Swot Analysis Of Tesco PlcThis print version free essay Swot Analysis Of Tesco Plc.
Autor: reviewessays 25 November 2010
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Swot analysis of Tesco plc
We all know Tesco as a food retailer, and we know that they are in constant competition with other retailers such as Sainsburys and Asda, yet we do not know much about what goes on beyond the shelves and the tills, the marketing plans and the day to day tactics that have to be devised to stay the number one food retailer in the United kingdom today.
I am going to analyse Broughton Parks Tesco and their possible competitors Swot Analysis
Firstly, four main goals, under which these particular four are Strengths:
1. Tesco is about a strong UK core business. Last year the industry saw some very marginal growth as a whole, however Tesco continued to grow beyond the market by offering better value for money and through getting cheaper.
2. To be as strong in non-food as in food. The market for non foods (such as clothes entertainment cleaning products) is worth seventy five billion pounds in the UK today. You can see through the growth of their dot.com business which now has over four hundred and fifty thousand users and is the largest grocery online retailer in the world, and through the success of tescos personal finance with over 1,5 million customers that they are making some real in roads into non foods.
3. International growth, Tesco have 30% of their stores outside the United Kingdom and plan to make it 45% by the end of next year, and will be approached through central Europe and trough Asia
4. To have the most loyal and committed staff.
Tesco as a company uses clear values to underpin what they do. Their core purpose is based on â€œCreating value for our customers to earn their life time loyalty?Tesco have invested one billion pounds
Tesco believe that one of they offer the best quality on a broad range of products and believe that they offer the best value. They have invested one billion pounds since 1996 on the campaign to reduce prices to customers and that continues to build as they go in to 2004. They offer outstanding customer service, every customer is offered help at the checkout. Location and convenience is another reason to choose Tesco, they have introduced a staggering 200 in the last two years that stay open 24 hours a day and they plan another 1540 new express stores, which are Tesco mini stores linked on to esso garages and forecourts.
Another key difference for Tescos is that they do not market to the average customer. Instead they use Customer Insight, to drive their actions, and to focus their starting point for all the different strategies. They have Club card segmentation data, which can give a real insight into Customer profiles and their shopping habits. Tesco use the Organics, Finest and Value brands to deliver to customer needs.
Their Customer Plan delivers the customer part of their strategy. It's an annual activity plan, and is an agenda for customers with these projects forming part of category plans. It is designed to drive trade, and to improve the shopping experience for customers.
The Operational Plan is an annual activity plan, including for example upgrading, replenishing systems and better ways to build stores for the future. Lets now look at our store portfolio in the U K.
This can be broken down into Hypermarkets, Superstores, and High street & Express stores.
Tesco hypermarkets, of which some in the UK are now up to 100,000 sq. f t. such as Peterborough, Watford , have been designed to a footprint which is being used world-wide across our business.
They have 277 superstores including Broughton Park, 81 compact superstores, 27 Express stores, 41 Metro stores, and 229 other stores (mainly high street stores, which Chesterâ€™s Tesco is). They also have Tesco.com, which has no walls so they could sell houses, garden furniture and trips to the moon! Looking at the number of stores in each category you can see that we have got 659 stores in total.
Moving onto the Company Overview and Tesco figures, turnover is tremendously healthy, at nearly ?0 billion, including VAT, just in the UK, representing nearly 17% in market share.
During the 1990's when Tesco started their international expansion, you can see that initially in central Europe it had always been through acquisition. Tesco acquired Global (41 stores) in Hungary, (32 Stores) in Poland, Kmart (13 stores) in Czechoslovakia, and in Ireland we bought 110 stores in 1997. Tesco acquired Lotus in 1998 in Thailand and then 1999 went in to a joint venture with Samsung in Korea. In the meantime in 1995 we became the UK's first retailer and last year the Group turnover reached ?0 million, Tesco are also now looking at Japan and China to continue worldwide expansion.
They plan to have new space of nearly1.5 million sq. ft. in 2004 so the growth does not just stop there, Tesco's overseas strategy, focuses on adding value to the customers who are living and working in those Countries and developing the hypermarket concept world-wide.
