Tesco Competitiveness Analysis

This assignment requires a critical analysis of Tesco's declining competitiveness in the face of rivals like Lidl and Aldi. Students must examine factors contributing to this decline, such as pricing strategies, business models, and the impact of economic conditions and legal issues on Tesco's performance and image. The analysis should draw upon provided research materials and potentially include additional sources.

RESEARCH PROJECT

TABLE OF CONTENTS
TASK 1............................................................................................................................................3
1.1 Formulating and recording the research project outline specifications.................................3
1.2 Identification of factors that contribute to selection of research project selection................3
1.3 Literature review....................................................................................................................4
1.4 Producing a research project specification............................................................................6
1.5 Providing an appropriate plan and procedure for the agreed research specification.............6
TASK 2............................................................................................................................................7
2.1 Matching resources efficiently to the research questions......................................................7
2.2 Undertaking proposed investigation as per specification......................................................7
TASK 3............................................................................................................................................9
3.1 Description of methods to be used for analyze data collected...............................................9
3.2 Analysis of data.....................................................................................................................9
3.3 Recommendation.................................................................................................................14
REFERENCES..............................................................................................................................15
APPENDIX....................................................................................................................................16

TASK 1
Title: To identify reasons for slow growth of Tesco in comparison to peer firms: A case study on
Tesco.
1.1 Formulating and recording the research project outline specifications
Background of study
In the current research report evaluation of the UK giant retail firm Tesco will be done.
Tesco is the firm that cover a large portion of the UK retail sector in terms of market share in
comparison to peer firms like Sainsbury, Morrison, Lidl and Aldi. From past few years firm is
observing very slow growth in its business. Either it face loss in its business or earn very low
amount of profit in the business. Thus, it is decided to carry out a detail research on Tesco and
identifying the reasons due to which it is facing loss consistently in its business and failed to
compete strongly with the rival firms (Major supermarkets see sales rise by a sliver but Tesco,
Asda and Morrisons still lose market share while Aldi and Lidl draw in even more shoppers,
2017). In current time period business environment is changing at a very fast pace and rivals are
implementing new strategies in the market. It is observed that rival firms like Lidl and Aldi are
offering product at very low price relative to the Tesco then also they manage to earn sufficient
amount of profit in the business. Moreover, growth rate of these firms is relatively higher then
Tesco. Thus, current research is focusing on Tesco and identification of reasons due to which
performance of the firm get deteriorate.
Aim of research: To identify reasons for slow growth of Tesco in comparison to peer firms.
Objectives of research
Objectives of the research are given below.
To evaluate the effectiveness of business model of the Tesco.
To evaluate low price pricing strategy and its impact on the business firm.
To identify impact of legal cases on firm image among the customers.
To identify impact of economic condition of people on firm performance.
Research questions
What is the extent to which business model of Tesco is effective?
What impact low price strategy have on Tesco performance in terms of sales?
What impact court cases have on the firm image among the general public?

What impact economic condition of firm have on firm sales?
1.2 Identification of factors that contribute to selection of research project selection
Retail industry is one of the largest industry in the UK relative to other one. There are
number of reasons due to which mentioned topic is selected for the research. Tesco is the one of
the largest retail firm in the UK which have largest market share in the mentioned nation then
also it is struggling for earning profit in the business. It is the strange that one of the largest firm
is not able to compete with two small retail chains namely Lidl and Aldi. Thus, it was very
important to identify the factors that impede growth rate of Tesco and make it incompetent in
front of mentioned rival firms. If these firms will be compared with each other in terms of
growth rate then it can be observed that Tesco current market share is 28.7%, ASDA market
share is 16%, Morrison stands at 10%, Lidl stands at 18.9% and Aldi stands at 15%. These facts
revealed that Lidl and Aldi are giving stiff competition to large size retailers. So, it can be said
that Lidl and Aldi are giving stiff competition to Tesco and it was important to identify the
reasons due to which such kind of things happened in the UK retail sector. These were the major
factors that contribute to selection of research project.
1.3 Literature review
To evaluate the business model of the Tesco
According to Fernie and Sparks, (2014) business model have an immense impact on firm
operations. This is because the way in which core business operations will be executed is
ascertained by the business model which firm is following in present time period. Tesco main
target is to make available product at low price to the customers and in order to do so it purchase
items in bulk from producers are regular interval. Due to this reason it manage to save
intermediary cost. Moreover, it get huge amount of discount from the suppliers and this enable
firm to make available products at low price to the customers.
As per views of Fernie, Sparks and McKinnon, (2010) from past two to three years Tesco is
facing stiff competition from its rivals. This is because rival firms like Lidl and Aldi are
following unique business model which allow them to make available product at very low price
to the customers. Like Tesco these retail chains are also purchasing products from producers but
their business model is little distinct from same of the retail giant. Lidl and Aldi purchase items
from the small producers whose products quality is good but are not well known in general
public. Both firms have higher bargaining power then small manufactures and due to this reason

