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Free «SWOT Analysis of Tesco» UK Essay Paper

Free «SWOT Analysis of Tesco» UK Essay Paper

Introduction

Tesco is one of the largest grocery retailers in the United Kingdom and the third largest one in the world. The company was founded in 1929 by Jack Cohen. Tesco has stores in 12 countries all over the world. During 2011-2012, the company’s GBP has increased by 7,3 percent comparing to the previous period. Tesco is a leader among the other retailers in the UK, however, on the global arena, this company does not occupy the first position. Tesco has many opportunities for its further development and improvements which will help to move the company to the top among the grocery retailers in the world. Thus, it is necessary to analyse the company’s strengths and weaknesses and also take into consideration its possible opportunities and strengths. The SWOT analysis will help to determine in what direction the company should develop and what steps are necessary to take to achieve the targeted goals more effectively.

Strengths

  • Tesco is a leader in grocery retailing in the UK market. This company has a reputation of a reliable retailer almost for one hundred years. In addition, it has a stable strategy for continuous development as one can see in the diagram below. According to this diagram, Tesco was a leader in 1998 (Coe & Lee 2013); it took the majority of the UK market and overwhelmed other companies such as Sainsbury’s, Morrison’s, and Asda. In 2008, the leading position of Tesco became more than obvious; the company occupied almost one third of the entire market while other companies started losing their positions.
  • Tesco had 6,750 stores in 2012; presently, the number of stores has increased by 431. This fact indicates that Tesco extends its influence in the world, opening new stores and, as a result, moving to the first position in the global market.
  • Tesco provides innovative ideas. For instance, the company opens such stores as Tesco Metro and Tesco Express. These stores are smaller than the original Tesco stores, but they are more convenient for the customers because they can be found in the neighbourhood, not only in the city centre.
  • Tesco improves and extends its business opportunities. For instance, it develops the online shopping which will help to enlarge the number of potential buyers.

Weaknesses

  • The biggest weakness of Tesco is the promotion of new technologies. The company was founded almost hundred years ago and has been successfully developed till the present days. However, Tesco has always been primarily oriented towards the traditional grocery where it succeeded. The development of new technologies, including the IT products, occupies very little space in the company’s variety of products. In other words, such goods as the brand smartphones and tablets do not receive much promotion by Tesco. In 1990s, the promotion of new technologies did not play such a big role as today (Quinn 2014). Nowadays, the customers’ demands are primarily oriented to these goods than on the traditional products.
  • Tesco has to invest more in the developing of web technologies. The company is more oriented to the traditional market and does not pay enough attention to its online development. Today, online shopping is a leading method of making purchases. Hence, if such company as Tesco does not develop its online opportunities and does not promote the online shopping, it loses many of potential clients who have already changed their ordinary purchases for shopping online.
  • Despite the fact that Tesco´s profit increases every year, the company does not put enough efforts to enlarge its influence abroad. Tesco is primarily oriented to customers in the United Kingdom than to customers all over the world. The company, which occupies the third place in the world promoting its products only in 12 countries, has very low rate. The company is too dependent on the home market than on the global one. It tries to have the leading position at home, forgetting that extending the market abroad will bring more profit.

Opportunities

  • As it was said before, Tesco does not develop its IT technology which could help to move the company to a new level and receive more profit. However, the recent investment in Blinkbox may change this situation for better. Eighty percent of investment in digital entertainment by Tesco in Blinkbox may make the company digital-competitive to others.
  • Tesco may introduce its own brand smartphones and tablets. As a result, it will attract foreign investors, especially those from China, Thailand, and South Korea.
  • Developing and promoting online shopping. Tesco has already made some steps towards providing online services to its clients. However, the company still prefers to obtain a traditional way of retailing. If Tesco could change its orientation to the online promotion, it would bring more benefits to it. Flexibility is the main advantage of any online shopping. People do not have to waste their time on going to shops, choosing products, and waiting in the lines. Instead, they are able to make all necessary purchases using their smartphones when they have a five minute break. According to this fact, Tesco should become more flexible to its customers. Online shopping will increase potential profits since more and more people prefer to make their purchases online.
  • The overseas expansion using the online shopping opportunities. If Tesco could successfully complete the online shopping improvement, it may receive an opportunity for the extension of its business in Australia. In this country, the grocery retail business is too weak and has very little competitive forces. Thus, such company as Tesco could easily become a leader in Australia which will open a new market for its products, thus increasing the annual profit.

Threats

  • Tesco is a leader in the UK, and thus other companies such as Sainsbury’s, Morrison’s, and Asda try to move Tesco from its top position. In order to achieve this goal, Asda started cooperation with Wal-Mart which is the ninth world brand. This cooperation gives Asda the additional opportunities for making Tesco weaker and decreasing its influence in the UK (Phillips 2006). Wal-Mart is a strong competitor which has necessary skills and uses its experience to remove Tesco from its leading position.
  • The rising prices on raw materials in the UK will make Tesco increase prices for its products. As a result, some of Tesco’s products will become competitive-weak comparing to other world-brand companies offers.
  • Tesco uses the old school approach of studying the customers’ behaviour. The example of this method is the poor development of online shopping. Tesco does not provide the current researches in order to identify what customers need and how to satisfy their demands.
  • The crisis in the UK also has a negative impact on Tesco´s well-being and led to the declining of sales in the UK. Tesco is primarily oriented to the UK market; thus, the crisis in the UK has a direct and huge impact on the company’s possible profit.

Recommendations

Tesco is a company which is famous in the UK and occupies the leading position in this country, but it does not pay enough attention to its worldwide promotion. First of all, it is necessary to say that the company should revise its current policy about the customers’ needs. Tesco should provide innovations according to the necessities to satisfy the majority of customers and attract new ones. The company should also introduce new methods of purchases such as online shopping. According to the latest tendencies, many people prefer to make their purchases online because it is more comfortable for them and there is no need to spend time in stores. Thus, Tesco is necessary to promote its online shopping development in order to save its current customers. In addition, the company is not as popular abroad as at home. Hence, its market should be extended due to the increasing of its stores overseas; especially in those regions which have comparatively little competitor’s force.

Conclusion

To sum up, it can be said that the SWOT analysis demonstrated the company’s strong and weak sides. In addition, it helped to reveal what can be done to improve the situation and bring the well-being of the company at a new level. Tesco demonstrates good results at home, but its main weakness is old school approaches and the ignorance of current tendencies. The SWOT analysis also indicates that the main competitor of Tesco is Wal-Mart which tries to promote Asda in the UK and remove Tesco from the leading position. Nevertheless, the SWOT analysis underlines that Tesco’s orientation to the global market is the correct decision. In addition, if the company introduces its own brand devices such as smartphones or tablets, it will attract more customers because the IT technologies are very popular today and in great demand in the global market.

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