Tesco Plc Case Study: Navigating UK Business Challenges

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Identification of current challenges faced by the UK business and
evaluating their responses to these challenges
A case study of Tesco Plc
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Table of Contents
Introduction......................................................................................................................................3
Challenges for businesses in UK.....................................................................................................4
Analysis of Tesco............................................................................................................................7
Conclusion.......................................................................................................................................9
References......................................................................................................................................10
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Introduction
Globalization has opened many success doors for the businesses of the global environment. But
it should not be ignored that the businesses have to deal with more challenges due to the
emergence of globalization. The UK business environment considers as one of the developed
markets for the businesses desired to be successful. The businesses in the UK have been facing
enormous challenges due to the uncertainties of political as well as economic environment.
Technological advancements have also contributed to these challenges due to their versatile
nature. This report will initiate the identification of challenged being faced by UK businesses.
Further, an analysis of a UK business named Tesco Plc will conduct along with the evaluation of
its responses to the identified challenges.
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Challenges for businesses in the UK
From last few months, the businesses in the UK have been dealing with difficult times due to
economic and political uncertainties. However, the British businesses have indeed been dealing
with serious challenges from last more than ten years as economic recession occurred in 2007
and banking collapse in 2008. The economic downturn in the UK has led to the shutdown of
hundreds of businesses until now. It had become difficult for businesses to obtain credit for their
growth and business operations. The economic recession directly hit down their sales and
profitability that constituted the cause for the closing down of businesses (Tmf-group, 2018).
These challenges not only hit hard to the small business but also the giant players of the UK
industry. Even nowadays, survival for some businesses has become struggling due to
globalization, economic recession and market competition etc. Following are the key challenges
faced by the businesses in the UK:
Announcement of BREXIT
BREXIT states as the exit of Britain from the European Union, which transformed into massive
trouble for the businesses in the UK. This decision has been affecting the businesses mainly in
negative terms since BREXIT resulted in the slowdown of economic growth of the UK and
increased inflation rate and so on. Majority of the challenges for businesses are related to the
BREXIT decision (Cumming and Zahra, 2016). An in-depth analysis shows that the businesses
in the UK have lost their customers, human resources and also the high cost of resources. They
have become unable to bring talented employees into their business due to the high inflation rate
and increased competition.
Recruitment issues
Currently, the businesses in the UK have been focusing on developing strategies for retaining
talented employees within the business for the long-term. It can say that recruitment issues have
been caused mainly as the negative impact of BREXIT. It involves the mobility of the
workforce, and it has become highly vital for the UK businesses to keep their employees
motivated, satisfied and happy. Workforce mobility has developed a gap between skilled
workforce demand and supply. For the businesses, increased investment in human resource has
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become significant for retaining the employees (Bean, 2019). Apart from this, it has become
challenging for the businesses to eliminate the issues of easy job switching due to availability of
better compensation packages offered by the competitor companies.
Social media
In the technological era, the companies require the skills of quick adaptation of technological
advancements for winning the business game. Social media has transformed into a useful and
convenient communication tool for businesses to interact directly with existing or potential
customers. Social media trends have made it a marketing platform for the businesses who desire
for large scale promotion and advertising with cost-effectiveness. However, still, many
businesses are finding it challenging to manage customer relationship and marketing through
social media (Paniagua and Sapena, 2014). Thousands of business pages have emerged in social
media, and it has eliminated the significance of other marketing tools to some extent. With such
a huge competition, it is a difficult task for some businesses in the UK. The main social media
sites are Facebook, Twitter, Instagram and LinkedIn.
Online shopping trends
With the digitalization, the retailers of UK have adapted the technological advancements quickly.
The non-food market of UK industry has generated a significant market share for internet
shopping while there is inevitable growth in the online food market. It directly impacted the
businessmen or retailers who are offering their products and services through physical stores or
supermarkets. The increasing trend of online shopping has transformed a large number of
businesses into E-businesses (Du and Temouri, 2015). There has been developed a massive gap
between physical and digital business experience. The retailers have now sold online as well as
an offline platform for developing a competitive advantage in the high street market.
Branding issues
The high inflation rate or weakness in the pound currency has led to the shifting of numerous
businesses into the new markets. Brexit has impacted the business environment by weakening
the marketing strength of the businesses. The significance of branding has enhanced with the
increase of Brexit and globalization. Marketing has also shifted to the online branding but for
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some businesses; it is a complicated task for maintaining their momentum in the business market
through the internet or digital platform (Resnick et al., 2016). The exploitation of effective
branding strategies is vital as well as challenging for small or large businesses in the UK.
