Tesco's Business Evolution: A Study of Market Structure and Strategy

This case study provides an in-depth analysis of Tesco's business operations, focusing on its retail strategy and market structure evolution since its inception. Starting as a small grocery provider in the UK, Tesco has expanded globally, adapting to different market conditions, including periods of monopoly, monopolistic competition, and oligopoly. The study explores Tesco's product and service diversification, competitive strategies against rivals like Sainsbury and ASDA, and its adaptation to changing consumer preferences and technological advancements. It also discusses the impact of market structure on Tesco's profitability, market share, and overall business development, highlighting the challenges and opportunities the company faces in maintaining its leading position in the retail sector. Desklib offers a variety of similar solved assignments and study resources to aid students in their academic pursuits.

Food Retail

Table of Contents
Introduction......................................................................................................................................3
Company and its products/services and history ..............................................................................4
Market where Tesco operates since its inception............................................................................4
Company operations in different market structure in its history. ...................................................6
Nature of industry where firm operates ..........................................................................................8
Conclusion ......................................................................................................................................9
References .....................................................................................................................................10

Introduction
Retailers are those who sales their goods and products direct to their customers. Retailers
get their products from direct manufacturer. Food retail increase their profit by raising prices of
their products. Tesco is one of the leading company in UK and have a large number of
supermarkets all over the UK. Large number of revenue for government are generated by Tesco.
In this project we will prepare history about Tesco on their overall working and effectiveness of
their business. Overall market structure effects their business and help them to expand at a large
scale. It is an multinational company and have all over the world.
Company and its products/services and history
Tesco is one of the leading company provide groceries product to their customers. Tesco
expands their business at a global level to increase overall profitability of their business and to
engage large number of customers with their services(Heck and Raneri, 2019.) . Due to their
positive image in minds of customer help them to increase profitability of their business and
make them one of the leading retail company in their sector. After success of their business
Tesco expand their business in different sectors like clothing, electronics, petrol, software also
provide financial services. Their low cost product help them to engage customer more easily as
compare to their competitors. Company is founded by Jack Cohen in 1919 and open their first
shop in 1931. In 2019 Tesco operates with 6,800 shops all over the world in different territories
with 450,000 employees. Trying to innovate their services to engage more customers and
provide them quality services. Tesco have large number of stores that provide grocery items.
They also expand their business in Europe and Asia. Company also provide banking services to
their customers of UK. Their financial consultancies help customers to take important decision.
Tesco expand their business in 1990 in Poland,Hungary by opening new supermarkets.
Company also acquire a retailer of UK. Purchases hypermarket to develop presence of their
business all over the world. Open new gasoline stations in UK to bring variety in services. Tesco
launched their online website where customers will buy grocery products. They also launch new
food products in their supermarkets at low price to engage more customers easily. They provide
barcode services so that customers can easily scan and pay for items. Company aim is to earn
more profit for overall development of business at a large scale. Customers loyalty of Tesco

make them successful and develop overall value of their business. Due to diversity in their
services help them to expand their business in different sectors and help to engage more
customers easily with their business.
Market where Tesco operates since its inception
Tesco started their business as a retail industry of Britain in UK,. When company start
their working there are less competitors are available in market which help them to expand their
business at a large scale. UK market help them in development of their business at a large scale
and maintain overall effectiveness of their company(Wilde, Llobrera and Ver Ploeg, 2016.) .
Company become one of the biggest supermarket of UK. Britain market help Tesco to develop
political stability in UK help company to expand their services and develop them at a large
scale. Due to changes in growing market help to develop opportunities for Tesco. Tesco operates
in different countries all over the world. Due to expansion of their business to achieve goals and
objectives. Retail market is developing day by day. When Tesco starts their work retail sector is
less organized and company faces problems working effectively for that they need to work to
achieve goals and objectives of organization. In recent time retail market is more organised due
to online facilities are available for customers so that they are able to work effectively towards
their success. Company need to maintain their working and innovate services according to
organization. Tesco provide facilities of home delivery which help their customers to develop
their business at a large scale. Business are able to make effective use of all available resources
to achieve goals and objectives of organization towards their success. Market of developing
countries help them to establish their business. Due to prices of their products help them to get
attention of customers from every sector.
Oligopoly market
U.K grocery supermarket is largely managed by few firms like Tesco, Sainsbury and
ASDA. Each business their products at different prices to attract more customers towards their
services(Li and Wang, 2017.) . Development in UK market companies to expand over an
extreme level. Tesco is one of the leading and top company of U.K in retail; sectors and after that
Sainsbury and ASDA are giving tough competition to Tesco. In oligopoly market only few firms
are available to dominate each other. Also their facing competition with each other in fuel

