Case Analysis : ' Tesco '

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.

Tesco was feeling the pressure because they saw a fall in profit since 2008 and were worried that their customers would not return. However as time moved on the economy started to pick up again in 2009. Customers started to spend more and were more comfortable about their current financial situation. However Tesco realised that their customers were not purchasing goods of high price, meaning that customers were likely to purchase readymade meals and organic products. The demand for a product depends on the economic factors such as interest, inflation and local employment levels. Tesco doesn’t have control on the economic factors; however these do have an effect on the business.

While looking at the Tesco Annual Report I can clearly see that Tesco have a strong customer base and their sales have increased by 8.1% in the past year. This shows that Tesco is growing firmly, and regardless of a few areas which they have failed to comply with legislation, shows that they must be

Tesco has about 310,000 employees (Tesco PLC, 2014) in the country, this has a significant effect on the entire countries economy and directly effecting the GDP of the United Kingdom; about £5billion was spent on wages in 2010 by Tesco. This money would have increased consumer spending in Tesco and many other shops, generating profits across the country enabling our economy to grow out of a recession (Worksmart.org, 2011).

There are several laws that affected Tesco due to the organization markets a wide-ranging of products and services. Like the agricultural goods the UK government is improving the shared agricultural policy. The government is revising the way direct subsidies will be allocated to farmers (Gov.uk, 2014, n. p.). Such measures can lead to lower subsidies, which affect the capability of farmers

We all know Tesco as a food retailer, and we know that they are in constant competition with other retailers such as Sainsburys and Asda, yet we do not know much about what goes on beyond the shelves and the tills, the marketing plans and the day to day tactics that have to be devised to stay the number one food retailer in the United kingdom today.

The purpose of this paper is to present the shares of three companies for the purpose of their inclusion in portfolio and for their statistical analysis. For the purpose of this paper shares of Tesco, Morrison and Sainsbury are selected for conducting the analysis. The data for the share price is extracted by using Yahoo Finance and the selected time period for the share price is from September 2015 and onwards. The aim of this paper is to provide statistical analysis on the basis of share prices of selected organisation along with the well-structured and informative statistical description.

Tesco, UK’s largest supermarket is facing a stiff competition from discounters (Aldi) and to a certain extent from the high-end supermarkets (M&S) since the past few years. Tesco’s share value fell from 321p in December 2013 to 168.15p in December 2014. (Yahoo, 2015) To add to this depreciating market value and low profits, Tesco has been in the headlines for a myriad of scams. Such a situation calls for a strategy overhaul. The shortcomings in Tesco’s strategy to deal with the competition and the overall situation of the retail market has been analysed in this report. Before analysing the current situation and devising a plausible strategy to deal with the situation, we will have to assess the resources and capabilities of Tesco as these shape the strategy of the firm to fit the external environment and not the other way round. Some of the major strategic changes which need to be made by Tesco to fit itself better in the new retail market and cope with the competition have been discussed and highlighted in the final section of the report. In the words of Alastair Dryburgh “You can 't compete on price with someone who has systematically designed their business to be cheaper than you.” (Dryburgh, 2014) Tesco needs to cope and not compete, and this issue is highlighted in various contexts in the report.

Initially a UK-centered basic supply retailer, since the mid 1990s Tesco has progressively expanded geologically and into zones, for example, the retailing of books, apparel, gadgets, furniture, toys, petrol and programming; money related administrations; telecoms and web administrations. The 1990s saw Tesco reposition itself, from its recognition as a down market "heap 'em high, offer 'em shabby" retailer, to one which requests over a wide social gathering, from its Tesco Value (dispatched 1990) to its Tesco Finest extents. This was effective, and saw the chain develop from 500 stores

The retail sector in the United Kingdom is essential for the economy, the company Tesco PLC currently corresponds to the biggest retailer in the UK (1) by revenue and it is one of the top five in the sector at the world level according to market capitalisation (2). Therefore, it would have been justifiable to consider Tesco as a safe investment. However, the company is now facing agency issues (3) which has concerned investors and has caused the company to lose 50% of its market share price.

These may be as a result of Tesco's troubles from accounting scandal that has obligated changes in its top management, a sinking share price, decreasing sales and loss of consumer confidence as consumers turn to discount rivals such as Lidl and Aldi. Nevertheless, Tesco has put in place a road map to address the key issues by rebuilding trust with shareholders and stakeholders, as well as to win consumers’ confidence in Tesco’s brand.

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.

Today Tesco is an international retailer of household goods, and clothing, as well as providing a deliver service and banking service in some markets. Tesco’s home (UK) market share is ranked at the top holding monthly a 29% share from January 2015 to September 2016. (The Statistics Portal) The company’s first supermarket was established in 1950s and has continued to grow with activities like expanding online. A report (2008, Global Retailing: Preparing for Change, IGD) said that by 2012 Tesco will be in second position with an estimated growth rate of 12% compared with Carrefour’s 7%. Tesco’s strength rests in providing value for money offer supported by strong partnerships, and an effective supply chain.

Tesco is still considered one of the largest supermarkets and retailers in the world which many competitors try to imitate, and hence compete

Tesco operates in a global world and is now located in several countries, and this international business is still growing, but it remains dependent on the UK market. This excessive concentration on a single market exposes them to risks and would be negatively affected by any slowdown in the UK food market (as the crisis of “mad cow” in the 1990s)