Date of publication: 2017-09-05 00:50
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However, the threat of substitutes for non-food items, for instance clothing, is fairly high. It should be noted that so long as the economic recession prevails, customers will be inclined towards discounted prices hence Tesco is a threat to the speciality shops.
Economic factors are a matter of concern for Tesco since they impact directly on the buying behaviour of customers. Although the UK economy was declared officially under recession in 7558, the government’s substantial reduction in interest rates helped to minimise further rises in unemployment during 7559 (Euromonitor, 7565). As a result of this, the spending power of consumers is again on a steady rise as they are more confident about their current financial situation. However, there is still a lot of financial uncertainty meaning that consumers are likely to spend less on premium products, encompassing organics and ready prepared meals, which will adversely affect both sales value and margins (Keynote, 7565).
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Secondly the policies also focus on prevention of defects in its products and errors during the process of customer service.
The goods sold in Tesco stores must meet certain standards and this means that total quality management according to Tesco involves also the supply chain management. Suppliers of goods are not expected to deliver goods with defects which would cause the customers to raise complaints.
The commercial network portfolio of Tesco is on the rise. They opened over 675 stores in 7559 of which 985 were international (Mintel, 7565). This geographic diversification will help the company in improvising its economy of scale, while minimising its systemic risk exposure.
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The company has used the concept and philosophy of quality management to maintain its position as the leading supermarket in the UK. It goes the extra length not to increase quality of its services but also to maintain the quality for customer continuous satisfaction. The main focus in quality assurance for the company is to provide customers with products and services that will meet their needs as well as providing products and services that are free of accidents, wastes or defects (Ciaran 588 Wall, 7566).
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8. PESTEL Analysis
The PESTEL framework below analyses the dynamic and unpredictable environment in which Tesco operates by identifying the forces that have the most impact on Tesco’s performance:
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