TESCO SWOT Analysis

TESCO SWOT Analysis 2019 | SWOT analysis of TESCOhttps://bstrategyhub.com/tesco-swot-analysis-2019swot-analysis-of-tesco/BackgroundBasic InfoCEODave LewisYear founded1919HeadquarterWelwyn Garden City, Hertfordshire, UKNumber of Employees440,000Strengths – Internal Strategic FactorsWeaknesses – Internal Strategic FactorsOpportunities – External Strategic FactorsThreats – External Strategic FactorsProducts & ServicesGroceries | F&F Clothing | Tesco Club card | Tesco Bank | Tesco MobileCompetitorsFun FactDid you know that Tesco has a grocery retail market share of 27.4% in the United Kingdom?Argos | Waitrose | Aldi | Iceland | Insta Cart | Safeway | Sainsbury | Morrisons | Giant Eagle | Carrefour | Lidl | WalmartBiggest grocery retailer in the UKTesco is the leading grocery retailer and No.1 supermarket in the UK. It has higher sales and revenue as compared to other supermarket chains in Great Britain. According to its 2018 annual report. Its annual operating profits rose 28%.Leading market shareAmongst the big four supermarkets, Tesco dominates the grocery retail market of Great Britain with 27% of market share. It has recently become the most popular supermarket in Ireland.Geographically diversifiedTesco has a thriving global presence with more than 6800 stores in 14 countries. Apart from Europe and North America, it has a huge market share in Asian markets as well.A growing number of stores – From 3,751 stores in 2008, Tesco now operates 6,966 grocery retail stores worldwide. Its revenue is increasing every year because of the addition of new stores in its operational chain.Diversified storesTesco has launched different forms of stores. Its diversified divisions of stores include Tesco Homeplus, Tesco Metro, Tesco Extra, Tesco Express, One stop, and Tesco Superstores.Diversified market and product rangeTesco’s diversification strategy has proven to be quite successful for the company. It has clothing range, home-ware items, mobile phones business, music downloads and DVD rentals, school uniforms, financial and telecom services, and cotton fair-trading across the globe.Europe’s largest private employerTesco offers more than 743K jobs opportunities for employees worldwide. It has been acclaimed as the largest opportunity builder in entire Europe.Obtained several international awardsDue to its successful commercial performance, Tesco has achieved several awards. These include British’s Favourite Supermarket (among BIG FOUR), The Grocer’s Own Label Food and Drink Awards (25 awards), The Grocer of the Year, ‘Waste Not Want Not‘ Award, and Best Grocer Award (2018).Superior technology usageTesco uses technology in the best optimal way to enhance the shopping experience of its customers. It has introduced a new RFID-enabled barcode system to count the products automatically. It also has advanced M-commerce facility and mobile payment app.Efficient supply chain networkWith a simplified business model, reduced incurring costs, and efficient waste management policies, it has created a reliable and efficient supply chain network. Tesco bears profitable relationships with suppliers.Failed operations in the US and JapanTesco had to exit from the American and Japanese markets in 2012. Its failed export operations forced the company to close stores in Japan after nine years and the US after 5 years.Fraud Trial and Accounting ScandalIn 2017, Tesco was charged with fines due to the false accounting declaration and misrepresentation of profits.Decrease in operating profitsAs of Oct 2018, the share prices of Tesco fell more than 9% due to the decline in operating profits. It has proved to be the worst performance for the company since the Brexit Referendum.Financial errorsDue to its high debts and credit card liability, Tesco’s financial profits are profoundly affected.Low-cost strategyAlthough Tesco is the price leader in the UK market, its low-cost strategy can lead to reduced profit margins.Poor operational performance in specific marketsFew stores and grocery outlets of Tesco are not performing well in certain countries. Experts suggest that Tesco didn’t carry out sufficient market research before entering into these markets.Clubcard controversyIn January 2018, Tesco switched up its Clubcard scheme (in which points could be doubled or quadrupled) without giving prior notice to customers. It faced a massive backlash from angry customers.Expanding Jacks’ businessTesco has recently introduced Jacks, a new discount store which has shown significant growth. It has an opportunity to grow this business and can successfully compete as a low-cost rival with Aldi and Lidl.Strategic alliances with other brandsDeveloping strategic partnerships with reputed companies can offer an excellent opportunity for Tesco. It will enable Tesco to offer more products and attract more customers.Joint venturesThere is an opportunity for joint ventures in the regions where Tesco stores are underperforming. The local companies can provide profound market knowledge which can help in improving performance in such regions.Online shoppingTesco can avail the opportunity by growing and upgrading its online shopping business as well as home delivery services.Emerging marketsAlthough Tesco has stores in many developing countries but expanding its business to emerging countries like South Korea, Turkey, and Indonesia can be a profitable opportunity for the company.Christmas ad controversyTesco faced social media backlash when it launched its Christmas ad in 2017. People boycotted the store claiming a disrespectful act from Tesco against Christian faith.‘Fake Farm’ legal threatTesco was accused of misleading customers with fake farm brand names and marketing its food products under fake name of “Woodside Farms.” It faced severe legal threat proceedings over the issue in 2017.Brexit ReferendumWith Britain no longer in the European Union, the trade deals and cost matters have posed a threat for Tesco.Competition with supermarket giantsWith rising growth and performance of WalMart (with ASDA acquisition), Carrefour, and Aldi, Tesco’s biggest competitors, Tesco’s market position can be threatened.Economic crisis and credit crunchesGovernment regulations, legal and tax matters, credit crunches, and economic upheavals can affect the operational efficiency and performance of Tesco stores in critical regions.RecommendationsExplore the emerging markets and expand its stores in Asian and African countries.Resolve the controversial crisis by addressing the issues quickly.Perform in-depth market research and market analysis before entering a new market to avoid failure and losses.Upgrade its online business and e-commerce sites to provide a pleasant shopping experience for customers.Take customer feedback regarding the launches of new ads and schemes. It can prevent any potential disapproval from the public.Resolve legal and financial matters including high debts, tax payments, and credit card crunches.Boost its marketing and advertising activities to grab more customers than its competitors.
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