Global Business Environment: SWOT Analysis of Tesco (BM461)

This report conducts a comprehensive SWOT analysis of Tesco, a leading UK-based international grocery and general merchandise retailer. The analysis identifies Tesco's strengths, such as its market dominance, diversified market presence, technological advancements, and efficient supply chain. It also examines the weaknesses, including past unsuccessful ventures, accounting scandals, and brand reputation issues. Furthermore, the report highlights opportunities like the launch of new discount stores, strategic alliances, and the potential for online shopping and expansion into emerging markets. Finally, it addresses threats such as social media controversies, misleading consumer practices, and the impact of Brexit. The report concludes by discussing how the identified key drivers from the SWOT analysis can impact Tesco's business operations, particularly in marketing and strategic planning, emphasizing the importance of leveraging strengths and opportunities to mitigate potential risks and achieve future goals.

RUNNING HEAD: GLOBAL BUSINESS ENVIRONMENT
GLOBAL BUSINESS ENVIRONMENT
Name of the Student:
Name of the University:
Author’s Note:

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Executive summary:
SWOT analysis is used by the management team of the business organisation to identify the
strengths, weaknesses, opportunities, threats of the company. The identified key drivers can
create an impact on the business operation. TESCO is the biggest retailer in the UK. This
company is a British international groceries and general merchandise retailer. This report will
conduct a SWOT analysis of this organisation to identify its strengths, weaknesses,
opportunities, and threats. Identified key drivers, which will be identified by the SWOT
analysis, can create an impact on TESCO’s functional areas like marketing, operation.

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Table of Contents
Introduction:...............................................................................................................................3
SWOT analysis:.........................................................................................................................3
Strengths:................................................................................................................................3
Weaknesses:...........................................................................................................................4
Opportunities:.........................................................................................................................5
Threats:...................................................................................................................................6
Impact of key drivers on business operation and marketing:.....................................................6
Conclusion:................................................................................................................................7
References:.................................................................................................................................8

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Introduction:
Tesco, which is the biggest retailer in the United Kingdom and second-biggest retailer
in the world, was formed by Jack Cohen in 1919. Since its inception, Tesco has established
itself excellently. This organisation conducts eighty million shopping trips every week. In
every second, this organisation serves sixty-six shoppers and earn £141,000 sales in every
minute (Tesco PLC 2020). This report aims to identify its strengths, weaknesses,
opportunities, and threats. For this purpose, a SWOT analysis will be conducted as it will
help the authority to improve its functional areas like operations and marketing.
SWOT analysis:
To identify the key drivers of a business organisation, the management team of the
company has to conduct a SWOT analysis. This analysis will identify strengths, weaknesses,
opportunities, and threats (Gürel and Tat 2017). Swot analysis of TESCO Company will help
the top management tea of this business organisation to manage future obstacles with
appropriate precaution.
Strengths:
 Being the leading supermarket and grocery retailer in the United Kingdom, this
organisation has higher sales and revenue in comparison with other supermarket
chains of the United Kingdom. The annual report 2018 of this company shows that
the annual operating profits increase twenty-eight per cent.
 This organisation dominates the grocery retail market of the United Kingdom with
twenty-seven per cent market share (Tesco PLC 2020). Besides that, in Ireland, this
organisation has become the most favourable supermarket.
 The supermarket chain is successful in maintaining its presence in fourteen countries
with 6966 grocery retail stores (Tesco PLC 2020). This organisation is geographically

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diversified as this organisation is present in Europe, North America and Asian
markets.
 Diversified market and product range is the key strength of this company.
 The largest private employer in Europe is Tesco. This organisation offers worldwide
job opportunities more than 743k (Tesco PLC 2020).
 This organisation is successful in implementing the technology. To provide the best
shopping experience to the customer, Tesco utilises the latest technology in the best
optimal way. Mobile payment app, RFID-enabled barcode system, advanced M-
commerce facilities are introduced by Tesco (Tesco PLC 2020).
 By maintaining the simplified business model, this organisation is successful in
curtailing the incurring cost. An effective waste management system is followed by
this organisation. The supply chain network of this company is the strength of Tesco.
Weaknesses:
 In 2012, due to unsuccessful export operations, Tesco had to exit from the market of
the US and Japan. This organisation has to shut down its stores in the US after five
years and in Japan after nine years (Tesco PLC 2020).
 Because of false accounting declaration and misrepresentation of profits, this
company was charged with considerable fines in 2017. The brand reputation of this
company was damaged by this fraud trial and an accounting scandal.
 According to the annual report of 2018, the share price of this company decreased by
more than nine per cent because of the drop in operating price (Tesco PLC 2020).
 The profits of this company are affected by the high debts and liability of credit cards.
 This organisation follows a low-cost strategy to generate market share. However, this
strategy can reduce the profit margin.

