Swot Analysis of Tesco
Tesco is an MNC retailer of a general merchandising company that is proceeding with its business online and in multi-format stores. The organization was founded in 1919 by Jack Cohen in Hackney, London in the UK. Its headquarters are in Hertfordshire of England in the UK. In the 1990s Tesco has failed to grow in many countries started its expansions and in 2011 the company claimed the third position in retailing business in the world based on its gross revenues.
The company has already expanded in a total of 84 countries, not including the UK which are France, Hungary, Ireland, Slovakia, China, India, Indonesia, Japan, Pakistan, and so on. In the financial year 2021 to 2022, Tesco has improvised its revenue by three billion British pounds amounting to 56 billion British Pounds.
Strength Of Tesco-
Another key strength of Tesco is that it is the biggest grocery retailer with a Supermarket company in the UK. Accordingly, it has been hiking its revenue by incrementing its sales compared to other competitive supermarket chains. Hence, Tesco has been capable of making £ 57.8 Billion in revenue in 2021 which is showing growth. Tesco is also leading the market share in grocery retailing by acquiring a 27.9% market share.
Due to the pandemic, many companies have been facing too much hassle in progressing with their business in a sustainable direction. But Tesco has shown its proficiency level by making a growth of 10.5% which has been boosted because of its online sales.
Furthermore, during this time, 16000 employees have been hired to meet the demands of consumers. Tesco is geographically diversified by acquiring 4673 stores in different 14 countries which has enabled the company to get the attention of huge consumers.
On the other hand, Tesco has been focusing on coming up with a variety of products in a diverse market that has improved its consumer base at an effective rate. Tesco has been using not only innovative technology but also updating them in M-commerce which has enabled it to give proper consumer service and protection of data of its consumers. An effective supply chain network has enabled them to keep a supply of its product to meet the needs of customers.
Failed to grow
Tesco has failed to grow its business in the US and Japanese markets which is one of its key weaknesses. The company was incapable of exporting its operations and working on a proper execution plan that has come up with such a negative outcome. Competitive pressure has been becoming another problem for the organization as the company has to take part in price wars that have led to lowering its profitability margin. The sudden Switching of Clubcard without giving any information to the consumers in 2018 has dissatisfied its consumers.
Due to this reason, the organization was incapable of growing its customer base which has lowered its growth level again. On the other hand, in the year 2017, the company was accused of an accounting fraud scandal that lowered its brand value and damaged its reputation in the competitive market. Shortage of some of the products has been clearly observed in Tesco which is another weakness that the company is possessing. Inventory management is another venerable issue that Tesco has been going through.
With respect to it, Tesco had to pay £175000 as a fine as the company had displayed such products that were already expired. Decrementing in operating profits is another vital issue due to which their operating profit fell by 21.3% and hence, their share price goes down by 8% in 2022.
Tesco has been capable of getting opportunities in business by growing its online grocery sales because of the usage of online groceries which has helped them most during the covid pandemic situation. On the other hand, during this time, the company has recruited many people in the age group of 16 to 24 which has improved its brand value in the market.
According to me, Strategic alliances with different brands can be a great opportunity for selling its product to the customers of its strategy company that can boost its sales in an efficient manner. Joint ventures can have another opportunity that is waiting for Tesco and the company can utilize it in such places where its stores are underperforming to hike its sales growth level. Tesco can focus on giving cashless stores to consumers in its supermarket.
Pressing on cashless stores will enable the company to reduce the health risks posed by touching elements like notes and coins that are circulating from person to person. Huge growth through the “One Hour Delivery” service that Tesco has introduced recently and can extend throughout all the countries where it is operating. Tesco can also have an opportunity to improve Machine learning and AI and implement them in its operations.
These have been becoming too vital aspects for keeping the supply chain, and other performance for providing fruitful services to the consumers and reaching sustainability in a hassle-free manner.
Some threats for improving growth-
Tesco can face threats to improving its growth because of the distortion of the UK and EU relationship after Brexit that has taken place. Due to this reason, trade agreements with other European countries have not been implemented in the UK, which is increasing its overall operating cost and gradually declining its business.
In my opinion, the economic recession that has been coming in the UK has been becoming a potential reason for degrading the overall growth of its business and increasing the importing of goods that are not good for the welfare of the business. The Christian ad controversy that was given by Tesco in 2017 has disrespected the belief of Christians that is lowering its consumer base and possessing a further threat that the community will not show any interest in buying its product.
Tesco has utilized a fake name of “Woodside Farms” for branding with marketing its food products due to which the company had to face legal issues in 2017. This has become a vital issue for the company as the situation has already degraded its brand value in the market.
Moreover, competition with the supermarkets such as Walmart, Aldi, and Carrefour can come up with extreme threats to keeping itself in a safe position.