The Recent Expansion of Tesco into the US - Case Study Example

 The recent expansion of Tesco into the US has been a positive sign, it is a signal of intent and it also goes to show that the organization is only going to expand from here on in but the expansion into the US has not produced ideal results, the company has suffered losses but it does not mean they should quit and call it a day. A good strategy would be to cut the prices for the time being so as to generate more interest. This paper will shed more light upon how Tesco can make it big in the US and the SWOT analysis of Tesco will also be conducted in this paper. Tesco is based out of the UK, dealing mainly with grocery items and general merchandising retail chain. If the global sales and domestic market share of the company is taken into account then it is found that the company is the largest British retailer by far. The profit of the company exceeded £2 billion for the year 2008 and it is believed that the profit will be much higher in the year 2009. The company mainly focuses upon food and drink but it has also started dealing in clothes, financial services, internet services etc. The brand Tesco first appeared in the year 1924 when Jack Cohen supposedly bought a tea shipment from Mr. T. E Stockwell. The year 1929 marked the opening of a store in North London and the company rapidly developed from there on. The head quarters of the company was first established in North London in the 1930s. In the year 1932 the company became a private limited company, another feather in the cap of Tesco. SWOT analysis of Tesco The current success of Tesco is largely because of the favorable political climate, Tesco has managed to penetrate into nations which were previously considered difficult to penetrate into and this is certainly paved the way for success. Politically the organization has helped in solving the unemployment problem in the UK, the credit crunch has taken a toll on the employment rate but Tesco has still managed to provide job opportunities hence bringing down the unemployment rate in the UK. The EU laws largely favor Tesco, the EU laws tend to favor organizations that have a large presence in a country, Tesco not only has a large presence in the UK but it has also expanded rapidly in other countries as well and this has certainly worked to the advantage of the organization. Tesco needs to be aware of the planning permission because it has plans of further expansion and things can go horribly wrong should an organization avoid planning permission. It is extremely important to pay attention to the marketing strategy of Tesco, the organization has put in a lot of efforts into marketing, and they have captured almost every opportunity to grow. The specialty of the organization was initially in drink and food business but the giants gradually decided to enter into consumer products like music players, CD players, computers and other products that sell like hot cakes. The competitive marketing plan of the organization is right up there with the best, each store is a different segment and steps are taken on every store to increase the sales and generate good profits. The SWOT is in favor of Tesco, the biggest strength of the organization is its workforce, as mentioned earlier the employees are very affable and friendly. The customers feel good when they share their problems with the employees. Another strength of the organization is its global reach, the stores are spread across in several countries which is no ordinary achievement. Jack Cohen started on a very basic level and within no time the organization has grown into a big and a really powerful unit. The organization has also received funding from the bank of Scotland which also means that the organization has financial backing which is obviously good for any organization. Reasonable prices is another strength of the organization, customers flock like bees into the various stores because they get the best prices and this is what makes an organization better and powerful over a period of time. If the weaknesses are to be discussed the organization can work on making the marketing plan better, for instance a food company in South Korea knew that the Koreans are very hardworking people and they have no time to shop, they introduced virtual stores on the railway stations, this meant that the customers can text the virtual code of the product that they would like to buy and the product gets delivered right at their doorstep the next day. This has really propelled the sales of that particular company; something along the same lines can be introduced by Tesco also. It will become a rage and the organization will make even more money. Opportunities are too many but the right sense is essential to capitalize on those opportunities, Tesco can still get a lot of profit. They have to manage the workforce better and cut the deadwood out in order to make the organization better and effective. There are several threats to Tesco, the likes of Wal-Mart, Sainsbury and a few others present huge threats to Tesco. These threats can however be countered with the help of the right approach and thinking. Tesco has to become more aggressive and it should work on its marketing strategy. It is important to know that the organization can make the most of logistics; this is one key area which can change everything for the best. This was the SWOT analysis of Tesco, strengths, weaknesses, opportunities and threats have been comprehensively analyzed. “On average, Sainsbury's is 'slightly cheaper than Morrisons and slightly more expensive than Tesco and Asda'. A Grocer magazine survey claims that Sainsbury's has been cheaper than the 'industry average' for the past two weeks and King pledges to retain this position. (Sainsbury’s Declares Price War). Sainsbury aggressively cut the prices of its products in order to attract the attention of the customers and the same paid off as the profit of the company increased. Another competitor Asda, at the very same time increased its prices to 3.3% and Tesco on the other hand also recorded an increase in its prices by 1.5%. Tesco and Sainsbury have been involved in more battles than one and the same has been going on for decades. Both the Stores wanted to build a store in the centre of Wolverhampton in order to expand. Conclusion and Recommendation After conducting the SWOT it is safe to say that Tesco is in a very strong position, the results in the US may be a little negative but the overall growth of the organization is simply stunning. This growth can be sustained only by expanding into even more countries and this is exactly what the organization is trying to do. Tesco should not close operations in the US, instead slashing prices would be a sensible option considering the recent problems that the organization has faced in the US. Works Cited Sainsbury’s Declares Price War. In this is Money. Retrieved from: Read More