Porters Five Forces Analysis of Tesco 2018

By: Jonathan Kush

Tesco has been the UK's most dominant supermarket for more than two decades and it is still the biggest supermarket in the UK. But all is not well for the giant food retailer. Since 2013, the company has posted declining UK sales. The food retailing giant has also been losing market share in the UK from a high of 30.9% in 2012 to the current 27.6% as of 2018. It has had to close loss making Tesco Direct, and is currently contending with a possible merger of Sainsburys and Asda (Sainsdas) which if successful will mean a more potent rival bigger than Tesco, further putting a squeeze on market share and Tesco margins in a competitive environment that is already characterized by price wars, high inflation and slow wage growth. Using Pestle, Swot and Porters Five Forces, this report examines the current macro environment and some of the most critical factors Tesco faces and how the industry structure is being changed by the emergence of Aldi and Lidl before an analysis of current strategies Tesco is applying to recover lost ground and how it can supplement them with new recommended strategies.

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