Comparing two existing online businesses
For this assignment I will compare and contrast two
online businesses, the businesses I have chosen are Tesco & Amazon.
History of Tesco
Jack Cohen began selling surplus groceries from a stall in the East End
of London in 1919. The
first own-brand product sold by Jack was Tesco Tea - before the company was
called Tesco. The name comes from the initials of TE Stockwell, who was a
partner in the firm of tea suppliers, and CO from Jack's surname. In the 1930s
Jack Cohen grew the business by buying stores in the expanding London suburbs.
Computers for Schools was
launched in 1992. The Every Little Helps strap line was launched in 1993. The
first two Tesco Express stores opened in London in 1994. The Tesco Clubcard was
launched and with the introduction of Clubcard, Tesco overtook Sainsbury's in
market share in 1995.
Tesco.com, launched in 2000, has grown to serve over
500,000 customers weekly. A new 'Every Little Helps'
campaign was launched in 2004. Tesco Direct, their catalogue business, launched
in 2006. A new Clubcard app launched in the UK in 2010. Tesco launched the new
Everyday Value range to replace Tesco Value in 2012.
Number
of stores - 3,054
Revenue
for 2011/12 - £42,248m
Current share price – 360.55p
Challenges that Tesco faced in the early
years
The following companies are the major
competitors of Tesco PLC:
ASDA
ALDI
John Lewis
Marks and Spencer
Morrison’s
Sainsbury
These are all competitors of Tesco and have all been battling with Tesco
in order to survive and show that they have to be taken seriously.
P.E.S.T
Analysis on Tesco
Political
Politically, the
recession is currently affecting all the countries which may lead to higher
numbers of unemployment. As one of the fastest growing retailers more jobs will be available with Tesco therefore helping to
reduce unemployment.
Economical
One of Tesco’s competitive
advantages at present relates to their overwhelming physical presence, but
there are issues about Tesco driving out the competition from other retailers.
The situation is
in no way being assisted by the ever expanding chains of store.
Under EU law,
there is presumption that an organisation with a large market share is
dominant. The concerns with this are that quality of products and services will
slip and there is a risk of paying higher prices.
Tesco to date
has not been assessed as posing a risk of exploitation but should bear this in
mind.
Social
This involves
lifestyle trends, demographics consumer attitudes and opinions, consumer buying
patterns major events and influences buying access and trends in the case of Tesco
considerations such as the increase in immigration of Eastern Europeans or
increase in young professionals.
Naturally there
is therefore a demand for new goods for example; the career minded professional
who is a single person.
Technological
Technological
factors which have perhaps had the most impact on Tesco have been the growth in
the use of the internet. Internet has given new shape to new day shopping.
They have
capitalised on the use of online shopping forum Tesco direct and provide a
delivery service through their website at www.Tesco.com which has aided the
company to cater to a larger segment of people.
Tesco are also
instrumental as a retailer in supporting carbon reductions and have created a
£100 million Sustainable Technology Fund for this purpose.
SWOT Analysis
- Strength, Weakness, Threat and
Opportunities of Tesco
Strengths
One of the largest and renowned grocery
retailers.
Diversified into different countries with about
1 million workforces from different backgrounds.
Won several retail awards for keeping up their
standards and providing best retails services.
Continuously expanding with propositions of
opening several stores on an international level.
Use its own-brand products, including the
upmarket "Finest", mid-range Tesco brand and low-price
"Value".
Offer loyalty card schemes to customers.
Weaknesses
Due to the current economic conditions Tesco
may suffer from the rising cost of living and lower incomes available to the
public resulting in less demand for the non essential and mid to high priced
items.
Due to the ongoing recession Tesco’s
Finance profit levels were impacted through bad debt, credit card arrears and
household insurance claims. This could continue if the market doesn’t see
change soon.
Retained its position as a price leader
in UK markets.
Opportunities
The third largest global grocer which
indicates a level of buying power to ensure mainstream economies of scale.
Tesco Direct has been one of the recent achievements
which have been seen as one of the important tools in increasing the sales
margins.
The online and catalogue shopping will
grow the use of technology.
Tesco
mobile have grown ¼ million customers in 2008 and moved into profitable status
suggesting further growth and development within this technological area can be
developed.
Threats
Loss of employment and lower income
available will impact and strategic focus may need to change to lower priced
basic products with less focus on higher priced brands and luxury products
suggesting a change in pricing structure due to the recession.
Rising raw material costs from both food
and non food will impact profit margins.
Has always feared the threat of takeover
from the market leader Wal-Mart who has both means and motive to pursue such
action. With its alliance with ASDA in the UK they are one of the nearest
competitors.
Growth Strategies and the future plans for Tesco
To be the most
successful international retailer.
Tesco has
products that will be suitable for different geographical areas, population or
age.
Tesco has a
well-established and consistent strategy for growth.
Tesco aim to be
as strong in non-food as in food.
Tesco emphasis
on providing value services and to earn life time loyalty.
Have close connections
with charitable organizations like cancer research, race for life etc.
The expansion of
Tesco relies on retaining existing customers and acquiring new ones.
Tesco's
structured approach to training and developing its existing and new employees
provides a strong foundation for its continuing growth.
