Types of business ownership, sources of finance and a case study of Tescos

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Introduction

The Business I have chosen to base my work on is Tesco. Tesco is a very big company with huge revenues. This is also a public limited company that means it has limited liability. The aim of this company is to make profit. I have chosen this company because it is a well-known and established company, which has been trading for many years. The business had a turnover of £28,613m in the year 2003. Its core service is retail. Tesco is a leading retailer, operating 2,291 stores around the world and employing 296,000 people. It used to be purely a UK operation but has expanded to many other parts of the world such as Europe and even as far a field as Asia. There are four strands to Tesco's strategy: core UK business, non-food, retailing services (personal finance and online grocery sales) and international.

Tesco also has commitments as a company such as protecting the environment. Most of its products at the present time are not tested on animals for or by Tesco as is written on the product. Tesco also likes to help deprived communities. For example they have 6 regeneration partnerships opened to help communities that are deprived of social and economic wellbeing. In the UK alone they have 1,982 stores. The stores they open are all tailored to meet the customer's needs. For example, they have four types of stores; Extra, Superstore, Metro and Express. All 4 offer different shopping experiences but all have the same outstanding value. As a result of listening to their customer's feedback, they have improved 200 of their stores over the UK. 104,000 of their staff are shareholders in the business.

Tesco's Clubcard is the UK's most popular loyalty scheme. Two hundred million AIR MILES have been issued to customers this year. Clubcard holders can collect points at over 3,000 UK outlets including Allders and Marriott hotels. Tesco also has its own brand. Items of its own brand are usually much cheaper than other brands. This benefits customers who are not well-off economically but still require the same quality standards as others.

History Of Tesco

Tesco believes in building a world class business by working harder to deliver great value for customers, in every store, in every country, everyday. The businesses in Europe continue to prosper and achieve better results and gain momentum, supported by learning from the UK. Tesco are now the leading hypermarket retailer in four of the five European markets, serving three million customers a week and employing 41,000 people. All four parts of the Tesco strategy, the core UK business, non food, retailing services and International are growing. Tesco plc. are now market leader in 5 of the 9 markets that they now operate in.

Tesco was founded in 1924 by Sir Jack Cohen. He used his gratuity from his Army service in the First World War to start selling groceries in London's East End markets in 1919. The brand name of Tesco first appeared on packets of tea in the 1920s. The name was based on the initials of T.E. Stockwell, a partner in the firm of tea suppliers, and the first two letters of Cohen. The first store to be opened was in 1929 in Burnt Oak, Edgware. Over the last seventy eight years, as the retailing market has changed, the company has grown and developed, responding to new opportunities and pioneering many innovations. Today it is Britain's leading food retailer.

In the 1930's self service supermarkets opened in the USA, during the depression. Companies soon realised that by selling a wider variety and having a larger volume of stock, and employing fewer staff, companies could offer lower prices to the public. During the 1930's depression, the Tesco business prospered and grew in the years between the war.

In 1947 Tesco Stores Ltd was floated on the Stock Exchange, with a share price of 25p. The price at the beginning of February 2002 was approximately 2.42p.

After the Second World War, Self-service stores arrived in Britain, and Jack Cohen opened the first Tesco Self-service store in St Albans in 1948.

In 1956 the first Tesco self-service supermarket was opened in a cinema that was converted in Maldon.

By 1970, Tesco had become well known and a household name. Its reputation had been built on providing basic groceries at very competitive prices; the slogan "Pile it high and sell it cheap" was the title of Sir Jack Cohen's autobiography. But as people's wealth increased they required more luxury items as well as everyday household products and food products. In the late 1970s the company decided to broaden its customer base and make its stores more attractive to a wider range of customers. Most of the old and highstreet stores closed and the company concentrated on creating bigger out of town stores. As the stores were bigger, they sold more items, had wider isles and had better lighting; all this while still offering competitive prices on all of its products. The emphasis was also on quality, customer service and a customer friendly environment. In 1947, Tesco opened its first petrol stations at its major sites, selling petrol, also at very competitive prices. Tesco finally stopped giving trading stamps in 1977, at the same time introducing a price cutting campaign under the banner "Checkout at Tesco" which proved to be a major success.

Private Limited Companies

Most PLC's commence as sole traders or partnerships. They are mostly small-scale operations, often with just family members running the business. One would establish a limited company to:

> Improve their financial security, as the owners (now called shareholders) are no longer personally liable for their debts. Instead their liability is limited to the amount of their investment. The abbreviation 'Ltd' has to be part of the name of the business. If the business fails, the owners do not go bankrupt. Instead the company goes into liquidation. So another business that lends or sells items on credit should check that the business is financially secure before trading or providing a service to them.
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> Display a good image of themselves to their customers, who are likely to believe that the business is more secure whether it maybe or not.

A private limited company distributes shares to its owners. Each share represents a share of the company and each share equals one vote. If a shareholder had more than half of the company's shares they could always the rest of the shareholders. This is why the amount of shares distributed and held always has to be thought out carefully. Otherwise the business may lose many shareholders and therefore more if ...

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