same obtain goods at very low price from latter entity. All purchased items are sold by these
firms under their own brand name. This is the reason due to which firms manage to sell items at
very low price relative to Tesco.
To evaluate low cost pricing strategy and its impact on the business firm
As per views of Christopher, (2016) low price strategy originate both threat and opportunity for
the business firms. In current time period recession heavily affect the people income level and
savings. There are large number of people that are unemployed and employed people have to pay
their expenses. This reduce people spending capacity. In such a situation low price strategy is the
best option that any firm is having in order to increase revenue in recession and grabbing as
much as possible large market share in the industry. This strategy create a lots of opportunity for
the business firms. However, same strategy also make competition fiercer among the business
firms. This happened in the UK retail sector, as mentioned above due to recession people
spending power reduced and in order to remain consistently in the market business firm’s start
selling their products at low price to the customers. All companies that operate in the UK retail
sector follow same strategy. Thus, profitability of the firms to some extent get reduced.
Moreover, with advent of the Lidl and Aldi situation get changed and there offering at very low
price forced Tesco to further reduce its product price which was not supported by its business
model. Due to this reason it face heavy loss in its business. Thus, it can be said that low cost
pricing strategy that is followed by Tesco and rivals play a very important role in deteriorating
firm performance.
Contrary to this Grugulis and Bozkurt (2011) state that low cost price strategy is not responsible
for the firm poor performance. This is because the steps that were taken by the rivals can also be
followed by Tesco, but it remain stick to its business model and never try to alter it. It is simply a
policy failure. Business firm does not make changes in its business and does not identify the
extent to which due to unique business model German retailers can achieve huge success in the
business. This is the main reason that is responsible for the failure of the Tesco in its business.
To identify impact of legal cases on firm image among the customers
According to Haskel and Sadun, (2012) on Tesco there are many legal cases which destroy
firm image among the people. There are large number of cases that are filed against the Tesco
on which court does not give verdict till the date. Some of the cases like horse meat and filing of
case by university student are very popular among the people. Under the first case which is

horse meat firm serve food items which contain contaminated ingredients. Apart from this real
facts related to serve items were concealed from the people. On this ground firm was sue in the
court and this damaged the firm image among the people. Apart from this, in case of students
online order was placed by Tesco does not make available that order. When students asked for
refund to the managers of Tesco money was not returned back. Both cases revealed that firm
does not behave ethically in its business and cheat its customers. All these things overall create
negative image of Tesco among the people. This is the reason due to which less number of
people prefer to make purchase from Tesco retail store. All these things ultimately affect the
firm profit to large extent.
To identify impact of economic condition of people on firm performance
Gustavsson and Stage, (2011) claims that economic condition of the nation put a very huge
impact on the firm performance. This is because due to economic recession firms earn low profit
or face loss in the business consistently. Due to this reason in order to survive in the market
business firms curtail their workforce as same thing is observed across all nations of the world.
So, the scenario that comes in existence due to this situation is that employed people have to bear
burden of unemployed people. Due to this reason overnight people saving rate reduced which put
negative impact on the people spending capacity. In order to combat with this situation business
firms reduce their product price. Lidl and Aldi substantially reduce their product price relative to
Tesco and this is the reason at rapid rate manage to increase their market share in UK retail
sector.
1.4 Producing a research project specification
Aim of research: To identify reasons for slow growth of Tesco in comparison to peer firms.
Objectives of research
Objectives of the research are given below.
To evaluate the effectiveness of business model of the Tesco.
To evaluate low price pricing strategy and its impact on the business firm.
To identify impact of legal cases on firm image among the customers.
To identify impact of economic condition of people on firm performance.
Research questions
What is the extent to which business model of Tesco is effective?
What impact low price strategy have on Tesco performance in terms of sales?

