Understanding Retailing Unit 29

Tesco's has recently had to make many changes in their staff and have had to change the management structure to be able to pay every manager fairly and pay the wages for their general employees. These effects were taken place due to a major profit change and an unstable financial system. Another effect that has been changed is the Tesco pension scheme back in 2012. The Tesco pension scheme had changed due to financial problems however this would mean employees who have a pension scheme with Tesco will have to work longer if they were in their early 60's . This became a challenge for Tesco's as they couldn't afford to pay out on pension schemes at that precise moment.

Also the price checker would has contributed to this as it has increased the amount of customers that shop at Tesco also it has shown people awareness of the Tesco business itself and this has increased the sales of Tesco which has been able to increase the sales revenue.

In the first place I will begin with concise presentation of the firm I am expounding on. Tesco PLC is a international global general merchandise and grocery stock retailer whose headquater is situated in Cheshunt Hertfordshire, United Kingdom. Tesco offers an extensive variety

Supply and Demand change frequently and Tesco 's is currently in a state of disequilibrium. There is an issue that relates to demand due to the desirability of a product, and is unlikely that income will increase enough to cause a change in the demand, therefore Tesco have to create product that are desirable.

An economic factor that might affect Tesco is the demand of the consumer and customer which will decrease with the different problems; people are having in the world. As the demand decrease so the economy of the business will decrease and the profit of the business will decrease too. This refers in the fiscal and monetary, for example since when the government decided to raise the VAT from 17.5% to 20%, the business increase their goods price and due to that reason the customers do not purchase enough goods like they used.

As Tesco is a profit-based business, it maximises their sales and profit, expanding to maintain its competitiveness in addition to outshining competitor. It also focuses on providing shareholders with progressive returns on their investment improving profitability through investment in efficient stores and distribution depots, in productivity improvements and in new technology, developing the talents of its people

There are three fundamental rivals of Tesco and the superstore sector including, Sainsbury’s, ASDA, and Morrison’s and they apply multiple tactics independently to attracting the customers. The strategy of Sainsbury’s for its customers is on delivering an effective service quality, whereas ASDA is engaged in procuring value for its customers and these competitive attempts employed by the Tesco’s rivals are creating the issue of managing price and quality of its commodities (Which, 2012). Moreover, the customers of Tesco independently have an insignificant amount of strength in terms of the entire corporate strategy of the company (Tesco, 2011a). Nevertheless, customers jointly exposed meaningful strength because of the little expenditure and convenience in transferring to another brand (Tesco, 2011a). The past records of Tesco showed that the vendors appeared reluctant to trade with Tesco, which ultimately influenced Tesco to reduce prices as the company deals with numerous agriculturists instead a sole broad supplier (Independent, 2011). Nowadays it is very complex for non-established retailers to ensure survival in the marketplace because of the significant control of Tesco on the marketplace which taught newly entrants to modify the behavior they execute trading involving the improved part of cooperatives and they reveal the risk of fresh companies and this will be a fundamental aspect for Tesco to determine its expected competitive strategy

(Walmart, 2012). Tesco not only had to fight the recession but had to compete with Wal-Mart as well. Tesco had a tough journey ahead of itself since Wal-Mart was a typical American retail company and it had a strong brand image in the American market. The market was already familiar with Wal-Mart and its products. It had already won the brand loyalty of the customers. This is another reason why Fresh & Easy had a tough time influencing American customers. United States is a Mixed economy, bit of market and a bit command economy, where supply and demand determines the quantity of goods and services to be produced and under government regulation as well. Therefore private enterprise and government regulation have come to be integral and important to the economy. (Mixed economy, 2013). In reference to the Tesco scenario there was a free market mechanism, customers demand determined the sales of Fresh & Easy which was not in their favour. This resulted in Fresh & Easy making no profit in 5 years. Looking at the command side of the market, government tends to takeover firms during recessions that are vital to the economy. United States government didn’t bail out Tesco in the recession because it was a British owned company.

As I have mentioned before, this research paper is being taken exclusively with the aim to evaluate the Tesco’s performance in both financial and business terms over a three years period. Since the financials will be compared with its three year

Tesco is the leading food retailer in Britain, they have also focused on building non-food sales which are available in store and online. Tesco is one of the world’s largest retailers with approximately 4,331 stores in 14 countries which include Asia, Europe and the United States. (Tesco, 2011). See appendix 1 for a map of the countries Tesco operate in.

“Sir Terry: Where Tesco went wrong ‘” Sir Terry saw failure in leadership because the changes In culture that were brought it by the new management was not for the better” thus, Tesco still remains the UK biggest supermarket but the brand has lost its reputation due to low prices but then again customers expect Tesco to have the best prices on the kinds of product they buy which some of the customers trust has been lost and does not resonate powerful enough as sir terry mentioned when you are at the top and the business goes well you get credit and if it doesn’t you must take responsibility towards it. In September 2014 the new boss Dave Lewis was alerted about the shortfall in Tesco worth £250m which was expected as half-year profit, the issue behind this was caused by Tesco securing deals with suppliers earlier than it should have been therefore Tesco is issue shock profits warning in January following a poor Christmas which then have left Tesco out scaled by the rivals as the market share have gone down since 2005, while Tesco is rivaled Morrisons, Sainsbury, Waitrose pressured with efficient marketing and effective offers and deals. Tesco have failed to meet the suppliers demands with the pricing that has been arranged with the two parties, therefore, they have falsely overstated its profits by delaying or deducting payment to their suppliers while still owing money, this is an issue because its business they need these suppliers in order their business to work

Tesco is one of Britain’s leading food retailers and has 586 stores. From 1992, Tesco has grown greatly and has increased its market share from 10.4% to 15.2%. This increase in customers has also given Tesco a large amount of profit.

tesco can take advantage of its successful international expansion. tesco is in a position to share their know-how and also is able to apply technologies and know-how which will create a competitive edge over its rivals and also step its learning curve.

Since acquiring number one ranking in 1996, Tesco has developed a successful multiformat strategy that has accelerated its advantage. Its UK sales are now 71% larger than Sainsbury’s. Also the Competition Commission’s report makes it very difficult for a competitor to challenge its scale and has effectively scuppered Wal-Mart’s chances of stealing UK leadership. Therefore, Tesco is in an enormously strong position in its domestic market.

Tesco had to adapt to the local requirements, offering new solutions to previously recognized issues, by combining centralized purchasing and working with local suppliers, Tesco achieved economies of scale and transfer the benefit it to its customers in its express outlets. It actively engaged in creating a favorable environment in various markets; from bringing its UK based suppliers to USA and setting up in DC to engaging in Thailand with local community to explain the benefits of its value chain.