Select your language

Suggested languages for you:
Log In Start studying!
StudySmarter - The all-in-one study app.
4.8 • +11k Ratings
More than 3 Million Downloads
Free

All-in-one learning app

  • Flashcards
  • NotesNotes
  • ExplanationsExplanations
  • Study Planner
  • Textbook solutions
Start studying

Tesco SWOT Analysis

Save Save
Print Print
Edit Edit
Sign up to use all features for free. Sign up now
X
Illustration You have already viewed an explanation Register now and access this and thousands of further explanations for free
Business Studies

Tesco was founded by Jack Cohen in 1919 in London, United Kingdom (UK). Currently, Tesco is one of the most well known British multinational grocery and merchandise retailers. This makes Tesco a market leader in the UK. Furthermore, the company's operations are not only limited to the UK. In fact, this retailer has grocery stores in 12 more countries around the world. This national and international success led Tesco to achieve the position of being the 17th largest revenue-earning retailer globally.

In terms of Tesco's products, the company offers its own-branded products and supplies and sells grocery items from other popular brands as well.

SWOT analysis

First, let's define each element of the SWOT analysis and understand how SWOT can assist Tesco in analyzing the company's strategic positioning and internal and external decision making.

Strengths

To analyse strengths, a company should examine what it does well, especially what makes business better than its competitors.

Examples of strengths include a strong brand image, a loyal customer base or the use of new technology.

Weaknesses

Organizations should pay a lot of attention to identifying what areas within their business are the weakest and require further improvements.

Common examples of weaknesses can be a weak brand image, lack of a loyal customer base, high level of business debt.

Opportunities

The company should identify potential external opportunities that could give the organization a competitive advantage.

An example of a business opportunity is expanding to another country where the cost of production is cheaper as this can help the company lower its costs of production and increase revenue.

Threats

Businesses should identify external factors that potentially can be harmful for the organization, as once identified certain actions could be taken to minimize the threats.

Examples of threats include new competitors entering the market or an increase in the costs of materials that the company uses for production.

To conduct an insightful SWOT analysis the main focus should be on real-life scenarios.

Tesco SWOT Analysis, SWOT analysis, StudySmarterSWOT Analysis, StudySmarter

SWOT analysis of Tesco

So far we have examined Tesco and its role in the market. Additionally, we have analyzed each element in SWOT analysis. These foundations will help us to conduct Tesco's SWOT analysis.

First, let's examine Tesco's strategic positioning using the internal elements of the SWOT analysis, which are strengths and weaknesses.

Strengths of Tesco

  • One of Tesco's biggest strengths is having the largest market share in the UK. According to Statista, Tesco's market share was at 27% in May 2021.

  • Tesco has the ability to increase its growth even during the pandemic. This surge in growth was mainly due to online sales. During the pandemic, in the three summer months, Tesco grew by 10.5% and this led to employing 16,000 additional people due to its expansions.

  • Tesco is highly adaptable, as has been shown during the pandemic. For example, Tesco quickly adapted to changes in people's habits during the pandemic and increased its delivery capacity to meet the increased demand for online shopping.

  • Tesco is able to adopt new technology to enhance people's shopping experiences. For example, Tesco implemented a new system of using radio-frequency identification (RFID) tags instead of standard barcodes, which allows Tesco to count the items automatically once they are scanned. This saves the effort of employees as stock is counted automatically and suppliers are informed of any additional items that need to be supplied.

  • Tesco holds the title as the largest private employer in Europe and it gives more than 500,000 job opportunities to people globally.

Weakness of Tesco

  • Tesco fails to adapt and operate in markets outside of Europe. For example, Tesco failed its operations in the Japanese and US markets. This was due to the failure of exports. As a result, in Japan, Tesco closed after nine years and in the US after five years.

  • Tesco has been involved in major food safety and quality issues in the past. These events had a negative impact on brand image.

    For example, the 'horsemeat scandal' occurred when Tesco included some horse meat into products that were being sold as beef without informing consumers.

    This has affected the company's image and its sales. To be exact, Tesco's market value fell by £ 300 million.

    Another example, in regards to food scandals, is when Tesco had to pay a £ 175,000 fine for placing products that were more than 15 days past their expiry date on shelves.

Opportunities of Tesco

  • Opportunities in the external analysis will assist Tesco in making a decision about how the company can take advantage of the surrounding environment.

  • Tesco has an opportunity to continue to increase its investments, especially in regard to online shopping. Due to COVID-19, many people have a preference to do grocery shopping online rather than in physical stores.

