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代写Marketing essay范文:Tesco case study

时间:2016-07-20 12:53来源:EssayPhD团队 作者:EssayPhD团队 点击:

代写Marketing essay范文:Tesco case study

PRESTCOM model是marketing专业中常用的分析模型,常见于各种case study中。
Tesco是英国零售业巨头之一,近年来却陷入困境。是电子商务的冲击还是竞争对手的低价策略?本文是由EssayPhD团队来之UCL的marketing大神的代写marketing essay范文。EssayPhD保证范文的原创性,请勿使用作其他用途。

Introduction

The purpose of this study is to examine the factors that affect Tesco’s business operation in a macro business context using PRESTCOM model. More specifically, the first part of this study identifies some problems that Tesco is currently facing and the second chapter investigates the influence of each factors of PRESTCOM model has on Tesco’s currently situation through a large number of literature reviews such as up to day news and journal etc.

Problems

In October, 2014, The Serious Fraud Office (SFO) had executed a financial crime investigation into an accounting practice at Tesco, who was one of the biggest retailers in the UK, and followed by another internal investigation of the misreported profits conducted by the accountancy firm Deloitte. It discovered that Tesco had overstated its profits for £263m, with £118m in the first half of 2014, and £70m in the 2013-2014 financial year and £75m before that (BBC News, 2014a). This profit overstatement had resulted in the worth of £2.2 billion loss for the value of the company’s stock market value (BBC News, 2014b). Four executive members of staff had been suspended during this accounting crisis, which included Carl Rogberg, the UK finance director and chairman Sir Richard Broadbent (Ruddick, 2014). Warren Buffett, the man who runs an investment fund Berkshire Hathaway, was the highest profile seller, and also announced that it was a huge mistake to invest in Tesco with 4.1% investment stake, which had cost him £465m in a year (Financial Times, 2014). The Financial Times expressed it as a storm cloud surrounding over the supermarket when its share price plunged and Guardian’s Nils Pratley also commented that any matters that related to such scandal would result in being toxic for a company’s reputation (McFarlane, 2014).

Problems always come in battalions rather than in single spies. By October 2015, Tesco’ profit had been continuing falling. For the first half of 2014-2015 financial year, the profit were £354m, with 55% reduced on the like-for-like period last year. The pre-tax profit was suffered a loss of £19m for the same period in 2014, and sales also shrunk for 1.1% for the business in the UK (BBC News, 2015a).

As a matter of fact, Tesco had appeared to lost its attraction to the customers and been suffering a continuous loss of profit even before this overstate announcement. BBC News (2014a)
pointed out that Tesco’s sales result was falling out faster than most of its competitors such as the discounter Aldi and Lidl, as well as the high-end market rival Waitrose. According to the research firm Kantar Worldpanel, Tesco had witnessed its sales falling by 3.6% in the four months to October, and it also had decreased the market share to 28.8%, compared with 30.1% a year ago (BBC News, 2014b).

What went wrong? Next, this article is going to analyze the key factors to the reason of Tesco’s falling profit using PRESTCOM model.

PRESTCOM model analysis

Political factor

Tesco had been facing a massive of political burdens in the recent years. The Chief executive Dave Lewis made a speech at the Confederation of British Industry’s conference in 2015 regarding to the corporate tax and business rates that had been hitting Tesco’s profits. He claimed that Tesco’s profits and property values were continuing decreased, yet business rates were increased dramatically, with 35% risen in five years, and it is now 2.3 times the corporation tax bill and three times the OECD average (Collins, 2015).

As one of the Britain’s largest corporate tax payers, Mr Lewis also expressed the intention to have a closer negotiation with the government in regard of the retail industry’s policies and the change of business rates, the living wage and the apprentice levy etc (Ahmed, 2014). Retail industry are facing £14 billion of extra outgoings in the next five years, which business rates and the new national living wages are included (BBC News, 2015b). The pressure on the rising costs came at the expense of deflating food prices, which had hit Tesco and most of other big supermarkets’ profits.

It is noticeable that most company in the retail industry are struggling in gaining profits under this circumstance. The impact of industry’s policies on Tesco plays a vital part in its decreasing financial results. As Mr Lewis described that it was not worth in increasing the policy pay at the expense of other benefits (BBC News, 2015a).

Regulation factor

Regarding to Tesco 2014 accounting crisis, it happened as a result of accelerated recognition of commercial income and delayed accrual of costs, said by Dave Lewis, the Tesco chief executive (Ruddick, 2014). In other words, Tesco had been taking money from suppliers earlier than expected and extending payment dates without permission. However, Graham Ruddick, the editor of The Telegraph, suggested that Tesco was not the only one that conducted this practice, given that £263m accounted for its approximately a quarter of profits, it might have been widespread in the UK business (Ruddick, 2014).

This crisis is thought provoking and illustrated the woeful supervision of retailer supply chain regulations in the UK and the breach of the Groceries Supply Code of Practice (BBC News, 2014a). There is currently no regulation or set of rules in regard to the controlling of the relationship between retailers and suppliers in the UK. Lack of related regulation could have been a potential provocation for Tesco’s accounting scandal, and it is suggested for government to devote more attention into this related regulations (Ahmed, 2014).

