marketing

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Two Competing Organisations In The Same Industry

Looking and discussing the competitions between organisations in one industry its business issues and also the ethical position of a business internationally. We will also be having a glance at the BSGE topic which will elaborate on the growth of the industry. This is one of the main intentions of this project to examine present situation in the industry and the future preparation of the industry. We will look at the general situation of industry in this section, by glancing at the market, compass and recognizing the key players. In order for an organisation to do this they need to have a highly qualified workforce. Managers must recognize that they need to learning and adapting some of the vital changes that the industry comes across in order to be able to define a variety of options that are available and going a ahead in order to take a chance.

Modern society needs are fast and to be able to race this speed where the new generation defines the competition and likes sudden changes. Technology which plays a role in good communication that increases the effectiveness of the business and the preserve globalisation. The speed of change is so rapid that it looks a different type of firm to be dominant and marked completely new period of business. This new era can also be indentified by the easy reaching of the technologies and a customer who has just adapted to live in this fast society and whose changeable favourites are revised with the speed of a T.V advert.

The industrial competition doesn’t remain a local challenge any more the faster developments has taken it as far as internationally. The pressure of the competitions persuades companies to manage their business in the most organised way as possible.

The management goes under a lot of pressure to cut down the costs and increase profits. Hamel and Prahalad argued “that the competition is not just about getting to the future first, but getting there with lowest possible costs”(Hamel and Prahalad,1994). The speed and potential of change distinguish form 1 forum to another. Companies must set up centre competencies, benchmark regularly and outsource persistently in order to increase reliability and to achieve the best practice. Plan as defined by porter is a make of a unique and valuable position which involves different activities (Porter, 1996).

Company chosen and Comparison Company in the same sector:

The two companies that we will discuss the pros and cons about are Tesco Plc and Sainsbury’s Plc. these companies are counted in the top companies of UK are centre of attention to the public.

Reason for choosing the focused company:

Tesco Plc is our main company that we will focus on. We will compare Tesco against Sainsbury’s in order to provide a base for future opinion, we will look at where the company is heading towards and quality the company has which makes it the UK’s number one trader.

Aims and objectives of the report:

The aim of this report is to present work in rational and professional manners. A detailed report which discuses various financial ratios with discussions of both the company’s profits and loss account and balance sheet. The report should show why there is a range of difference between the two companies even though they are mostly trading the same sort of things. The report will also present our research and opinions. It will present information such as our group work and our short meetings.

Background Research on Tesco Plc:

Tesco was launched by Sir Jack in 1942. Mr Jack used his bonus from his Army service that he did in World War 1. In 1919 he was selling supplements in east London End market. Tesco name was used for the first time on the tea bags. Tesco opened its first ever store in 1922 in Burnt oak, Edgware. In 1947 holdings of Tesco Stores Ltd were hanged on the Stock Exchange, share price was 25p at that time and now in February 2010 the share price per share is about £4.35.

http://www.tesco.com/everyLittleHelps/csrenvironmentdetail.htm

Tesco became the customer’s eye by the early 1960s. it started with selling groceries, fresh foods clothing and many household goods. Tesco stores were situated in the high streets of many towns. The largest store of Europe was then opened and achieved a place in Geniuses book of record for 16,500 square feet of selling place in Leicester in 1961. By buying in bulk and keeping costs down, up until 1964 Tesco should have been able to sell at very reasonable prices to its customers. In the early 1990 Tesco was having very tough time from its rivals Tesco was always very good in buying and selling but they forget about customer service. When sir Teary Leah got the office CEO, he could see the rivals of Tesco, so he decided to provide ancillary customer service to attract customers. After that introduced Tesco club card which is the guarantee of customer loyalty, after that Tesco introduced many ancillary customer services like Tesco finance, Tesco insurance, Tesco.com and Tesco direct and many more. In September 2002 Tesco introduced its own clothing brand with the name of Cherokee and Florence Fred, these brands really give great boast to Tesco sales.

Tesco is a very visionary company at the moment Tesco is operating with more than 440,000 employees and 3700 stores globally. Now Tesco is operating more in 13 countries except UK, including USA, China, and indea.

http://www.guardian.co.uk/supermarkets/story/0,12784,1453893,00.html.

Background research on Sainsbury’s Plc:

John James and Mary Ann Sainsbury founded Sainsbury’s in 1869. Their first small dairy shop was opened in London Drury which was London’s poorest areas. This shop become very popular because of its quality food items and after that they opened their more branches in different areas and in towns.

