Using suitable analytical tools, critically evaluate the current situation facing Tesco as they contemplate their entry in to the US food retail sector. Your discussion should draw attention also to any issues considered relevant for Tesco vis--vis the

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Case Study 3: America’s shoppers get selective

Case Study Three: “America’s shoppers get selective”

Questions

  • Using suitable analytical tools, critically evaluate the current situation facing Tesco as they contemplate their entry in to the US food retail sector. Your discussion should draw attention also to any issues considered relevant for Tesco vis-à-vis the marketing mix.

  • Your group are to act as the Marketing specialist engaged by Tesco. Therefore, using a suitable framework, recommend a course of action that would allow the firm to enter the US west coast next year whilst maintaining the integrity of its ‘Grab and go’ concept, also highlight any ethical issues relevant to your action plan.  

The macro environment

These consist of broad environmental issues that may influence a business. This includes for main topics of political/legal, economic, social/cultural and technology. This is known as a PEST analysis. These are all uncontrollable factors, therefore it is important that any organisation acknowledges this.

- The political and legal influences which may affect Tesco are EU laws. This would prevent them dominating a market and restricting them for expansion. However as the company is trying to break into the US market this will not apply. There are some issues to be considered such as tax laws. If taxes are higher in the US, then their price strategy would have to change and if a higher price is charged then they can afford, this will affect sales. The company will also have to look at government regulations such as employment law and conditions. Setting up a business in a different country would be difficult and through research will have to be done.

- Economic factors that Tesco face in the US are that the market is highly competitive. They have already got to compete with Wal-mart which is the biggest retailer of foods in the US, Publix and Winn-Dixie. However if Tesco establishes a unique-selling point (USP) from their competitors by selling fresh products and cheap and easy meals, then they will not struggle too much with competitors as they do not currently offer this.

- The organisation should carefully look at interest rates and the level of inflation. As these both can affect prices and may contradict Tesco’s approach towards their products being cheap.

- Demand in the U.S for organic foods has been growing at a positive rate and if Tesco focus on selling organic foods it will be beneficial.

- The social and cultural factors are that people in the U.S are looking for meals that can be easily made and relatively cheap. Tesco is offering this, however it must meet the needs of consumers by price and it cannot rise heavily.

- The land where tesco plans to open needs to be carefully thought out about. They should not demolish any sites which local resident protest about. Getting government planning permission may be difficult.

- The organisation will be creating many jobs for residents and this will have a positive effect.

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Technological factors - Tesco should expand on their web usage in America. Ordering online should become available. Market research should be carefully conducted on what U.S consumers would expect. Also self service machines could be implemented.

The Micro environment

This involves a firm’s internal environment that has a direct impact on a firm’s strategy. The customers that Tesco are targeting are those of a lower income who are looking to cook a quick and cheap meal. Tesco has suppliers which will be happy to move to the U.S. However there may be higher prices charged for this ...

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