Economic factor

In 2011, the retailer giant Tesco reported its weakest six-monthly UK sales results for 20 years under this particular economic environment (Tesco, 2011). Zoe Wood (2011) pointed out that this was mainly due to the increasing food and fuel costs which contributed to consumers’ cutting budget on non-food spending such as CDs, games and electronics etc in the stores. Tesco chief executive Philip Clarke also claimed that the retailer industry had been facing one of the most challenging market under the tough economic environment (Wood, 2011). He also added that the high prices were the major problems for customers’ reduced spending and it was discovered that consumers found it too difficult to deal with the tight budgets (The Guardian, 2011). As the largest non-food business supplier supermarket in the UK, this economic influence had partially led to Tesco’s falling sales deeply. 

Social factor

In recent year, the attitude of the people in the UK has been changing and devoted more consideration into diet and health. As a result, there is a massive increasing number of people who join fitness clubs and choose organic food rather than simply tasty food (The Guardian, 2009). Society’ concern had been grapping retailers’ attention and changed the operation and decision-making within the business environment. Some high-end supermarket such as Whole Foods Market, Waitrose and Marks & Spencer are able to offer organic foods to satisfy customers requirements (Smithers, 2009). However, other mainstream supermarkets such as Tesco and Sainsbury’s failed to provide enough organic food choices to meet customers’ constantly changing eating habits due to their own market position as cost-effective supermarket. This lack of reflection to customers’ changing lifestyle may result in losing market share and the demand for their products (The Guardian, 2009).

 

Technological factor

Technology is widely used as a competitive advantage for most companies and recognized as one of the most powerful weapons on strategic management (Cooper and Taylor, 2007). The retailer industry in the UK had been hit hard by the changing of consumer behavior over the past two decades (Thompson, 2014). Among of the changes, online shopping, as one of the most competitive technological changes, has required full attentions from the supermarkets as it can be one of the primary courses of their falling sales and profits (Gaelle, 2006). Consumer behavior had been changed due to the advantages of online shopping such as information symmetry, price comparison, convenience easier assessment to customer review (Boswell, 2011). Tesco was the first retailer to operate online shopping in 1996, and the Tesco. Com was formally introduced in 2000 (Gaelle, 2006). However, this e-shop channel has turned out to be highly competitive as most of supermarkets has open online shopping channels for their consumers, but stereotyped service and online pattern and the lack of technological innovation again test supermarkets’ ability to provide various online shopping experience. In reaction to the fierce competition, Tesco had tried to launch some automatic devices such as Hudl, Tesco’s own tablet, in order to influence how people shop online. However, the editor of Techradar had commented “The Hudl is a bit of a revelation, but only the price will wow you” (Mundy, 2014). Thus, Tesco has to continue to be alert to more technological innovation possibility to gain back more of the customers if it targets online shopping as a profit generation channel (Boswell, 2011).

Competitive factor

The rival of Britain’s retailer industry is not longer among the big four supermarkets, but also the competition of the price war, with the arrival of discounter Aldi and Lidl (BBC News, 2014a). According to the research firm Kantar Worldpanel, both discounters had been slowly but steadily eaten Tesco’s market share, from 30.2% to 28.8% (Ahmed, 2014). It was noticeable that the retailer industry in the UK had been in a position of over-supply. Decreasing like-for-like sales, declining profits and lower margins had became threatening issues for most of supermarkets. Kantar’s data also presented that the falling sales for Sainsbury’s was 3.1% and Morrison’s by 1.8%. and Tesco’s sales had fallen faster than any of its competitors with 3.6% in the 12 weeks to October (BBC News, 2014a).

In contrast, the discount retailers Aldi and Lidi had increased their market share, with the rise sales of 27.3% and 18.1% respectively, and the high-end rival Waitrose had also been seen a sharp increased sales of 6.8%. Interestingly, Asda was the first supermarket to decrease its prices ahead of its rival among the big four supermarkets, and was also the only one that catch a rise in sales of 1% (Ahmed, 2014).

Fraser Mackvitt, the head of Kantar’s retail and consumer insight, commented that the retailer industry in the UK was a clear and competitive polarization market, with both high-end and discount ends of the market obtaining unequal market shares, while mainstream of supermarkets struggled to survive in the middle (BBC News, 2014b).

Organizational factor

In 2015, Tesco’s criminal investigation is still under conduction by the Serious Fraud Office after its confession of overstatement with £263m profits. It is understandable that this accounting crisis had caused an enormous negatively impact on Tesco reputation and resulted in the continuous loss of its customers. BBC News (2015b) reported that customers appeared to take this scandal associating the brand Tesco with untruth. Tesco announced another big decreasing in profits as a partly result of its damaged brand name, and The Telegraph (2015) reported that Tesco’s like-for-like sales were decreased 1.1% for the UK and 55% down for the profits for the first six-monthly financial year.

Market factor

The retailer industry in the UK have been brought under the spotlight as most of its retailers are experiencing falling sales and profits (Thompson, 2014). Fraser Mackvitt, the head of Kantar’s retail and consumer insight, commented that retailer industry in the UK was fiercely competitive and the market had became polarized (BBC News, 2014a). Meanwhile, Kamal Ahmed, BBC News business editor, has pointed out that Tesco was facing a problem of market saturation that there were not many areas of UK that did not have a Tesco store (Ahmed, 2014). In other words, unlike other rivals such as Asda and Sainsbury’s which can gain more market share by simply invest more stores, Tesco is under a difficult market environment where the market is fiercely competitive and, as the same time, Tesco itself is suffering of a market saturation. Therefore, Tesco has to discover an innovative way in finding out an exit to a profitable door under this difficult market environment.

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