Comprehensive Business Analysis of Tesco: Strategies and Challenges

This report provides a comprehensive analysis of Tesco, a multinational retail giant. It begins with an overview of Tesco's history, global presence, and financial performance. The core of the report focuses on several analytical frameworks: a PESTLE analysis to evaluate the macro-environment...Read More

Assessment

Overview of the firm...................................................................................................................3
Tesco’s pestle analysis.................................................................................................................3
Swot Analysis..............................................................................................................................5
Porter five forces..........................................................................................................................6
Conclusion...................................................................................................................................7

Overview of the firm
Tesco was established as a small grocery store by Jack Cohen in the year 1919. Today Tesco is
known as one of the Multinational firm that operates all over the world such as Malaysia,
Thailand, India, Slovakia, Poland, Czech Republic and Ireland. Also Food as well as non food
products are also provides financial and telecommunication services. In Total, the firm has
440,000 staff members and runs over 6,800 stores all over the world. It has more than 300,000
employees and 3,400 stores. Tesco is consider as one of the general merchandise retailer and
largest grocery with United Kingdom within market place. Within the year 2017/2018 financial
year , Tesco has increased about 2.6% increase as compare to the last year and generated around
£51 billion in sales. It also has around operating profit around £1,644 million that around an
increase 3% as compare to the 2017 report (Popa, 2020). Tesco is basically known
for its food and non food products as it also gives the mobile, finance, hardware
services ,insurance and many more. It is a Multinational firm and has 12 stores all over the
world. Tesco’s headquarter within United Kingdom. In terms of profit made it is known as the
second largest retailer that focuses on revenues.
Present report focuses on the Pestle analysis where it focuses on its external environment , Swot
analysis where firms focuses on internal environment and Porter five forces and last focuses on
the issues faced by the tesco.
Tesco’s pestle analysis
A pestle analysis is a tool that can be used to identify the macro forces faces by an entity. It is an
acronym and depending on the firm, it can also sometimes reduce to PEST.
Within marketing, tactical plan can be applied. To conduct a situational evaluation is
fundamental and the pestle forms the part that must be repeated at regular interval minimum
about six months to recognizes the macro environment changes. Firms also successfully monitor
as well as respond changes within macro –environment. They are capable to differentiate from
the rivalries as well as creates an advantage is competitive (Dzimitrowicz, 2018) .
Political factors- Tesco is a multinational firm and operates all over the world , various global
factors that impacts the performance of Tesco. It also focuses on acts of legislation, tax rates as
well as stability of the nations as it operates (MA Motalib, 2017). As because of the financial
instability within world as several government boosts domestic population to create jobs. As

Tesco is the firm that uses to creates opportunities as well as also increases the demands
regarding products as well as diversifies employees (Thorpe, 2016).
Economic factors- These are the several factors regarding points that are focuses on the
concerns for Tesco as these are most focuses on demand, leverage cost, prices, profits, leverage
cost and many more. Thus for the firm must be aware regarding changes within policies such as
changes within taxation or other several factors that impact accessibility of finance
(Dzimitrowicz, 2018) . It is vital to mention that business is growing more globally, the firm is
also dependent on the United Kingdom market where the share of the market is around 40%.
Social factors- Tesco has enhanced the number if non food items that can be offered through
sale because if several changes trends also indicates that consumers within United Kingdom to
the one stop shopping and bulk shopping. There were various types of services and goods
demanded through consumers is mostly impacted through their attitudes and beliefs that turns
significant through social conditioning due to consumers are more aware regarding health issues
because of that approach towards food items is change regularly. Tesco is also changes through
the adapting demands regarding organic products (Popa, 2020). Obesity is also one of the issues
within society as nowadays people are more concern about their health and for that they need to
eat less spicy and junk food and more inclined towards the organic food. In order to take care of
such needs Tesco can introduced more organic food and also introduced several flavored
organic food which is good in taste .Firms also introduces two flavor mix of organic food such as
mango and vanilla organic food and many more (Thorpe, 2016).
Technological- There were several various opportunities brought for Tesco as such as online
shopping as in covid 19 , it is one of the best source where people can shop and fulfill their
needs. Also self service checkpoints can also be consider as one of the best ease for students.
The firm has also implemented various range of technological advancements such as radio
frequency, digital marketing and many more (H. and Aithal, 2020). Firm is well presented
within the social media platform around 2.6 millions followers on Facebook and many more.
Environment- As there is an increased pressure on firms to address various issues that are
related to the environment as by the end of 2021 Tesco reduces its carbon footprint by 50%.
Firms also minimize waste products within their stores (MA Motalib, 2017)
.

