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Tesco Case Study
Transcript of Tesco Case Study
Reasons why Tesco has outsourced production
They can get cheaper labour in LICs as the minimum wages are often lower
There are fewer work regulations and laws so Tesco can get away with extremely long working hours and exploitation (and possibly child labour as well)
Nearness to raw materials
Availability of cheap land for building factories
Absence of tight anti-pollution regulations
Tesco outsources supplies of foodstuffs, clothing and other goods directly from producers both in the UK and in LICs such as Thailand, India, Kenya, Sri Lanka and Bangladesh.
Tesco's Global Influence
Tesco globalised its chain of supermarkets.
The 1990s is when they opened stores in Eastern Europe (Hungary, Poland, theCzech Republic and Slovakia).
Tesco opened its first non-Europe stores in Taiwan and Thailand in 1998 and in South Korea in 1999.
They have also expanded into China, Japan and Malaysia.
Today, 60% of Tesco’s profits come from Asia.
A single grocery store in the East End of London 1919
Set up its first self- service supermarket 1956
1970s, 80s and 90s the company expanded become the largest food retailer in the UK
Now operate in 14 countries around the world
Employ over 500,000 people and serve tens of millions of customers every week
Are Tesco guilty of exploitation?
Claims that Tesco is planning to hire 3,000 permanent night shift workers using the JSA—(Job Seekers Allowance), mandatory work scheme in the UK.
Workers under 25 would earn £53.45 per week from the allowance and not a real salary.
Offers from a program – which gives training and a guaranteed job interview.
Combat youth unemployment, instead of exploiting.
Accused of using sweatshop workers in Bangladesh - made to work for 80 hours a week, bullied by bosses to lie about pay and conditions.
Workers earn less than half the minimum wage and work in risky conditions.
Workers make clothes for Primark, Asda and Tesco.
Primark and Asda promised to investigate the claims - immediate change if the claims were true.
Tesco instead insisted that all its Bangladeshi workers were paid above the national minimum wage.
India: Tesco does sourcing from India worth £230 million, 70% of which is clothing and apparel. They have also begun to source food from India as well.
Sri Lanka: Tesco's sourcing in Sri Lanka has increased from $19 million in 2001 to $102 million in 2005. Tesco's buying in Sri Lanka is mainly for the Cherokee clothing brand, buying for example buttons and zippers.
Hong Kong: Every day about 200 20ft containers full of clothing, TV sets, barbecues and shopping trolleys are shipped out of Hong Kong to Tesco stores around the world. More than 60% of all clothing and 40% of other non-food products sold in Tesco's UK stores, as well as most of the non-food items sold in other countries Tesco operates in are outsourced from its global sourcing office in Hong Kong.