A strategic review of Tesco PLC in the United Kingdom

Résumé du document

Founded in 1924, Tesco is the largest supermarket chain in Great Britain and one of the most profitable organization, which sells food and non-food items. It now controls just over 30% of the grocery market in the UK. In 2007, it announced over £2.55 billion in profits. It has approximately 1880 sale points throughout United-Kingdom, which include: Extras stores, Superstores, Metro stores and Express stores. In recent years it has diversified its business. It sells non-food products, such as textiles, pharmaceuticals, information technology, optics, video TV, household travel etc. It offers also several financial services which includes insurance, loans, savings, credit cards. The Competition Commission is an independent public body which investigates the market and resolves the problems. If the merger of two companies allows them to hold more than 25 % of market shares it can turn out anticompetitive.

Extraits

[...] Moreover, in the last few years the disposable income of the British has grown allowing the households to save or to consume more (appendix 2). These 2 facts are important for the distribution chains as they are influential in the purchasing decision. However, currently, interest rates are high (appendix 3). As it leads to inflation and reduces the purchasing power of households, the supermarket industry requires a decrease in the rates (appendix 4). SOCIO-CULTURAL FACTORS In the last few years there were some changes in the lifestyles of people. Notably regarding the households, there are more people interested in living alone (appendix 5). [...]

[...] Therefore we can say that buyers have a real power on the large-scale retailing. THE DEGREE OF RIVALRY BETWEEN EXISTING COMPETITORS Although Tesco is the biggest retail chain, there is a great rivalry within the English mass distribution, for instance we notice it through the price war that exist in retail stores. However the rivalry concerns especially 4 bigger players as the others are far behind (appendix 7). Analyses of the opportunities and threat OPPORTUNITIES In Asian countries where the economy appears and in nations in development of the Eastern Europe lifestyle becomes more urbanized, it is a strong point to establish new sites in these regions. [...]

[...] For their general purchase households prefer to move towards large shopping malls that enables them to move only once to make all their purchase and where they will have access to a wide variety of products at a lower rate. Considering online suppliers, Tesco like many others, has already created its own website to sell online. THE BARGAINING POWER OF BUYERS We already know that hypermarkets engage in a real price war to propose more competitive prices in order to attract more customers. [...]

[...] The difference of standards of living of the consumers leads shopping centres to propose a wide range of products offering various prices and various qualities. It is what makes Tesco, it is thus flexible, to adapt its offer to different types of customers. Tesco directed to the non-food productions because of the change of the lifestyle, its offers are now diversified. But it can create trouble to the company because the presence in wide range of areas alone does not facilitate the functioning of the company and it can also lead to a lack of knowledge in certain markets. [...]

[...] These devices make it possible to monitor the supply line with the aim of improving the logistics and the follow-up of stocks. Tesco has several distribution centres, which are close to suppliers, to store all the products. There are more than 35 such centres in UK. OPERATIONS The leader of the wide retailing has not equipped itself with the system RFID only as regards its deliveries but also for its products on shelves. So, they can be refill in time. [...]