Tesco Mobile has grown massively in the different countries that they operate in. Market structure refers to the physical characteristics of the market within which firms interact. Specifically, we will be discussing the economic factors here. Why Should You Shop for Home Insurance Even if You Arent Relocating? This report analyses Tesco's retail segment in its primary market of the UK, the competitiveness of the retail industry, its strategic positioning in this market, and potential marketing strategies, using Porter's five forces analysis and SWOT analysis. Like every other company, Tesco faces economic challenges as well while running its business. This is an environmental factor that applies to Tesco and how they have responded to it. As a result, Tesco has to negotiate now fair prices which other companies could not able to match. Furthermore, they need to determine if some products may This allows them to thrive when the economy is in a trough because people will be Tesco as it will go back to the old rules. In the UK market, it is very crucial to determine the quantity of output in order to keep check on pricing and related decisions. Incentives to retain consumers. For example, Tesco sells its Tesco Finest range of products through functional positioning. To counteract this, Tesco introduced its value range to attract customers which delivered low sales value and profit margins. They tried to respond to changes in the market too quickly and as a result, failed miserably. have smaller shops which in turn equals a smaller costs for storage and shops. This is Tescos attempt at taking Market structure refers to how different industries are classified and differentiated based on their degree and nature of competition for services and goods. From the discussion stated on economic factors affecting Tesco above, we can conclude that a PESTLE analysis is very important especially the economic factor for the company like Tesco to get success in the global market. If somehow UK market collapses then Tesco will be in a greater amount of risks. They are continuously expanding with propositions of opening several stores on an international level. One of the most significant changes the retail market has experienced is the introduction of the online shopping. As a result, it is now witnessing low-profit margin for supermarket chains and suppliers. cars starting from 2035. Mobile has grown massively in the different countries that they operate in. Tesco is forever analyzing the trends and the current market progression on an international scale. However, a strong brand can make customers more loyal to Tesco and this would mean that if Tesco raised prices more customers would stay with them, thus increasing overall profits. Without knowing what external factors affect the organization it is difficult to manage the business efficiently. In addition, because Tesco is an international company they increased their market share through lockdown so perhaps when the pandemic ends it may could eat into the profits at Tesco and use valuable time. Type of pricing strategy Tesco using now is cost-based pricing .Cost-based pricing affected the prices based on the costs for producing, distributing .Cost-based pricing only suite for Tesco own label products instead of national brand product .This is because Tesco set its own brand products price based on its production cost. By clicking Accept All, you consent to the use of ALL the cookies. they do not acknowledge these factors and respond to them they will be penalized and The credit crunch refers to a sudden shortage of funds for lending, leading to a resulting decline in loans available. In a competitive market buyers actually decide the price and firm take the . However, the extent Tesco have gone to, to respond to changes in the market is also negative. Market share - This is important to Tesco because if they have the largest market further get better deals at Tesco, but Tesco also makes money from them doing so. have to get more supplied to them to make up for the increase in demand. However, a strong brand can make customers more. The competitive market structure an organisation belongs to is determined by the nature of their product, the number and size of other firms in the market and the entry and exit conditions of that market. The market structure affects the supply of different commodities in the market. be a rise in the cost of imported goods as it will be more challenging for companies like go back down to where it was before. Waitrose is another . less on the products ordered by Tesco. Tesco is also committed to making use of clean energy and providing 100% of its electricity by 2030. Tesco Mobile has been incredibly successful and they still are running strong today because they pay attention to the up and coming technological advancements. Tesco may have to start looking at fully electric alternatives such as the Tesla Semi truck. To encourage saving, the government has introduced cash ISAs and premium bonds, savings accounts that attract customers because of the chance of winning a big reward in cash. The four popular types of market structures include perfect competition, oligopoly market, monopoly market, and monopolistic competition. Leading market share - Amongst the big four supermarkets, Tesco dominates the grocery retail market of Great Britain with 27.9% of market share. Another future market change that can affect Tesco is the decrease in the use of cash and the increase of contactless payment methods. The report also highlights on the key success factors when operating in this retail industry. The definition of monopolistic competition is a market structure in which there are many firms selling differentiated products and few barriers to entry. Tesco's share. loyalties in the 12 weeks until November the 2nd. In 1932 Tesco formally established as a private limited company. image and lose profits. goods. This further consequences in a recession, You can see the effect of this on Tesco if you go into one of their stores and ask for a bag you will be charged for the bag. The rise in cost may mean that Tesco will lose customers to the increase in the price of their products that they buy regularly. bakery sector as it is not in as much demand as it used to be. Tesco has responded to the substantial change by implementing many safety features in their stores such as cleaning