Tesco and ASDA Businesses - Case Study Example

Two UK Businesses Name Institution Tutor Date Introduction All business organization has the aim of being successful in their operations. None is ready to incur losses and fail in their operations. There are vast business ideas deployed by the different business organizations, yet most of the business plans may or may not be successful. This paper explores ; Tesco and ASDA as two supermarkets that have experienced success and failure. TESCO TESCO is one of the most bullish and the biggest supermarkets in Britain. The supermarket, however, has failed to deliver to the customers. The last blow to the supermarket is the extraordinary overestimation of the half-year profits. This amounts to a quarter of the profits expected for the given period. Due to this, TESCO has lost close to a tenth of its original value. This is a blow to Davis Lewis, who is the new chief executive who succeeded Philip clerk who left after he was defeated to solve the problems of the supermarket (Jessica, 2015). The timing of Tesco supermarket was very unfortunate, most of their ventures deeply declined. Their focus on the ready meals demanded high levels of spending than the raw produce. This meant that the customers had to try something more radical and new to them. This made the customers take home a supermarket meal. This did not go well for the Tesco supermarket. Many customers had no money to buy the readymade meals. This reduced the Tesco’s market for their products. This type of food required the customers to change their habits. This meant that the customers had to think otherwise on how they shop and what they shop. It was hard for the customer to change their spending habits since it was very expensive to them. Changing from one habit to the other require much time for the new habit to sink deeply into an individual. This made the company fail (Jessica, 2015). Stores The Tesco supermarket considered a move into the United States market. They sent their senior executives to live in California and observe the spending habits and how people shopped. They constructed different stores in the United States. However, according to the researchers, the Tesco supermarket did not pay attention to the researchers and decided to build their stores in their wanted areas instead of listening to the prospective buyers. For example, most of the United States shoppers prefer shopping in bulk in order to save money yet Fresh and Easy store provided small packed goods. Again the stores offered British ready meals that were very unfamiliar to the United States shoppers who were initially relying on self-service. Just like other retailers in Britain, Tesco struggled to locate their store in the right places. The supermarket planned to open more small stores. It needed close to 50 outlets in order to justify their investment in a United States food factory. However, due to the stumbling sales at Fresh and Easy stores, the supermarket had to take their time and improve the existing stores before starting the new stores (Heffernan, 2013). The management Philip Clarke departed from the supermarket after the several display of poor results. During his time, the supermarket was faced with several overstatements of the profit. He took over the chief executive post after Sir Terry Leah in 2011.during his leadership; he oversaw the attempts by Tesco to position itself in the competition face from the German discounters Lidl and Aldi. However, he allowed the company to lose out on the Share Market to its rivals (Jessica, 2015). Prices and customer base Mr. Clerk splashed out in the upgrading of several stores; the prices went up, and this drove away the customers. This was a major mistake since Tesco, and other supermarkets from Australia and America face from the hard discounters who sell their products at a cheaper price without compromising the qualities of the food. Such hard discounters include the family owned, from Germany and Lidl and Aldi. This made many customers turn to the cheap food from other supermarkets since their prices were fairly cheaper as compared to the Tesco (Heffernan, 2013). ASDA The key success of ASDA is providing more valued prices at low price. They have the ability to acquire global procurement approaches and develop good and proper relationship with different stakeholders and the customers. The new style local supermarket creates the low prices near homes. There are nearly 180 Supermarkets of Asda across Unite Kingdom. Many of the supermarkets were opened in order to convert the Netto stores into new supermarkets. ASDA makes it possible for the customers to do their shopping without having to travel to other places using the same price guarantee. The supermarkets have a challenge in ensuring there is an optimum range of stock and availability of different products while maintaining control of cost, high service delivery and strong motivation of the teams.The chief executive director improved the success of the supermarket by suggesting more spaces for the fresh food, health foods, and hot food and beauty products. He also suggested the sale of goods that are mostly bought online such as DVDs, television and CDs (Randall and ‎Andrew, 2011). Management Asda supermarket is managed by the former store manager Andy Clerk. He joined the company in 1992. He replaced Andy Bond, who was appointed the chairman of the ASDA supermarket. Mr. Clerk took over the post at a time when there was intense competition between different supermarkets. According to WellMat, the clerk was the ideal person for the position of the chief executive since he cared for the need of the company and knows the business well (Randall and ‎Andrew, 2011). Stores There are more than five hundred stores in United Kingdom. The store ranges from bigger ones to smaller ones but is formed perfectly. Even though the stores vary in their location, sizes and variety of facilities and products, the prices are very low, and the approach is very friendly in all the ASDA stores. The stores provide the customers with different online groceries. They also sell furniture’s, George brand clothing, consoles and many more. The data encompasses phone numbers and different store hours. One of the stores is the Lincolnshire located in Grantham (Nehls, 2006). Prices and customer base The Asda supermarket imported a cafe cheap idea from Walmart charging the customers one pound for any product on its menus such as salads, drinks, and pizzas. After these charges, the sales at the Grantham stores increase by one percent every year. This was a better performance than other large supermarkets that declined in their sales. Asda pledged more price cuts and the chief executive said that the supermarket could go further to cut the costs if the competition intensifies. This low price has led to the success of the ASDA supermarket. The customers can afford different products from the supermarket due to the low prices (Randall and ‎Andrew, 2011). Conclusion The two supermarkets are striving to be successful in all their operations, the Tesco company is not able to compete effectively due to improper market strategies, they do not consider the interest of the consumers, they lack proper market research on the needs of the customers. On the other hand, the ASDA supermarket is well established, they are aware of the market trends and reach the customers even through the internet. They also offer low prices to the consumers. This has made them successful throughout the years. Reference Heffernan M, 2013, Why did Tesco fail in the U.S. New York. CBS Interactive Inc. Jessica, M, 2015, Supermarket suffered "failure of leadership" under Philip Clarke.retrieved from: .retrieved from: http:/ /207421/sir-terry-leahy-tesco-suffered-failure-leadership- under- clarke Nehls V, 2006, Private Label Brands at ASDA: Why Supermarket Retailers. München. GRIN Verlag  Randall R and ‎Andrew S, 2011, The Grocers: The Rise and Rise of Supermarket Chains.london: Kogan Page Read More