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Food Retail Business

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  • Unit No: N/A
  • Level: High school
  • Pages: 11 / Words 2669
  • Paper Type: Assignment
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Question :

This assessment will cover the following questions:

  • Describe about the Tesco company, its products/services and history in detail.
  • Tesco is the retail supermarket in UK.  Why do you think the Tesco company operates in one of the market structures i.e. oligopoly, monopoly? Discuss.
  • Discuss and analyse the characteristics of its previous market structure of the Tesco.
Answer :
Organization Selected : Tesco

Introduction

Retailers are those who sell their goods and products directly to their customers. Retailers get their products from direct manufacturers. Food retailers increase their profit by raising the prices of their products. Tesco is one of the leading companies in the UK and has a large number of supermarkets all over the UK. A large number of revenue for the government are generated by Tesco. In this project, we will prepare the history of Tesco on the overall working and effectiveness of their business. Overall market structure affects their business and helps them to expand at a large scale. It is a multinational company and is all over the world.

Company And Its Products/Services And History

Tesco is one of the leading companies providing grocery products to their customers. Tesco expands its business at a global level to increase the overall profitability of its business and to engage a large number of customers with its services(Heck and Raneri, 2019.). Their positive image in the minds of the customer helps them to increase the profitability of their business and make them one of the leading retail companies in their sector. After the success of their business, Tesco expanded their business in different sectors like clothing, electronics, petrol, software also provide financial services. Their low-cost product helps them to engage the customer more easily as compared to their competitors. The company was founded by Jack Cohen in 1919 and opened its first shop in 1931. In 2019 Tesco operates with 6,800 shops all over the world in different territories with 450,000 employees. Trying to innovate their services to engage more customers and provide them with quality services. Tesco has a large number of stores that provide grocery items. They also expand their business in Europe and Asia. The company also provide banking services to their customers in the UK. Their financial consultancies help customers make important decisions.

Tesco expanded their business in 1990 in Poland, and Hungary by opening new supermarkets. The company also acquire a retailer in the UK. Purchases hypermarkets to develop a presence of their business all over the world. Open new gasoline stations in the UK to bring variety in services. Tesco launched its online website where customers will buy grocery products. They also launch new food products in their supermarkets at low prices to engage more customers easily. They provide barcode services so that customers can easily scan and pay for items. The company's aim is to earn more profit for the overall development of business at a large scale. Customer loyalty to Tesco makes them successful and develops the overall value of their business. Due to diversity in their services helps them to expand their business in different sectors and help to engage more customers easily with their business.

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Market Where Tesco Operates Since Its Inception

Tesco started its business as a retail industry in Britain in the UK, When a company start working there are fewer competitors available in the market which helps them to expand their business at a large scale. UK market helps them in the development of their business at a large scale and maintain the overall effectiveness of their company(Wilde, Llobrera and Ver Ploeg, 2016.). The company become one of the biggest supermarkets in the UK. Britain's market helped Tesco to develop political stability in the UK helping the company to expand their services and develop them at a large scale. Due to changes in the growing market help to develop opportunities for Tesco. Tesco operates in different countries all over the world. Due to the expansion of their business to achieve goals and objectives. The retail market is developing day by day. When Tesco started its work retail sector was less organized and the company faced problems working effectively for they needed to work to achieve the goals and objectives of the organization. In recent times retail market has become more organised due to online facilities available for customers so that they are able to work effectively towards their success. Company need to maintain their working and innovate services according to organization. Tesco provide facilities for home delivery which helps their customers to develop their business at a large scale. Businesses are able to make effective use of all available resources to achieve the goals and objectives of the organization towards their success. The market of developing countries helps them to establish their business. Due prices of their products help them to get the attention of customers from every sector.

