Founded in 1924, Tesco is the largest supermarket chain in Great Britain and one of the most profitable organization, which sells food and non-food items. It now controls just over 30% of the grocery market in the UK. In 2007, it announced over £2.55 billion in profits. It has approximately 1880 sale points throughout United-Kingdom, which include: Extras stores, Superstores, Metro stores and Express stores. In recent years it has diversified its business. It sells non-food products, such as textiles, pharmaceuticals, information technology, optics, video TV, household travel etc. It offers also several financial services which includes insurance, loans, savings, credit cards. The Competition Commission is an independent public body which investigates the market and resolves the problems. If the merger of two companies allows them to hold more than 25 % of market shares it can turn out anticompetitive.
[...] In 2005, Tesco equipped itself with a large number of devices of identifiers with radio frequencies, RFID. These devices make it possible to monitor the supply line with the aim of improving the logistics and the follow-up of stocks. Tesco has several distribution centres, which are close to suppliers, to store all the products. There are more than 35 such centres in UK. OPERATIONS The leader of the wide retailing has not equipped itself with the system RFID only as regards its deliveries but also for its products on shelves. [...]
[...] Tesco holds a wide part of the market in the field of the large-scale retailing. If a company has a large share of the market it distorts the competition and the committee tries to stop it. Despite its large market share, the merger or takeover of companies may worry Tesco, it is a real threat. Though it is a leader in its market, a combined effort can take the leading position from Tesco. Suggestions to improve Tesco's strategic fit The company's Website could be used to counter the allegations made by the media. [...]
[...] The porter's five framework The Five Forces Framework helps to identify the sources of competition in a sector. THE BARGAINING POWER OF SUPPLIERS In order to be more competitive, the retail chains try to reduce the prices as much as possible. At the same time they are careful about reduction as it may decrease their profit, so they will turn to their suppliers to ask for lower prices. Normally the suppliers accept this strategy because they fear losing one of their best customers. [...]
[...] As it leads to inflation and reduces the purchasing power of households, the supermarket industry requires a decrease in the rates (appendix 4). SOCIO-CULTURAL FACTORS In the last few years there were some changes in the lifestyles of people. Notably regarding the households, there are more people interested in living alone (appendix 5). People spend more time in their leisure activities, their hobbies; furthermore they lose a lot of time in the public transportation. Seeing the opportunities, the retailers extended their services by proposing "ready to individual items and stores are open 24/7. [...]
[...] THE DEGREE OF RIVALRY BETWEEN EXISTING COMPETITORS Although Tesco is the biggest retail chain, there is a great rivalry within the English mass distribution, for instance we notice it through the price war that exist in retail stores. However the rivalry concerns especially 4 bigger players as the others are far behind (appendix 7). Analyses of the opportunities and threat OPPORTUNITIES In Asian countries where the economy appears and in nations in development of the Eastern Europe lifestyle becomes more urbanized, it is a strong point to establish new sites in these regions. [...]
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