What impact court cases have on the firm image among the general public?
What impact economic condition of firm have on firm sales?
1.5 Providing an appropriate plan and procedure for the agreed research specification
S. No. Activity/Week April
2016
May
2016
June
2016
July
2016
25 2 9 1623 3 10 17 24 18 17
Week
number 1 2 3 4 5 6 7 8 9 1
0
1112
1 Developing research proposal
2 Determining objectives of research study
3 On the basis of secondary data development
of thesis.
4 Creating research methodology
5 Gathering primary data.
6 Arranging data in systematic way.
7 Analysis of data by using thematic analysis
method.
8 Formation of conclusion.
9 Developing recommendation.
10 Preparation of report
11 Submission of report
12 Making of report
13 Final submission
In order to conduct present research study both primary and secondary data will be collected.
Secondary data will be collected from the books, journals and magazines. Apart from this,
primary data will be collected from 20 people that have knowledge of relevant research topic.
Both quantitative and qualitative data is collected in the present research through gathering

secondary data and primary data through distribution of questionnaire among respondents. In the
current research study Tesco firm is analyzed and in this regard secondary data is gathered from
multiple sources. Questionnaire is distributed among 20 respondents. On this basis it can be said
that there is wide scope of the project.
TASK 2
2.1 Matching resources efficiently to the research questions
There are some of the resources that are needed to conduct research in respect to above
mentioned questions. These resources are finance and time. Funds are required to collect primary
and secondary data. In order to collect primary data one or two people need to be hired that will
collect data from the respondents. Human resources are the important element of entire research
process. This is because they ensure that entire research work will be carried out in proper
manner at workplace. Resources match efficiently to research because according to research
requirements all are arranged by the researcher. Thus, fund is needed to meet their travelling
expenses and compensation need to make to them for the work they are doing in the research.
Time is another important resource that need to be used properly. On right time data need to be
collected from the respondents so that they freely give answer to the questions. By effectively
using all these resources research will be conducted in better way. Time is another resource that
match with the research requirements. Researcher need to classify determined time among varied
research activities in appropriate manner so that maximum work can be done in best way.
2.2 Undertaking proposed investigation as per specification
 Research design: Exploratory research design will be used in the present research. This
is because in order to conduct research it is very important to develop broad
understanding about research subject. It can be done only through exploratory research
design.
 Research type: There are two sort of researches that are conducted namely qualitative
and quantitative research (Keightley, 2010). In the present research study qualitative
research will be done by using thematic analysis method. In this way research will be
done in better way.
 Research approach: There are two approaches by following which research is conducted
namely inductive and deductive. In the inductive approach observation is done and on

that basis new theory is developed. Whereas, in deductive approach inverse happened. In
present research inductive approach will be followed and on that basis meaningful
information will be obtained.
 Research philosophy: In research there are two sort of philosophy namely interpretivism
and positivism. Interpretivism philosophy is followed when nonscientific research is
conducted by the researcher (Danping and Lee, 2011). Contrary to this, positivism
philosophy is used when scientific research is conducted by an individual. In current
research, interpretivism philosophy will be used.
 Data collection and sampling: Data will be collected through primary and secondary
sources. Secondary data will be collected from the books, journals and magazines.
Whereas, primary data will be collected from the 30 respondents that are employees of
Tesco. Sample will be collected by following simple random sampling method. In this
way, both sort of data will be gathered by researcher.
 Data analysis: Collected data will be analyzed by using thematic analysis method. Under
this charts will be prepared and interpretation of same will be prepared.
 Ethical considerations: It will be ensured that data collected from respondents is safe
and is inaccessible to any unauthorized person. In this regard appropriate measures will
be taken by the research at his own level.
 Research limitations: The main limitation of research is that small sample size is taken in
the present research (Dane, 2010). Every attempt is made to ensure that reliable data will
be collected from the respondents. Hence, it can be said that correct results will be
obtained from the research.
 Research scope: In the current research study Tesco firm is analyzed and in this regard
secondary data is gathered from multiple sources. Questionnaire is distributed among 20
respondents. On this basis it can be said that there is wide scope of the project.
TASK 3
3.1 Description of methods to be used for analyze data collected
In order to analyze the data thematic analysis method will be used in the present research.
By using this method collected data will be analyzed in systematic way. Table for each asked
question will be prepared separately and charting of same will be done. In this way data will be

