Free Samples and Examples of Essays, Homeworks and any Papers. Tesco has a strategy that helps them hold a strong relationship with customers, colleagues, suppliers, and stakeholders. Due to the current economic conditions imposed by COVID-19, Tesco may suffer from a and governments rely on people to save money because it can boost economic growth as The government utilizes fiscal policy such as tax and government spending, to control the gaining market share year by year due to their extremely cheap prices that constantly Research has shown that there are numerous market structures with unique pricing strategies in place. Each point equates to 1p in store when redeemed or 4p when used A legal factor that could influence Tescos activities will be the business/contract law. Furthermore, banks Market Structure Pricing and Output Decision. You will need to look at the environment in which TESCO operates and gather information to enable you to consider the following points: Explain how the following contribute towards Tescos competitive advantage: Discuss the following external factors that affect Tesco: Inflation = the rise in the cost of living makes consumers more price-conscious (shop around), Economic growth is weak = people spend less on luxuries, go to discount stores Taxes = the increase in VAT makes many goods more expensive, (Evaluate the extent to which the business has responded to past changes in the business environment, and suggest how TESCO may react to future changes), Eg: They set prices similar to competitors They use branding and promotions as non-price competition -examples, They make higher profits as all supermarkets charge more than if the competition was perfect, They need to make their products and service different They need to build customer loyalty, They have high overhead costs of their stores so prices need to be high enough to cover this, There are high barriers to entry for competitors so the big 4 supermarkets can make good profits, Pricing: Price promotions, buy one get one free, extra loyalty points, price-matching rivals, everyday low prices, cheaper value items, branded items, finest range Output: Tesco has power over suppliers so it demands lower prices for suppliers output (and what their product should look like (apples without spots, straight cucumbers), Tesco is facing competition from Aldi, Lidl so they have sacked many of their middle managers to cut costs of labour output, Tesco has reduced opening hours on 24-hour stores because there was no demand, Tesco has focused more on non-food (electricals, clothing, etc) as this is more profitable, Tesco has grown its click and collect and online sales and deliveries due to customer demand and new technology. brung into action because they copied Tescos idea of the Clubcard. ClubCard points are also converted into coupons that can be redeemed Drawing upon Datamonitor (2010), Tesco is ranked third largest grocery retail company in the world, operating over 4,331 stores primarily within the USA, Europe and Asia. oligopoly, monopoly, perfect competition, and imperfect competition. Businesses around the world are working to use more Legislations give the consumer and employees protection from unsafe products and deceitful traders. For example, the Tesco stores in Thailand have competition against 108 Shop and 7-eleven to name a few. most cost-efficient option rather than Tesco, Sainsburys, ASDA, Morrisons, and more. However, Tesco has admitted itself to things in the past which show otherwise. The change to electric vehicles may affect customers as they might not get their Structures are classified in term of the presence or absence of competition. Tesco faces many positive and negative, internal and external challenges when selling goods to customers. Tesco has capitalized on the use of online shopping by adding delivery to its customers doorsteps with the help of easy access to the internet. It is important for Tesco to consider their competitors as they could surpass them when it comes to sales and customer retention. Tesco name used for the first time in Edgeware London in 1929. Tesco was the leading grocery store over the years and its products were second to none. BREXIT is put simply, the withdrawal of the UK from the European Union. Tesco has feared the German supermarkets Aldi and Lidl for a while as they are quickly gaining market share year by year due to their extremely cheap prices that constantly undercut Tesco. Therefore Tesco needed to cut spending on the The brand name is one of the biggest strengths they possess and take advantage of. possibly sued. BREXIT. cheaper alternative to higher-priced items or even regular priced items. Another way demand can decrease Tescos profits and affect them negatively is if the demand for a product drastically decreases and Tesco have a high stock of the item; Tesco will have to decrease the price of the product to sell it quicker therefore they would lose money to a decrease in demand. A Some of the factors that influence the demand for the products and services at Tesco include To keep up with the demand certain areas will need to be evaluated frequently. Tesco has reported that their online orders have doubled and they have done well to meet the sudden surge in demand. This is an environmental factor that applies to Tesco and how they have The credit crunch refers to a sudden shortage of funds for lending, leading to a resulting decline in loans available. Tesco's structure is also based on function as opposed to location. Tesco does not single-handedly dominate the market they How does the market structure affect the behavior of firms? Determinants of Price Elasticity for Cadbury. Due to technological improvements over the years, customers buying behaviours are forever put the UK in a recession. need to spend any more money on PPE for their employees. Corporate culture refers to the beliefs, The PESTEL analysis will identify the external and internal forces that may affect Tesco's performance in the fair-trade clothing sector in the UK . Furthermore, if Tesco has to go fully electric this may increase the costs of transportation and slow transportation down and the vehicles would need to be charged which can take time. Tesco management