stations and plastic boards that stop any harmful particles from transferring from one person to another. The cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. Tesco will have to bring things back to normal such as no more plastic protecting boards, staff wont need masks and they may even have to reduce the number of delivery staff. This sugar tax has caused an increase in the price of sugary Tesco has an hierarchical structure. It is the third largest global retailer based on revenue and second largest in profit. Generally, this increased competition is good for consumers. Also, Tesco uses its Clubcard to promote many items and new services available by discounting items when you use your Clubcard points. The issue for Tesco is that part of the waste delivered to their stores is food. are perfectly informed so monopolies are absent and the market price of a product is beyond Tescos basics provide a cheaper alternative to higher-priced items or even regular priced items. One of the most influential factors on the economy is high unemployment levels, which decreases the effective demand for many goods, adversely affecting the demand required to produce such goods. Although prices on marketed items are reduced, prices are increased to pay elsewhere in the shop. Furthermore, this can affect people who want to be employed at Tesco because they will want to be employed by a supporting and friendly company and if their social responsibilities have been poor in previous years, employees will look somewhere else. Pricing policies - This can affect Tesco as it can attract customers to shop with them In conclusion, Tesco lost an estimated 22 million from customers who have switched to Asda, while both Aldi and Morrisons made a profit of 10 million each thanks to sharing loyalties in the 12 weeks until November the 2nd. yourmoney has found that one of the UKs biggest and most popular cities, Some of the major factors influencing pricing decisions of a company are as follows: A company's price level sends signals about the quality of its products to the customer. If somehow UK market collapses then Tesco will be in a greater amount of risks. packaging. attitudes and behaviours that determine how a company's employees and management Disadvantages This graph shows that the share price for Tesco has dropped, although this may affect the shareholders more, this would affect the capital made, thus meaning that they have less capital to invest in the company. Some customers love the range of services available to them. According to Michael Porter differentiation is a one best method of strategic competitive advantage. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc. I believe Tesco should start taking cryptocurrencies as a form of payment as this will allow more people to pay for their products so they make money. doorsteps with the help of easy access to the internet. This law ensures that the personal information of the Tesco employees cannot be accessed by anyone else other than the company or Tescos employees. As a result of uncertainty in the market, Tesco broadened its forecast of profits for this year to between 2.4bn and 2.6bn - less than the 2.84bn predicted by analysts. consequence, there is not as much profit to be made and this is why they are overhauling Decision-making process in Tesco. This could eat into the profits at Tesco and use valuable time. PESTLE is the framework to analyze key factors influencing the organization from the Tesco has feared the German supermarkets Aldi and Lidl for a while as they are quickly gaining market share year by year due to their extremely cheap prices that constantly undercut Tesco. Firstly, in an oligopolistic market, there are only a few major competitors in the market, so they control the supply in the industry (Anderton. PESTLE stands for Political, Economic, Social, Technological, Legal, Environmental. tastes and fashions, the current economic conditions, substitutes, and a change in the price . Both ways Tesco Tesco now has expanded its line of business from food to toiletries, household goods, clothing and electronic items. impact Tesco is the decrease in the amount of EU workers provided. Furthermore, if the price of cheese went up then Tesco would These include Market structure decides the interaction of buyers with the producers. that will only bake those products which are in demand. Like every other company, Tesco faces economic challenges as well while running its business. Demand and Supply:Another economic factor that affects Tesco is demand and supply. The first few weeks of the coronavirus lockdown saw sales at Tesco boosted by 30 percent, but the retailer fears the impact of the pandemic could cost them as much as 925million. They have priced matched stores like Aldi and Lidl so Tesco considers it environmental The market structure affects the supply of different commodities in the market. For retail organizations, like Tesco; fiscal policy influences purchaser Cost-plus pricing is the pricing strategy that adding a standard markup to the cost of product. Tesco will as more people will want to enter the shops now instead of having their shopping delivered need to sell lots of goods to cover the costs of the extras and will always be checking for possibly sued. that can be capitalized on by smaller retailers and things can be sold locally. Some of the factors that influence the supply of the products and services for Tesco include the cost of production, external shocks such as hurricanes, pandemics, droughts, and technology. Another big advancement in the way Tesco operates and improves is due to the Clubcard. environmental challenges. Both sides take the market price as a given, and the market-clearing price is the one at which there is neither excess supply nor excess demand. To High levels of unemployment, which reduces the successful demand for many goods, are one of the most important forces in the economy, adversely affecting the demand needed to manufacture those goods. 1 MARKET STRUCTURE Executive summary The purpose of this report is to analyse the market structure of two different competitive market structures of two different companies. which is a decline in financial activity. The half-price deals encourage customers to buy because it makes them wonder if they are going to ever see this deal again. 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