The British Culture
British culture is indeed distinct and unique from other cultures such as America. The cultural
differences in the UK can be evident in language, business practices, and food culture or clothing
traditions, and so on. These differences have made it complicated for the businesses that came
from other countries to develop mutual understanding. The different professional culture of UK
has challenged the businesses in the UK to undertake operations or develop customer base
effectively (Tmf-group, 2018). Language barriers due to British culture have been affecting the
business deals and communication in current times. Businesses have to deal with challenges
when they ignore gaining an understanding of the UK business and personal culture.
The emergence of new technologies for payment
The trends of online shopping have been increased rapidly, which is already a challenging factor
for the businesses of the UK. Online businesses have been competing these days for improving
the online shopping experience of the customers. Earlier, it was a time-consuming process for the
customer to check-out from the online sites. The demands of online shoppers have increased for
the quick payment service with the one-step payment process. The businesses in the urge of rapid
adaptation of technologies have understood that the payment area during online shopping
requires improvement (Growthbusiness.co.uk, 2018). New online payment applications have
been linked to the online shopping experience for making check-out hassle-free. Technologies
such as Amazon and iDebit have made it easier for the customer to pay through online banking
directly.
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Analysis of Tesco
Tesco is a UK-based multinational supermarket company engaged in the retailing of general
merchandise and groceries. The company was founded in 1919 and has now marked a strong
position among the top players of the UK supermarket and grocery industry. The company is a
well-known supermarket chain in different countries such as Malaysia, Poland, India, Thailand,
and the Czech Republic and others. Tesco Plc has the largest operations in the UK within the
Tesco Group. It is the owner of more than 3,400 stores within the UK, along with 300,000
colleagues who work collaboratively for better customer experience (Tescoplc, 2019). The
company attained a competitive advantage in the UK industry by providing products and
services with high quality, affordable prices and broader product portfolio.
Indeed, Tesco has always tackled the challenges that appeared due to the UK economic or
political uncertainties and technological advancements through effective strategies. Brexit did
not even spare Tesco, which is one of the strongest companies in the UK industry. Tesco handled
the challenges in the following ways:
Response to Brexit
Due to Brexit, one of the key strategies adopted by Tesco is renting containers of frozen food.
The company has adopted this strategy by renting refrigerated containers for enhancing the
quantity of frozen food for the remaining year 2019. It implemented this strategy for mitigating
some degree of risks caused by Brexit. The company adopted it as a contingency plan as the
response to Brexit (Eley, 2019). It becomes difficult for Tesco to ensure continuous food
supplies but to deal with this, it decided on the stockpiling of food. Earlier, more than £200
million values of food products that are long-life were stockpiled to protect the supply chain
from disruptions. However, there will be a challenge for Tesco regarding the sourcing of fresh
food.
Response to recruitment issues
Brexit has created several challenges for the businesses in the UK, out of which recruitment
issues were significant. Tesco was aware of the fact that this decision would significantly affect
the human resource management of the company. It considers the owner of more than 440,000
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employees across the world. Out of such a considerable number, Tesco decided for cutting down
approximately 9,000 jobs employed in the UK solely. It means that 9,000 jobs would be affected
as a result of dealing with Brexit by Tesco (Tsang, 2019). However, with such a huge decision,
the company decided to move more than 50% of these jobs to other job positions. The company
implemented a price-cut campaign before four years, and it is said that this campaign inspired the
company for job cutting decision.
Response to online trends
Tesco started trading through an online platform a few years back in response to the increasing
online shopping trends. Now, it has initiated to dominate the online grocery market of the UK. It
would not be wrong to say that Tesco has set its monopoly in the online grocery market. The
company appreciates its online marketing strategy for attaining such a strong position. This
marketing strategy involved mainly establishing online visibility through effective organic search
or search engine optimization strategy (Smartinsights, 2017). Apart from this, it has a very well-
designed and structured website that helps the customers in a convenient online shopping
experience. Tesco attained a dominant position when it comes in organic search. Last year, the
company achieved the title of the company providing the best experience to digital customers. It
has set benchmarks for other companies to exhibit digital customer experience.
