ECONOMICS

Tesco Economical Analysis

Tesco

Tesco is a highly reputed organization specializing in the fast moving consumer goods industry as well as characterized by a diverse sets of clientele which further enhances the quality of the organization. It has products in multiple categories and thus is highly diversified in its operations. Throughout its history, Tesco has looked to make use of strategic choices as a way to tap into multiple markets.

Although in the times of its infancy, Tesco was mainly touted as an organization specializing in food related products but with the large scale expansion, Tesco currently has also looked to tap the opportunities prevalent in the non food sector as it has greatly multiplied the profits from food related products. With the increasing competition greatly impacting the supermarket industry, Tesco looked to take advantage of opportunities from not only the food related products but also non food sector (Oliveira-Castro, Foxall, Yan, & Wells, 2011, pp. 106-114).

In the case of contemporary market, Tesco is characterized by diverse product ranges comprising of electrical products, clothing, sports, toys, equipment as well as other products. Its main competitors are Sainsbury, Somerfield, and ASDA but it has been known to compete on a large scale with J Sainsbury. In some cases, Tesco has been known to be following the core mechanism of price elasticity of demand. In the following sentences, we would discuss some core products of Tesco that have been affected to a great extent by the implications arising out of the price wars.

For instance the rising price wars in uniforms greatly influenced the decision of the Tesco management to go for selling a complete set of school uniforms for a price of £3.75. Their low pricing strategy in the face of rising price wars in school uniforms greatly resulted in a rising sales of more than 20%. A decrease in price according to this situation in the context of price elasticity of demand results in increased sales. Tactics of a similar nature are now being adopted for other product ranges as well.

On the other hand, the Tesco bread would also be considered as being highly price elastic because of the fact that there are many better alternatives accessible to the consumers. When Tesco decides to increase the price of its Tesco bread, customers would switch to the alternatives as a way to tackle the rising price (Ottaviano, 2011, pp. 231-240).

HHI

Before discussing the concept of HHI, it is necessary for us to delve deep into the mechanism of monopoly within economics. A monopoly related situation is known to exist when an enterprise or a particular person is considered the only supplier of a particular commodity. In other words, such a person or organization has been able to enjoy the benefits of a monopoly characterized by an absence of competitors and thus customers do not have any alternatives at their disposal. Monopolies are economic concepts which are characterized by a complete absence of economic competition that is required to ...