TESCO Case Study

Section: A (Analysis)
1. SWOT Analysis

SWOT analysis is a strategic planning tool used to identify strengths,

weaknesses, opportunities, and threats related to the success of an individual or an
organization's business and project planning.
The strength of the company is a wide-ranging food retailer in the United
Kingdom. It has two major food brands, such as Finest and Everyday Value Ranges.
Besides, about 27.7 % of the market share of grocery stores in the United Kingdom
was dominated. Business accounts for 60 percent of all Tesco revenue and earnings.
This is one of the greatest strengths of the organization. Moreover, Tesco becomes
leading by its expansion into twelve different countries such as China, the Czech
Republic, India, Malaysia, Ireland, Hungary, and Poland. This position clearly
illustrated them to be a leading global brand all over. Thus, it becomes one of the
strengths of Tesco. Tesco has fulfilled its core principles through its commitment to
the use of its size as a leading distributor by winning awards. For the launch of the
first carbon-free retailer in Ramsey, Cambridgeshire, Tesco was awarded Green
Retailer of the Year 2012 at the Annual Grocer Gold Awards. Tesco has great
enthusiasm for this award. Tesco is also playing a vital role in being a community-
focused global business. It works with communities through Corporate Social
Responsibility. Not only that, but the commitment of using its scales for good
demonstrated Tesco's 'Three Big Ambition'. Thus, it drives success in the competitive
retailing world.
The Tesco also has some weaknesses. Firstly, Tesco was highly dependent on
the UK's core business. Although its chain stores are expanding in various countries,
almost 60 percent of profits come from the United Kingdom and 40 percent only from
other countries. This clearly shows that Tesco is not very successful in integrating
companies with different working cultures and not geographically diversified because
they are exposed to a competitive risk in the UK market. For example, it will close its
operations in Japan and the US in 2012. The explanation was that it was unable to
export its services and to carry out its offshore plans efficiently, which is considered
to be a major weakness for the company. Tesco is a very large organization with a
very diverse product line. They sell food, books, clothing, and furniture items to fuel
or insurance. Yet there are the flaws. Bad debt from credit cards and too many
domestic insurance markets affected financing income from Tesco. They are also
struggling to gains new markets in addition to the foodstuffs industry, such as books,
as companies specialized in this field, including Amazon, may provide better services
and more consumer loyalty in this field. Another example is when Tesco wants to
offer phone services as a lack of experience and expertise may lead to debts. One
example is if Tesco wants to offer telecommunications services as a lack of
knowledge and competence will contribute to liabilities. Tesco does not focus on the
concentration of one region but seeks to reach other markets that may have a negative
impact. Tesco is attempting to sell online recently. Recent times. However, Tesco will
spend a lot of money on the latest web technology to continue selling online, just like
biggest online retailers. At this time Tesco is insufficient with free cash because it has
vast quantities of debt that can be harmful as prices.
Furthermore, the Tesco can explore its business in many ways for great
opportunities. One way may be the strategic partnership with other firms. Tesco will
then attract more customers and take advantage of other advantages. It is important to
remember that Tesco is now considering a shop-in-store alliance with the next-
generation giant to use unused inventory for shops effectively. Likewise, Tesco is
developing the strategy of creating highly valued brands through its brands such as
F&F clothes and Tesco Finest to offer quality goods to customers at a competitive
price. Tesco has strong brand recognition especially for its Tesco.com highly, with
more than 60 percent of its 1,000,000 online customers generating revenue from this
platform. There are various strategic business partnerships with several businesses,
which will improve their productivity and provide superior goods and services. For
example, the Tesco Group retailer, one of India's biggest industrial companies, signed
a limited franchise agreement with Trent. Tesco should adopt the plan to reach new
markets with innovative goods that will be adhered to. The Internet offers tremendous
opportunities as Tesco aims to fulfil the needs of its customers. Build even products
such as Tesco Value or Tesco Finest that are tailored for the ideal group of customers
who would purchase it in Tesco. Besides that, in Asia and other foreign markets, there
is always the potential to expand the Tesco brand. Tesco's customers are now facing
several attacks as it is number one, and become the targeted competition.
There are a number of threats. Tesco marketers launched a Christmas ad in
2017. It would be funny. But a lot of people were offended. They said that the attack
 on the Christian faith was insensitive and immediate. TV commercials and advertising
should be free from any demographic criticism. Social media users respond poorly to
TV commercials; some say Christmas has 'removed' the chain of supermarkets. The
beginning of a global financial crisis culminated in a 2.4 percent downturn of the UK
economy in 2009, in which the International Monetary Fund (IMF) is expected to
further contract 4.2 percent. Therefore, the concentration of Tesco in the UK market
will adversely affect its financial results. In the UK food industry, there was fierce
competition. While Tesco has been leading the sector for 15 years, it faces intense
market share pressure from its competitors. The remaining 'big four' are, respectively
Asda, Sainsbury, and Morrison.