claimed that they are doing store adjustments that take into account such environmental factors. Another factor that will impact Tesco is the decrease in the amount of EU workers provided. Due to the ongoing recession in the UK, markets have been affected by economic concerns. One of the old governing bodies that affected Tesco was the Presidential Regulatory Authority. to increase its sales by 20%. growth in the use of the internet. Tesco says they care about people in many ways through healthy living and education initiatives, support for charities, providing good working conditions, promoting inclusivity, and advancing human rights in the supply chain. This is positively reflecting the company and this is why they say it. share then they can keep costs low and afford to advertise. profitable. Tesco saw its worst during the recession as their sales By clicking Accept All, you consent to the use of ALL the cookies. Specifically, we will be discussing the economic factors here. less on the products ordered by Tesco. Perfect competition is an ideal type of market structure where all producers and consumers have full and symmetric information, no transaction costs, where there are a large number of producers and consumers competing with one another. decreased due to many different factors such as bad weather then Tesco would have to The future has to be planned out by Tesco otherwise their company would crumble. technology. Tesco is one of Britain's leading food retailers and has 586 stores. A A highly competitive market is one in which an extensive amount of producers rival each other to fulfil the wants and needs of the members of the general public. ABC is a powerful tool to understand the components of a company's costs and their underlying causes. and the competition is affected by advertising, other marketing tools, customer loyalty, and This applies to Furthermore, another advantage of oligopoly is that It takes a lot of distribution effort to have a national chain of shops so for the moment the big 4 looks enough. care about people in many ways through healthy living and education initiatives, support Furthermore, this can affect people who want to be employed at Tesco because they will want to be employed by a supporting and friendly company and if their social responsibilities have been poor in previous years, employees will look somewhere else. While Lidls sales increased by 12% is below Aldls it is still We also use third-party cookies that help us analyze and understand how you use this website. sales value and profit margins. Technological factors which have perhaps had the most impact on Tesco has been the growth in the use of the internet. goods. Tesco was the leading grocery store over the years and its products were second to none. How does market structure affect pricing? Imperfect competition is a market where many them may bring their market share down as they cannot offer a replacement for petrol/diesel Another example of a political factor affecting Tesco is the sugar tax that has now been decides to increase the taxes, then the customers would have to start saving and spending While specific figures are not available, it is reported that a 1:1 shift in ad spend from traditional marketing tactics to digital marketing efforts has occurred. Technological -Tesco has been very attentive in the past when it comes to technology because it opens up many opportunities for them. This applies to Tesco as it affects how many people will shop with them as it can affect their brand image. basic selection. Tesco provide endless good deal placing in core good around non-foods to undercut levels of competition which actually Tesco marketing with good deal. savings eg get rid of bakeries. Brexit is mainly negative to Tescos because it will cost them more to import items as well as they may cut contracts with different suppliers. For example, if the demand for cheese went up at Christmas time then Tesco could raise the The market share of Tesco has been reduced because of innovation and advanced technologies. want to be employed by a supporting and friendly company and if their social responsibilities planning they take into account many things that can affect the short term and long term. Environmental trends in a business involve the decrease of carbon footprint, the use of more For example, if Tesco reduces the price of a product, the demand for it will rise. Benefits of Tesco. Aldi managed to increase its sales by 20.7%. Tesco says that they care about their staff immensely. selection is positive in the way that it provides for the lower-income households but is also In total there will be 58 stores that will stop baking and 201 that will only bake those products which are in demand. Pricing policies - This can affect Tesco as it can attract customers to shop with them Tescos basic The focused price cuts made it possible for Tesco to attract more customers with Lower price than other supermarket. The internet allows people who typically struggle to shop to be able to easily order from Tesco. Therefore, Tesco has to refocus on innovative production and refocus on using technology to adjust the price of its products. In pure competition, price is set by supply and demand. Market structure relates to the feature of the market that influence the competition and product pricing. On August 9th, 2007, the credit crunch occurred. to shop at Tesco regardless of price. They are continuously expanding with propositions of opening several stores on an 4 How does market structure affect supply and demand? To compete with other organizations, cost-plus pricing is the most suitable pricing strategy for Tesco. Financial Turnaround: Thanks to the leadership of Dave Lewis, Tesco recovered from an annual loss of 6.4 billion in the annual report of 2015 to an operating profit of 1.9 billion in the annual report of 2020.; Market Share: According to Kantar, Tesco has 26.9% of the grocery market share in Great Britain. This proved to be true as a survey of 2000 people suggested that the VAT rise could cost each household in the UK almost 500 a year, with reduced spending notably on computing and electronic devices, holidays and eating out. This cookie is set by GDPR Cookie Consent plugin. low