Free Tesco Penetration To Other Markets Report Example
Tesco is a British retailer of general merchandise and grocery that operates in many countries. Its headquarters is located in Cheshunt in England. The company was founded by Jack Cohen in 1919 in the London. The first own Brand was Tesco Tea in 1924. The first Tesco store was opened in Burnt Oak in 1929. The company has grown tremendously; it currently operates in 12 countries and has more than 530,000 employees on its payroll. It is estimated to serve approximately 75 million customers every week. Tesco currently operates in India, Turkey, Malaysia, Czech Republic, Ireland, Hungary, Slovakia, China, Poland, Thailand, South Korea and England.
Tesco reported a group profit 70.9 billion British pounds as the group sales and a group profit before tax of 2.3 billion British Pounds in the latest reported financial statements. This represents a 0.3 percent increase in group revenue and 6.9 percent reduction in its trading profit that resulted in a 7.3 reduction in diluted earnings per share. Tesco declared a 14.7 pence full year dividends.
Figures below show distributions of the group profit according to region in millions and the group revenue per region in billions.
Source: Own creation
Source: Own Creation
The largest group revenue is from the UK market with the smallest from Tesco Bank. However, Tesco Bank shows a relatively larger proportion of the total trading profit compared to the group revenues. This could be attributed to the fact that Tesco Bank has fewer operating expenses.
Source: Own Creation
UK has the highest number of stores at 3,378 followed by Asia which has 2,417 stores and lastly Europe which has 1,500 stores. The number of stores explains the distribution pattern of group revenue and consequently trading profits.
Source: Own Creation
The pie chart show the distribution of loyal card members in millions. Tesco launched its loyalty scheme in 1995 as a way of gathering market intelligence. Cardholders receive points for every purchase made which can later be translated into money-vouchers in some pre-determined method. Although not every shopper at Tesco owns a Tesco card, it is an estimator of the approximate number of loyal shoppers. From the group UK still lead with 16 million followed by Asia at 14 million and lastly Europe at 8 million.
Tesco has thirteen main subsidiaries; Tesco UK, Homeplus, Tesco Lotus, Tesco Malaysia, Tesco Bank, Tesco Czech Republic, Tesco in India, Tesco in Hungary, Tesco Ireland, Tesco Kipa, Tesco Slovakia, Tesco Poland, Tesco China and dunnhumby. Tesco subsidiaries are mostly country specific and manage the Tesco retail stores located in that country Tesco Lotus manages Tesco retail stores in Thailand whereas Homeplus manages Tesco stores in South Korea. . As discussed above, Tesco Bank provides financial services. Dunnhumby provides consumer market insight to Tesco suppliers. It analyses data of its clients in order to gain insight on consumer preferences and optimal prices. It addition, it provides product promotion services.
Tesco entered the market of most countries through acquisitions or joint ventures. In Turkey, Tesco acquired majority ownership in Kipa which is giant supermarket chain in Turkey. In Poland, Tesco purchased thirteen HIT hypermarkets and rebranded them as Tesco retail stores. Tesco made entry in Ireland through purchase of Crazy Price and Stewarts chains of stores from Associated British Foods. In Czech Republic Tesco made headway by acquiring K-Mart and rebranded their department stores that were trading under the name Maj. In Hungary, Tesco acquired twenty six of the well-known S-Market stores. The number of stores have increased to over 200 stores currently. In China, Tesco partnered with China Resource Enterprise forming a joint venture aimed at creating multi-format retailer. In Malaysia, Tesco used a different strategy. It built its own stores throughout the country. In India, Tesco made headway in the market by signing a franchise agreement with Trent Ltd that is owned by Tata group.
Product Development of Ansoff Matrix
Product Development of Ansoff Matrix was named after its developer Igor Ansoff. It is used by companies in planning their growth strategies. It relates products and markets which as viewed as new or current. In the current market current product the strategy is market penetration to attract more customers and increase revenue. Tesco has developed various products for its existing markets. Tesco has diversified its business over the years into other sectors. Its trading profits are generated from Tesco Superstores, Tesco Extra, Tesco Express, Tesco Metro, Onestop, Tesco Homeplus, Internet retailing. It has also diversified to other business lines including Tesco Bank, Petrol Stations, Telecoms, Dobbies Garden Centers and Tesco Family Dining Ltd. Tesco Bank is the product development that contributes the largest proportion to Tesco trading profit after retail trading profits. Tesco Bank is a branch of business that provides financial services. The financial services Tesco provides includes; mortgages, loans, saving account, credit cards and general insurance.
Government Factor of Yip´s Model
Tesco operates globally in 12 countries. Its operations and profits are likely to be influenced by government policies, legal environment tax structures as well as other government driven factors. In Asia Tesco benefits from cheap labor force as compared to the UK. The labor laws are not very stringent. However, the situation is changing. Minimum wages in these countries are rising. For example in China, the minimum wage was raised from 7.75 US dollars to 10 US dollars per hour. This is likely to negatively impact on the trading profit margins. The European Union allows free movement of goods, services and people. This has enabled Tesco to expand to the wider European market and minimized its expenditure on import duty payable on its goods sold in those countries. However, in Asian countries Tesco has to grapple with Import duty and excise duty. Laws on goods quality and contract have been harmonized in the European Union making it simpler for Tesco to comply.
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