Tescos world-class hypermarkets blue print is about having a common layout, common systems and common operations globally and then applying to that local people, and local marketing and services.
Tesco now has 37% of its space overseas and the total number of hypermarkets will be 130 by the end of 2002.Tesco will have 100 hypermarkets in four years, which will not only benefit shareholders but the global economy too.
Tesco now operates in four Countries in Eastern Europe and no other retailer is in all four of those Countries. It's been extremely important to work with the regional and the local staff there, as they have got so much knowledge about the local produce and products. Tesco now employ over 27000 people in central Europe alone. Southern Ireland now has 75 stores and was acquired in 1997.
The focus here has been on rebranding since the acquisition, with 3 new stores opened in 2002, and there will be a further 6 new stores opening there this year.
Tesco has now got worldwide sourcing in Hong Kong, India and Thailand, to assist in the development of the international business, 30% of tescos products are sourced internationally and continue to grow.
To conclude, Tescos international business is an incredibly important part of the Tesco business and Tesco future strategy.
Tesco will have 130 hypermarkets by 2001, with 45% of space overseas by 2002 and the International sales target was ? million by 2002, which was met.
The way in which tesco devises its Swot, is very good, Now all stores will want to have the four goals stated above, these are set out by the directors, but tesco staff can also help with view point, a questionnaire designed to help the director get an opinion off the staff.
It is also a good way to see where they have gone wrong with the last yearâ€™s analysis.
Brief Outline Of Tescos SWOT
National store network (638 stores)
UKs largest food retail purchaser
Multiple store formats competing in different sectors
Customer focused philosophy
No-food and Tesco Extra hypermarkets
Overseas developing markets in Eastern Europe and Asia
Lack of Global Scale
Large portfolio ageing stores
Threat of takeover
UK recession/Price war
Entry of Wal-Mart
Development of Sainsbury's Local
Tescos financial services was set up around three years ago and comprises of House and car insurance policies, offering competitive rates against the insurance company leaders of the likes of AA and RAC.
Tesco also have a club card scheme which overtook the stamp savers, now for spending a certain amount or buying certain products you are allocated with so many points and every month are sent vouchers entitling you for money off your shopping and is an amazing advertising ploy, but Sainsburys have been sending tescos customers letters telling them that they can use theses vouchers in their stores, a threat from such a major runner against tesco could be very expensive for tesco, instead we are now accepting sainsburys vouchers.
Another ploy on tescos behalf to win the customers loyalty it that of vouchers for schools a scheme where one voucher I given for every five pounds that is spent in store, not only does this encourage adults to help their children but will make the children encourage the adults to shop at tescos to help their school.
Tesco Direct, the dot.com company, enables customers to shop from the comfort of their own home and they have left no stone unturned, setting up a site for blind shoppers and forging a deal that will segue into digital television when its adoption becomes a little more widespread.
A new strength that has been adopted among the staff at tesco stores is called future, instead of having criteria to meet every store, the strengthâ€™s, weaknesses, opportunities and threats are discussed with staff in each store and problem are sorted out, making each stores swot that little bit different, although the main goals are not ignored.
The development of Sainsburys local will have a big impact on many of the city centre tesco stores, as many sainsburys store are superstores and not situated in built up areas, which is why tesco snapped up the opportunity to put very small Metro shops in high streets, the result was a success and Sainsburys are soon to up the competition.
This is how the current major retailers stood from 1998 up to 2001
Rank 2000 Company & Operations Sectors Sales 00/01 Sales 99/00 Sales 98/99
1 Tesco Plc Grocer 16,958,000 15,835,000 14,971,000
2 J Sainsbury Plc Grocers; DIY; mixed goods 13,570,000 13,184,500 12,682,000
3 ASDA Group Plc Grocers 9,204,000 8,198,300 7,619,200
4 Safeway Plc Grocers 7,659,200 7,510,700 6,978,700
5 Marks & Spencer Plc Mixed goods 6,482,700 6,601,100 6,695,800
Mixed goods; DIY; electricals;
drug stores; music goods 6,098,644
7 Somerfield Plc Grocers 5,465,700 5,897,900 3,483,600
8 Boots Company Plc Chemist, opticians 4,668,000 4,474,700 4,465,300
9 GUS (UK Retail) Mixed goods 3,810,100 3,675,600 3,597,500
10 Dixons Group Plc Electricals 3,377,000 2,945,400 2,838,200
11 John Lewis Partnership Plc Grocers; department stores 3,374,400 3,168,000 3,117,400
12 Wm Morrison Supermarkets Plc Grocers 2,970,100 2,533,781 2,296,996
Tesco shows what can happen when talk becomes action. Its profits are proof that doing things pays off in the end.