carbon choices. D2 achieved. This will cause Tescos whole pricing structure to change. share a lot of the market with other competitors such as Sainsburys, Asda, and Morrisons. The definition of monopolistic competition is a market structure in which there are many firms selling differentiated products and few barriers to entry. Revenue is calculated as Price Quantity demanded. Although prices on marketed items are reduced, prices are increased to pay elsewhere in the shop. In legislation, the government's monopoly regulation and buyer power reduction policies will restrict entry into this sector with such restrictions as licence requirements and access quotas for raw materials. were halved and they were losing customers to competition like Aldi and Lidl. This is beneficial to For retail organizations, like Tesco; fiscal policy influences purchaser This old body adopts a micro-perspective and is responsible for organizations engaged in financial services products operating in adherence to the relevant regulations. Tesco would want to avoid this at all costs because it will affect their brand Furthermore, it also allows them to have smaller shops which in turn equals a smaller costs for storage and shops. However, a change in supply and demand can be bad also as if the supply of a product with club card deals. Cost-plus pricing is the pricing strategy that adding a standard markup to the cost of product. Customers may go somewhere else where the products are sold that they wish for at a cheaper price so they may stop shopping at Tesco. In total there will be 58 stores that will stop baking and 201 A market structure is a tool used to determine the pricing power of certain products in diverse firms. enough. Tesco has to be careful with how they price their items as it can drastically affect the demand for their products. Furthermore, a monopoly is a market structure with one firm that dominates an industry. Businesses around the world are working to use more renewable energy sources because they can lead to lower operating costs. Tesco is a large U.K grocery firm and retailer whose main competitors are Sainsbury's, ASDA, and Morrison's, which are often called the Big Four in the United Kingdom. Also, Tesco uses its Clubcard to promote many items and new services available by discounting items when you use your Clubcard points. Furthermore, in some of their stores, they have implemented a green and red light traffic light system that lets customers know when they can and can not enter the store. If the government decides to increase the taxes, then the customers would have to start saving and spending less on the products ordered by Tesco. Consumers may spend less on premium products, Overall macroeconomic situation in the UK, Monetary and Fiscal policies introduced by the government, Economic Factors of PESTLE Analysis Affecting Business Organization, Everything You Need to Know About Content Authoring Tools for E-Learning, 3 Top Tips for Choosing Ambulance Only Insurance Cover, 4 Simple but Effective Techniques to Maximize Your Sales, The Advantages of Using Payday Loans for Wedding Expenses, Factors to consider while choosing a custom boxes seller online, Subsidized Loans and Unsubsidized Loans All You Need To Know. Firms in this market structure majorly resort to non-price competitive measures as their marginal costs can fluctuate and still result in the same market price. In an oligopoly, prices rise as the market is controlled by only a few companies. The structure of a market refers to the number of businesses in a market, their market shares and other features which affect the level of competition in the market. One factor that affects Tesco in the external environment is the political factor, Brexit. In a monopolistic competition,. One way I believe Tesco will respond to future changes in the market is its response to Brexit. Tesco has the power to make contracts dictate the details of the purchases Tesco makes eg lots of things that will be returned if not sold eg flowers, newspapers, the customer returned goods. products as quickly, and Tesco may shut down their petrol stations as it may no longer be Tesco themselves have said, we need to adapt to changing customer demand and tastes for bakery products. every 1 they spend in a Tesco store or on Tesco. may stop shopping at Tesco. image and lose profits. Tesco Throughout the years societys attitudes to saving have changed dramatically. It hinders companys overall performance in both local and international markets. Waitrose is another . Due to technological improvements over the years, customers buying behaviours are forever changing so Tesco has to keep changing their strategy to keep up with the demand for many things. Tesco saw its worst during the recession as their sales were halved and they were losing customers to competition like Aldi and Lidl. they use a large number of vehicles to transport their goods and services around the globe. save in the future just in case they were to come across any potential unexpected costs. Both clients and the business benefit from the new technologies: customer loyalty improves when items are easily accessible, facilities can become more customised and shopping can be easier. In pure competition, price is set by supply and demand. Change management The change management theory involves the building blocks within the company in order to achieve the future goals. By focusing on the causal factors or A figure of cost of goods sold reflecting the cost of the product or good that a company sells to generate revenue, appearing on the advantages. Tesco PLC is a British international merchandising retail chain. Grocer setups are not set up to operate as specialist retailers in specific areas of products However, a strong brand can make customers more. The legal minimum wage for those aged 23 or older also rises 6.6% to 9.50 in April. Another future market change that can affect Tesco is the decrease in the use of cash and Flower; Graeme Henderson), Marketing Metrics (Phillip E. Pfeifer; David J. Reibstein; Paul W. Farris; Neil T. Bendle), Tort Law Directions (Vera Bermingham; Carol Brennan), Commercial Law (Eric Baskind; Greg Osborne; Lee Roach), This work is on A-level coursework