retailing, Sainsbury is one of the major competitor of Tesco. Companies are providing different
coupons and price discounts to increase their market share with pricing competition. Companies
develop facilities like online orders for customers. Tesco trying to develop product
differentiation as compare to their competitors. Companies are providing different free services
to their customers to engage them with organizations working. When Tesco start their business
it is an monopoly market for their industry. In recent times due to increase in competition with
other firms market become oligopoly. Tesco is working with 30% of market share in UK and
other companies like Sainsbury ASDA are working with 20% share and other small retailers are
also available in market Like Aldi, Lidl. Oligopoly market structure shows that only few
suppliers are available in market with competing each other and holds majority market of UK.
Monopoly market
Monopoly market where only a single seller is available in market. Company in this
market have full control over supply of products. They set prices according to their requirement.
Their are no substitute are available in market to compete. Other companies faces barriers to
enter in market due to unique quality of items help company to expand(Jürgens, 2018.) . When
Tesco launch and starts their working they are single seller in market and no competition and
close pricing competitor is available. After expansion of business of Sainsbury and ASDA it
effects working of Tesco and make them ineffective to achieve their goals and objectives. Due to
their pricing and branding strategy help them to earn more market share as compare to their
competitors. But due to development of different companies with same products and services it
effects overall development of Tesco. Due to increase in choices customers loyalty also
decreases and make organization ineffective in market. To earn advantage and to develop
monopoly market for their business Tesco need to reduce prices of their products.
Company operations in different market structure in its history.
Tesco is a leading company and operates in different market to innovate their
organizations services. When Tesco enters in market 1919 there are no close competitor is
available in market for Tesco. Their is monopolistic competition in market where company is
selling their products without any substitute and they have power to take pricing decision. At that
time customers also have no option they are restricted to purchase from Tesco. Company is able
to expand and work according to requirement of business. Market help firm to earn more revenue

in market and develop business at a large scale. In monopolistic market companies are free to set
prices of their items. In monopolistic competition Tesco is able to increases profitability of their
business.
In retail sector of UK due to development of new business organization and expansion of
their business the market turns into oligopoly which effects profitability of every business
organization. Sainsbury is close competitors of Tesco and have a market share of 16% in UK.
Sainsbury try to make good relation with their customers to increase their loyalty(Wood, Coe
and Wrigley, 2016.) . ASDA is competing with Tesco at a large scale and have ability to grab
number one spot in retail industry. Due to their effective presence and pricing policies help them
to sustain in market. Due to changes in market it effects growth and development of business at a
large scale. Company has monopolistic market structure which help them to develop at a large
scale.
Characteristics of market structure
In this competition products of company are differentiated and work on different fields
and able to achieve their goals more easily.
Large number of buyers and sellers
In this Tesco is able to develop their business. Because large number of buyers are
available in market and also buyers with substitute products can effect the growth of business of
Tesco(Sparks, 2019.) . Make them ineffective towards achievement of their goals and objectives.
Due to large number of sellers like Sainsbury and ASDA that effect overall profitability of
Tesco.
Free entry and exit
Companies are able to enter freely in market as there are large number of buyers and able
to work according to their requirement and improve effectiveness of their services and their
organization. Due to free entry in market it also increase competition for Tesco.
Product differentiation
Tesco develop unique items that help them to gain an advantage in market over their
competitors and improve efficiency of business. It help company to reduce substitution for their
product.
Non price competition

