MARKETING STRATEGY

Business Analysis: Tesco PLC

Business Analysis: Tesco PLC

Introduction

Tesco PLC is one the leading grocery and food retailers in the World. The company operates in 12 countries across North America, Asia and Europe. The headquarters is located at in Hertfordshire. The company employs around 492,500 people.

The company operates through store formats in the retailing business ranging from small retail stores to large hypermarkets. The company has built multi format retail stores consisting of Tesco Express convenience stores, Tesco Metro city centre stores and Tesco Supermarkets. Customers can buy general merchandise, grocery items, as well as, non-food items such as electric appliances. By the end of year 2011, the company was operating in 14 countries with 5,385 stores located in North America, Asia and Europe. The business of Tesco is based on five business segments including, the Tesco Bank, the US, Asia, Europe and the UK. The largest market of Tesco is the UK. The company was operating 2,700 stores by the end of 2011, in UK.

Analysis of the Internal and external environment

Internal and external analyses are a major part of analyzing an organization and the environment in which the company is operating. SWOT analysis is a great to tool to analyze the internal and external environment affecting the business of a company. Strength and Weaknesses highlight internal condition of a firm and Opportunity and threats highlight the condition of external business environment. PEST analysis is an abbreviation for political, Economic, Social and Technological Analysis. It is a framework for analyzing macro environment, which affects the industry and an individual country (Levy & Weitz 2004, pp.61).

PEST

Political Condition

The UK is one of the most influential and prosperous country in the world. The British companies play a vital role in international business. The country is a member of UN Security Council and NATO. The country is also a member of EU and G8. Prime Minister David Cameron took various actions to control the fiscal deficit of the country. These actions included a reduction in the central governments contribution to local councils to 24 percent by 2015 and another cut of 24% to the department for sport, media and culture. The participation of the UK in various international boundaries is quite helpful for British companies to expand internationally and Tesco has taken full benefit of country's political stability (Datamonitor.com 2011, pp.20).

Economic Situation

In 2007, the country attained high growth rate of 2.7%; however, the economic turmoil of 2008 resulted in contraction of GDP to 0.1%. The economy further contracted in 2009, by around 5% as demand was sluggish due to poor economic situation. Year 2010 saw economic recovery at a slow rate of 1.6%. The recovery continued till 2011. The economic recovery presents new growth potential for food and grocery industry and Tesco is in good financial condition to take advantage of economic expansion. The economic slowdown also affected employment in the country. Around 2.5 million people were without a job in 2010. This slowdown also affected the financials of the company during previous 3 ...