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Business studies coursework - On the next page, there is a table of Safeways profit and loss accounts:

Extracts from this document...

Introduction

"For a business to be successful, it has to achieve its aims and objectives it set for itself" Introduction There are 4 types of businesses: a sole trader, a partnership, a private limited company (Ltd) and a public limited company (plc). It is very hard to know the success of a private limited company because only the: a) Owner b) Auditor c) Inland Revenue/Customs and Excise d) Registrar of companies know the company's accounts and success. For example, Milcars Ltd. on Finchley Road are a private limited company. We don't know how successful they are. We can to a certain degree by visiting the shop and viewing: a) Whether they increase their staff, b) If the store is stocking more products, c) If you see people come out the shop/store having bought or just if there are many customers in the shop/store, d) If they open more branches or take over rivals or other companies. An example of a partnership would be Barnard's opticians. They work on Finchley Road and also Top Value on Finchley Road. An example of a sole trader could be Paper Plus on Golders Green Road. I have gone into my local 'corner shop' on Golders Green Road and have noticed that they have started stocking new products. I can see that they are doing quite well. A public limited company (plc) is easier to monitor. They are legally required to publish their reports and accounts for not just tax authorities but also for its shareholders and potential investors (anyone who wants them). It is for this reason that I have chosen to measure the success of a public limited company and I have chosen Safeway plc. I have their Annual Reports & Accounts 2003 to help me The success of a business can be measured in many ways. I will be attempting to measure the success of Safeway in the following ways: 1. ...read more.

Middle

I think this is because there was speculation about a take over bid and many people were concerned about the future of the company. This resulted in fewer people shopping which meant they had to cut jobs inorder to save money. 2. We can tell the business is growing if it opens new branches around the country. Safeway has stores all over the country including in Scotland, Wales, Northern Island, Jersey, Isle of Man, Guernsey and even one in Gibraltar. But this could be a sign of desperation to boost their profile and their profit - following in the steps of Tesco abroad. 3. Valuation of Assets Safeway company assets rose from �2,684.9 million in 2002 to �2,876.1 million in 2003 (1.07% increase). The group assets also rose from �3,337.2 million in 2002 to �3,657.2 million in 2003 (1.09% increase). (These figures are for the Total assets less current liabilities). These figures would suggest that overall, Safeway is growing into a big company. Safeway net assets, the company assets decreased from �1,704.9 million in 2002 to �1,691.1 million in 2003 (down by 0.99%). The group assets went up from �2,110.6 million in 2002 to �2,211.0 million in 2003 (1.04% increase). 4. Market Share Safeway's market share dropped from 9.9% to 9.2% in 2003. Whereas compared to rivals - the market share of Sainsbury's (16%) and Tesco (26.8%), their aim to increase their market share hasn't been successful. 5. Turnover of the Company Safeway's turnover for 2003 was only up by 0.91%. (From �8,560.0 million in 2002 to �8,638.7 million in 2003). This means that they are only selling slightly more than in 2002. Business Ratios There is a more definite way of measuring the success of a business by comparing ratios. The first comparison I will make is comparing the gross profit in 2003 compared to 2002. The calculation is made as a ratio by comparing the gross profit to the sales revenue per year: 2002 Gross profit: Sales Revenue �1,828,500,000: �8,560,000,000 Divide by ...read more.

Conclusion

I will now make the calculation for the percentage change in the 5 year record and a comparison between Safeway and its rival Sainsbury's: Sales: 1999 2003 �m �m 8098.9 9516.6 9516.6 8098.9 1417.7 1417.7 100 17.5% 8098.9 1 Now, if we look at Sainsbury's, we can see how they're comparing with a rival: 1999 2003 �m �m 16378 18495 18495 16378 2117 2117 100 12.9% 16378 1 These figures show that Safeway are getting a bigger percentage of profit than Sainsbury's in the five year records, although Sainsbury's are making more money. Safeway have expanded and more stores have been opened since 1999 and 2003: 1999 - Safeway had a total of 463 stores in UK. 2003 - Safeway had a total of 469 stores in UK. 463 469 6 If we look at the total number of stores for Sainsbury's, 1999 - Sainsbury had a total of 545 stores in the UK. 2003 - Sainsbury had a total of 695 stores in the UK. 545 683 138 This shows that Safeway are not looking to open new stores - they are looking to cut costs by not expanding rapidly - they only opened 6 new stores. Sainsbury, on the other hand, are rapidly expanding opening up 138 new stores. Conclusion Safeway has had a �3 billion take over bid from Morrison's for a couple of reasons: 1) its increase of profit is lower compared to competitors - so it would have to cut jobs, offer discounts and special offers, lower their share price...2) Their market share is declining -fewer people are buying their products and profit are not as high as expected which would not appeal to people who are looking to buy shares. The analysis of their accounts prove that the management have found it difficult to turn round the company and it had to fall victim to Morrison's which is a better run company. Sainsbury's used to be top of the market share table. Now, Tesco and Asda - Wallmart have overtaken them. . ...read more.

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