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Tesco is a powerful retail brand. It has a reputation for value for money, convenience and a wide range of products all in one store.
There has been a significant increase of number of Tesco retail stores within the UK, from 692 stores in year 2001 to 1780 stores in year 2005. Also with the introduction of the different stores such as Tesco Metro and express it has made it more convenient and accessible for customers.
Due to the size and the ability of Tesco to buy in bulk they enjoy Economies of scale. Ultimately, this means that they have the competence to lower prices when they want in order to keep their prices attractive and compete with its main competitors such as Sainsburys and Asda.
Ultimately it increased profits.
A company as big as Tesco who sell many products from groceries, books, clothing, and furniture to insurance etc has its weaknesses. It may not have the flexibility as many of its more focused and specialised competitors. For example Tesco would not be able to provide a better service in Books than Waterstones can, as they specialise in this region.
Over the years Tesco has increased its Market share and has increased in size. At present it is the UKs largest supermarket with over 26% Market share, which almost doubles the closest rivals Asda. Tesco controls its own massive empire. This could leave some weaknesses due to the huge span of control and can suffer from bureaucracy.
Tesco is relatively new to the phone and insurance market therefore may lack experience and expertise. Tesco has recently entered many different Markets, so therefore not specialise and focusing on one particular market like other companies, which can have a negative affect.
There are many opportunities for Tesco. Merging or forming a strategic alliance with another company is a great way to improve their services and overcome some of their weaknesses. It would be a good idea to form alliances with companies in the areas they are not doing so well in and could do with the expertise of a specialised company. In this way Tesco Might be able to get access to better locations and reach out to its customers.
New locations and store types offer Tesco opportunities to exploit market development. They diversified from large super centres, to local and mall-based sites.
Opportunities exist for Tesco to continue with its current strategy of small and large, super centres and taking over villages.
Tesco also faces many threats. Being number one means that you are the target of competition. One big threat that Tesco faces is the takeover of Asda by Wal-Mart. The reason this is a threat is because Wal-Mart is the largest Global Competitor and therefore has the necessary skills, resources experience and funds to cause Tesco problems.
A major threat to Tescos current strategies of expansion is the government and the Monopoly and mergers commission. Also there is a Growing public concern and annoyance that Tesco is threatening the smaller retailer. The smaller shops are disappearing due to the growth of supermarkets and this is annoying some people. So there is a social and legal implication as well.
POLITICAL
There is a growing concern that Tesco is getting too big and driving out competition. The Government, Monopoly and Mergers Competition could get Tesco in trouble for this.
Strengths
Increasing market share
Insurance
Tesco