Hence, Tesco would be badly affected by any slowdown in the UK food market and are exposed to market concentration risks.Ĭurrent trends indicate that British customers have moved towards ‘one-stop’ and ‘bulk’ shopping, which is due to a variety of social changes. Although international business is still growing (Appendix A), and is expected to contribute greater amounts to Tesco’s profits over the next few years, the company is still highly dependent on the UK market. These economic factors are largely outside the control of the company, but their effects on performance and the marketing mix can be profound. One of the most influential factors on the economy is high unemployment levels, which decreases the effective demand for many goods, adversely affecting the demand required to produce such goods.
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In an industry with a typically high staff turnover, these workers offer a higher level of loyalty and therefore represent desirable employees.Įconomic factors are of concern to Tesco, because they are likely to influence demand, costs, prices and profits. Tesco employs large numbers of student, disabled and elderly workers, often paying them lower rates. Tesco understands that retailing has a great impact on jobs and people factors (new store developments are often seen as destroying other jobs in the retail sector as traditional stores go out of business or are forced to cut costs to compete), being an inherently local and labour-intensive sector. Also to meet the demand from population categories such as students, working parents and senior citizens. It also operates in Asia: in South Korea, Thailand, Malaysia, Japan and Taiwan), Tesco’s performance is highly influenced by the political and legislative conditions of these countries, including the European Union (EU).įor employment legislations, the government encourages retailers to provide a mix of job opportunities from flexible, lower-paid and locally-based jobs to highly-skilled, higher-paid and centrally-located jobs (Balchin, 1994). Operating in a globalized environment with stores around the globe (Tesco now operates in six countries in Europe in addition to the UK the Republic of Ireland, Hungary, Czech Republic, Slovakia, Turkey and Poland. Other retailing services offered include Tesco Personal Finance. As well as convenience produce, many stores have gas stations, becoming one of Britain’s largest independent petrol retailers. The company’s own-label products (50 percent of sales) are at three levels, value, normal and finest. The company sells almost 40,000 food products, including clothing and other non-food lines. The UK is the company’s largest market, where it operates under four banners of Extra, Superstore, Metro and Express. It provides online services through its subsidiary,. Tesco is one of the largest food retailers in the world, operating around 2,318 stores and employing over 326,000 people.
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Two future strategic options are suggested in regards to the resources based strategies. The report below provides an insight into the supermarket company, Tesco, with emphasis on its external environment analysis and company’s analysis of resources, competence and culture.
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In recent years UK supermarkets have come under increased scrutiny over their treatment of suppliers, particularly of own-label products, yet the development of strategic supply networks has been an integral part of most supermarket strategies for the past decade. In 2003 retail accounted for 9% of gross domestic product (Datamonitor, 2003). The food and drink retail sector represents the largest industry in the UK, providing employment for over three million people in primary production, manufacturing and retailing.