analyzed in thematic analysis method. Thematic analysis is the one of the most important
approach that is used to analyze the data set if someone does not want to make use of statistical
method for data analysis purpose. Thematic analysis is widely used because under this in each
category number of respondents comes is clearly determined. Hence, one just by looking at
graph or table clearly identify trend or likely response that people give on research topic. Thus,
there is huge significance of the thematic analysis method for data analysis.
3.2 Analysis of data
Do you think that in past few years Tesco competitiveness is reduced?
Yes 20
No 10
Figure 1Respondents comments on Tesco competitiveness
Interpretation
It can be seen from the table that there are 20 respondents who think that in past few
years’ competitiveness of mentioned firm get reduced. There are 10 respondents who think that
competitiveness of Tesco does not reduce. It can be said that majority of respondents think that
Tesco is less competitive to its rivals.
Tesco failed to compete with Lidl and Aldi in terms of price?
Strongly agree 15
Agree 10

Somewhat agree 2
Disagree 2
Strongly disagree 1
Figure 2Tesco competition on price with Lidl and Aldi
Interpretation
15 and 10 respondents are strongly agree and agree on the fact that Tesco failed to
compete with Lidl and Aldi. There are only two respondents who are somewhat agree on the
asked statement. Two respondent are disagree and one is highly disagree on same. It can be said
that Tesco failed to compete with Lidl and Aldi on price factor.
Business model of Tesco is the main reason for making it in competitive in front of Lidl and
Aldi.
Strongly agree 10
Agree 9
Somewhat agree 1
Disagree 5
Strongly disagree 5

Figure 3People response on impact of business model on firm performance
Interpretation
10 and 9 respondents are strongly agree and agree on the fact that business model is the
one of the most important factor which does not make Tesco competitive relative to rival firms.
One respondent is somewhat agree and 5 respondents are disagree and highly disagree on same
statement. It can be said that most respondents think that business model of Tesco negatively
affect its performance.
Economic environment badly affect firm performance.
Strongly agree 15
Agree 9
Somewhat agree 3
Disagree 2
Strongly disagree 1

Figure 4Impact of economic environment on firms
Interpretation
Half of respondents think that economic environment put adverse impact on the firm
performance. 9 and 3 respondents are agree and somewhat agree on same statement. 2 are
disagree and 1 is highly disagree and believe that economic environment does not affect firm
negatively. It can be said that fluctuation in economy affects people purchasing power.
Cases that are on Tesco in the court heavily damage its image and affect performance in terms of
sales.
Yes 25
No 5

Figure 5Impact of court cases on firm image
Interpretation
There are only 25 respondent who think that cases on the firm that are in court heavily
affect its image. There are only 5 who assume that court cases have no impact on firm image
among people. Case was filed against Tesco for using horse meat in producing burgers. It was
serious case of cheat with customers. Thus, court give verdict against the business firm which
tarnish its image in the market. It can be said that cases that are on the firm in court affects its
sales.
Low price strategy prove profitable for the business firm. Do you agree?
Yes 16
No 14