  • Tesco could take an opportunity in regards to increase youth employment rates. Tesco holds the title of the biggest employer in Europe. Especially during the pandemic, Tesco was one of the few employers that increased its staff capacity. Tesco could take advantage of unemployment and invest more in expansions and the hiring of more staff that can assist the company to grow and optimize its services.

  • Growing its plant-based products rage. Tesco should take advantage of the growing market in regards to meat alternatives, and invest more to produce plant-based products.

Threats of Tesco

  • Threats are the external environment factors that may be disadvantageous to the business. For Tesco, threats are important to analyze and to be aware of, as they may lead to decisions that help prevent the identified threats from occurring.

  • New post-Brexit rules can result in negative effects on the supply chain meaning shortages in stock for certain products may occur.

  • Competition, especially from companies like Asda, which was acquired by the US mega-retailer Walmart. This event may raise certain threats for Tesco, such as losing market share to Asda.

  • Government regulations can be one of the biggest threats to Tesco. These may include increased taxation and other legal requirements or regulations on certain products or advertising.

  • The prices for necessities such as food are constantly rising. This can be a threat to Tesco as due to increased prices people may reduce their spending levels which may have an impact on Tesco's revenues.

Tesco market analysis

In addition to SWOT analysis, it is important for businesses to conduct market analyzes to understand the market that their business is operating in, in more depth. In regards to Tesco, market analysis will allow Tesco to fully understand its market and see the company's position among competitors. Additionally, market analysis can help Tesco to identify further internal or external elements that can be included as part of the SWOT analysis.

Market analysis in this section will be concentrated in regards to Tesco's operations in the UK.

The fundamentals that Tesco needs to take into consideration when conducting market analysis are listed here:

The market size, (sales value and sold volume): according to Statista in 2020 the value of the grocery retail market was worth 205 billion GBP and supermarkets were in the lead with a market value worth 90.2 billion GBP.

The PESTLE analysis - These include:

  • Political - tax, financial stability, changes in legislations
  • Economic - economic growth, rates of employment
  • Social - demographic influences, lifestyle factors
  • Technological - technology innovations
  • Legal employment laws, regulations
  • Environmental - laws in regards to regulations of pollution, customers attitudes

Check out our explanation on the external environment for more insight into the PESTLE analysis.

Competitors and the share that they have in the market: the biggest Tesco competitor supermarkets in the UK are Sainsbury's, Asda and Morrisons.

Customer loyalty in the market: according to Statista, half of the customers in the UK are neither loyal nor disloyal to grocery retailers. Therefore, there is no clear loyalty to providers in this market. However, other providers including Tesco are aiming to increase customers' loyalty by offering various loyalty programs.

For example, Tesco offers a loyalty membership card known as 'Tesco's club card'.

Market segmentation: grocery retail market consumers can be segmented based on different factors, including Geographics, Demographics, Psychographics and Behavioral.

To explore this concept in more detail take a look at our explanation on Segmentation.

Consumer's decision making within the market: using market research, Tesco can analyze what process is involved in consumers' buying journey that leads to making a transaction of Tesco's products. This can assist in making effective strategies that optimize a consumers' buying journey.

Overview of Tesco SWOT analysis

Overall, the Tesco SWOT analysis that we have explored in this case study examined Tesco's current positioning in terms of the business's strengths and weaknesses. We have also outlined the company's external environment which includes the opportunities and threats that the company can either take advantage of or be cautious of.

Tesco's key strengths include being a UK grocery retail market leader, being highly adaptable and innovative. The biggest weakness of Tesco is adapting to markets outside of Europe and being involved in various food scandals. The key takeaways in regards to the internal analysis are that Tesco should continue working on its strengths to further increase customer loyalty. On the other hand, to turn weaknesses into strengths, Tesco must conduct sufficient market research before entering new markets and pay attention to food quality to avoid instances, such as food quality scandals, from occurring.

Additionally, the external environment and factors are crucial for analysis by Tesco as they can help the company see what next steps can be taken to take advantage of opportunities. On the other hand, analyzing threats assists Tesco in knowing what they should be cautious about.

Tesco SWOT Analysis - Key takeaways

  • Tesco is the biggest grocery and merchandise retailer in the UK.
  • SWOT is aimed at analyzing the company's strategic positioning as well as assisting businesses in making decisions.

  • SWOT analysis includes four elements which are; Internal: Strengths and weaknesses. External: Opportunities and threats.