Oligopoly Market

UK grocery supermarket is largely managed by a few firms like Tesco, Sainsbury and ASDA. Each business their products at different prices to attract more customers towards their services(Li and Wang, 2017.). Development in UK market companies to expand over an extreme level. Tesco is one of the leading top companies in the U.K. in retail; sectors and after that Sainsbury and ASDA are giving tough competition to Tesco. In an oligopoly market, only a few firms are available to dominate each other. Also, they face competition with each other in fuel retailing, Sainsbury is one of the major competitors of Tesco. Companies are providing different coupons and price discounts to increase their market share with pricing competition. Companies develop facilities like online orders for customers. Tesco trying to develop product differentiation as compared to their competitors. Companies are providing different free services to their customers to engage them with organizations working. When Tesco start its business it is a monopoly market for their industry. In recent times due to an increase in competition with other firms market become an oligopoly. Tesco is working with 30% of the market share in the UK and other companies like Sainsbury ASDA are working with a 20% share other small retailers are also available in the market Like Aldi and Lidl. The oligopoly market structure shows that only a few suppliers are available in the market with competing each other and holds the majority market in the UK.

Monopoly Market

Monopoly market where only a single seller is available in the market. Companies in this market have full control over the supply of products. They set prices according to their requirement. There are no substitutes available in the market to compete. Other companies face barriers to entering the market due to the unique quality of items helping the company to expand(Jürgens, 2018.). When Tesco launch and started working they were a single seller in the market and no competition and close pricing were available. After expansion of the business of Sainsbury and ASDA, affected the working of Tesco and made them ineffective in achieving their goals and objectives. Their pricing and branding strategy help them to earn more market share as compared to their competitors. But due to development of different companies with the same products and services affects the overall development of Tesco. Due to the increase in choices, customer loyalty also decreases and makes organizations ineffective in the market. To earn an advantage and to develop a monopoly market for their business Tesco needs to reduce the prices of their products.

Company Operations In Different Market Structures in Its History.

Tesco is a leading company and operates in different markets to innovate its organisational services. When Tesco entered the in market 1919 there were no close competitors available in the market for Tesco. There is monopolistic competition in the market where the company is selling their products without any substitute and they have the power to make pricing decisions. At that time customers also have no option they are restricted to purchasing from Tesco. The company is able to expand and work according to the requirements of the business. The market helps firms to earn more revenue in the market and develop business at a large scale. In a monopolistic market, companies are free to set the prices for their items. In monopolistic competition, Tesco is able to increase the profitability of its business.

In the retail sector of the UK due to the development of new business organizations and expansion of their business, the market turns into an oligopoly which affects the profitability of every business organization. Sainsbury is a close competitor of Tesco and has a market share of 16% in the UK. Sainsbury tries to establish good relations with their customers to increase their loyalty(Wood, Coe and Wrigley, 2016.). ASDA is competing with Tesco on a large scale and has the ability to grab the number one spot in the retail industry. Their effective presence and pricing policies help them to sustain themselves in the market. Due to changes in the market, it affects the growth and development of business at a large scale. The company has a monopolistic market structure which helps them to develop at a large scale.

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Characteristics Of Market Structure

In this competition products of the company are differentiated work in different fields and are able to achieve their goals more easily.

Large Number Of Buyers And Sellers

In this Tesco is able to develop their business. Because a large number of buyers are available in the market and also buyers with substitute products can affect the growth of business of Tesco(Sparks, 2019.). Make them ineffective towards the achievement of their goals and objectives. Due to a large number of sellers like Sainsbury and ASDA, it affect the overall profitability of Tesco.

Free Entry And Exit

Companies are able to enter freely in the market as there is a large number of buyers and are able to work according to their requirements and improve the effectiveness of their services and their organization. Free entry into the market, also increases competition for Tesco.

Product Differentiation

Tesco develops unique items that help them gain an advantage in the market over their competitors and improve the efficiency of the business. It helps companies to reduce substitution for their product.