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 Though this organisation is successful in the UK and Europe, yet the grocery stores of
Tesco is not successful to perform appropriately in certain countries.
 In 2018, the brand reputation and customer loyalty of Tesco were affected by
‘Clubcard Scheme’ (Tesco PLC 2020).
Opportunities:
 A new discount store, named ‘Jack’ has launched by Tesco. The annual report of this
company has referred that this initiative has succeeded in achieving significant growth
(Tesco PLC 2020). If Tesco utilises this new initiative successfully, then they can
dominate its competitor Aldi and Lidl.
 This organisation has the opportunity to create a strategic alliance with other reputed
organisations. This excellent opportunity can help this business organisation to
maximise its product range and attract maximum customers.
 There are certain grocery stores and outlets of this company are not performing well.
Through a joint venture, this organisation can improve the performance of those
underperforming stores and outlets. In the joint venture, the authority of Tesco can
utilise the profound market information from the local companies.
 To follow the latest market trend, Tesco can provide the online shopping system to its
customer. The online shopping opportunity and appropriate home delivery system can
help this company to avail extra benefits.
 Though this organisation has presences in several developing markets, yet
establishing the presence of Tesco in emerging markets can help this company to
increase its market share.
Threats:
 In 2017, the Christmas ad controversy created social media backlash for Tesco (Tesco
PLC 2020). Customer of this company claimed that this ad was a disrespectful act and

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against Christian faith. They started boycotting the stores of Tesco. These types of
activities can be treated as a threat to this company.
 This organisation was accused of misleading its consumers with ‘Woodside Farms’ in
2017 (Tesco PLC 2020). By using this fake brand name, Tesco misled its consumer
regarding food products.
 ‘Brexit Referendum’ has created a politically unstable situation in the UK. The
business operation of this company will be affected by the ‘Brexit’.
 Government regulations, legal and tax-related issues, financial crisis, credit crunches
can create an adverse impact on the operational efficiency of this company.
Impact of key drivers on business operation and marketing:
SWOT analysis has identified several key drivers that can create an impact on the
business operation of Tesco. This organisation has to conduct adequate market research
before entering new markets to avoid incidents like Japan and the US. To enter in new
emerging markets, Tesco can utilise the joint venture method as this method will help Tesco
to gather sufficient information for the new market. Marketing is an essential functional part
of business organisation (Fatricia 2017). In certain countries, the outlets and stores of Tesco
are underperforming. Through effective and appropriate marketing, the management team of
Tesco can boost the performance of these underperforming stores and outlets. It will help the
company to accomplish its future goals.
Conclusion:
This report aims to identify the key drivers that can influence the functional areas of
Tesco. By conducting a SWOT analysis, several key drivers are identified that can create an
impact on the business operation and marketing of Tesco. So it can be said that Tesco can

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manage those negative key drives, which can create an adverse impact on the performance,
by focusing on its strengths and opportunities.

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References:
Fatricia, R.S., 2017. STRATEGIC ANALYSIS OF TESCO SUPERMARKET. Jurnal
Manajemen Terapan dan Keuangan, 6(02), pp.69-86.
Gürel, E. and Tat, M., 2017. SWOT analysis: A theoretical review. Journal of International
Social Research, 10(51).
Tesco PLC (2020). How we do business. [online] Tesco PLC. Available at:
https://www.tescoplc.com/about/how-we-do-business/ [Accessed 19 Jan. 2020].
Tesco PLC (2020). Key Facts. [online] Tesco PLC. Available at: https://www.tescoplc.com/about/key-
facts/ [Accessed 19 Jan. 2020].
Tesco PLC (2020). Our businesses. [online] Tesco PLC. Available at:
https://www.tescoplc.com/about/our-businesses/ [Accessed 19 Jan. 2020].
Tesco PLC (2020). Our history. [online] Tesco PLC. Available at:
https://www.tescoplc.com/about/our-history/ [Accessed 19 Jan. 2020].