Business Society and Environment Issues - Case Study Example

Name : xxxxxxxxxxx Institution : xxxxxxxxxxx Course : xxxxxxxxxxx Title : Competitive Analysis of the TESCO Retailer. Tutor : xxxxxxxxxxx @2010 Competitive analysis of the TESCO retailer TESCO was started as an international merchandising retail shops, and also dealt with grocery it was based in the United Kingdom. Currently it is the largest retailer in Britain by global sales and also domestic market the merchandise makes more than 3 billion dollars annually. Currently it is the third biggest global retailer which is based on revenue, but it is the second biggest in making the highest profits, TESCO originally specialised in foods and drinks but later in the years specialised in clothing, consumer electronics, financial services, car insurance, telecoms, home, dental plans. It also incorporated other services like retailing and renting DVDs, CDS, music downloads (Hoggan 1998). TESCO was founded by Jack Cohen in 1919 where he was selling surplus groceries from a stall in London. The name was founded after Jack Cohen got a shipment of tea from the Stockwell. Using the first letters he came up with labels of the suppliers’ name (TES) and the first letters of his surname (CO). This formed the name TESCO. The first store dealing the name TESCO began to operate in 1929. This was in Burnt Oak, Edgware, and Middlesex and later was expanded to England under the name TESCO Stores Holdings Limited. A self service store was first opened in 1956 in St. Albans which is still operational; the first large supermarket was opened in 1956 in Maldon. Between 1950 and the 1960s TESCO expanded organically, and again through acquisitions, until they opened more than 800 stores .TESCO company bought 70 Williamson stores in 1957, in 1959 they opened 200 Harrow stores outlets, 1960 Irwin’s stores and 97 in Phillips Charles .The merchandise TESCO appeared first in 1924 .Jack Cohen is highly attributed to the motto “you cant do business sitting on your ass”. The administration and strategy analysis Jack Cohen was an enthusiastic lawyer of trading stamps as incitement to shoppers for them to be able to patronise his stores. Jack signed up an agreement with Green Shield stamps in 1964 and he became one of biggest clients of the company Jack Cohen resigned in 1973 and he was replaced by his son-in-law, Leslie Porter in 1973 as the chairman, he also employed a Managing director Ian Maclaurin Porter and lan did away with Cohen’s philosophy and piled it high, which had made the company to be in a state of stagnation and also a bad image. TESCO in 1977 came up with operation checkout that enhanced the abolishment of green shield stamps, reduction in prices and centralising purchase of all stores .due to all these changes there was positive results in market rise which rose by 4% in a period of 2 months (Martin 2006). In the year 1987 May, TESCO summarised the hostile take-over involving the Hilliard’s chain of forty supermarkets to the North of England for 220 million pounds. In 1994 TESCO company took over William low supermarket chains company, they successfully defeated Sainsbury’s for the control of Dundee based organisation that operated about 57 stores. This gave a chance to TESCO to be able to expand its availability in Scotland. That was by far weaker than in England. In 2006 Inverness was named after TESCO because over 50 percent in each dollar that was spent on food was believed to be spent in almost three TESCO stores. TESCO came up with a loyalty card branded as club card in the and later introduced internet shopping service, By November 2006. TESCO was able to make food retailer online. It was the only one at the time that was able to make great profit from the introduction. This enhanced great competition from other organisations. In 1996 the TESCO type face of the logo was transformed to the current logo which has got stripe reflections underneath. Terry Leahy took the position of the chief executive. This appointment had been announced in 1995 November. March 21st in 1997 TESCO company announced the buying of the retail arm of the associated British foods that comprised the Quinn worth, Stewarts and crazy prices chains in the state of Ireland and Northern Ireland, and also the associated businesses, for 640 million pounds. This agreement was approved on May 6, 1997 by the European commission the acquiring of this retail arms gave TESCO a great presence in the republic of Ireland and the major presence in the Northern Ireland than Sainsbury’s that had started its movement into the province at around 1995. TESCO and Esso, which was part of Exxon Mobil in 1997 forged a commercial alliance which comprised of several petrol filling stations under lease from Esso, TESCO was operating the close stores in the form of express format .in turn Esso was to operate the forecourts then sell their fuel under the TESCO stores .10 years along more than 600 Tesco/esso stores may be found across the united kingdom (P Walker 2005). In July 2001 TESCO was involved in online grocery retailing in the United States of America where it attained a 35 percent stake in Grocery Workings. In 2002 TESCO bought 13 hypermarkets in Poland. It also made a great move into the United K kingdom convenience store retail market