ASDA’s current form
Having so many stakeholders, Tesco admit that it’s hard to satisfy everybody, but given its reputation, it can’t fail with any one of these groups. There are aims that companies have to maintain peace between stakeholders as well as ensuring the highest profit possible. Shareholders own a proportion of a business. Although people own varying numbers of shares, shareholders expect to receive dividends. At the end of each financial year, they want some of the company’s profit on every share. Without shareholders it’d be hard for a company to function because cash flow would be poorer.
Within the company, a shareholder does little, with only major decisions being voted on by shareholders. The board carries out the daily running. Even if the company makes losses and can’t pay a dividend, shareholders are allowed a copy of the annual report, including financial documentation. Naturally, companies want to offer high dividends to maintain good relationships with shareholders. Employees are important assets to a company; employees require good relationships and wages. Different employees have responsibilities, which is why they have varying salaries. People recognise that skilled employees expect to receive more.
Nowadays companies try to motivate. Government has laws, leading to more secure workplaces. Employers must ensure that employees are safe which has resulted in increased training and an improvement in machinery and environment. Employees expect their job to be secure; however, it’s hard to prove that an employee isn’t to become jobless. To receive these benefits they must carry out specific tasks and naturally, these tasks are listed in contracts. Customers use a company in order to receive a desired product. Customers want the lowest price, their primary concern for using any company.
There is more emphasis on high customer service standards. In competitive markets, prices are similar, and companies must offer something a little bit more. If customers feel welcome and special, they are more likely to return. Other than paying, a customer has no responsibility to remain with a company, which is why its vital companies have the best value products paired with the optimum customer service. Creditors sell a product to a company, however are still owed money by the company. They must ensure that the product they offer is to the highest quality; the company must pay them the remainder of the given price.
A decision is agreed as to how much is paid, when payments are due and how much is to be paid in every instalment. If the creditor isn’t paid on time, they may be reluctant to offer the service again, if the situation becomes out of hand, the company may be unable to use creditors in the future. Suppliers, sell their product to a given company in exchange for economic gain. A decision on price is agreed by both parties, as is quantity. A Company expects suppliers to offer products at lower prices if they buy more than competitors. Naturally, suppliers must sell products of the highest quality.
If companies feel they aren’t receiving the best value for money, or if the product they buy doesn’t meet rigorously high standards the relationship is likely to cease. The community is a stakeholder of any company. In some instances a company may choose to aid charities, although nobody demands this it brings the community together. By making the company appear as a locally run business the community feels the company is more accessible to them and their needs. Companies can not damage the environment and a breach of this law will create bad press, a problem for other stakeholders.
Tesco PLC have these stakeholders, and with varying demands and constraints they have a difficult job ensuring t everybody is satisfied with the outcome of decisions. Naturally, the company’s shareholders demand high dividend and this year much anger was felt by many of the shareholders as it appeared more than i?? 200m was spent on reducing prices. Shareholders felt this was unacceptable as in the early part of the year shares fell to 90% of last year’s value. Reducing costs may have been a successful decision by the company, as it is meant customers felt that Tesco offered the best value for money.
This paid off as shareholders expect a final dividend of 6. 2p per share, up 10. 7% on last year. This increase may have come because of grievances of shareholders with the re-appointment of Terry Leary as COO. The operating profit margin has increased from 5. 13% to 5. 19%. The company may be wrong in increasing dividends on shares so dramatically and to invest the money would have been more successful. With little being invested back into the company the shareholders will see falls in the future with the imminent threat of Morrison’s takeover of Safeway and ASDA’s current form.
The only investment that has been made by the company over the past 12 months is a small number of Tesco express stores and a small Japanese takeover. In future, whilst competition is tough, more money should be invested in British stores to increase the market share. I predict it’ll be hard with competitors stealing customers to offer such high dividend, leading to problems as shareholders may leave the company. My personal recommendation to shareholders would be to keep their shares until the New Year though the re-appointment of Terry Leary would lead to great problems.