TESCO

Impact of Financial Crisis on Tesco

Impact of Financial Crisis on Tesco

Introduction

Tesco is the one of the largest retailers in the UK retailing industry. The retail giant ranks as the third largest retailer in the retailing industry of the world with Wal-Mart being the first in the rank and Carrefour being the second largest retailer. Tesco has been marketing over 4000 food related products in the UK market. Tesco started its operations retailing only grocery related products in the UK market but later diversified its business across various markets including utensils, health, beauty, entertainment, clothing, electrical goods, and other home products. Tesco started opening retail stores in the other countries immediately after 2006 and is currently engaged in operating in more than 14 countries with almost 520,000 employees employed in the respective countries in which it operates. Tesco has been able to serve millions of customers all over its global operations serving vast geographical markets. Tesco has been able to serve diverse customer types belonging to many income groups. Jack Cohen founded Tesco in 1919 and its name is made with the combination of the names of its founders Jack Cohen and S. T. Stockwell. Tesco was listed at the stock exchange in 1947 and the shares were sold at the stock market at 25p (Bartram & Brown, 2009).

Tesco has also been marketing non-food products in the markets that it serves and has been able to successfully diversify its business in the petrol retailing and marketing financial services. Tesco aims to create and maintain the value that it generates for its customers.

UK market competition analysis

Tesco has been operating in a very competitive market which has been subject to variations in the power holding among the retailers. Tesco has been in direct competition with Sainsbury, Morrison and Asda in the UK retail industry and with Wal-Mart and Carrefour in the international context of the retail industry. The retailing rivals have been in strong competition with each other and have a great impact on the UK economy. However, Tesco has been able to withstand the strong competition from the rivals with its exceptional service and product offerings (Neftci, 2000).

Impact of Financial Crisis on Tesco

The financial crisis of 2008-2012 was seen as the worst economic crisis of history after the great depression of 1930. The financial crisis had a very strong impact on many business organizations throughout the world including financial institutions, banks, retailers and the stock markets. The impact of the financial crisis was also very strong on Tesco which made the retail giant loose its market share significantly(Berkmen & Gelos, 2009).

The recent financial crisis led to the breakdown of economies and the decrease in the purchasing power of the customers across the UK market. The financial crisis also had a very strong impact on the operations of Tesco and made it struggle to maintain its market share of the UK retail market. The financial crisis made the customers of Tesco search for other cheap alternatives in the retail market ...