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It has a global name and has established several supermarkets around the world. It is estimated more than 3000 outlets around the world and has employed over 460000 employees, to take care of the operations which are fully automated. Through tesco's super and hypermarkets all the things needed for the customers can be bought in a single one roof shop. Tesco has continued to stay in hearts of its customers for a very long time. More over it has a very good supply chain of groceries and it is always providing them at competitive prices thru their efficient inventory management systems.
Retail industry is a highly competitive industry and it is like a rope walk to survive because of the highly competitive prices and emergence of technology and e commerce. Now information flows in seconds thru internet where people discuss on the latest brands and analyze the prices. They go to only the cheapest price bidder. More over tesco also has high competitions like Sainsbury, Asda, which operates in same domain as tesco and also they are present in near by geographical locations of TESC. So, tesco now plans to open outlets in counties like India, Malaysia where the competition is very less. These are untouched markets and we have lot of scope here. It is always intelligent to succeed in place where there is no competition.
Tesco focuses mainly on customer satisfaction and it has created a very strong name from 1920's when it was a small time retail shop. Now, it always believes that its key for success is mainly its customers who come back every time. They are never mistreated and it has a huge database to maintain all the information about its customers.
A detailed SWOT analysis and PESTEL is done on tesco. All its opportunities, threats, mainly the barriers or challenges are discussed. The view is given on what strategies can be applied to improve TESCO and retain it as number one for ever.
Tesco is already well established in UK.
Now here it has touched saturation point and is looking to expand in places like Europe and Asia where there is a very less competition and more scope for the business.
It's adopting a strategy called win easily in a land there is no king instead of fighting continuously in existing markets, spending more resources and finally ending up in taking less profits.
The markets here in UK facing high competition, heavy taxation from government, lot of barriers where as in Asia and Europe taxation policies are less and profit is more. The government rules are more liberal there.
With this in mind Tesco has opened a lot of its chain of super and hyper markets over China, Thailand, Malaysia and entire continues to expand over entire Asia.
It has increased business there and provides job to nearly 2.6 lakh peoples.
It is also concentrating more on internet businesses.
The main advantages of B2C e-commerce are,
1. A wide range of Choices to people:
A wide range of products are offered to customers that they are really confused what to buy.
2. Tesco mall is open only certain hours where as the online e shop is open 24 hours a day, 7days a week and all 365 days a year Easy shopping experience sitting from home.
3. Price of the products is more competent.
4. Decreases operations cost.
Cuts the cost of
Retain the customers
One great advantage for tesco is that it has a store and also an online shop. So it can attract all the customers both, online and those who comes to shop depending up on the taste of the people. Tesco will never loss any customer. Even when customers are tired and they don't go to shop they will prefer to go in to Tesco's website to buy the goods rather than visiting others.
Globally available service through out the world
Even in places Tesco shops are not there they can buy the goods online and only transportation charge will raise.
6. Tesco already has the customer membership cards but her it can still understand its customers more.
Tesco's organizational structure serves to be aiming for the company's missions and goals. Tesco has three committees, the Remuneration Committee, the Audit Committee and the Nominations Committee[TEO2] . Below is Tesco's organizational chart of each stores.
Thus Tesco never and ever leaves even a single customer. It treats them like god and they turn as life time customer for tesco due to the quality of the service they provide.
It has got highly trained, skilled and motivated workforce to take care of the customers and their full work is to understand their customers and respond to them in providing the service very quickly at the same time efficiently.
Well Established Brand name
Has stood in hearts of people as market leader for more than 90 years since 1924.
Offers exclusive quality products under its own brand name at low price
Highly motivated and experienced work force.
Continued focus on customer satisfaction
Applying innovative ideas they are also leaders in e retailer industries
They know their customers thru the card and points system
All the networks of Tesco are connected by high end ERP - using SAP to manage the entire process of business
Tesco introduces a product and if it is not good it immediately removes it. It never continues to sell it again.
Customer values - It gives importance to the customers and spends more money to know them. It has a very good database to store all their customer names, what they buy- their like and dislikes based on their unique name and Tesco id thru their tesco card. So it can easily know the customer's taste and change its products according to that.
Asian market - Which is going to be high revenue grocer for Tesco in future. 12.5 % increase in profit only in Asian market which is very high.
New opportunities in B2C E market place.
It is going more automated, thus reducing workforce and maximizing profit. Thus it is spending more money for the automation of the entire process.
Planning a more efficient supply chain to re innovate the art of doing things from logistics to every thing it does.
It has to still develop its web sites which are far less in standards compared to Amazon.
It can still raise it profits if it can give cheap prices compared to Amazon.
But also since Tesco has products from a-z needed for living, that is diversity of products for Tesco is very high compared to Amazon.
Since it is going global it can't concentrate every where. It should concentrate more on international branches also since there is no direct involvement over the international business.
Tesco has failed to open stores at major centre places of the cities in UK and others like Sainsbury are talking it as an advantage and conquering those places fully.
Tesco is more dependent on UK market alone and its major income is only from here. It has to concentrate and work on other parts of the world also to conquer the world business. It should go more global because the next part of growth is more in Asia compared to the highly developed western countries which have already come to a saturation point.
Tesco's supply chain are good but still it needs to be more optimized to reduce the operational costs as it was evident that the operational costs for Tesco had raised very highly.