Non Price Competition

In this market, companies are competing on other factors as compared to price. Because every company is working on their own platforms it helps them to develop their business according to requirements and it helps them to develop business without concentrating on prices.

More Elastic Demand

Due to product differentiation each and every has a customer base that helps them to expand(Eichner, 2019.). Customer loyalty helps Tesco to achieve its goals more easily.

Nature Of Industry Where Firm Operates

The retail sector means business where a company sells directly to customers. The retail sector of the UK is expanding day by day due to expansion of leading industries like Tesco and Sainsbury helping the retail sector to achieve a higher level. Due to the development of online technology customers are able to shop easily and different options like home delivery to customers help businesses to expand. Due increase in consumer income and the development of purchasing power helped the retail sector as well as Tesco to grow their company at a leading level. The retail market helps in the development of the overall economy of the UK.

Operating In Different Market Structure Is More Suitable For Firm.

Tesco is working in an oligopoly market where few sellers are available in the market and competing with each other for the overall development of their business. In this market organizations like Sainsbury, Tesco, and ASDA are competing with each other for the development of business. This affects the overall growth of the business and requires to improvement of the overall abilities of the organization at an extreme level(Vives, 2018.). The quality of the product affects the growth of the business. Pricing competition is also increases in market to attract customers towards organization services. The selling cost of products affects the overall growth of businesses to innovate their business.

If Tesco is operating in a monopoly market then they are able to develop their business more effectively as compared to the oligopoly market. In this market, Tesco is a single seller of products that they are selling which helps them to reduce competition and develop their business at a large scale. In a monopoly market companies make effective use of available resources and achieve their goals more easily. As a single seller, Tesco is able to set prices for their products according to requirements and customers are bound to purchase products due to a single seller. No close substitutes are available in the market that effect the success of businesses and to innovation of their organization services. Due to less competition, Tesco is able to grow in that market and move towards its overall success. A monopoly market helps Tesco restrict other firms from entering their business with the help of a legal framework. Due to leading companies in the market demand for their products also increases. Tesco is able to control the overall supply of their product and able to negotiate with suppliers for a reduction in prices of raw materials. Tesco became a price maker in the market with the help of a monopoly.

Government Intervention In Tesco

The increase in taxes by the government affects the overall profitability of retail companies. The high amount of taxes reduces their overall profit and makes them ineffective in the market(Zeuthen, 2018.). Political stability in an economy helps Tesco to expand its business without any legal issues. Government control for mistreating suppliers by Tesco affects the growth and development of the business and needs to face legal matters. The increase in online sales tax affects their firm's advantage. Due to heavy interest rates by the government retail companies need to increase the prices of their products and services. Trade restrictions on some products reduce firm efficiency to expand. Rules and regulations against company policies affect the smooth working of business in a territory. Government intervention affects the overall performance of a firm and reduces its ability to expand at a large scale. Environmental laws and health regulations by the government need to be taken care of properly for the smooth working of Tesco.

Government influence affects business as well as society. Due to health regulations set by the government against retail companies people get healthy food products to develop quality life. An environment where society is living is good for people. The rights of workers and employees are secure and they get fair pay for their efforts in an organization. Governments are able to educate people about the pros and cons of using a product or service(Merhav, 2017.). Help to develop overall infrastructure for society to develop a standard of living. Strategic planning innovates organization services to improve their business at a large scale and work effectively towards overall development of business and require to make innovation in business. Political pressure on businesses and heavy taxes on their product increases prices of their product due to which people have to purchase products at high prices. Government intervention has both positive as well as negative impacts on the growth of society.

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Conclusion

In this report, we will prepare the overall effectiveness of their business. Companies provide retail and food products to their customers satisfy them with their quality services and engage them with business abilities. A monopolistic market helps Tesco to expand its abilities and improve the effectiveness of its services. Different competitors in the market affect the overall ability of Tesco to expand its business. Government have a huge impact on the smooth working of Tesco's business.

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