  • The key Tesco strengths are: having the largest market share, ability to increase its growth even during events such as the Coronavirus pandemic, high adaptability to the constantly changing environment, innovation especially in regards to new technology and being the largest employer in Europe.

  • The key Tesco weaknesses are: failure to adapt to markets outside of Europe, being involved in scandals regarding food safety and quality.

  • The key opportunities for Tesco are: investing in optimizing consumers' experience of online shopping, increasing youth employment rates, investing in expanding the range of plant-based products.

  • The key threats for Tesco are: post-Brexit rules, other government regulations, competition and inflation of prices for necessities.

  • In addition to SWOT analysis, market analysis will allow Tesco to fully understand its market and see the company's positioning among the competitors.


Reference List:

1. National Retail Federation, Top 50 Global Retailers , 2021.

2. Andrea Blázquez, Market share of grocery stores in Great Britain from January 2017 to May 2021, 2021.

3. Statista, Consumers' level of loyalty towards the supermarket they currently shop at in the United Kingdom (UK) in 2014, 2014.

4. Sarah Butler, Tesco gives permanent jobs to 16,000 staff taken on in Covid crisis, 2020

5. Nick Fletcher, Horse meat scandal wipes £ 300m off Tesco's market value , 2013.

6. Nicole Vassell, Tesco fined £ 175,000 for out-of-date baguettes and two-week-old yoghurts, 2020

7. Andrea Blázquez, Market value of grocery retail in the United Kingdom (UK) in 2020 with a forecast for 2022, by channel, 2021

8. Adrian Holliday, Tesco Europe's biggest private employer, 2011

Tesco SWOT Analysis

Tesco uses SWOT analysis for analysing its strategic positioning and for making decisions while considering the external environment. 

Tesco's main weaknesses are:

  • Failure to adapt to markets outside of Europe, 
  • Being involved in scandals regarding food safety and quality.

The main strengths that Tesco has are:

  • Having the largest grocery market share in the UK

  • The ability to increase its growth even during events such as the Coronavirus pandemic, 

  • High adaptability to the constantly changing environment, 

  • Innovation especially in regards to new technology,

  • Holding the largest employer's title in Europe. 

Currently, challenges that Tesco is facing are:

  • Post-Brexit rules, 

  • Competition

  • Government’s regulations

  • Price inflation of necessities 

Tesco maintains a competitive advantage by being responsive to a fast-changing environment, investing in new technology and being able to employ many people across Europe which leads Tesco to have the largest grocery market share in the UK.

Final Tesco SWOT Analysis Quiz

Question

Where and when was Tesco founded?

Show answer

Answer

Tesco was founded in London, the United Kingdom in 1919.

Show question

Question

Who is the founder of Tesco?

Show answer

Answer

 Tesco’s founder is Jack Cohen. 

Show question

Question

What type of market does Tesco belong in?

Show answer

Answer

Tesco belongs to the grocery and merchandise retailer market. 

Show question

Question

Is it true that Tesco only sells its own brand products?


Show answer

Answer

No, as well as selling its own brand products Tesco also supplies and sells other popular grocery item brands.

Show question

Question

Why do businesses use SWOT analysis?


Show answer

Answer

 Business uses SWOT analysis to analyse their strategic positioning in terms of strengths and weaknesses. Additionally, it assists companies in decision making with consideration of external factors and the environment, in terms of opportunities and threats.

Show question

Question

What are the key elements that are included in SWOT analysis?

Show answer

Answer

There are four key elements that are included in the SWOT analysis. They are strengths, weaknesses, opportunities and threats. 

Show question

Question

Regarding SWOT analysis, what elements are used for internal analysis and which ones are used for external analysis?


Show answer

Answer

For internal analysis: Strengths and weaknesses

For external analysis: Opportunities and threats

Show question

Question

 What is meant by threats?


Show answer

Answer

Threats are external factors that can potentially be harmful to the organisation. 

Show question

Question

What are the key Tesco’s strengths?


Show answer

Answer

The key Tesco’s strengths are:

  • Having the largest market share in the UK
  • The ability to increase its growth even during events such as the Coronavirus pandemic, 
  • High adaptability to the constantly changing environment, 
  • Innovation especially in regards to new technology,
  • Holding the largest employer’s title in Europe. 


Show question

Question

What are the key Tesco’s weaknesses?

Show answer

Answer

The key Tesco’s weaknesses are:

  • Failure to adapt to markets outside of Europe, 
  • Being involved in scandals regarding food safety and quality.

Show question

Question

What are the key Tesco’s opportunities?

