BUS4046 Individual Report
Introduction
In the era of globalization, the retail industry has emerged as one of the largest and profitable industries across the globe. Considering the recent FTSE index 2021 and its list of companies, the retail industry in the UK seems to have evolved itself as one of the largest industries in terms of market capitalization and revenue growth. Among the largest retail firms in the retail industry of the UK, Tesco PLC is a major merchandise retailer firm located headquartered in Welwyn Garden city in England. The company is one of the largest retail firms in the UK.n Globally, it is considered the third-largest retail company in terms of its gross revenues. The company has placed its firm position in the list of FTSE index 2021. This individual report aims at analyzing the nature and the scope of the industry along with Tesco’s positioning and performance within the industry.
Analysis for the nature and scope of the industry
Political and economic scanning
n begin with, the Political environment and its factors significantly impact the company and its industry over the years. In terms of political factors, the support on behalf of the government is considering a crucial political factor that encourages the company and the retail industry to expand its business largely (Efstratiadi et al. 2019). The support from the government also includes its taxation policy levied on the corporate group. It has been learned that tax rates and overall taxation policy of the government have been proved to be conducive for the company and the entire retail industry in the UK.
Going forward, the economic environment and its factors within the country have also been crucial for shaping the nature and scope of the company and the retail industry. Considering the economic factor, labor cost is regarded as a crucial economic factor that impacts UK supermarkets. The annual wage bill of the labor cost has increased 4.5 billion GBP and consequently, it cost millions of pounds to Tesco and the entire retail industry (Adewuyi, 2016). In addition, one of the major economic factors affecting the retail industry of the UK is the high value of the real estate which is held by supermarket retailers in the country (grin.com, 2021).
Influence of social and technological changes
At the outset, the social changes influencing Tesco and the retail industry in the country are the general buying behavior of the consumers which is considerably known as a tradition. It plays an important role for the consumers to decide the venue from where they can do their shopping. It has also strengthened the customer base of the retail industry (Adjudicator, 2016). According to a report on "retail economics", the retail industry has witnessed $403 billion of its sales value in 2020 (retaileconomics.co.uk, 2021).
Keeping the role of the technological changes in mind, Tesco has introduced RFID technology for a better consumer experience (Haddock and Rigby, 2015). The entire retail industry has adopted technological innovation and is banking on digital applications for online shopping and grievances on behalf of the consumers.
Responses to fend off threats
It is crystal clear that the retail industry has been witnessing immense growth in the country over the years. Hence, in order to fend off threats, it would be viable for Tesco to frame up effective marketing strategies to combat the threats of growing competitiveness as many other retail firms are adopting the technological changes. For exploiting the opportunities that the changes bring in for the company, Tesco is supposed to ramp up its manpower for online delivery of its food products as most of the consumers rely on online shopping owing to cascading effect of pandemic (Imrie and Dolton, 2014). The enhancement in customer support would pave the way for gaining and strengthening its customer base.
Ecological and regulatory scanning
Tesco has always complied with sustainability in its business operation. It is the core agenda of the company to keep the growing carbon footprint at bay thereby adopting sustainability in business. The retail industry in the country has also adopted safe and sustainable business practices to strike a balance in ecology. Tesco has to abide by the regulatory aspects and acts as having been framed up for regulation (Mollah, 2014). It includes “National minimum wage act 1998, the health and safety at work act 1974” along with its “strategic business unit” (SBU).
Ethical business practice
Tesco values its ethical business practice since its inception. It has developed an ethical culture of the business within its operation management. It treats each individual equally and fairly. It has also implemented ethical trade business practices with its external stakeholders.
Absorption of additional cost
Tesco has introduced its CSR policies for its trade partners thereby absorbing additional costs resulted from ethical practices (Rhodes and Brien, 2014). The introduced CSR policies of Tesco show how the company has been putting pressure on its trading partners to adhere to its CSR policies.
Standard of ethics
It can be relatively acknowledged that the company passed on the same standard of ethics down the chain of supply.
Ethical standard for suppliers
As mentioned, Tesco has framed up its extensive CSR policies for its stakeholders including its suppliers so that ethical standards of the business can be complied with in each sphere of the business (Wood et al. 2017). With this, it encourages its ethical business standard to be followed among its suppliers. nnn
Analysis for the firm’s positioning and performance within the industry
VRIN resource of Tesco
n makes use of its VRIN resources for framing up competitive strategies which are completely based upon core resources and strengths of the company in terms of obtaining competitive advantages. nn
Competitive advantage of Tesco
Tesco has been able to gain a competitive advantage over its market rivals with its effective marketing strategies. One of the achieved competitive advantages of Tesco is its “retail low prices” and improved value chain that helps the company to strengthen its inbound logistic mechanism. The most important competitive advantage to be discussed is the company’s increased market share and market capitalization (retaileconomics.co.uk, 2021).