Response to technological advancements
Tesco has been digitally transforming since its inception. It never fails to amaze people by
installing effective and advanced technologies. With its technological advancements, it is evident
that it understands completely how to enhance value for customers. Technologies have improved
not only online but also the offline customer experience. It has launched an improved system of
RFID-enabled barcode to make the work for the employees easier. This system helps in counting
the products and removes them automatically whenever they enter or exit the store after and
before the buying undertaken (Ecommerceworkroom, 2016). Apart from this, it has installed an
in-house application designed especially for the mobile payment named PayQwid. This system
has proved effective for the physical stores as well as customers and makes payment more
manageable. Along with this, it adopted advanced M-commerce, the merger of "If This Then
Than" and the integration of BYOD for employees.
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Conclusion
From this report, it can be said that operating in the UK business market is not a cake-walk. UK
industry has possessed numerous challenges for the businesses which have been identified in the
report. Out of these, specific problems can be listed as Brexit, recruitment issues, social media,
online shopping trends, the emergence of new payment technologies, branding issues and the
British culture. These challenges impact all the businesses operating, whether on a small or large
scale. Tesco is one of those companies that affected primarily by these challenges, which shows
that even giant players are not spared. However, Tesco has handled these major industrial,
political and economic issues of the UK. In the technological context, Tesco has always been one
step ahead of other companies in technology adaptation. Due to Brexit, the company has decided
to cut down thousands of jobs and started using rented refrigerated containers for frozen foods.
Tesco develops effective strategies for dealing with these challenges and maintains a strong
position in the UK industry.
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References
Bean, S., 2019. UK employers struggling with recruitment and retention of service
workers. [Online] Workplaceinsight.net. Available from: https://workplaceinsight.net/uk-
employers-struggling-with-recruitment-and-retention-of-service-workers/ [Accessed on
July 20, 2019]
Cumming, D.J. and Zahra, S.A., 2016. International business and entrepreneurship
implications of Brexit. British Journal of Management, 27(4), pp.687-692.
Du, J. and Temouri, Y., 2015. High-growth firms and productivity: evidence from the
United Kingdom. Small business economics, 44(1), pp.123-143.
Ecommerceworkroom, 2016. Technology in Tesco – Using Technology To Improve The
Shopping Experience. [Online] Ecommerceworkroom.co.uk. Available from:
https://ecommerceworkroom.co.uk/technology-in-tesco-how-tesco-are-improving-online-
and-offline-shopping/ [Accessed on July 20, 2019]
Eley, J., 2019. Tesco braces for Brexit by renting frozen food containers. [Online]
Ft.com. Available from: https://www.ft.com/content/56421ec2-1982-11e9-b93e-
f4351a53f1c3 [Accessed on July 20, 2019]
Growthbusiness.co.uk, 2018. Challenges facing businesses in 2018. [Online]
Growthbusiness.co.uk. Available from: https://www.growthbusiness.co.uk/challenges-
facing-businesses-2018-2553695/ [Accessed on July 20, 2019]
Paniagua, J. and Sapena, J., 2014. Business performance and social media: Love or
hate?. Business horizons, 57(6), pp.719-728.
Resnick, S.M., Cheng, R., Simpson, M. and Lourenço, F., 2016. Marketing in SMEs: a
“4Ps” self-branding model. International Journal of Entrepreneurial Behavior &
Research, 22(1), pp.155-174.
Smartinsights, 2017. How Tesco refreshed their marketing strategy to get back on track.
[Online] Smartinsights. Available from:
https://www.smartinsights.com/online-pr/reputation-management-online-pr/tesco-turned-
marketing-strategy-around/ [Accessed on July 20, 2019]
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Tescoplc, 2019. Tesco UK. [Online] Tescoplc.com. Available from:
https://www.tescoplc.com/about-us/our-businesses/tesco-uk/tesco-in-the-uk/ [Accessed
on July 20, 2019]
Tmf-group, 2018. Top Challenges of Doing Business in the UK. [Online] Tmf-group.
Available from: https://www.tmf-group.com/en/news-insights/articles/top-challenges/
doing-business-in-uk/ [Accessed on July 20, 2019]
Tsang, A., 2019. Tesco Supermarket in Britain Will Cut Thousands of Jobs. [Online]
Nytimes.com. Available from: https://www.nytimes.com/2019/01/28/business/tesco-
supermarket-job-cuts.html [Accessed on July 20, 2019]
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