Tesco Swot Analysis Essay

Situational analysis involves scanning both internal environment and external environment where a firm operates in. It is crucial as it helps Tesco in determining factors in internal and external environment that can affect their business. To have a better understanding of Tesco, we have analysed it using SWOT analysis.
Following the Wal-Mart and Costco, Tesco has positioned themselves as third biggest chain of food retailers in the world. To offer better service experience, Tesco have adopted innovative business methods by operating in many formats such as Tesco Extra, Homeplus and Tesco express that are match to local needs. Tesco has a long-standing history and strong brand name in United Kingdom which gives them credibility and assurance

The decrease of consumers’ income and purchasing power have made consumers become more sensitive to prices, causing consumers refuse to pay higher prices and less likely to buy anything unless the items are on sale. As competitors becoming more promotion-driven, consumers tend to shift their attention to other food retailers that offer sale prices. Although Tesco have been a strong player in this sector for many years, now they face a variety of intense competition from their rivals such as Asda and Morrison who are gaining part of market share. Competitive threats are coming from Asda and Sainbury’s as they are offering lower prices and have more established supply chain networks to move products efficiently than Tesco because they are highly innovative and utilized advanced technology. Next, the stiff competition has caused other retailers to give a lot of incentives to their consumers, thus affecting Tesco as the prices frequently need to be driven down. Besides, bargaining power of consumers are high as there are availability of substitutes. If consumers are unsatisfied, they tend to switch to other brands as switching costs are