The SWOT Analysis Of Tesco

A tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, straightforward model that assesses what an organization can and cannot do as well as its potential opportunities and threats. The method of SWOT analysis is to take the information from an environmental analysis and separate it into internal (strengths and weaknesses) and external issues (opportunities and threats). Once this is completed, SWOT analysis determines what may assist the firm in accomplishing its objectives, and what obstacles must be overcome or minimized to achieve desired results.

Purposes of SWOT analysis:
A SWOT analysis is used to examine the strategic fit between the internal and external environments

A second strength is that it has a large number of loyal customers (Thompson et al., 2012). In addition, through the marketing and promotional policies alluded to above, it is clear that Tesco is continuing to widen its appeal to further sectors of the population.
The development of Tesco online is a third strength from which Tesco benefits, as noted by Ma, Ding and Hong (2010). That Tesco has a strong platform for the development of revenue through online shopping mechanisms and reflects changes in consumer attitudes to shopping – as Koen, Bertels and Elsum (2011) note, online buying is a substantial growth area. Finally, Tesco benefits from having a loyal staff who are proud to work for the firm (Rosethorn, 2009). As a consequence they work hard, represent the brand well and present a united and professional front that impresses customers.

In addition, it faces greater competition, especially from discount supermarkets such as Aldi and Lidl (Metzger, 2014). This is a pronounced concern for Tesco because, despite its portfolio diversification, it is still overly dependent upon its largest market, the UK (Stevenson, 2014). Given continued economic uncertainty within the UK and Europe (further exacerbated by concerns relating to Scottish separatism) it can be argued that the UK market is not as eco-politically stable as was hitherto the case (Ruddick, 2014). Though individual sector results have been strong, with profit warnings in the UK market it could be argued that Tesco has overly diversified and that as a result it has ‘taken its eye off the ball’ of its core business (Ruddick, 2014). This is clearly reflected in shareholder dissatisfaction, which can be key to investment sources (Stevenson, 2014).
Future Opportunities:
Tesco now operates in 12 countries outside the UK (Tesco, 2014); it has reconciled its non-profitable ventures, such as the Fresh & Easy group in the US and instead focussed on its Asian markets, as they offer a significant long-term profitability opportunity (Wood and McCarthy, 2014). In addition, Tesco’s entry into the mobile phone, digital entertainment, and finance sectors are growth areas within the global economy which offer Tesco vast profit possibilities (Wood and Gibbs, 2014).