In this market companies are competing on other factors as compare to price. Because
every company is working on their own platforms and it help them to develop their business
according to requirement and it help them to develop business without concentrating on prices.
More elastic demand
Due to product differentiation each and every has their customer base that help them to
expand(Eichner, 2019.) . Due to customers loyalty help Tesco to achieve their goals more easily.
Nature of industry where firm operates
Retail sector means business where a company sells direct to customers. Retail sector of
UK is expanding day by day due to expansion of leading industries like Tesco and Sainsbury
help retail sector to achieve higher level. Due to development of online technology customers are
able to shop easily and different option like home delivery to customers help business to expand.
Due to increase in consumers income and development of purchasing power help retail sector as
well as Tesco to grow their company at an leading level. Retail market help in development of
overall economy of UK.
Operating in different market structure is more suitable for firm.
Tesco is working in an oligopoly market where few sellers are available in market and
competing with each other for overall development of their business. In this market organizations
like Sainsbury, Tesco, ASDA are competing with each other for development of business. In this
it effects overall growth of business and require to improve overall abilities of their organization
at an extreme level(Vives, 2018.). Quality of product effects growth of business. Pricing
competition is also increases in market to attract customers towards organization services.
Selling cost of products effects overall growth of business to innovate their business.
If Tesco is operating in monopoly market then they are able to develop their business
more effectively as compare to oligopoly market. In this market Tesco is a single seller of
product that they are selling which help them to reduce competition and develop their business at
a large scale. In monopoly market company make effective use of available resources and
achieve their goals more easily. As a single seller Tesco able to set prices for their products
according to requirement and customers are bound to purchase products due to a single seller. No
close substitute are available in market that effect success of business and to innovate their

organization services. Due to less competition Tesco is able to grow in that market and move
towards their overall success. Monopoly market help Tesco to restrict other firms to enter their
business with help of legal framework. Due to leading company in market demand for their
products also increases. Tesco is able to control overall supply of their product and able to
negotiate with suppliers for reduction in prices of raw materials. Tesco become a price maker in
market with help of monopoly.
Government intervention on Tesco
Due to increase in taxes by government it effects overall profitability of retail
companies. High amount of taxes reduces their overall profit and make them ineffective in
market(Zeuthen, 2018.) . Political stability in an economy help Tesco to expand their business
without any legal issue. Due to government control for mistreating suppliers by Tesco effects
growth and development of business and need to face legal matters. Due to increase in online
sales tax it effects their firms advantage. Due to heavy interest rates by government retail
company need to increase prices of their products and services. Trade restrictions of some
products reduces firm efficiency to expand. Rules and regulations against company policies
affect smooth working of business in an territory. Government intervention effects overall
performance of a firm and reduce their ability to expand at a large scale. Environmental laws and
health regulation by government need to be taken care properly for smooth working of Tesco.
Government influence effects business as well as society. Due to health regulation set by
government against retail companies people get healthy food product to develop quality life.
Environment where society is living is good for people. Rights of workers and employees are
secure and they get fair pay on their efforts in an organization. Government are able to educate
people about pros and cons of using a product or service(Merhav, 2017.) . Help to develop
overall infrastructure for society to develop standard of living. Strategic planning innovate
organization services to improve their business at a large scale and work effectively towards
overall development of business and require to make innovation in business. Political pressure on
business and heavy taxes on their product increases prices of their product due to which people
have to purchase products at high prices. Government intervention have both positive as well as
negative impact on growth of society.

Conclusion
In this report we will prepare overall effectiveness of their business. Company provide
retail and food products to their customers and satisfy them with their quality services and
engage them with business abilities. Monopolistic market help Tesco to expand their abilities and
improve effectiveness of their services. Different competitors in market effects overall ability of
Tesco to expand their business. Government have a huge impact on smooth working of Tesco
business.

References
Books and Journal
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Heck, S.C. and Raneri, J.E., 2019. A cross-disciplinary mixed-method approach to understand
how food retail environment transformations influence food choice and intake among
the urban poor: Experiences from Vietnam.
Jürgens, U., 2018. Food retail supply shortages. Conceptual development of food desert from a
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changing urban systems, p.41.
Li, D. and Wang, X., 2017. Dynamic supply chain decisions based on networked sensor data: an
application in the chilled food retail chain. International Journal of Production Research.
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Merhav, M., 2017. Technological dependence, monopoly, and growth. Elsevier.
Sparks, L., 2019. Tesco: how supply chain strategy supports retail success. The Business &
Management Collection.
Vives, X., 2018. Strategic complementarities in oligopoly. Handbook of Game Theory and
Industrial Organization, Volume I, 1, p.9.
Wilde, P., Llobrera, J. and Ver Ploeg, M., 2016. Population density, poverty, and food retail
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Wood, S., Wrigley, N. and Coe, N.M., 2016. Capital discipline and financial market relations in
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Zeuthen, F., 2018. Problems of monopoly and economic warfare. Routledge.