for business, LIBF Level 3 Certificate in Financial Studies Exam Studies Questions, Copy of Assignment 3 for business a level, Assignment 3 for business a level coursework. They will have to consider the amount they have to spend on getting existing items they sell onto the shelves in their stores and determine whether it will be worth it because of increased taxes and transportation costs. withdrawal will cause many factors that will affect Tesco to change. could eat into the profits at Tesco and use valuable time. Market structure is important in that it affects market outcomes through its impact on the motivations, opportunities and decisions of economic actors participating in the market. This will save the company a lot of money. An oligopoly is a market structure with a small number of firms, none of which can affect the others from having significant influence. Confidentiality is not the only thing that must be incorporated inside the agreement. Furthermore, banks and governments rely on people to save money because it can boost economic growth as businesses can use that kind of money to invest more and it can also be used for household mortgages. This encourages people to save their Clubcard points so they can services products operating in adherence to the relevant regulations. Consumers often switch to other brands because of various personal reasons including fair and convenient price. for extra points or cash totals. as it also gives other companies the advantage. The credit crunch refers to a sudden This also can change the prices of the competition as they may not offer extra services so they have to reduce their prices to make up for it. Clubcard to promote many items and new services available by discounting items when you due to their reputation. In essence, the corporation enters emerging markets by acquiring performing retail chains. opening a new no-frills discount brand, Jacks. also collect points by paying with a Tesco credit card, or by using Tesco Mobile, Tesco. In 2015, Tesco's ad spend declined sharply to less than 80 million, marking a huge shift compared to just two years prior. The cookies is used to store the user consent for the cookies in the category "Necessary". These cookies track visitors across websites and collect information to provide customized ads. is not much demand for freshly made bread anymore in the market that they operate in. Functional positioning is associated with increased range and quality of functionalities of products and services. In 1994, Tesco acquired both Global TH and WM Low and Co. Economical -Labour cost is huge for Tesco as it provides a foundation on what their workers are entitled to be paid. PESTEL Analysis. Clubcard points, customer service, cafes, car parks, etc are all reasons people may decide Decision-making process in Tesco. that will only bake those products which are in demand. 1509 Words7 Pages. It is the third-largest retail company after Wal-Mart Stores Inc. & Carrefour SA. On the other hand, Competitive Advantage strategies of Tesco A company should be strategic enough to assess the possible techniques of brand management and then select the most appropriate and worth enough competitive advantage method. Tesco stores in Thailand have competition against 108 Shop and 7-eleven to name a few. In 1930s when Mr. Cohen built a headquarters and warehouse in North London, its brand continually rises. When the competition is high there is a high supply of commodity as different companies try to dominate the markets and it also creates barriers to entry for the companies that intend to join that market. But now its competitors are providing the substitute products of Tesco in the market. Also, Tesco uses its This is because tax-related fiscal policy Public law (Mark Elliot and Robert Thomas), Electric Machinery Fundamentals (Chapman Stephen J. What is Tesco's market structure? Leading market share - Amongst the big four supermarkets, Tesco dominates the grocery retail market of Great Britain with 27.9% of market share. However, the extent Tesco have gone to, to respond to changes in the market is also negative. Tesco responds to pricing by multiple different strategies such as its finest range, cheaper value items, buy one get one free, and more. This applies to Tesco as this will affect smartphones. Furthermore, Tesco has the power to force suppliers to give them discounts but Another opportunity that Tesco has been capitalizing on is the growth of Tesco mobile. on the threatening German supermarkets Aldi and Lidl. Furthermore, in some of their stores, they have implemented a green and red light traffic This report analyses Tesco's retail segment in its primary market of the UK, the competitiveness of the retail industry, its strategic positioning in this market, and potential marketing strategies, using Porter's five forces analysis and SWOT analysis. This will affect Tesco as they will have to When planning they take into account many things that can affect the short term and long term. For example, the However, a strong brand can make customers more loyal to Tesco and this would mean that if Tesco raised prices more customers would stay with them, thus increasing overall profits. This will further result in nonessential items would cause an increase in customers. I believe Tesco should start taking Tesco Mobile has been incredibly successful and they still are running strong today because they pay attention to the up and coming technological advancements. The reason they use a hierarchical structure is because the organisation is large and has multiple layers within it. the cost of production, external shocks such as hurricanes, pandemics, droughts, and In business, there are different market structures in the external environment. Tesco has said that they have priced match hundreds of products in their school to help customers financially with the recession we are currently in. Furthermore, there will be no need for the red and green lights before you enter For example, there will be a rise in the cost of imported goods as it will be more challenging for companies like Tesco to transport goods over.
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how does tesco's market structure affect pricing