Report on Tesco plc
When Sir jack Cohen first started out in 1919 he began as a sole trader and was selling groceries in London’s markets. The brand name Tesco didn’t appear until the 1920’s. Over the years Jack Cohen’s business grew and become a partnership. There are many advantages of this one being that more funds are available and also you can share the responsibility of the business. This can be an advantage to some people and in Jack Cohen’s case it was a good idea to go into partnership because he just kept expanding his business and has come very far in life.
To start as a sole trader and now become Europe’s biggest food retailer. A disadvantage of being a sole trader is that you have unlimited liability over your business and could find it difficult to obtain additional funds, also you have all the work to do and it might get too much. A disadvantage of being a partnership is that you still have unlimited liability and capital may be restricted. Where as an advantage of been a sole trader is that it is your business so you are your own boss, also you get to keep all the profits.
1. 2 How Tesco started its chain Tesco opened its first store to the public in the late 20’s at Edgware. By the early 30’s they opened a self-service supermarket in the USA. The name Tesco came from a partner in tea supplies, which was based on the initials T. E. Stockwell. They started selling a bigger range of stock and buying in bulk, which meant that they could promote low prices. By now Tesco were been recognised and in 1947 they were quoted on the stock exchange with share prices at 25p.
This was when Tesco became a plc, which meant that there were more funds available and the partners of the company might specialise in certain aspects of the business. A disadvantage to the company of being a public limited company is that they will have a lot of paperwork to do and also plc’s can often be seen as remote from their customers. Tesco also must produce a memorandum of association this is a document that gives you an insight into what the company is and what it is concerned with.
There is also something called articles of association this is something that sets out the rule that govern what goes on inside the company. Although is not a franchise if they were this might be an advantage because they could benefit, as they are able to expand their business with limited finance also franchisers are able to keep any remaining profits. If Tesco was a franchise this might be a disadvantage because they are often restricted to a specific site and for a specified time.
Even though Tesco is a plc now it started as a private company the advantages of this are they have limited liability and it is easier to borrow money. On the other hand a disadvantage would be that you cannot sell shares to the public and may only have one director to handle everything. As Tesco began to expand again they brought about selling clothes, household things and fresh food. With the demand for more space to store all the stock they opened a store at Leicester and measured 16,500 feet in 1961, which hit the Guinness book of records.
In 1960 Tesco took over a chain of North East stores and then added another 144 stores in 1964 and 1965. By now Tesco were looking to expand even further and came up with the idea of superstores and in 1985 they opened the 100th. They also brought a store called Tesco metro 1992 this was to cater for shopping centres. 1. 3 Tesco organic range In 2001 they decided to expand the range of organic food and now stocks over 1,100 organic products. Tesco is the Uk’s largest organic retailer. Recently they have announced that a further i?? 12 million products are sourced in the Uk.
They have to keep up with customer demand for these products and have extended the range of organic products and have cut prices on 50 of the most popular brands people buy. 1. 4 Tesco annual turnover Tesco have a very big turnover now from 2001 – 2002 Tesco saw an 82% rise in its annual turnover. Between 2002 and 2003 the profit grew to 1,946 million sales by this time were 28,613 million. 1. 5 Company sectors Tesco operates as a public limited company, which means that shares can be bought and sold and the staff have unlimited liability over the company.
Also a board of directors on behalf of the shareholders run it. Being a plc also means that the business has a higher status. With a public limited company it is normally the shareholders and board of directors that have control over the company. The way in which the profits are distributed is that because there are shareholders they will receive a dividend from Tesco for their share that they have in the company. When becoming a plc you need to have certain documentation this will include. Tesco is registered under the company’s act 1985. 1. 6 Comparison of companies
A comparison with Tesco to Morison’s is to be made because they are both big retailers in Britain but the difference is that Tesco is not just a British company they went multinational and expanded to sites all over the world and not just England. Tesco went multinational because they had a chance to expand and raise more capital. A multinational company is an organisation that owns or controls production or service facilities outside the UK. As with Tesco, Morrisons started as a sole trader and became a public company in 1967. They also both started as a small business and expanded into small shops and grew from there.
As both companies expanded and bought more sites for there shops Tesco began to expand in different ways. They expanded outside the UK and have sites all over Europe where as Morison’s only expanded in the UK. They now have 123 supermarkets in the UK Tesco have 1,982. As Tesco states they have grown and developed responding to new opportunities Morrison on the other hand try to keep customers coming back and offer extended opening hours at all stores this includes Sunday shopping. They also offer free car parking, including spaces for parents with children and people with disabilities.
Both Tesco and Morrison offer facilities for petrol and baby changing rooms. At Morison’s they design the facilities to make visits as convenient and as comfortable as possible. Morison’s and Tesco both say that they try their best to offer value for money. Morison’s say they deliver “the very best for less”. The main difference with Tesco and Morrison is that Morrisons is only a UK based company and Tesco is a multinational company. This is a big advantage because they can receive more profits and they get credibility for being the world best retailer.
Tesco has changed because when they went multinational the profits have more than doubled since they opened stores outside the UK. 2. Objectives All businesses have their own objectives. Objectives in a business are something that the business wished to achieve or meet. Aims and objectives are what a business sets out to do. Tesco have objectives that they often try to meet just like any business. Tesco have a mission statement, Tesco call their mission statement the core purpose they say “creating value for customers, to earn their lifetime loyalty”.
They also say that no one tried harder for customers. 2. 1 Profit This year all four parts of the Tesco strategy, the core UK business, non-food, retailing services and international have increased in profitability. The current turnover for Tesco is now i?? 21,615 and they have opened 1,982 stores in the UK and now have a total of i?? 1. 8 million sq ft of selling space. This has been of great profit to Tesco every time they open another store they increase the profit of the company and increase the share price.
In the UK they opened 62 new stores this year creating another 1. 4 million sq ft of selling space, which means that the profit has been increased. In the past five years Tesco have made a profit of 9,179 million this is because they have opened more stores and went multinational. In the next five years this profit will have most probably have trebled. Tesco have a profit aim to keep the business going and because they have share holders they have to make sure they are going to make a profit out of there share.
If Tesco were a co-operative supermarket then they would only want to break even because they haven’t got shareholders and they only need enough money to re order and stock up. Tesco need to aim for a goal just like people aim to loose weight, tesco aim to make a certain profit margin and every year they try to aim high and reach their goals/objectives. 2. 2 Growth Tesco have grown in many ways, one of them is the profit. The profit has risen in 2002 from 1,221 million to 1,401million by the end of 2003.
The sales have risen because of them introducing more new products the sales have risen from 25,654 million in 2002 to 28,613million by the end of 2003. Their objectives are to meet targets and succeed in being the world’s best retailer. The graph shows the percentages of the turnover in 2001 – 2002 in the UK, Europe and Asia. It also shows the number of stores open and the percentage of selling space Tesco has. As in 1924 Tesco started off as a name on packets of tea bags, which the based on the initials T. E. Stockwell. Tesco has grown in produce and as time went on Tesco stores began to open across the UK. 2. 3 Providing quality
Tesco have an aim to provide quality for customers and not just value for money this is to keep their sales up and keep customers coming back which relates to their customer loyalty incentive that they call their core business activity. In 1995 tesco launched “would I buy it” this was an incentive that was more focused on the highest quality for the customer. This is also a marketing strategy because they find the customer wants and needs and try and meet that this will most probably be sales and marketing’s biggest aim to provide goods of a quality nature.