BUSINESS ENVIRONMENT

Business Environment

Business Environment

In today's ever growing and fast past economy many companies are created with the objective of developing and generating a profit. While some companies might target there local area, some would want to go nationwide or international. To achieve this, companies would want to compete in order to gain market shares. The food retail market and more precisely that of a small conveniences store would target there local area, their objectives are not national but are localised. When it comes to large retail outlets like Tesco they have a larger scope of vision and compete locally, nationally and internationally. They have attained critical size which permits then to compete fiercely and sometimes eliminate their competitors. While competition tends to be in the favour of the consumer it could also have an adverse affect on prices, there is where the role of the Office of Fair Trading (OFT) intervenes to ensure that competition and consumer laws are respected and in the process of this ensure that companies are not bullied out of the market from large chains such as Tesco.



“Our strong belief is that markets work well when there is a vigorous but fair competition within them and that this underpins the UK's economic wellbeing” (John Flingleton, 2006) www.kpmg.co.uk/services/t/ps/ess/filedl.cfm?fileid=1607&type=dl.

The Office of Fair Trading (OFT) was established in 1973 and is headed by John Flingleton, it is the UK's consumer and competition authority. There mission is to ensure that markets perform well for the consumers. To do so: they encourage businesses to comply with consumer law and to improve there trading practices thru self regulation; take the necessary steps to stop hardcore and flagrant offenders; conduct markets studies and take measures where required and finally they empower consumers in order to make the best out of the market. Even though there are no particular mention on how the OFT regulates the supermarket industry there some indications of the methods and criteria's employed to regulate these. In the case of Tesco the OFT have intervened several times in order investigate and monitor Tesco's marketing and expansion strategy.

When John Cohen the founder of Tesco opened his first market stall in 1919 his vision to sell any and everything that a market stall can hold was unique and he was good at it, he opened several market stalls around London in the following years. As business grew he moved into wholesaling for other market merchants. It was not until 1932 that Cohen officially opened Tesco Stores Limited, to expand the business he based his strategy on acquiring other small retail outlets cross England and by 1940 Tesco counted more than one hundred stores.

Tesco expansion strategy is based on being everywhere and they are everywhere. In 2002 Tesco acquired T&S a chain of 850 stores across the UK doubling its number of outlets. Before Tesco both T&S, Bicester in Oxfordshire counted 2 Tesco's after the acquisition that a amount tripled leaving residents feeling trapped as to do all their shopping at Tesco, one ...