Notesale: Turn your study into money

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Kyle Muir

Tesco in crisis
Introduction
Founded in 1919 by Jack Cohen, Tesco has grown massively since it
opened it‟s first store in Barnet, England and now operates in 12
countries across Asia and Europe
...
Tesco sell a variety of products including
food, clothes and electrical items and also offer services such as
Tesco Mobile
...
A loss of customers and
internal errors are among the problems at Tesco
...
In order
to do this I will use SWOT analysis which will allow me to highlight
the four aspects of Tesco – their strengths, weaknesses, opportunities
and threats
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Research
I retrieved secondary information from „The Grocer‟ website (source
1)
...
However it enabled me to see what
Tesco did and I could compare their actions with competitors
...
It is a reliable source as the BBC is a

Kyle Muir

neutral organisation and therefore the information should be true and
fairly accurate
...
By doing this I found out why Tesco was
decreasing in popularity
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Analysis and Interpretation
Strengths

Weaknesses

)Leadership position in the UK
)Solid cash reserves
)Effective marketing strategy

)Internal errors – overstating profits
)Over-dependence on UK market
)Poor relationship with some suppliers

Opportunities

Threats

)Expansion – move into new countries
)Offer a wider range of services

)Rising costs of operations
)Discount stores – Aldi & Lidl are cheaper

Tesco SWOT analysis

As seen in source 1, Tesco overstated their profits by £250m – “crisis
as profit hole of £250m is discovered”
...
However all this has done is damage
customer‟s trust in the business and is one of the reasons behind their
decrease in popularity
...
So, in effect, Tesco‟s efforts to make the
business look better have backfired and damaged their reputation,
hurting their profits and customer base in the process
...
This shows that the discounts
stores are a problem that Tesco know they must respond to in order to
improve their situation and attract customers back to their stores
...
Half of all people that I asked agreed that the discount
stores are the main reason for the fall in profits that Tesco have
experienced over the last year
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Despite recent turmoil, a strength of Tesco is their strong leadership
position in the UK as shown in my SWOT analysis
...
This shows the dominance they have had over the years in the
UK
...

In source 3, I also asked people where they prefer to do their shopping
and Tesco‟s loss of customers is clearly displayed in the results
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In fact less than a quarter of people chose Tesco as their
supermarket of preference, not reflecting their market share of 29%
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It is clear from the BBC panorama episode about Tesco (from which
source 2 is summarised) that Tesco has a poor relationship with many
of it‟s suppliers
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One example is of a man
who sold children‟s toys and Tesco were his biggest buyer, without
their orders his business would have collapsed
...
This ruthless technique
has resulted in lots of suppliers being angry at Tesco and may affect
the UK‟s biggest retailer‟s ability to negotiate successfully with
suppliers in the future as a large number of their suppliers have been
put off doing business with them
...

Tesco may have seen a decrease in market share and share price over
the last year however this is an issue which can be solved with some
work
...
This would mean that a disaster in one country (like
the current situation in the UK) would not affect the overall state of
the business as much
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Evidently from the information in this report, Tesco must work hard
to rebuild relationships with suppliers that have been mistreated
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I would recommend that Tesco investigate supplier
mistreatment and offer reasonable compensation to those affected
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It will also show that Tesco takes responsibility for it‟s
errors and is willing to mend them
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Their cheap
prices have lured customers away from Tesco, and obviously action
needs to be taken to get rid of customer‟s temptation to shop in a
discount store instead of in Tesco
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This
can‟t just be promotional pricing however as Tesco have already tried

Kyle Muir

this and been criticised for it – It must be permanent pricing
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