Legislative factors- Here the legislations and government polices are also impacts directly to the
performance of the firm. Such as change in prices without from supplier without any changing
demands and many more.
Swot Analysis
Tesco’s strength
 Tesco is considered as one of the leading grocery retailer as well as supermarket within
United Kingdom. It has higher revenues and higher sales as compare to the other
supermarkets chain within Great Britain (Bhatt, 2018).
 Tesco has launched various forms of stores as its diversifies that involves Tesco Metro,
Tesco Homeplus , Tesco express.
 Tesco also uses technology as consider as the best technology as it increases experience
of its consumers. Such as RFID enabled barcode system.
Tesco’s Weaknesses
 Fraud Trial as well as accounting scandal – Within 2017, Tesco was charged because of
false accounting declaration.
 Low cost strategy- As per Tesco it is considered as the price leader within UK market. As
it has follow the low cost strategy that leads to the decrease amount of the profit margins.
 Financial errors- As of the credit card liability and high debts Firms financial profits are
impacted profoundly.
Opportunities
 Firms has recently opened Jacks a new discount store that has shown a tremendous
growth. It also has several opportunity to grow as well as can be successfully to compete
as rivalry i.e is low cost such as Lidl and Aldi.
Threats
 Brexit Referendum- With Britain there must be no longer European Union as the cost
matters and trade deals have posted a threat for Tesco.
 There must be legal as well as tax regulations, tax matters as well as economic upheavals
can impacts the performance as well as efficiency of Tesco (Stümke. and Ruël, 2017).
Porter five forces
Rivalry- Within UK retail market is very rivalry since there were several firms such as
Sainsbury, Aldi that can operates within such segment (Ahmed, 2016). There were major rivals

over prices, products as well as promotions that makes the similarity level very high (Goud. and
Goud, 2019).
Bargaining power of suppliers- The bargaining power of suppliers is rather low as supplies of
food as well as non food products regarding more than 1100 suppliers all over Europe. Thus
Tesco can also easily negotiates prices of products while selecting only those suppliers that
impacts products at a very high quality (Tama, 2017).
Bargaining power of consumers- The bargaining power of the consumers is also impact highly
as the switching cost within retail industry are low. Thus consumers can focuses switch to other
retailer as if they are not happy with the product range of Tesco .Thus this fact slightly decreases
consumer’s power of bargaining (Briaza. and Tzezairlidou, 2016).
Threats of substitution- The major substitutes of large retail channels are organic stores
unable to pose any type of the serious threats to the financial stability of Tesco. In addition to
this the Tesco can also offers same types of goods at the cheaper prices as well as making them
more attractive to the costumers. With other hand, costumers also purchases non food products
from other retailers such as Gap, H&M and Zara (Goud. and Goud, 2019).
Threat of New Entrants- Within retail market, threat new entrants within low firms have to
invest financial resources to makes their presence. One of the other factor a high level of market
saturation that prevents firms to take entry within this market segment (Carr, 2020).
Issues faced by Tesco
On the basis of the above analysis Tesco faces issues such as The price as the recession of the
U.K, within the all over the world impacts a lot within the UK grocery market so price of the
grocery as because of this German Discounters such as Lidl ,Aldi alongside rock bottom prices,
and a response of this Tesco can slowfooted its prices.
Other issues such as similar products from other firms such as Aldi and Sainsbury at low cost
than Tesco also impact a lot in Tesco in negative form .
Firms faces various Financial crisis such as frauds, financial errors and many more.
Conclusion
From the above it had been concluded that Tesco faces a lot of issues such as price of the
products that becomes very low because of the recession but due to the pandemic Covid 19, all
people needs to stay at their home and needs grocery at home and for that firms organizes the
online grocery app and makes its prices better than before and provides free delivery so that they

can build the costumers loyalty as also firms sanitizes the grocery items. It is also focused on the
issues such as similar products firms can be deals it with providing the various specification
within Niche Market and introduces about their product and also improves the consumers
services more as compare to earlier. From the above it is noticed that firms achieves all of its
issues in fact firms gets profit because of the Covid 19, as people becomes more loyal to the
firm and trust it. Report also focuses on Pestle analysis where the firm focuses on the It also
focuses on acts of legislation, tax rates boosts domestic population to create jobs as it also
also increases the demands regarding products as well as diversifies employees and also focuses
on several taxes and government rules and regulations. Firms weakness is financial crisis that
impact the firms globally. For that Tesco can appoints new accountants who are good at their job
and also uses digital things that can makes their work more accurate and precise.

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