According to the above statics, Tesco has gained 27% of the total market share as of May 2021 leaving behind its market rivals such as Sainsbury, ASDA, Morrison, Aldi, etc.
Source of competitive advantage
The sources wherein the company has acquired its competitive advantage are the following. These sources are:
- Diversification
- Distribution system
- Investment in digital platform
- Striking advertisement
- Cost leadership
Nature of the relationship
The nature of the relationship between core competencies, resources, and competitive advantages of Tesco is based upon its value of the brand, relationship with its core suppliers, and improved distribution channel for the company.
Global standard
As far as the global standard of business of Tesco is concerned, it can be acknowledged that over the years, the company has expanded its business in the global market. It has gained the position of being the third-largest retailer and has been operating the business in dozen countries in Asia and Europe. Currently, it operates in 13 countries. It has a global workforce. The company has its brand value worth 8.5 billion USD (tesco.com, 2021).
Outsourcing
It is acknowledged that Tesco has engaged in outsourcing business. It has an outsourcing contract with Xansa for management of its application, development of software, and consultation. nn
Offshoring of business process
Tesco has its off-shoring business process which the company has expanded on the global level as part of its global business expansion plan. The impact of this process on the business can be relatively linked with its increased market share despite the crippling and adverse impact of the pandemic.
Knowledge-based business
Since the inception of Tesco, it has established itself as one of the knowledge-based businesses. With its effective service and innovation in each sphere of the business, the company has established its brand value among the consumers and it is because of the effective marketing strategies of the company, most of the consumers of the company prefer its products and services. With the changing time, it has also introduced “oracle and SAP business objects polestar applications” for its smooth functioning.
Knowledge creation through R&D
With the utilization of knowledge and innovation in business, Tesco Plc also focused on its Research and development. The R&D team of the company innovates and develops new products and services that aim at providing the best experience to customers. The company uses its lab for its "cultural innovation". Under the leadership of its head of engineering and product and design, Mr. Adrian Bracewell and Carl Knibbs, the company lays emphasis on its R&D. The scope of R&D within the company can be stated with the core manifesto of its team who always strive for building a reputation through research and innovation.
Conclusion
Tesco, having listed in the list of FTSE index 2021 company, has paved the way for fulfilling its vision for becoming the largest retail firm across the globe. The place acquired by the retail industry in the domestic market of the country shows its pace of development in business innovation. This individual report keeping the growth of the retail industry in mind has critically analyzed the scope and nature of the industry along with the firm's performance and positioning within the industry. nn
Reference List
Journalsn nnn
Adewuyi, A.W.A.W., 2016. Ratio Analysis of Tesco Plc Financial Performance between 2010 and 2014 in Comparison to Both Sainsbury and Morrisons.n Open Journal of Accounting,n 5(03), p.45.
Adjudicator, G.C., 2016. Investigation into Tesco plc.
n , M., Acha, S., Shah, N. and Markides, C.N., 2019. Analysis of a closed-loop water-cooled refrigeration system in the food retail industry: A UK case study.n Energy,n 174, pp.1133-1144.
Haddock-Millar, J. and Rigby, C., 2015. Business Strategy and the Environment: Tesco PLC’s Declining Financial Performance and Underlying Issues.n Review of Business & Finance Studies,n 6(3), pp.91-103.
Imrie, R. and Dolton, M., 2014. From supermarkets to community building: Tesco plc, sustainable place-making, and urban regeneration. Sustainable London, pp.173-194.
Mollah, A.S., 2014. The impact of relationship marketing on customer loyalty at Tesco Plc, UK.n European Journal of Business and Management,n 6(3), pp.21-55.
Mollah, A.S., 2014. The impact of relationship marketing on customer loyalty at Tesco Plc, UK.n European Journal of Business and Management,n 6(3), pp.21-55.
Rhodes, C. and Brien, P., 2014. The retail industry: statistics and policy.n House of Commons Library Briefing Paper, available at http://researchbriefings. files. parliament. UK/documents/SN06186/SN06186. pdf (accessed 13th August 2018).
Wood, S., Wrigley, N. and Coe, N.M., 2017. Capital discipline and financial market relations in retail globalization: insights from the case of Tesco plc.n Journal of Economic Geography,n 17(1), pp.31-57.
Online articles
disfold.com, (2021), top-companies-uk-ftse, available at: https://disfold.com/top-companies-uk-ftse/ [Accessed on : 08.05.2021]
grin.com, (2021), document, available at: https://www.grin.com/document/278978 [Accessed on: 08.05.2021]
retaileconomics.co.uk, (2021), library-retail-stats-and-facts, available at: https://www.retaileconomics.co.uk/library-retail-stats-and-facts[Accessed on: 08.05.2021]
Website
tesco.com, (2021), about the company, available at: https://www.tesco.com/ [Accessed on: 08.05.2021]
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