The report below provides an insight into the supermarket company, Tesco, with emphasis on its external environment analysis and company's analysis of resources, competence and culture. Two future marketing strategic options are suggested in regards to the resources based marketing strategies.
Tesco is one of the biggest food retailers in the world, functioning around 2,318 stores and has more than 326,000 employees. It offers online services through its subsidiary, Tesco.com. The United Kingdom is the biggest market for the company, where it functions under four signs of Extra, Superstore, Metro and Express. The company vends approximately forty thousands food products, together with clothing and other non-food lines. The own-label products (fifty percent of sales) of the company are at three stages, value, normal and finest. As well as convenience produce, many stores have gas stations, becoming one of the largest independent petrol retailers in UK. Other retailing services offered include Tesco Personal Finance.
Operating in a globalised environment with stores around the globe, Tesco's performance is highly influenced by the political and legislative conditions of these countries, including the European Union (EU).
For employment legislations, the government encourages retailers to provide a mix of job opportunities from flexible, lower-paid and locally-based jobs to highly-skilled, higher-paid and centrally-located jobs. Also to meet the demand from population segments such as students, working parents and senior citizens. Tesco understands that retailing has a great impact on jobs and people factors (new store developments are often seen as destroying other jobs in the retail sector as traditional stores go out of business or are forced to cut costs to compete), being an essentially local and labour-intensive sector. Tesco employs large numbers of; student, disabled and elderly workers, often paying them lower rates. In an industry with a typically high staff turnover, these workers offer a higher level of loyalty and therefore represent desirable candidates.
Economic factors are of concern to Tesco, because they are likely to influence demand, costs, prices and profits. One of the most influential factors on the economy is high unemployment levels, which decreases the effective demand for many goods, adversely affecting the demand required to produce such goods.
These economic factors are largely outside the control of the company, but their effects on performance and the marketing mix can be profound. Although international business is still growing (Appendix 1), and is expected to contribute greater amounts to Tesco's profits over the next few years, the company is still highly dependent on the UK market. Hence, Tesco would be badly affected by any setback in the UK food market and are out in the open to market concentration risks.
Tesco: Share of all European food retailers' sales, 2001-2005
(Market watch, 2006)
Current trends indicate that British customers have moved towards 'one-stop' and 'bulk' shopping, which is due to a variety of changes in social trends. Tesco have, therefore, increased the amount of