with a purchase of T & S Stores, the owner of 870 convenient stores in the One Stop, Dillon and Day and Night chains in United Kingdom. TESCO Company started a United Kingdom telecoms division, consisting of the mobile and domestic phone services, in order to complement the existing Internet service provider business. In 2003 June TESCO bought the C 2-Network in Japan It also got a majority stake in the Turkish supermarkets chain Kipa. January 2004 TESCO bought Adminstore, the owner of 45 Cullen’s, Europa, and Harts convenience stores, in around London In the same year August, it also came up with a broadband service. In Thailand TESCO limited Lotus was a group venture of the Charoen Pokphand Group and TESCO but underwent criticism because of the growth of hypermarkets. CP Group sold the TESCO Lotus shares the year 2003. In 2005 Tesco got the twenty one remaining Safeway/BP stores that was after Morrison’s did away with the Safeway/BP venture. In mid 2006 TESCO bought eighty percent stake in the Casino’s Leader Price supermarkets in the Poland. They were rebranded as small TESCO stores July 14 2007, fourteen TESCO stores in the United Kingdom were closed temporarily after a 'bomb scare' and a criminal thorough investigation established after threats were made A 'suspect device' was recovered in a store on 16 July 2007 that caused the store and the surrounding area to be closed off while the Army Explosive Ordnance Disposal unit disposed of the package In 2007, TESCO was involved in a joint venture with O2 come up with the TESCO Mobile virtual network operator in Ireland (P Walker 2005). 2007 Tesco was put under investigation by the United Kingdom Office of Fair Trading (OFT) for being part of a scandal of 5 supermarkets (Safeway, Tesco, Asda, Morrisons and Sainsbury’s) and a number of dairy organisations to fix the price of milk, butter and cheese. December 2007 Asda, Sainsbury and the former Safeway agreed that they acted against the interests of consumers and publicly claimed that they were supporting 5,000 farmers that were recovering from the foot-and-mouth disease. They were given a fine of a total of 116 million pounds. TESCO maintained that it was not involved in the cartel. A two-part television advertisement campaign that was celebrating Christmas with the Spice Girls that aired in 2007. They reportedly paid five million dollars. In April 2009, Tesco reported that it had made a super tomato that "doesn't leak". The tomato was grown in the Holland and it was meant to be a better tomato for making sandwiches since, they were less juicy, they didnt make sandwiches as soggy like the regular tomatoes do. The Corporate strategy Findings from the Citigroup retail analyst David McCarthy pulled off a trick that it is not aware of any other retailer achieving. That is to ask all sections of the market" One plank of this strategy has been TESCO’s use of its own-brand products including the upmarket "Finest", mid-range Tesco brand and low-price "Value comprising several product categories like food, beverage, home, clothing, Tesco Mobile and financial services, in the Beginning of 1997 when Terry Leahy began working as the CEO, TESCO started marketing itself through the phrase, "The Tesco Way" this was used to describe the organizations core purposes, values, principles, and goals. This phrase was the core marketing speaks for Tesco as it expanded domestically and internationally while under Leahy's leadership, showing a shift by the company to stand on people, customers and employee, to be able to protect the brand image, and given its growth plans in Thailand, TESCO has previously been employing a policy of showing defamation proceedings. (Hoggan 1998).November 2007, TESCO sued a Thailand academician and also the former minister for the civil libel and criminal defamation. TESCO insisted that the two had to pay 1.6 million and 16.4 million pounds plus two years' imprisonment respectively. They were alleged to have misled people in saying that TESCO's Thailand market amounted to 37percent of its worldwide revenues, amongst criticism that TESCO's propensity to put peasant retailers out of the business.TESCO's core advertising motto was "Every little helps". Its advertisements on print and in the media mostly consisted of product shots (or an appropriate image, such as a car when advertising petrol) against a colourless background, with a price or necessary text (e.g., "Tesco Value") super imposed on a red rounded shape. On television, the voices heard are given by recognisable actors and presenters to enhance appropriate marketing. T he Corporate tax organization May 2007, it was found out that TESCO had relocated the main office of its online operations to the revenue tax haven of Switzerland. This allowed it to sell CDs, DVDs and electronic games via its web site without asking for any charges. The working earlier had been run out of the tax haven of Jersey, but it was closed by authorities who were fearing damage to the Island's reputation. June 2008, the state government said that it was closing a tax loophole that was being used by TESCO. (Hoggan 1998). The scheme, that was identified by British magazine the Private Eye, used the offshore holding companies in Luxembourg and partnership agreements to prevent a corporation tax liability