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Applying Business Functions in Context –BS1954A
Business Word Count - 1995
Functions in
Context
, An assessment of Tesco critically
considering how their eight business
functions contribute to their overall
aims and objectives
Abstract
Despite Tesco PLC’s international success as a supermarket, the company has also developed a
negative reputation for accounting and food retailing scandals. Their overall appearance has both
incited and eroded the trust of stakeholders, particularly customers. This study aims to offer an
insight into Tesco’s business practices and behaviour as one of the most influential multinational
organisations within its industry, and will identify and analyse the salient reasons for its success as
well as its current limitations. In this report, an investigation will be carried out into Tesco PLC’s
corporate strategy, the structure and governance of their organisation, and will explore a number of
their core business functions. From this a conclusion will be drawn detailing whether Tesco is in a
position to perform successfully at present, and continue to meet customer needs. Tesco’s future
within the grocery industry will have an effect on the sectors total growth. Tesco is one of many
businesses whose success may be largely impacted by fluctuations in the UK macro-environment. In
researching the influence Tesco’s macro and micro environment has on its performance, this report
will add to similar examinations into food retailing and business in the UK.
1|Page
Applying Business Functions in Context
Business Functions in Context – BS1954A
,Contents
Introduction……………………………………………………………………………………………………………………………………3
Figure 1 – SWOT Analysis……………………………………………………………………………………………4
Figure 2 – Porter’s 5 Forces…………………………………………………………………………………………7
Figure 3 – STEEPLE Analysis…………………………………………………………………………………………9
Tesco PLC’s Structure and Governance…………………………………………………………………………………………14
Business Functions……………………………………………………………………………………………………………………… 19
Tesco’s Current and Future Position……………………………………………………………………………………………23
References……………………………………………………………………………………………………………………………………24
2|Page
Applying Business Functions in Context
Business Functions in Context – BS1954A
, Introduction
Tesco PLC, headquartered in Hertfordshire, UK, is one of the biggest food and grocery retailers in
Great Britain (Market Line, 2017), as well as selling non-food products and services via Tesco Direct,
F&F clothing, Tesco Mobile and Tesco Bank (Tesco, 2017f). Jack Cohen founded the Tesco brand in
1919 when he started out selling army surplus food to his local community and gradually expanded
his business into a mass-market chain, which offered large amounts of produce at low prices
(Winterman, 2013). The now multinational company has approximately 510, 444 employees (Forbes,
2017) a 27.6% UK market share (Statista, 2018a), £55.92 billion revenue at the end of 2017 (Tesco
PLC, 2017e). This is due to the company’s superior use of a cost leadership strategy acting as an
advantage over both direct and indirect competitors (Winterman, 2013).
The grocery industry is an oligopoly, consisting of four key supermarkets; Tesco, Sainsburys, Asda
and Morrisons (Kantar WorldPanel, 2018). Firms are interdependent on one another, each rivals
activities posing an incentive for others to act in response to in order to attract their customers away
(Economics Online, 2018).
In this highly saturated market, brand image is crucial in order to remain successful. Tesco has faced
negative public attention on several recent occasions for example, the 2013 horse meat scandal,
which reduced Tesco’s market value by £300 million, creating a situation in which everyone
developed an undesirable interest in the company, including those who do not shop with Tesco .
Customers predominantly remain passive stakeholders until an incident occurs which concerns
them. Also, whilst the UK is facing high inflation rates as a result of Brexit, food prices have begun to
rise. This will affect Tesco’s ability to offer competitive prices to customers in comparison to discount
stores such as Aldi and Lidl (Dryburgh, 2014).
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Applying Business Functions in Context
Business Functions in Context – BS1954A
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