TESCO SWOT Analysis | SWOT Analysis of Tesco Plc. (2020, January 26). Retrieved April
25,2020, from Marketing Tutor website: https://www.marketingtutor.net/tesco-swot-analysis/
Swot Analysis for Tesco Malaysia Essay Example. (2016, November 7). Retrieved April 25,
2020, from Graduateway website: https://graduateway.com/swot-analysis-for-tesco-malaysia/

Tushar, A. M. (n.d.). Strategic Management on Tesco PLC. Academia. Edu. Retrieved April
25, 2020, from https://www.academia.edu/6616602/Strategic_Management_on_Tesco_PLC

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2. Marketing Mix of Tesco
There are seven marketing mixes. The product is the first one. In its different
stores, Tesco has a wide variety of items. Product selection is broad such that
consumers from various parts of the market satisfy their requirements and
expectations. The approach of the company in the Tesco marketing mix is as follows.
The goods include such as food and pets, snacks, frozen food, baking items,
electronics, home electrics and games goods, home electric items, home products for
home care and gardens, toys, DIY and vehicles, Sports and leisure, baby and
children's products, party products and gifts, health and beauty products, clothes and
accessories, entertainment and books. products are also included. Tesco has its brand
such as Tesco, Finest, Everyday Value, Tesco Lotus Baby, Tesco Kipa, Tesco Bank,
F&F Fashion, Tesco Quality, Option Tesco has different styles of shops that relies on
the shop size. Tesco also offers online sales of its products. Tesco has recently
updated its 33 categories of food and its line of goods by 18%. Tesco Bank offers
financial services including credits, savings accounts, loan cards, mortgages, and
insurance.
In its pricing approach, Tesco is following the cost leadership policy. It
provides the cheapest products and at the same time maintains quality. To sustain
competitive costs, the company exploits economies of scale and the best supply
networks. In collaboration with its suppliers, Seveso is constantly evolving and
strengthening the supply chain to rising costs. In 2016, the cost of a weekly average
shop was reduced by more than 3%. Upon receiving consumer input, Seveso reduces
sales rates to an even cheaper level, providing competitive and affordable prices. The
Tesco scheme has its name, 'Brand Guarantee,' which ensures that the consumer pays
least to Tesco if the consumer buys 10 or more items than the customer can get
cheaper rates of any advertised product somewhere else. Recently, Tesco has
launched new low-price grocery products. The company has restructured its product
team to obtain the best offer for its customers.
In the place or distribution strategy of Tesco, it has about 6,900 outlets in
eleven countries. The following types of stores are available at Tesco such as Tesco
Metro, Tesco Express, Tesco Extra, Tesco Superstore. Tesco supermarkets are major
supermarkets that offer food and a limited variety of non-food goods. Tesco Metro,
which is concentrated in towns and city centers, is an average of 1,000 square meters.
Smaller stores than critical goods and high margins are Tesco Express. Express items
are costlier than Tesco's other stores. Tesco Extra is a massive hypermarket that
carries a wide variety of items under one roof including foodstuffs and general
products, enabling consumers to shop on a single trip and under one roof all of their
routines. One-stop is a different brand of Tesco outlets, which are very small and
charge prices higher than any other Tesco store.
In the promotion strategy, Tesco can be highlighted for its reliable low-price
brand identity. This aspect is the focus of Tesco's promotional activities. Tesco uses
advertising platforms such as hoardings, TV advertisements, and charity activities. It
also uses promotions and deals, including buying one, to a significant degree. Tesco
uses the Tesco Club Card to identify and to reach its clients. The card is Tesco's Gift
Card. The owners of the club-card get discounts by redeeming the points. Club card
owners also enjoy customized deals and discounts. Tesco also markets its goods
online and promotes them.
Tesco is one of the largest supermarket firms with many employees. People
are the company's staff, who are chosen by the company. To get the right people for
the company and the project, careful selection of positions and policies is required. In
11 countries worldwide there are over 480,000 workers. In Tesco, diversity is actively
encouraged. People are more respected to make the business more efficient. Tesco
employees are encouraged to support each other. The employees who are perceived as
having greater potential are given promotional opportunities.
Tesco is a mechanism that has taken into account the achievement of the
customer mission. It was planned to reduce the deviations from the policy of the
company. Additional considerations are flexibility, service characteristics, and output
capacities as part process strategy.
Lastly, physical evidence is evidence of the genuine goods of the customer.
The signs, colours, labels, and appliances are all the facts that the company uses as
proof for its customers. Stores are therefore tangible proof of the brand and a place of
reality for consumers. As a result, the marketing strategy of Tesco has been
completed.
Zigu. (2016). Tesco Marketing Mix (4Ps) Strategy | MBA Skool-Study.Learn.Share.
Retrieved from MBA Skool-Study.Learn.Share. website:
https://www.mbaskool.com/marketing-mix/services/16731-tesco.html