of up to 50 million pounds in a year. Another scheme that was previously identified by the Private Eye involving depositing 1 billion pounds in a Swiss partnership, and then giving loans to the overseas TESCO stores, so that the profit could be moved indirectly via interest payments. The scheme still is in operation it is estimated to be costing the United K kingdoms exchequer of up to 20 million pounds a year in corporation tax . A tax expertise Richard Murphy gave an analysis of this avoidance structure. The commercial social responsibilities TESCO made an agreement to the corporate social responsibility ,by making a contribution of 1.87 percent in the year 2006 of the profits they make to charitable organisations and the local communities or organisations ,this compares well with the marks and Spencer s 1.51 percent but not very well with the Sainsbury 7.02 percent will Hutton ,the chief executive officer of the work foundation praised TESCO recently for being able to lead a debate on corporate responsibility, but intelligent given has criticized TESCO for directing all the staff helping and supporting charity work of the company. Early 1992 TESCO began a computer for schools scheme, they were giving computers to schools and hospitals then these institutions would get vouchers from individuals who did there shopping in TESCO, by 2004 92 million of equipments were offered to these institutions .These scheme has also been introduced in Poland. 2005/2006 during the football season TESCO company sponsors the TESCO cup which is a football competition that young players around the united kingdom ,now the cup runs a boys competition under the age of 13 and a girls cup under the age of 14 .More than forty thousand boys were involved in the competition in the 2007/2008 competitions .The year 2009 TESCO use the phrase ,” change for good” to advertise this is a trademark used by UNICEF for charitable organisations that was meant to encourage people to help children who are in need they wanted to ask people who have children’s welfare at heart ,to think of helping children in case they are making customer choices . TESCO's growth has not lacked criticism , in some instances, active opposition in 2006 , was experienced an article on the newspaper criticized the company’s expansion and its dominance in the united kingdoms market .this caused a lot of challenges to the retailer .In 2007 people in the Hall Green area of Birmingham had their opposition strongly stated when TESCO stated plans to open a retailer in the Robin Hood area of the suburb the local retailers feared competition from TESCO and so incited the local oppose the idea. In March 2007 the habitants of Bourneville, Birmingham struggled to maintain the ancient alcohol free status of the locality, after they won a court war with TESCO, to stop it from selling alcohol in its local surrounding. No shops are allowed to sell beer in the region and there are neither bars nor fast-food shops in Bourneville. Plans to establish a bigger TESCO store in St Albans, Hertfordshire, had attracted local opposition. This resulted to the formation of the "Stop St Albans Tesco Group". June 2008, St Albans Council denied the planning permission to the area of the proposed store. Conclusion From Starting on a small stall in the East of London, today TESCO is among the largest retailers in the United Kingdom and had over £59 billion sales in the year 2008. In this dynamic surrounding , TESCO has made it to stay ahead of the competition through the centre on people, both the customers and workers but , in today’s really changing worldwide environment , anything would happen. Companies and organisations today have to always come up with new ideas and reinvent themselves to be able to maintain the competitive advantage. The total surrounding that TESCO works in provides both the opportunities and pressure so, for nourishment of growth and development, TESCO has to have the appropriate planned directions that looks into these global and environmental challenges. (Martin 2006).Though the Tesco Company has large widespread retails worldwide; TESCO’s biggest market is still in the United Kingdom. TESCO has managed to stay at the top of the competition and even offering help to the needy in the society , TESCO has grown gradually from a stall to large and hyper markets ,and this has been easy for them since they have seen the growth from an earlier stage so it has been easy to deal with most of the challenges, it has also been able open alit of branches in the united kingdom .TESCO has also been facing lots of criticism from other companies, however they have managed to stay put and maintained a high level of standards and through there vast experience they have managed to stay ahead of there competition . Bibliography McGauran, Sir Ian, 1999, Tiger by the Tail: A Life in Business from Tesco to Test Cricket, Pan Books, London. Nash, B., 2006, Fair-Trade and the growth of ethical consumerism within the mainstream: an investigation into the Tesco consumer, University of Leeds, Leeds.   Simms, A., 2007, Tescopoly: How one shop came out on top and why it matters, Constable, London.  Terry, M. & Phillips, T., 2006, scoring points: How Tesco continues to win customer loyalty, Kogan, London & Philadelphia.   Read More