Executive summary
The rationale of a chosen topic Tesco is because it is a top UK supermarkets since 1995.Tesco has shown considerable increase in the market and is been rewarded for its performance. In our evaluation of business environment of Tesco in past 5 years we have come to know that it is constantly making improvement in all environmental factors. By doing this models like Porters Five Force Rule, Pest Analysis, SWOT analysis we come to know why Tesco is UK's top supermarket by being focused differentiator. We have explained the successful strategy of Tesco by linking it with Bowman's Strategy Clock which helps us to know the strategy followed by Tesco over the years. Our evaluation on Tesco includes the statistic that proves why Tesco is the Best supermarket in the UK. Our statistic proves the number of customer increase of customers turning in Tesco in previous years. In our conclusion we have showed all this points of Tesco's successful strategy and always trying to do something innovative to keep their customer focus because of the changing needs of customers in different cultural environments.
Introduction
The founder of Tesco was Jack Cohen, he managed to gain a profit of £1 and sales of £4 on the day he started with Tesco. Tesco is ranked third in world for largest grocery retailer, with its operations in more than 14 countries. The name "Tesco" had appeared first in 1924, and its first shop was opened in London. This strategy made them successful and is now the topmost Supermarket in UK. Tesco apart from being one of the largest retailers for food have also embraced the non food products and expanding on household goods, toiletries, electrical items, clothing etc. Strategy of Tesco is to focus on its customers. www.tescoplc.com, (2010) [online]
Business environment: "Business Environment is the total of all things external to business firms and industries which affect their organisation and operations." (B. Wheeler, 1968) "The Environment is anything outside an organisation which may affect organisations present or future activities, thus the Environment is situational and it is unique to each organisation." (J. Kew, J. Stredwick, 2005) Changes that occur within a company are called as internal factors and changes outside the company are called as external factors. This affects the objectives and strategies of the company.
PEST Importance
The pest analysis tool helps us to understand the growth or decline of the market. It also helps to know about its position, potential and direction of the business. It is basically a business measurement tool. It consists of four main factors they are political, economic, social, technological.
Pestle analysis of Tesco
Pestle does consist of following factors such as political, economic, social, technology, environmental and legal.
Political
Political factors of any company has some government instruction and legal formalities and it also defines formal and informal rules. www.quickmba.com, (2010) [Online]
Economic Environment
"Business Organisations operate in an economic environment which shapes, and is shaped by, their activities. In Market based economies this environment comprises variables which are dynamic, interactive and mobile and which, in part are affected by government in pursuit of its various roles in the Economy." C.Britton, I. Worthington, (2006)
These factors are those which reduce the buyer's capacity to purchase and also cost on capital. www.quickmba.com, (2010) [Online]
Social Environment
The social environment handles the graphical and cultural nature of external environment. Which contain of customer needs and size of potential needs. www.quickmba.com, (2010) [Online]
Technological Environment
Technological factors help us in reduce barriers of entry, influence outsourcing decisions and also help in reducing minimum efficient production level.
Environmental Environment
Analysis
Porter's Five Forces: By using porter's five forces we are going to investigate the threats of substitutes from supermarkets, the buying capability of purchasing groceries, buying capability of suppliers regarding groceries, last but not the least the buying power of customers. www.321books.co.uk, (2010) [online]
SWOT Analysis - Strength, weakness, Threat and Opportunities
Understanding thorough various business models, all companies need several business strategies to run their business in a smooth manner. They follow various methods to do so. One of the major is to analysis the strengths weakness of the company along with the opportunities it has and which may arise in future and the threats which they may face.
Strengths
Weakness
Opportunities:
Threats:
Bowman strategy Clock:
The Bowman's clock is a way to analyze competitive position of the markets as compared to other competitors. "The first step is competitor analysis, the process of identifying, assessing and selecting the key competitors. The second step is developing competitive e marketing strategies that strongly position the company against competitors and give it the greatest possible competitive advantage." P.Kotler, et-al, (2008). There are eight options:
Focused differentiation: The primary objective of Tesco is focusing their customers and to improve relation with them in order to maintain a good customer loyalty with them, in order to survive in such a high competitive market.
The main Steering Wheel of Tesco is its performance in all areas of their business like financial sector, non-food products, telecommunications and new markets to spread their business. The following are some important points as follows:
Conclusion:
After researching about the environment of Tesco we have come up with this opinion that the strategies adopted by company are paying off from them. The company is showing a constant graph of their sales and the yearly turnover made by the company. Although company is doing good and is still making profit in the retail market during this recession period but still they are facing few challenges which are been tackled by constant technological enhancements and supported by good strategy. The company is diversifying pretty fast in international market but they are also looking to improve on better customer satisfaction. They stand at number three in the world retail market and have 30% of market share with them. They also have launched a new range of cheaper products to stop deserting of shoppers. They provide shoppers with a discount on buying of more than two items. The most successful story of Tesco is there launch of "club card" which has encouraged customers to buy and maintain loyalty.
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