained slow.
• A charge of 235 million pound was taken by the company for the
accounting scandal of 2014.

Current performance of Tesco
 The cost of imported foods surged significantly due to the
Brexit vote.
 It created a price pressure on the prices of consumers and
costs of retailers.
 However, Tesco was able to keep its margin up amid Brexit
turmoil in 2017.
 As of 2019, the net income and operating income of the
company was 1320 million pound and 2206 million pound
respectively (Jiang, Wu and Zhu 2018).
 In 2019, the revenue recorded for the Tesco was 63911 million
pound.

SWOT analysis of Tesco
o It is a strategic planning technique which enables to identify
four important factors in terms of business competition for the
organization.
o SWOT analysis of Tesco aims to examine the weakness and
strengths of the company (Chowdhury 2016).
o Likewise, it also assesses the potential opportunities and
threats of the Tesco.
o Therefore, it would help to analyze the overall performance of
the company.

STRENGTHS
 The leading retailer in the UK market, Tesco has a positive
growth trajectory (Tse et al. 2016).
 Outside the UK, it also spread in various European and Asian
countries.
 As of 2019, the market share of the Tesco in the grocery
market of UK was 27.7%.
 The robust promotional and marketing tool used by the
company helped in their success.

WEAKNESS
 It also witnessed some failures in countries like Japan and USA
other than its excellent performance in other countries.
 It stopped operating in the Japan and USA market in 2012
(Felgate and Fearne 2015).
 Hence, the company was unable to analyze these two
international markets.
 In the UK, Tesco also charged by the Serious Fraud Office,
which impacted the performance of the company.

OPPORTUNITIES
 The company may expand its operation in other emerging
economies such as South Africa, Mexico, Brazil and Indonesia.
 Merger, acquisition and strategic alliances are also useful tool
for business expansion (Wood, Wrigley and Coe 2016).
 Moreover, it also planned to explore the discount chain
segment to mitigate the competition.
 Amid Brexit turmoil, it tried to maintain its performance in the
retail sector.

THREATS
 The supermarket sector in the UK as well as world is very
competitive.
 Moreover, it led to harsh price competition among all the market
players.
 The preference is given to the ready-mode and convenient foods
in the supermarket sector.
 In addition, presence of e-commerce and discount stores in this
sector created a serious threat for the company (Wood, Coe and
Wrigley 2016).

GROWTH Opportunity and
Recommendations
o The expansion of the company in the discount stores by
introducing new chain called Jack, would ensure robust growth.
o Tesco also tied up with fashion giant Next to utilize its
available stores properly. It would open a new horizon for the
company.
o To dominate the global market it is important for the company
to strengthen its market analysis and marketing strategy
(Tesco.com 2019).
o It should implement proper strategy to negate the risks
associated with the Brexit uncertainty.

Conclusion
 Tesco is the market ruler in the supermarket sector of the UK.
It also operates in several foreign countries (Ismail 2017).
 Though, it registered many failures, it continued dominating
the market.
 The company have various strengths and opportunities as well
as weakness and threats.
 The strategic planning and implementation helped the
company in several ways.

References
 Chowdhury, B.N., 2016. A critical analysis of customer loyalty and customer satisfaction-a case
study on Tesco Club Card (Doctoral dissertation, University of East London).
 Felgate, M. and Fearne, A., 2015. Analyzing the impact of supermarket promotions: a case study
using Tesco Clubcard data in the UK. In The Sustainable Global Marketplace (pp. 471-475). Springer,
Cham.
 Haddock-Millar, J. and Rigby, C., 2015. Business Strategy and the Environment: Tesco PLC’s
Declining Financial Performance and Underlying Issues. Review of Business & Finance Studies, 6(3),
pp.91-103.
 Ismail, I.N., 2017. The Roles of Corporate Governance and its Influances on Risk and Performance:
Tesco Plc.
 Jiang, Q.W., Wu, Y.S. and Zhu, B.Q., 2018. Construction of Logistics Distribution Performance
Evaluation System——Take Nanjing Suning Tesco as an Example. Logistics Engineering and
Management, (2), p.20.
 Tesco.com 2019. Tesco - Supermarkets | Online Groceries, Clubcard & Recipes. [online] Available at:
https://www.tesco.com/.
 Tse, Y.K., Zhang, M., Doherty, B., Chappell, P. and Garnett, P., 2016. Insight from the horsemeat
scandal: Exploring the consumers’ opinion of tweets toward Tesco. Industrial Management & Data
Systems, 116(6), pp.1178-1200.
 Wood, S., Coe, N.M. and Wrigley, N., 2016. Multi-scalar localization and capability transference:
exploring embeddedness in the Asian retail expansion of Tesco. Regional Studies, 50(3), pp.475-495.
 Wood, S., Wrigley, N. and Coe, N.M., 2016. Capital discipline and financial market relations in retail
globalization: insights from the case of Tesco plc. Journal of Economic Geography, 17(1), pp.31-57.