TESCO ENVIRONMENTAL SCAN

Tesco Environmental Scan

Tesco Environmental Scan

Introduction

Recent History

Tesco Plc was established by Jack Cohen, back in 1919, and he opened the first Tesco store in 1929, in Middlesex. Tesco is a UK- based public company, and most definitely the biggest retailer in the United Kingdom. There are numerous Tesco stores all over the world; however, the sales in the UK contribute 75% to the entire sales of the Tesco group. The initial focus of the company was to deal in the retail of grocery in the UK. However, after seeing the opportunities for growth, Cohen decided to diversify the businesses portfolio. The company currently operates a diversified portfolio, consisting of food, clothing, toys, electronics, home furnishings, telecommunications, entertainment, broadband, insurance, banking facilities, tyres, technical support, a film studio, beauty salons, a record label and a gold exchange (Tesco, 2011).

Discussion

Formats and Other Services

There are 6 formats that Tesco stores operate in, and they include Tesco Superstore, Tesco Express, Tesco Extra, Tesco Metro, Tesco Homeplus and Tesco One Stop. These formats enable Tesco to operate in different areas of the country, from the centre of cities to the outskirts and the countryside. Since the company has originated from London, there is a large network of Tesco stores in the Southeast part of England (Tesco, 2011).

As far as the banking services are concerned, Tesco entered into a joint venture with the Royal Bank of Scotland. The products that they agreed upon are mortgages, loans, credit cards, insurance and savings accounts. The move by Tesco was planned to ensure that the growth potential of the company outside of the retail market could be established. In the year 2008, the company acquired 50% of the stake in Royal Bank of Scotland for £950 million. A year later, the banking service provided by Tesco changed to Tesco Bank (Herald, 2010).

Recent Performance

Tesco has managed to remain ahead of its competitors, including the largest competitor Carrefour. Carrefour has been encountering a decline in its sales due to Tesco's further rise in the market share. These two are the world's largest retailers and face high competition from one another, but Tesco seems to be gaining more competitive advantage. Despite the obvious consequences of the recession, and Tesco's launch of the ultra- low price Discount Brands range, the company has been able to achieve impressive growth in sales. The growth has pushed Tesco up and beyond the £1 billion- a- week mark and £3.1 billion in profit (Robinson, 2004).

Element of Potential Impact

Globalisation

Tesco and Carrefour are among the top European food retailers, and both are highly active in the global retail industry. Tesco does not face many challenges due to the threat of new entrants, because it has managed to establish itself as the largest retailer in the UK. However, on the international front, there are a number of competitors like Carrefour, Walmart, and Target. The entry into the American market proved to be a wrong move by Tesco (Hall, ...