One major operation that is carried out in tesco stores and is saving them millions a year is that of reductions, these are mostly carried out on produce and provisions, such as meat and dairy and ready meals, and also bread and cakes, many of these items have are fresh therefore hold a very short out of code date, when the out of code date come, instead of throwing them away a computer will indicate how many will sell without a reduction and how many to reduce and at what percentage.
Tesco at Broughton Park, situated on Map, was opened in 1998 and the villagers in Broughton were extremely sceptical about the retail park.
Many people were used to the quiet and didnâ€™t want the hustle and bustle, but now it has been in the village for five years we can all see the boost it has had on the economy, tesco alone employs four hundred staff, many of which are from the village and the park has at least another thirty shops and free ample parking, attracting people from up to 20 miles around to come and shop without walking too far.
Due to the amazing impact the park had on the public Tesco decided to change its hours to being a 24-hour store, although this was frowned upon, as being a waste of peoples time it has been a major success.
So in the end Tescos Swot has made them
 The largest multiple retailer in the UK
 15.8% market share, sales per sq.ft of 9.5 per week
 Operates from 639 stores in the UK nation-wide
 International store portfolio
 Multi-format store operator
 UKâ€™s most profitable retailer
 Multinational store
Text book version Annual Report and Accounts Version
Consolidated profit and loss account 23 Feb 02 Consolidated profit and loss account
for the year ended Ðˆm for the year ended
Sales 23,653 Turnover
Cost of Sales -21866 Cost of sales
Gross Profit 1,787 Gross profit
Operating Expenses -465 Operating expenses
Net Profit before other income/costs 1,322 Operating profit
Other income/costs 32 Other costs/income
Net Profit before interest and taxation 1,354 Profit before interest and taxation
Net interest receivable (payable) -153 Net interest receivable (payable)
Net Profit on ordinary activities before taxation 1,201 Profit on ordinary activities before taxation
Tax on profit on ordinary activities -371 Tax on profit on ordinary activities
Net Profit on ordinary activities after taxation 830 Profit on ordinary activities after taxation
Equity minority interests 0 Equity minority interests
Profit for the year 830 Profit for the financial period
Dividends -390 Dividends
Retained profit 440 Retained profit
Text book version Annual Report and Accounts Version
Consolidated balance sheet 23 Feb 02 Consolidated balance sheet
Fixed assets Ðˆm Fixed assets
Intangible Assets 154 Intangible Assets
Tangible assets 11,032 Tangible assets
Investments 317 Investments
Total Fixed Assets 11,503 Total Fixed Assets
Current assets Current assets
Stock 929 Stock
Debtors 454 Debtors due within one year
Short term investments 225 Short-term investments
Cash at bank and in hand 445 Cash at bank and in hand
Total Current Assets 2,053 Total Current Assets
Creditors -4,809 Creditors: Amounts falling due within one year
Working Capital -2,756 Net current assets (liabilities)
Total assets less current liabilities 8,747 Total assets less current liabilities
Long Term Liabilities -2,741 Creditors: Amounts falling due after more than one year
Provisions for liabilities and charges -440 Provisions for liabilities and charges
Net assets 5,566 Net assets
Represented by Capital and reserves
Ordinary share capital 350 Called-up share capital
Share premium 2,004 Share premium
Other reserves 40 Other reserves
Profit and loss account 3,136 Profit and loss account
Ordinary shareholders' funds 5,530 Equity shareholders' funds
Minority interests 36 Minority interests
Capital Employed 5,566 Total capital employed