By 1882 John James Sainsbury had four stores and had plans to expand his business further. He opened a deposit in Kentish Town, north-west London, which was to supply this growing chain and on the same site, built bacon kilns that produced the first Sainsbury brand product. It was also in 1882 that John James opened his first branch in the prosperous suburb of Croydon. This shop sold a wide range of high-class provisions. The interwar year, which brought depression and hardship for many, was a period of rapid expansion for Sainsbury’s. Sites were acquired in London’s expanding suburbs as well in new trading areas, including Luton, Cambridge and St Albans. The company expanded into the Midlands in 1963, with the achievement of the through good chain. By 1939 Sainsbury’s has 244 stores. All of which received daily delivery of fresh foods from the Black friars headquarters. Modifications were done to the design of the shops and new products, particularly fresh meat and package own-brand groceries, were added to the range. By the 1920’s branch of Sainsbury’s had six departments, which offered a larger product range than its rivals. Each shop offered delivery service in surrounding areas.

http://www.j-sainsbury.co.uk/ar_2010/index.asp?pageid=28

In the early 1970s, even though it had reached a scale and stature that warranted public status. The company’s profile flotation in 1973 was at the time the largest ever floatation on the Stock Exchange, with a 45-fold over subscription for shares. Small share holders were given more Preference in the allocation of shares. Choices of products were doubled by Sainsbury’s in 1994 which continued to reflect the company’s historic strength in fresh foods exotic fruits ready meals speciality breads and reduced-fat milks were introduced in response to customer’s increasingly sophisticated tastes. Many other products showed customer’s wider social and environmental concerns. Which allowed Sainsbury’s to introduce fair trade marked products. The new era has screen shifts in customer’s needs with organic and GM food ingredients, farming for biodiversity, healthier options and convenience foods. We have responded to customer needs and are proud of the idea we have in place. All Sainsbury’s own-brand products have been GM free since 1999 in April 2004 Sainsbury’s won the soil Association’s Organic Supermarket of the year for the third successive year. Sainsbury’s opened their Bank in 1997 which now provides a good range of services including life and health cover, health insurances etc. Sainsbury’s was presented the best overall provider in the Your Money Direct Awards in 2003.

J Sainsbury’s plc employs around 150,000 people. www.sainsbury.co.uk

SWOT Analysis of Tesco’s:

Strengths:

Tesco strength is their strategic marketing and its ancillary customer service. Which includes Tesco finance, Tesco insurance, Tesco direct, Tesco home delivery system and many more . these are the strengths of Tesco’s , which are giving really tough time to its rivals,

Weaknesses:

While doing swot analysis of Tesco it can be think about the weakness that other companies are sharing with Tesco, like comparing British Airways with Tesco might stress you to think how Tesco is dependent on the UK market. Comparing Tesco with Amazon may show many faults in its attempt to come in new online market.

Opportunities:

While visiting the websites of Tesco it can be observed that where and what Tesco is missing. While visiting compare Tesco.com and Amazon.com, We can observed that how Tesco is giving opportunities to its customers. Like, how price can be compare? What opportunities Tesco keep and what Amazon has missing? And which has the best features.

Threats:

As we have already studied the strengths, weaknesses and opportunities, we can easily recognise the threats which Tesco can face. Specially they should keep concentrate on their strategic planning and the counter threats from the other companies. Like how Tesco can compete their prices with Asda? How Tesco can compare their financial offers with the other stronger rival.

Tesco PEST analysis:

A PESTLE analysis of Tesco examines the main external factors impacting on the company:

Political Factor:

Political factors can be different like national, international, or local. Like might be Tesco has agreement with British Government to supply the strawburies. Tesco might have a deal with Costa Rica to supply the bananas. Tesco might have a contract with Columbia for its coffee supply.

 Economic factors:

Economic factors can seriously affect the companies like Tesco is a bottom line company which can be seriously affected with economical factors like up and fluctuations in the stock market, tax increase, unemployment and inflation etc.

Sociological factors:

Sociological factors can be different from country to country to country like in UK immigration has changed the fashion industry. Technological factor can bring the great change. Like Tesco’s online shopping has brought a great change in the Tesco’ recent profits.

Technological factors:

While doing the pest analysis the most important is technological analysis. It is the major macro variable which has a major affect both on the company and for the customers aswell. this is the only technological factor that Tesco has upper hand on its competitors. Tesco has improved its technology devices than any other super market. The devices which Tesco is using like self check-out till points, intelligent scale, electronic labelling and radio frequency identification.

PEST analysis on Sainsbury’s

Political factors:

Political factors are different from place to place or country to country. Many governments can be involved in any company position like few years ago supermarkets are buying fresh fruits in bulk from many countries and selling them on less prices but still making a very good money. But because of this our own British famers were suffering.

Economical factors:

Economic factors can be discuss as how these companies are taking benifits to buying food items on bulk prices. How stock market can affect any companies business, and what can be impact of unemployment, credit crunch, murgers. These are the economical factors, which can play a very vital role in any companies business. These elements can be the major cause of profits and loses of any firm or company.

