At the moment, there are two major weaknesses that might threat the further evolution of the company and limit its opportunities. First, TESCO is extremely depended on the UK and European market as in accordance with the statistics, the bigger part of income comes from these two strategic locations (Wood 2014). Additionally, the company does not recognise this threat and does not devote resources to the development of other markets in areas where it works. The possible solution to the problem is the introduction of the strategy emphasising the critical role of other locations as the potential source of new clients and the generation of additional income. Improvement of the infrastructure in other states might help TESCO to improve its positions.
Another weakness is related to the previous one. Existing retail formats fail to show outstanding effectiveness in some countries because of the lack of market research about clients’ preferences, their buying power, preferable options, and demands to products (Wood 2014). In such a way, the company experiences a decrease in incomes in areas that are potentially beneficial. The possible solution might include additional market research with the primary aim to determine the main source of the problem and eliminate it.
Altogether, TESCO remains a potent retailing company that holds leading positions in the international market. The company is recognised in many locations, and in the UK and Europe, it is taken as a leading seller of food and products of acceptable quality and price (TESCO 2018a). All these factors indicate that there is a potential for further improvement and development for the brand to become a leader and compete with other giant corporations.
The company is focused on selling groceries as the biggest part of its operations; however, there is also an increase in the provision of other consumer goods to broaden the target audience and generate additional revenue. The latest reports show that that given approach remains effective as TESCO was the largest retailer in the UK by sale with 27.4% of the market share of total grocers (TESCO 2018b). There are three major shareholders which are BlackRock (6,64%), Norges Bank (3.99%) and Schroders (4,99%) that hold the company’s shares (TESCO 2019). The improved relations with these actors are organised via direct annual meetings and online methods.
At the moment, TESCO experiences a certain growth in the operating profit margin if to compare to 2017 (TESCO n.d). It can be explained by the stable high number of sales and effective strategies. However, there is a significant financial risk because the margin remains considerably low. It means that there is a need for a certain intervention.
Finally, the company has some weaknesses, which are the dependence on the UK and European market and the ineffectiveness of the research resulting in some failures in other locations. Consideration of these problems and their solutions might help to align the stable functioning and growth of Tesco as many other factors show that the corporation has the potential to hold leading positions in the market.
Reference List
TESCO n.d., Five year report, Web.
TESCO 2018a, Annual report and financial statements 2018, Web.
TESCO 2018b, Strategic seport 2018, Web.
TESCO 2019,Notice of annual general meeting 2019, Web.
Wood, Z 2014, ‘Five problems for Tesco’s new boss to deal with’, The Guardian, Web.