The Beta Value Of Tesco Is Ok Commerce Essay

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Tesco plc is one of the largest retailers in the world, operating more than 2,300 supermarkets and convenience stores and employing 326,000 people. Tesco's core business is in Britain, where the company ranks as the largest private sector employer in the United Kingdom and the largest food retailer, operating nearly 1,900 stores. In continental Europe, Tesco operates in the Czech Republic, Hungary, Poland, the Republic of Ireland, Slovakia, and Turkey. In Asia, the company operates in Japan, Malaysia, South Korea, Taiwan, and Thailand. Through Tesco.com, the company ranks as the largest online supermarket in the world. The company also offers financial services through Tesco Financial Services, which controls 4.6 million customer accounts roughly divided between credit cards and car insurance policies. Through the more than 100-unit Tesco Express chain, the company ranks as the largest seller of gasoline in the United Kingdom.

http://www.fundinguniverse.com/company-histories/Tesco-plc-Company-History.html

History of tesco :

The founder of tesco  jack  cohen ,he was the son of polish jewish tailor,and tesco was started as a one man  business in London east end  in 1919.jack cohen  made the sale of  4 pound and the profit he made on that day at stall in east end London was pound 1 ,the first tesco product was tesco tea before  the company was called tesco .Jack opened his first tesco in 1929 in Burnt oak ,edgware ,north London and most of all tesco became private limited company in 1932 .Tesco  ltd floats on the stock exchange with a share price of 25 p. Tesco.commade and launched in 2000and in 2001 tesco became leading organic retailer in the uk .tesco start business in all over the globe they start in Malaysia in 2002and in turkey in japan in 2003,in china entered in 2004,tesco start dealing at tesco direct in 2006.

 http://www.tescoplc.com/plc/about_us/tesco_story/#

http://www.apparelsearch.com/Definitions/Fashion/Companies/Tesco_definition.htm.

Vision of tesco :

                               "Every Little help"

As far as tesco vision statement is concern ,they have a mission to help the customers and communities and their surrounding by all aspects. As it obvious from statement they help customers from all  aspects like from a writing pen or you can take any other basic need to high need of electronics and even they dealing in finance as well ,like means they are serving communities with basic need of daily life like grocery items ,tobacco ,electronic product in short covering every side ,as well as they are offering credit cards and loans and much more ,and they do help local communities e.g schools ,care houses, they gave computers to schools and they are ready to help care home and churches with free food .

Mission statement:

 

 "What is a Mission Statement? A mission statement sets out the general purpose of a business. It helps employees work towards a common goal. Tesco's Mission Statement Tesco's mission statement is to Retain Loyal People. To make sure Tesco achieve their mission statement, they need to know who their loyal customers are.

Aims and objectives ,

A business aim is an         organisation's long-term goal. What is an Objective? Objectives are goals that a firm sets itself for the next three or five years. They have a timescale, they must be measurable and they must contribute to the business achieving. To compare prices with other leading supermakets to make sure they have a competing chance with prices  

1. To maximise sales

2. To grow and maintain the number one retail company in the u.k

3. Tesco wants to outshine their competitors and remain the market leader

4. The main aim of Tesco is to maximise profit

5. To provide goods/services that is cheap and affordable to consumers or the public

Stake holders :

Stake holders are the people and the part of business which  have a influence on business and can be influenced by business ,basically stake holder is a part of business ,stake holders are  person ,place ,machines ,employer ,employees, stock ,supplier, share holder and all factor who involve in business .

As far as tesco is concern it have a same stake holders , for example they are getting products from all over the world so the supplier of tesco is based in every where in world they get their stuff from Europe ,asia ,africa  from all over the globe ,so this is the main stake holder for teco so they have a effect on tesco if they don't provide product to tesco on time or if they don't make product good as standard so tesco could have a bad impact on it ,so as far as employees are concerned they are also a main part of  organization they could be impact good or bad on company ,share holder if tesco could not meet their commitment to share holder or if they couldn't  meet the committed debenture value so they could have lose their share holder this also have bad impact on company .Government is concern that's also have a major concern on tesco because if the government keep increase the taxes and make some policies which are not in the favour of tesco could be effected badly ,management should be professional should be strategic managers ,if tesco can overcome on all these factor or can manage them smoothly and turn all this in their favor so this could be beneficial for tesco and give them a advantage .