3. Porter’ s Generic Model – can use for sustainable competitive advantage

There are three of Porter's Generic Models, such as cost- leadership,
differentiation, and focus strategy. All these three models used by Tesco as part of its
strategy. The cost leadership approach of Tesco mainly uses to gain competitive
profit to be achieved by cost reduction. The main purpose of using this strategy is to
safeguard the role of market leaders through efficient management of the value chain.
This approach helps Tesco to increase the market share by targeting the middle class,
which in most of the countries constitutes the greatest proportion of the general
customer mix. The price factor is generally very relevant for medium-sized
customers, and cost leadership is the best strategy for meeting this consumer sector's
needs. Tesco tends to focus its products around the world on affordability and readily
available, contribute to brand recognition and steady revenue growth, and offer a
strong competitive edge. Discounts and vouchers have been granted to the company
to achieve sales revenue and to address the market pressure of its competitors, other
than offering the product at a lower price. It's all about reducing manufacturing costs
and optimizing the performance of the supply chain. The aim is to increase brand
awareness and promote consumption as a result of the discount and promotional
campaign. Through this strategy, Tesco gains an instant awareness of its brand,
extends its client base, encourages usage, and achieves sales goals by emphasizing the
affordability and accessibility of the product. This strategy basis for sustainable
competitive advantage in the highly competitive world consumer market.
The second generic approach of Tesco is to create a competitive edge with
differentiation. It uses differentiation in combination with the cost reduction policy
to achieve growth objectives. It encourages the Tesco to broaden its consumer base by
highlighting the unique features of this product. Its strategic objective is to identify
and address emerging health issues in the light of innovation. To distinguish itself
from its rivals and broaden the range of opportunities in the industry, Tesco has
expanded its product line after recognizing the growing desires of its customers. The
company was able to create a large and loyal customer base by integrating
differentiation and cost control. Tesco placed its commodity offerings in a way that
separates itself from the alternatives that are available through its differentiation
strategy. As a highly established brand, the business uses differentiation as a method
to reduce the competition of other brands. Heavy investment is being made to
differentiate Tesco from other brands in marketing, advertisement, and celebrity
endorsements. Comprehensive experience, the oldest brand, and a strong presence
across the world are some reasons to differentiate between the marketing and
communication strategies of the company. The brand logo is often used to lay the
distinguishing base other than these. The distinctive logo has a powerful brand
identity in the mind of customers. Though several changes have been carried out by
the company, the essence remains the same, which also makes a big difference. In
reality, the company provides a wide variety of flavours to meet the specific taste
needs of the consumer. It uses creativity as a means of providing a variety of and
improved services to enjoy and increase the Tesco preference for other brands.
The third generic model is focus strategy, which encourages firms to expand
narrowly-targeted segments in terms of resources. Through following the focused
approach, businesses gain different segments of the market and base their competitive
edge on niche marketing. Tesco adopts a strategy of focus both on low cost and on
offering the best value. The low-cost oriented approach is used to meet the needs of a
niche consumer segment at the lowest price possible. At the same time, the best value-
oriented approach is followed by stressing the taste, size, and style of the product that
best suits consumers. Tesco evaluates its branding plan with all of its reliance on
product features, continual improvements in product design, and packaging that meet
the mental needs of its consumers and improve profitability.
4. Ansoff Matrix / Core competencies
The Ansoff Matrix is a tool called a product or market expansion grid. It
allows wide-range businesses to analyse and plan strategies for continuous growth.
This matrix has four strategies that can be outlined to help a firm to grow and analyse
the risk associated with each strategy.
Or
Core competencies are the defining characteristic of a company that provides
the foundation for the business to expand, take advantage of new possibilities and
deliver value to its customers. The core competencies of a business, whether existing
rivals or new entrants into the market are not easily replicated by other companies.