Social factors:

There are different social factors that can play a very vital role in the company’s business. Like retail stores are increasing their food lines according to the area population where stores is situated. They can increase or decrease their lines according to the public demand. Immigration policy of any country can be very important for the any company policy or strategic planning.

Technological Factors:

Technological factor of any company is very important. While doing the technological analysis of Sainsbury’s it can be noticed that Sainsbury’s in need to introduce some technologies in their stores. Because they are much behind in technology if it is compare with the other supermarket.

SWOT Analysis Sainsbury’s:

Strengths:

Sainsbury’s recent actions about green environment issues are very important, and Sainsbury’s fair trade policy like buying fare trade bananas, these all policies leave very good impact on the hearts of the people and people because of these reasons really like to do shopping at Sainsbury’s.

Weakness:

Sainsbury’s is not growing very well and doing well like Tesco’s. Sainsbury’s was at the top about ten years ago. They are not competing with Tesco’s and Asda as they used to do. So for it is the time for Sainsbury’s to bring change in their strategic planning, and introduced new innovations like Asda and Tesco. They need to increase their ancillary customer services.

Opportunities:

By doing swot analysis in opportunities companies opportunities can be discussed in very detail by doing the study of weaknesses and strengths . like Sainsbury’s have advantage of its green issues. Its fare trade are in the major factors which give much strengths to Sainbury’s opportunities. But, not like Asda and Tesco. Tesco and Asda are doing very well than Sainsbury’s.

Threats:

Other companies or rivals of UK are at their best in offering innovations, offering products, and ancillary customer services. Sainsbury’s should develop new corporate strategy in order to compete with its rivals. Sainsbury’s rivals offering and innovations are the biggest treat of Sainsbury’s. One more threat of Sainsbury is their usage of Bio fuel which is directly affecting its supply chain. These all policies with UK making Sainsbury’s consumer bear the burnt.

Tesco corporate Strategy:

Tesco has a very effective and comprehensive corporate strategy. Which is giving great boost in current crises to the government and the people of United Kingdom as well. So, current Tesco corporate strategy has a great rule for the survival of the UK’s people in recession. Tesco is making a very good profit every year as well.

The main purpose of this strategy is to give the long term benefit to the people of UK, give support to UK population and economy in a long term. Expand the business and market with providing the ancillary customer service like, Tesco finance, Tesco direct, Tesco insuarance and Tesco Tele-com etc. With providing these services Tesco is really doing very well by enhancing their business in other 13 countries as well. In 1990’s when Tesco get a very hard time from its rivals from Asda and Sainsbury’s after that the CEO of the company review the policy of the company and he decided to give every little help to the people of UK. Tesco was very good in buying and selling but they forget about the customers, after that time the strategy which they have adopted to first take care of the customers. Because they know that with the winning the heart of the customers they could do good business and expand their business according to the CEO of Tesco Sir Teary Leah says “we serve the people in credit crunch”. From his statement it can be very easily analyzed that how Tesco is caring for their customers.

Tesco has some main objectives in their corporate strategy which includes

To be successful retailer in the world

By doing the business give support to UK business

To be as strong in non food goods as the are in food

To provide the ancillary customer service

To win the heart of the people

http://www.tescoplc.com/plc/about_us/strategy/

Corporate strategy of Sainsbury’s:

Sainsbury’s was built on tradition to provide fresh and healthy food to the people. Today Sainsbury’s is offering a large variety of food and non food items. Sainsbury’s always tries to give very improved quality to its customers and offer great prices for their products. Sainsbury’s aim is to provide the service beyond the customer requirements and expectations.

The value of the Sainsbury brand –very fresh and healthy food, their focus is to provide healthy and fresh food on very good prices. Their history of leadership and innovation is full of success and they have a very strong regard for their social and ethical operations which some times effect their upcoming operation.

Sainsbury’s has adopted some key rules to do business. This includes

Provide very good food on very good prices

Respect for the environment

Very good place to do work

Making good difference of the community

Sourcing with integrity

These are the main keys on which Sainsbury’s do business.

Sainsbury’s and Tesco are beating the recession:

Tesco and Sainsbury’s both fighting against the recession and helping the people to come out from the recession. Their policies and their operation are really appreciated. For helping the people both retailers has introduced different kind of sales and offers for their customers. These offers are like buy one get one free, buy one get other one on half price.

Tesco Executive Director says “As well as giving our customers a flexible new offer, we’re helping them to cut food waste.”

According to this statement Tesco is definitely helping out the people in recession but they are also cutting their food waste buy selling the food on low prices. But indeed they are making more money for that food, which they used to do waste. So, with this action they helping out the people and making money as well. That is the mean reason that they are increasing their profits in this global crisis as well.


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