 

Supplier

Employers

Share holder

Employees

Place& machines

Directors

Managers

Government

Customers

Buyers

Communities

Culture

SWOT ANALYSIS:

Tesco is a big name in market and now a days it known as Giant in market ,but as it obvious it also has some competitors in market as well the main are ASDA, SAINSBURY ,MARKS&SPENCER, LIDL ,and some more tesco has a competition with this companies in market ,they are the competitors of tesco in market .

So we can assess the  market value of tesco and can check the ,strength ,weaknesses, opportunities and threats for tesco through this SWOT analysis

Strenght

Weaknesses

0Opportunities

Threats

As far as tesco swot analysis is concern so tesco have have strength ,and as well as it has some weaknesses as well for example the opportunity for tesco is this they are operating in some forigen countries as well so they have opportunity to meet their requirement according to their tradition ,religion and culture if they can succeed to meet this requirement then they have opportunity to expand their business all over the globe ,weakness is that they might not get suitable enviorment their peole would not like them or they can afford the difference of exchange rate ,or they could not educated people might not get the fresh nd proper product their ,spouse we are operating in uk themn what could be the weakness for tesco will be the opportunity will be serve the forigener communities and weakness could be old system like old trend machines and staff ,if we take example of strength and threats strength will be the customer satisfaction as they are offering and providing every little help to customers from every aspect they are providing them every basic need of daily life and threats could be the competitor they might give those product on cheap price or on other hand they might have a threat from their employees suppose they are they treating fairly with their employees they could be have some kind of threats from them .

STARATEGIC ANALYSIS:

As far as strategic analysis is concern se we asses the analysis by PESTEL and PORTER FIVE FORCES ,we can assess the tesco  market status and tesco strategic policies and situation of tesco how they are progressing in market whether they   meeting customer need whether they are operating on standard how they are competing with their competitors ,are they beating them or  are they suffering  or competitors giving them tuff time so we can get all relevant information by using these two pestel and porters five forces .

PESTEL :

 

Pestel plays an important role to make any strategic plan or policies ,we can easily get the true picture of atmosphere and government and all other concerns .as far as tesco is concern they have most of the  part of pestel in his favor ,political condition  of uk is good to tesco there is not change of government and mostly they are not such bad policies for any business , so the political factor is in favor of tesco .and economical condition is not good as we all know the crisis is going on in economy its effect any business and definitely tesco also effected by this ,social factor for tesco is also manageable tesco is fulfilling the demands of communities and serving socially this factor is also in favour of tesco but they have to obey the customers demands if they are not upgrading their policies and product might they lose their customers ,technological tesco is doing well on this aspect like we can see they have introduce self service checkout ,online shopping ,finance and some other technological change they are adopting these change that's good for them ,environmental and  legislation factors  have major impact on any business, like weather comes in environmental condition teco is availing this opportunity they provide product according to weather ,fashion ,trend ,and keep all environmental factor in mind when make policies ,tesco must have to follow the legislation policies of uk before making any product and before providing any service they have to meet health and safety policies and should meet the hygienically need .and as far as tesco is concern they are meeting these standards at their high extend their product are certified from the concern departments.

PORTER'S FIVE FORCES:

As we all well aware by the Michael porters five forces what they all about what the talk about,

RIVALRY

BUYERS POWER

SUPPLIER POWER

BARRIER TO ENTRY

THREAT OF SUBSTITUE

As far tesco is concern we are taking tesco in consideration whether tesco is implementing porters forces in their business or we can asses the tesco strength in market how strong tesco is in market whether is their any opportunity for tesco to adopt these forces to make progress  in market .

So as far as rivalry is concern rivalry is fight between two for same cause or purpose for example like we are discussing tesco so rivalry is tesco has a competition between other same businesses like sainsbury's  ,asda ,marks

&spencer,lidl,and other so tesco is competing with these super market in the market .