The employees should still be thought daily about all their products so that they can still be faster and produce more profits. More efficient employee management - sometimes very rarely a same person takes care of more sections and leading to less help desks.
Current global recession
Heavy competition from Sainsbury, Morrison and Asda.
Heavy taxation policy of government.
Tesco has huge diverse products and concentrating every thing becomes really difficult.
It can break to several small firms like Tesco -books and music, Movies, over the online web site business, so that they can become still more competent in those specific areas. Say it can improve a separate website in competing standards with Amazon rather than putting all in oneâ€¦ Creating confusion for the user's and they will go for Amazon
Increasing operational costs.
Raise of fuel prices increasing and this leads to decrease in profits as they are spending more on transportation
Increasing salary for employees. Say raising salary for nearly 4.6 lakh employees â€¦ managing huge work force it self become a major threat.
A company's operations can be affected by some external uncontrollable factors. These factors have a direct impact on the company's performance and all of its decisions. These factors are broadly classified as Political, Economic, Social, Technological and Environmental. Examples for these are change in taxation policy by new government, Inflation, high national income, etc... These external factors are known as Macro environment.
Political factors refer to the policies of the ruling government. These include its attitude towards firms, Subsidies, Taxation policy and what the government actually wants to develop in a nation. Suppose if government does not want to develop Silk industries, it will stop giving more subsidies to company and this will affect the growth of the organization.
Economic factor encompasses the Interest rates, Inflation rate, economic growth, etc... For example a higher interest rate affects firm's growth because they can't borrow money to expand business.
Social factors include Population demographics, Wealth Distribution,Â Â Â Â Â Â Â Â Â lifestyles and Educational levels. For example if a firm need people with post graduate level and if it can't get them then they have to recruit from other countries for higher cost.
Technological Factors include new invention, Research & development of new products etcâ€¦ New technological advancements always help reduce cost, save time and improve business. An example for this is we use online e business to make our firm reach all over globe. Amazon sells its products online. It is cheap and reliable because no need of outlets in each country and no operations cost.
Environmental factors include climatic change and weather. Suppose if there is severe rain and flood tourism industry will be affected.
Legal factors include health and safety, employment laws and competition laws. If a firm does not follow basic ethics then its reputation gets damaged and customers will decrease.
On the other hand there are external factors which affect in a direct way a business activity such as suppliers, customers and competitors known as a Microenvironment (Palmer and Hartley, 2006).
PESTEL looks at the external factors which may directly affect the company - macro environmental factors. SWOT analysis is relays on the results of PESTEL. SWOT focuses on the internal factors (Strength and Weakness) and External factors (Opportunities and Threats) at the company level. So, they both are two different frame works. Their results vary and combining their results we can arrive at clear conclusion.
More tightened taxation policies in UK as government is facing more crises.
More strict laws on environmental protection so, in order to follow these rules some steps are taken by tesco that has raised its operational costs.
When expanding to new countries in Asia it has to see the threats in those countries. First, it has to get the support of the government. The existing shops are affected a lot due to arrival of Tesco so some governments refused opening Tesco and some places they levied more tax.
In some countries the transportation charge is less than compared to UK. So, it should learn to be flexible and continue to provide same quality of services provided in UK in other parts of the world.
Severe economic down turn has lead to decrease the average spending of money by the people. People also indulge in cost cutting. So, the overall gross profits and net profits have decreased and transportation costs has also raised - causing decreased earnings affecting the profit.
The products sold in UK are high standards and Tesco cant sell the same product there at a low price because the customers in those countries can't afford to spend those much.
Logistical costs have raise due to raising fuel prices and global oil crises that is a sever problem now-a-days.
Tesco's has to follow different strategies to respect and adapt to the social and cultural needs of the people where it is doing trade. In some countries they may prefer to do shopping morning early hour's so it should be ready to change its working hours.
Certain goods like pork are not allowed to be sold in certain Muslim countries and tesco should respect the needs of such people and adapt accordingly. It should not follow the same rules followed in UK every where. In some situations it has to change its existing style and products and this costs a lot.
It has high end ERP technology to maintain customers and the entire operations.
Providing competitive price has become a great challenge as people compare the prices in different web sites and buy only from the cheapest.
More efficient communication and correspondence with suppliers and distributors will reduce excessive storage and more inventories. Tesco follows all the latest innovative technologies to stay over the edge.
Legal effects are due to varying law in different countries and it should be more competent to meet any legal issues and even fight governments in certain cases.
Tesco is more environmental friendly. It is using only paper bags and those which are recyclable and radiation free. Similarly, it is also trying to reduce its logistics to reduce pollution. It follows all regulations with respect to the environment in UK.
Based on the above discussion, it is clear that in order to survive in today's world the company's have to be highly competent and innovative in terms of technologies. Tesco continues to walk in that path to retain its success. The strategy's of Tesco has always worked in gaining the customers, and every thing in Tesco is customer centric.
Even though in this severe down turn Tesco continues to maintain it's profit and stay ahead of its competitors.
Thus SWOT and PESTLE was done on Tesco and it was evident that it will continue to be global leader in retail industry. To sustain the prices Tesco manufactures its own goods at a cheap cost and good quality. Similarly Tesco's online business is also doing very fine and it is entering where ever it can and earns money.