Show answer

Answer

The key Tesco’s opportunities include:

  • Investing in optimising consumers’ experience of online shopping,
  • Increasing youth employment rates, 
  • Investing in expanding the range of plant-based products.

Show question

Question

What are the main Tesco’s threats?

Show answer

Answer

The main Tesco’s threats include:

  • Post-Brexit rules
  • Competition
  • Government’s regulations
  • Price inflation of necessities 

Show question

Question

Why SWOT analysis is an important part of Tesco’s strategic analysis and decision-making process?

Show answer

Answer

SWOT analysis is an important part of Tesco’s strategic analysis as it assists in identifying the business’s strategic positioning and making decisions with consideration of external factors and the environment.

Show question

Question

What is meant by market analysis?

Show answer

Answer

 Market analyses are used by businesses to get a sophisticated understanding of the market that they are operating in and identify the competition in the market. 

Show question

Question

Why is it important for Tesco to conduct market analysis?


Show answer

Answer

 It is important for Tesco to conduct market analysis as it will allow Tesco to fully understand its market and see the company’s positioning among the competitors.

Show question

Question

What are the key elements that market analysis is made of?


Show answer

Answer

The market analysis is made upon the following elements:

  • Market size
  • PESTLE analysis
  • Competitors
  • Consumer loyalty in the market
  • Market segmentation
  • Consumer decision making within the market

Show question

Question

What does a company analyse, to analyse its strengths?

Show answer

Answer

To analyse strengths, a company should examine what it does well, especially what makes business better than its competitors.  

Show question

Question

Which areas of the business does the Weakness element of the SWOT analysis draw attention to?

Show answer

Answer

It draws attention to the areas that require further improvements and are currently performing weakly.

Show question

Question

Potential external opportunities that could give the organization a competitive advantage are observed as a part of the ____________ element of SWOT analysis


Show answer

Answer

opportunity

Show question

Question

Identifying external factors that can be potentially harmful to the organisation is done is the process of identifying _______in the SWOT analysis.

Show answer

Answer

threats

Show question

Question

How was TESCO able to increase its growth even during the pandemic?

Show answer

Answer

This was achieved by the use of online stores.

Show question

Question

Give an example showing TESCO's adaptability.

Show answer

Answer

Tesco quickly adapted to changes in people's habits during the pandemic and increased its delivery capacity to meet the increased demand for online shopping. 

Show question

Question

How did the use of RFID tags help TESCO?

Show answer

Answer

This saves the effort of employees as stock is counted automatically and suppliers are informed of any additional items that need to be supplied. 

Show question

Question

TESCO failed in the Japanese and the American markets due to the failure of exports.

Show answer

Answer

True

Show question

Question

TESCO's involvement in food safety and quality issues is one of its major weaknesses.

Show answer

Answer

True

Show question

Question

TESCO is one of the biggest employer in Europe.

Show answer

Answer

True

Show question

Question

Plant-based products range is an unexplored opportunity for TESCO.

Show answer

Answer

True

Show question

Question

Brexit did not affect TESCO as it is a multinational enterprise. 

Show answer

Answer

False. It can affect the supply chain processes.

Show question

Question

Expand PESTLE.

Show answer

Answer

Political, Economic, Social, Technological, Legal, Environmental

Show question

Question

Name TESCO's competitors.

Show answer

Answer

Sainsbury's, Asda and Morrisons.

Show question

Question

Is TESCO taking steps to increase customer loyalty?

Show answer

Answer

Yes. Tesco is aiming to increase customers' loyalty by offering various loyalty programs.  

Show question

60%

of the users don't pass the Tesco SWOT Analysis quiz! Will you pass the quiz?

Start Quiz

Discover the right content for your subjects

No need to cheat if you have everything you need to succeed! Packed into one app!

Study Plan

Be perfectly prepared on time with an individual plan.

Quizzes

Test your knowledge with gamified quizzes.

Flashcards

Create and find flashcards in record time.

Notes

Create beautiful notes faster than ever before.

Study Sets

Have all your study materials in one place.

Documents

Upload unlimited documents and save them online.

Study Analytics

Identify your study strength and weaknesses.

Weekly Goals

Set individual study goals and earn points reaching them.

Smart Reminders

Stop procrastinating with our study reminders.

Rewards

Earn points, unlock badges and level up while studying.

Magic Marker

Create flashcards in notes completely automatically.

Smart Formatting

Create the most beautiful study materials using our templates.

Sign up to highlight and take notes. It’s 100% free.