Research Project Tesco | Case Study
Added on 2020-01-28
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RESEARCH PROJECT
TABLE OF CONTENTSTASK 1............................................................................................................................................31.1 Formulating and recording the research project outline specifications.................................31.2 Identification of factors that contribute to selection of research project selection................31.3 Literature review....................................................................................................................41.4 Producing a research project specification............................................................................61.5 Providing an appropriate plan and procedure for the agreed research specification.............6TASK 2............................................................................................................................................72.1 Matching resources efficiently to the research questions......................................................72.2 Undertaking proposed investigation as per specification......................................................7TASK 3............................................................................................................................................93.1 Description of methods to be used for analyze data collected...............................................93.2 Analysis of data.....................................................................................................................93.3 Recommendation.................................................................................................................14REFERENCES..............................................................................................................................15APPENDIX....................................................................................................................................16
TASK 1Title: To identify reasons for slow growth of Tesco in comparison to peer firms: A case study onTesco.1.1 Formulating and recording the research project outline specifications Background of studyIn 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 incomparison to peer firms like Sainsbury, Morrison, Lidl and Aldi. From past few years firm isobserving very slow growth in its business. Either it face loss in its business or earn very lowamount of profit in the business. Thus, it is decided to carry out a detail research on Tesco andidentifying the reasons due to which it is facing loss consistently in its business and failed tocompete 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 areimplementing new strategies in the market. It is observed that rival firms like Lidl and Aldi areoffering product at very low price relative to the Tesco then also they manage to earn sufficientamount of profit in the business. Moreover, growth rate of these firms is relatively higher thenTesco. Thus, current research is focusing on Tesco and identification of reasons due to whichperformance of the firm get deteriorate.Aim of research: To identify reasons for slow growth of Tesco in comparison to peer firms.Objectives of researchObjectives 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 questionsWhat 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 arenumber of reasons due to which mentioned topic is selected for the research. Tesco is the one ofthe largest retail firm in the UK which have largest market share in the mentioned nation thenalso it is struggling for earning profit in the business. It is the strange that one of the largest firmis not able to compete with two small retail chains namely Lidl and Aldi. Thus, it was veryimportant to identify the factors that impede growth rate of Tesco and make it incompetent infront of mentioned rival firms. If these firms will be compared with each other in terms ofgrowth rate then it can be observed that Tesco current market share is 28.7%, ASDA marketshare is 16%, Morrison stands at 10%, Lidl stands at 18.9% and Aldi stands at 15%. These factsrevealed that Lidl and Aldi are giving stiff competition to large size retailers. So, it can be saidthat Lidl and Aldi are giving stiff competition to Tesco and it was important to identify thereasons due to which such kind of things happened in the UK retail sector. These were the majorfactors that contribute to selection of research project. 1.3 Literature reviewTo evaluate the business model of the TescoAccording to Fernie and Sparks, (2014) business model have an immense impact on firmoperations. This is because the way in which core business operations will be executed isascertained by the business model which firm is following in present time period. Tesco maintarget is to make available product at low price to the customers and in order to do so it purchaseitems in bulk from producers are regular interval. Due to this reason it manage to saveintermediary cost. Moreover, it get huge amount of discount from the suppliers and this enablefirm 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 isfacing stiff competition from its rivals. This is because rival firms like Lidl and Aldi arefollowing unique business model which allow them to make available product at very low priceto the customers. Like Tesco these retail chains are also purchasing products from producers buttheir business model is little distinct from same of the retail giant. Lidl and Aldi purchase itemsfrom the small producers whose products quality is good but are not well known in generalpublic. 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 thesefirms under their own brand name. This is the reason due to which firms manage to sell items atvery low price relative to Tesco.To evaluate low cost pricing strategy and its impact on the business firmAs per views of Christopher, (2016) low price strategy originate both threat and opportunity forthe business firms. In current time period recession heavily affect the people income level andsavings. There are large number of people that are unemployed and employed people have to paytheir expenses. This reduce people spending capacity. In such a situation low price strategy is thebest option that any firm is having in order to increase revenue in recession and grabbing asmuch as possible large market share in the industry. This strategy create a lots of opportunity forthe business firms. However, same strategy also make competition fiercer among the businessfirms. This happened in the UK retail sector, as mentioned above due to recession peoplespending power reduced and in order to remain consistently in the market business firm’s startselling their products at low price to the customers. All companies that operate in the UK retailsector 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 lowprice forced Tesco to further reduce its product price which was not supported by its businessmodel. Due to this reason it face heavy loss in its business. Thus, it can be said that low costpricing strategy that is followed by Tesco and rivals play a very important role in deterioratingfirm performance. Contrary to this Grugulis and Bozkurt (2011) state that low cost price strategy is not responsiblefor the firm poor performance. This is because the steps that were taken by the rivals can also befollowed by Tesco, but it remain stick to its business model and never try to alter it. It is simply apolicy failure. Business firm does not make changes in its business and does not identify theextent to which due to unique business model German retailers can achieve huge success in thebusiness. 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 customersAccording to Haskel and Sadun, (2012) on Tesco there are many legal cases which destroyfirm image among the people. There are large number of cases that are filed against the Tescoon which court does not give verdict till the date. Some of the cases like horse meat and filing ofcase 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 realfacts related to serve items were concealed from the people. On this ground firm was sue in thecourt and this damaged the firm image among the people. Apart from this, in case of studentsonline order was placed by Tesco does not make available that order. When students asked forrefund to the managers of Tesco money was not returned back. Both cases revealed that firmdoes not behave ethically in its business and cheat its customers. All these things overall createnegative image of Tesco among the people. This is the reason due to which less number ofpeople prefer to make purchase from Tesco retail store. All these things ultimately affect thefirm 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 hugeimpact on the firm performance. This is because due to economic recession firms earn low profitor face loss in the business consistently. Due to this reason in order to survive in the marketbusiness 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 bearburden of unemployed people. Due to this reason overnight people saving rate reduced which putnegative impact on the people spending capacity. In order to combat with this situation businessfirms reduce their product price. Lidl and Aldi substantially reduce their product price relative toTesco and this is the reason at rapid rate manage to increase their market share in UK retailsector. 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 researchObjectives 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 questionsWhat is the extent to which business model of Tesco is effective?What impact low price strategy have on Tesco performance in terms of sales?
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