Market penetration means encouraging growth in revenue in the current

client base. It includes the practices done by concentrating on the current product in
the existing market to raise the market share. The primary growth-intensive strategy
of Tesco for fulfilling its growth objectives is market penetration. Tesco's
implementation of this approach allows for cost reductions and different marketing
and advertising methods for the promotion of revenue on the current consumer
market. The company provides different price discounts and promotions, performs
advertising campaigns regularly, and offers the product in new appealing bundles for
revenue development while staying in the same market. For using this strategy in a
competitive consumer market, aggressive marketing strategies are important. Tesco's
approach seeks to boost profits by rising price rates through cost leadership, as part of
Tesco's market growth approach. In this scenario, a correlation is believed between
low-cost leadership and low-price leadership. That growth rate can also be reached
through the convergence of innovation with a consistent basis of differentiation.
Despite competition in the industry, it allows Tesco to grow its client base. However,
it is important to remember that as the market hits its saturation level, market
penetration is more expensive. In this case, investment in various marketing and
promotional activities leads to a low return that allows the organization to pursue
other strategies for intensive growth. Tesco's ability to distinguish its offerings and
achieve cost leadership is related to its adoption of market expansion as a primary
intensive growth strategy. This intense growth strategy is assisted by the combination
of cost with differentiation of generic strategies. The strategy for market penetration
played an important role in making Tesco competitive in its internal market during the
initial growth phase. Later, national recognition was used to target new markets
around the world. Brand recognition has also acted as an instrument to sell new goods
to existing and emerging customer audiences through high market penetration.
Although Tesco is among the world's largest players in the industry, market expansion
remains the primary intensive growth strategy because the business now has more
growth opportunities in multiple consumer markets.
The second intensive growth strategy of Ansoff's growth matrix is product
development strategy. To meet growth goals, Tesco uses it as a secondary strategy.
This approach includes the introduction or alteration of new products in existing
product lines so that they are new to the current client base. Growing businesses such
as Tesco are embracing this approach because, with their existing product portfolio,
they have only a few prospects for growth in today's market. The product portfolio of
Tesco has increased considerably and its range has become too large. The Company is
allowed to mitigate costs, as the losses of one product line can be offset for the profits
of other products. The company currently represents more than profitable brands
worldwide. The production of goods is a significant tool for attracting more clients.
Escalating research and development spending in innovation and new product
production is a strategic objective linked to the implementation of this intense growth
strategy. Tesco encourages product creation and improves the ability to offer new and
innovative products to drive success on established consumer markets by using the
Differentiation of Generic Growth Strategy. This intense growth strategy, which helps
the company to reduce costs and to use existing resources to introduce new products,
is often encouraged by the management's cost control strategy. While the Company
can use the same resources to broaden product lines, Tesco will concentrate on
research and development and employ innovative technology required to implement
this approach for the effective production of new products. Tesco has three major
strategies in terms of new product growth. First, introducing new products that are
closely related to existing product lines. Secondly, to deliver new goods resonating
with current consumers' buying behaviour. The third approach is to create new goods,
refining, or reinventing existing ones. By constantly evaluating consumer needs,
Tesco manages to effectively launch new items.
The third Ansoff growth matrix is market development which aims to
cultivate and reach new market opportunities. As a growth strategy encouraging
market penetration and product creation, Tesco uses market development. The
company, which is currently present in more than competitor nations, has applied the
Strategy extensively. In making Tesco a global brand, successful penetration of new
consumer markets played a crucial role. Prices affordable, a good brand name, and
taste are the key factors behind the global presence. Other than these factors, Tesco
has helped to attract new clients and to take the lead on the market in many countries
with positive ads and celebrity promotions. The company continues to expand the
distribution network to reach every corner of the world through continued investment
in research and development, particularly in developed countries where its presence is
currently small. However, in most of the markets around the world, a business has
already entered; market growth is now only supportive and secondary insignificance.
The strategy of Tesco aims to extend the supply chain to sustain the development of
the distribution network. The ability of Tesco to reduce costs and achieve a cost
control role enables the firm to successfully execute this intensive strategy of growth.
The reduction in costs helps Tesco's increased plans for new consumer markets. There
are four different avenues for multinationals like Tesco to execute this aggressive
expansion strategy: the development of new sales networks, the creation of new
market categories with price variance, new product measurements, and new
geographical areas. The geographical expansion involves a considerable commitment
to the resources, and a company needs to determine the support of the decision to join
this specific geographical area for the existing distribution networks, as well as for