Buyer power as this is the second porters approach ,so we can make any strategy by keep buyer power in mind if we want our product succesfull in market then we have to see the buyer power and set the price ,as tesco is doing their job perfectly ,they have noticed the buyer power they know they the buyer are power full they have same product alternatively ,like other super market offering same product same quality might be be in less price so in this case tesco is weak and buyer are power full ,so tesco should make such strategies to capture their customers and make loyal customers .

Supplier power as far as supplier power is concern in this scenario tesco supplier are not power full as the tesco by it self because tesco is making most of it product by it's on, they are making their own products so they are not depended on  supplier .

Barrier to entry yes it's correct that there are so many barriers of entry to a new competitor in a market because new product can not be compete with the old product in market this product don't give that much profit they can't compete with the product which is already there ,because the main problem or main barrier is price difference they can't meet the expense at frist stage when you made a new product you have already spend too much money on it ,you need to put a certain price through which you can start getting your investment back at that stage the competitor reduce the price of the product ,at that cost which might less than your manufacturing cost .so there is basically barrier for new entry of product so tesco they have a barrier for other competitor to enter in market because they are well stable in market .

Threat of substitute threat of substitute is a major problem for any business in market the only threat they have is a substitute, because that is the main reason which stop's you to making profit  ,you have to put less profit to compete with substitute product tesco having same problem with asda ,sainsbury's and other businesses they offering same product in less price but most of the time tesco is threating them with substitute product's .

 

http://www.quickmba.com/strategy/porter.shtml

http://www.quickmba.com/strategy/porter.shtml

 

Financial review.

Sales have increased by 11.1% to £51.8 billion, Group profit before tax is up by 5.7% or by 15.3% if you exclude last year's exceptional - mainly the Pensions A-Day credit. Underlying profit has grown by 11.8% to £2,846 million. Underlying diluted earnings per share is up 13.1% using a normal tax rate, and the full-year dividend is also up 13.1%.These results demonstrate the real strength and diversity of the Group and real firm Tesco broad long-term strategy for growth set out just over a decade ago. International is now a powerful driver of growth for the Group. This year 2008 Tesco overseas business delivered very strong increases in sales and profit of 25.3% and 24.3% respectively. Tesco growth will continue as Tesco begins to lay the foundations for our long-term international expansion through our entry into the new major markets of China and more recently the United States. UK sales are up 6.7% and trading profits grew by 7.1% - after start-up costs in the US and on Tesco Direct - to £2,050 million, helped by a solid margin performance. Group non-food sales rose 12% to £11.8 billion and non-food remains an important contributor to our growth. 

http://www.tescoreports.com/areview08/downloads/tesco_annual_review_08.pdf 

Rate of return on share holders is 7.716% which is good because the companies because According the annual reports 2008 the underlying diluted earnings per share increased by 20.8% to 27.02p (last year 22.36p), benefiting from the significantly lower than normal effective tax rate for the year and from the elimination of earnings dilution linked to new share issuance, resulting from our share buy-back programme. On a normalised 28.9% tax rate basis, underlying diluted earnings per share rose by 13.1% and the beta value is less than 1 than means the company is in good financial position but the market is not going well at the movement due to recession period

Conclusion with Recommendation

As we can observe from the report that although the recession has hit almost every company in UK and the market value of the companies is going down but the as the beta value of Tesco is ok i.e the share value of the Tesco is going high .The investors are keen to make investments in Tesco by buying the shares of Tesco Plc .Tesco is number on  the market in retail business in UK and the competitors like Asda although are given tough times to Tesco but still the market share of Tesco is high. The investors grab the opportunity by buying the shares of Tesco as the company`s market is not going down and different calculations that are shown in the report shows that the value of shares of Tesco will go further up so the company is in good financial position. 

 

As my point of view i will recommend the investors to invest in Tesco as the Capital Asset Price Model , Beta , Rate of Return of Tesco is going well enough to demonstrate the value of Tesco so investors are in good position to invest. Tesco should also open its outlets in Asia also more because of higher population that lives mostly in Asia .The revenues of Tesco will rise more and the value of share of Tesco will go more upward.  

 

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