TESCO PLC

Tesco Plc





Tesco Plc

Introduction

Tesco came into existence in 1919. It was Jack Cohen's idea that gave rise to such a huge and gigantic organization. Tesco is involved in grocery and general merchandising retailing. Tesco is considered on number three largest retailer in the world if we gauge its position in terms of revenue. First store of Tesco started its operation in 1929. Tesco is one of the companies that are listed in London Stock Exchange (Palmer, 2004, p1075). Tesco has diversified both geographically and into areas such as retailing of books, clothing, electronics, furniture, finance, telecom and music download. Tesco is operating over 3,700 stores globally and employing over 440,000 people.

1. Examine the main arguments for and against 'globalization' in the food retail industry in terms of:

(a)The Threat of New Entrants and the Bargaining power of Consumers, and

In UK grocery market, there are three dominating competitors Tesco, Asda and Sainsbury's. Over the last 30 years, according to Ritz (2005, p22), the grocery market has been transformed into the supermarket-dominated business. Most large stores has built their power due to operating efficiency, one-stop shopping. This has impacted on small traditional shops, like butchers and bakers. This creates barrier for new companies wanting to enter the grocery market because its difficult to raise sufficient capital because of large fixed costs and developed supply chains. Other barriers are economies of scale and differentiation achieved by Tesco and Asda through aggressive operational tactics in product development, promotions and good distribution.

Being a global retailer, Carrefour is exposed to political problems in the countries that it operates in. Some regional governments are appearing much less friendly to large foreign retailers.The cost of producing many consumer products tends to have fallen because of lower manufacturing costs. Manufacturing costs have fallen due to outsourcing to low-cost regions of the World. This has lead to price competition, resulting in price deflation in some ranges. Ambitious international expansion plans of major rivals such as Wal-mart and Tesco may become a threat. Europe (including France) is the primary market for Carrefour, accounting for 86.4% of the company's revenues. With in the inflation period, all kinds of raw material' price may be on the rise. This situation causes the cost of production rise in price too. On the one hand, most of the retail chains have created a subsidiary of Internet sales and other, independent e-marketplaces do not meet the expected success (Rejer, 2000, p206).

Tesco customers have high bargaining power because they have a lot of options, such as ASDA and Argos. Supermarket customers are relatively price sensitive and a safe shopping environment. Tesco seeks to strengthen collaboration with its suppliers, ensuring competitive pricing of the final production. With its producers and producers who are working to create a series of low-priced products, of course, famous. The Tesco one of main objectives is to offer customers a pleasant shopping experience with friendly fellow friends. So Tesco offers many services to customers, as a warm welcome, sharing and devolution, ...