other resources. Culturally distant markets are more dangerous, as it demands that an
enterprise is culturally knowledgeable and develops efficient structures for
information management. When reaching new geographical regions, Tesco recognizes
the importance of cultural awareness and inclusion in marketing strategies of local
norms and values. Tesco has helped gain recognition in culturally diversified
consumer markets. Strong cultural knowledge. In this approach to be successful,
businesses must also carry out the comprehensive competition and market
intelligence. To make correct market entry decisions, well-informed operational,
financial and consumer data are important. However, the use of this technique means
that current customers are at risk of alienation.
The fourth intensive Ansoff matrix growth strategy is diversification. This
approach involves the development of new markets with new goods. The strategy of
diversification is further divided into related diversity and unrelated diversification.
The unrelated diversification is riskier than the related diversification because the
business wants to introduce completely new products with no prior experience in new
markets. The current expertise, capital, and infrastructure of the organization supports
the decision to diversify product portfolios in the case of related diversification. In
addition to promoting the growth achieved through consumer analysis and product
creation, Tesco places secondary emphasis on this strategy. The diversification of
Tesco's portfolio is underpinned by a cost leadership generic strategy for growth as a
cost management tool, and existing infrastructure allows the company to pursue new
product opportunities in new markets. The strategic aim associated with an aggressive
growth strategy for diversification is to increase the portfolio through successful
acquisition strategies. The business concentrates on the associated diversification and
avoids adverse encounters in unknown regions due to risk factors. Instead, the
organization utilizes brand recognition and influence in the global drink industry to
introduce similar products. Tesco also offers unrelated diversification merchandise
such as fridges, shirts, glasses to pens. Upon evaluating industry dynamics and
changing consumer preferences, competitive companies adopt the associated
diversification strategy. For example, the company sought to reduce losses from
decreased revenue by investing in green business practices and transforming business
partners into a positive brand identity as a response to increased protests by
environment conservation groups. The associated strategy of diversification increases
the company's competitiveness and assists the enterprise in achieving long-term
growth targets amid high market volatility. A well-managed product portfolio and
related diversification often provide risk custody as decreasing trends can be offset by
new trends in the related product areas in certain product areas.
To conclude, under this model, a company will lose the competitive advantage
of its rivals if either it does not follow the cost control or differentiation strategy. The
critics argue that businesses have the middle way to achieve a competitive advantage.
While the model has been criticized and limited, the real-world scenario has been
commonly adopted and large corporations such as Tesco have made significant
business decisions using these models. ‌
5. Recommendations
As a recommendation, I would like Tesco to consider creating green
marketing as a key to environmental sustainability. The Green Marketing concept
would improve Tesco's competitiveness by enhancing its environmental performance
to meet environmental legislation to resolve customers' environmental concerns and
the effect of its goods and services on climate. Although, Tesco being part of the first
zero-carbon supermarket by winning wards, but it also still need to consider more on
green marketing strategies to stands out from its competitors.
According to my research, I get to know that most of the consumers shopping
behaviour changing enormously where they are preferring more products that
associated with green marketing. Through this green marketing strategy, Tesco can
offer eco-friendly packaging to reduce the impact on environments such as polluting
or depleting natural resources. Packaging products and accessories are one of the
biggest perpetrators in an industry like Tesco. The cradle-to-cradle idea should
consider shipping a product from the supplier, the seller and the customer which often
require large quantities of costly packaging content. This has to be resulted in
environmentally- friendly approaches to conventional packaging materials. Tesco can
use eco-friendly packaging materials such as biodegradable packaging peanuts,
corrugated bubble wrap, air pillow made of recycled materials, corn-starch packaging,
mushroom packaging and seaweed packaging. Thus, Tesco should adapt to changing
needs and be versatile to the customers’ needs and preferences.
Moreover, Tesco also should consider implementing the reverse logistics
under green marketing strategy. Reverse logistics is a mechanism that helps
businesses by recycling, reusing, or reducing the number of products used to be more
environmentally friendly. A more comprehensive view of reverse logistics involves
materials reduction in the forward method to minimize resource backflow, resource
reuse, and recycling. The initiatives aimed at reducing waste begin with product
design, including transportation and final disposal, and integrate the entire product life
cycle. This allows waste to be reduced downstream and enables the commodity to be
reproduced, reused, recycled, or resold for the secondary market, in the chain. If
Tesco well-managed reverse logistics system it will save substantial money on
acquisition, recycling, production and transport. This can be achieved by the initial
producers of goods or by reverse logistics suppliers from third parties. In the next few
years, reverse logistics are expected to gain traction in developing countries through
increased industrialization and globalization, contributing not only to economic
benefits, but also to environmental conservation.