Figure 6 Low price strategy and profitability
Interpretation
Mixed response is received on asked statement as there are 16 respondents who think that
low price strategy prove profitable for the firm because without using same firm in any manner
cannot compete with its competitors. There are 14 respondents who think that low price strategy
does not prove profitable for the firm. Hence, it can be said that people have mixed thinking on
asked statement.
3.3 Recommendation
It is recommended to the business firm that it must change its business model and like Lidl
and Aldi must try to make purchase from the small scale manufacturers. Firm must ensure that
its managers are behaving in ethical manner. By doing so firm can prevent enhancement of
number of cases in court. Firm must prepare attractive offers in order to create more and more
new customers in business. By doing so firm can improve its performance. In this regard firm
can follow psychological pricing method under which product can be prices at £99 instead of
£100. By doing so firm can create positive psychology of customers towards its product and can
enhance sales of same. Change in business model will lead to reduction in the purchasing cost
and firm will be able to sale items at much cheaper rate to the customers. This will surely
improve firm performance to large extent.

3.4 Recommendation for future research
It is recommended that for conducting present research sample of more than 20 will be
taken. By doing so it will be ensured that data that is collected from respondents is reliable in
nature and can be used to obtain relevant results. It is also recommended that scope of research
must be widened by a researcher. This is because present research study is only confined to
identifying reasons for slow growth rate of the business firm. Tesco is one of largest retail player
and it is possible that it failed to offer right sort of product in combination or individually on
right shelf. Market basket technique can help firm in solving its problem. Thus, further research
can be carried out on topic whether people believe that all relevant products are offered to them
in single shelf, if no then to what extent this affect their purchase decisions.
TASK 4
4.1 Presentation

REFERENCES
Books and journals
Christopher, M., 2016. Logistics & supply chain management. Pearson UK.
Dane, F.C., 2010. Evaluating research: methodology for people who need to read research.
Sage.
Danping, L. and Lee, C.K., 2011. A review of the research methodology for the re-entrant
scheduling problem. International Journal of Production Research. 49(8). pp.2221-2242.
Fernie, J. and Sparks, L., 2014. Logistics and retail management: emerging issues and new
challenges in the retail supply chain. Kogan Page Publishers.
Fernie, J., Sparks, L. and McKinnon, A.C., 2010. Retail logistics in the UK: past, present and
future. International Journal of Retail & Distribution Management. 38(11/12). pp.894-
914.
Grugulis, I. and Bozkurt, Ö., 2011. Retail work. Palgrave Macmillan.
Gustavsson, J. and Stage, J., 2011. Retail waste of horticultural products in Sweden. Resources,
Conservation and Recycling. 55(5). pp.554-556.
Haskel, J. and Sadun, R., 2012. Regulation and UK retailing productivity: evidence from
microdata. Economica. 79(315). pp.425-448.
Keightley, E., 2010. Remembering research: memory and methodology in the social sciences.
International journal of social research methodology. 13(1). pp.55-70.
Walker, H. and Jones, N., 2012. Sustainable supply chain management across the UK private
sector. Supply Chain Management: An International Journal. 17(1). pp.15-28.
Online
Major supermarkets see sales rise by a sliver but Tesco, Asda and Morrisons still lose market
share while Aldi and Lidl draw in even more shoppers, 2017. [Online]. Available
through :< http://www.thisismoney.co.uk/money/news/article-3481797/Major-
supermarkets-sales-rise-sliver-Tesco-Asda-Morrisons-lose-market-share-Aldi-Lidl-draw-
shoppers.html>. [Accessed on 10th Marhc 2017].

APPENDIX
Name
Age
Do you think that in past few years Tesco competitiveness is reduced?
 Yes ( )
 No ( )
Tesco failed to compete with Lidl and Aldi in terms of price?
 Strongly agree ( )
 Agree ( )
 Somewhat agree ( )
 Disagree ( )
 Strongly disagree ( )
Business model of Tesco is the main reason for making it in competitive in front of Lidl and
Aldi.
 Strongly agree ( )
 Agree ( )
 Somewhat agree ( )
 Disagree ( )
 Strongly disagree ( )
Economic environment badly affect firm performance.
 Strongly agree ( )
 Agree ( )
 Somewhat agree ( )
 Disagree ( )
 Strongly disagree ( )
Cases that are on Tesco in the court heavily damage its image and affect performance in terms of
sales.
 Yes ( )
 No ( )
Low price strategy prove profitable for the business firm. Do you agree?

 Yes ( )
 No ( )