Case Study:
Introduction to Tesco
The name of the company that I am going to be studying is called Tesco. It has its headquarters in Chesunt, but has many stores around the country. These stores are in many cities including Manchester, Birmingham, and London. It has many types of stores and includes Tesco Extra (24 hour), Tesco Metro (located in town centres) and Tesco Express (attached to garages).
It sells many things including food and non-food items. These items include: toys, food, drinks, toiletry, CDs, videos, DVDs, books, cosmetics, medicine, tobacco, alcohol, fruits, vegetables, electrical goods, clothes, organic food. In Newport there are stores based at Spytty and Maesglas.
The type of ownership that my company has is public limited company. This means it is a large company with many employees. It has shares on the stock exchange and anyone over 18 can invest in a share. This will make anyone who has bought the share a part owner of the joint stock company.
As Tesco is a joint stock company the shareholders want a good return on their capital and to receive a dividend each year. If the company went bankrupt then the owners would have to pay off all of their debts, this would even mean selling their houses and cars.
The main objective of a business is to make a profit. If a business did not make a profit, it could not survive for long as it would be spending more than it received. A business needs to make a profit to pay- suppliers, employees, taxes, a dividend to shareholders and interest charges on money it has borrowed.
Companies are far more complicated to set up than sole traders or partnerships. They must be registered by companies' house. A certificate of incorporation is like a birth certificate for a company and will only be issued if the registrar is happy with the documents he receives from a company. The memorandum of association sets out the name of the company and the objectives of the company. The articles of association cover the internal rights of the company.
The advantages of Tesco being a public limited company is that the people who own Tesco will have holidays and if they aren't present and they have loss they won't have to pay for it.
Tesco have limited liability because the shareholders or owners have limited liability. Their financial liability is limited to the amount of money they have invested.
A company might be making so little profit that it could not pay its way and is forced to stop trading by going into liquidation. The company might be millions of pounds in debt, but the shareholders would not be responsible, they might lose the money they have invested in shares but not a penny more.
The disadvantages of Tesco being a public limited company is that, it is more complicated to set up a limited company than it is to start a business as a sole trader.
It is also more expensive as it is necessary to employ a solicitor to register the company.
Tescos main activity is retailing. Some of the activities involved are manufacturing. It also has an Internet delivery system that involves transport. It has many stores that are directed at different types of customers for example Tesco extra is for people who work during the day and prefer to do their shopping at night, Tesco express is for people who just need a pint of milk and not many things and prefer not to go into the main store, Tesco metro is for people who prefer to do their shopping in the town centre.
In many stores you will find the following items being sold-food clothes music electrical goods pharmacy insurance savings accounts credit cards club card newsagents photo development.
Tescos have produced a card called club card, this allows customers to get points when shopping and then turn these points into vouchers.
Types of Tesco Stores
Metro
Tesco first opened metro in 1992. They sell a wide range of quality products and luxury goods, to meet the needs of people at work and those who prefer to shop in the town centre.
Express
Tesco first introduced Tesco express stores in 1994. Tesco express is a combination of a filling station and retail sites. They sell quality Tesco goods at low prices for people who want to pick up a bit of shopping as they put in some petrol.
Extra
Tesco extra is the newest and largest store format. The first Tesco extra was opened in Essex in June 1997 and a second is planned for Peterborough. The ranges of goods sold vary from household goods to clothes. They have also added food courts for in-store and take away dinners. They attract customers who are at work during the day and prefer do their shopping at night.
History of Tesco
Tesco was founded in 1924. Over the last seventy years, it has developed and took every opportunity to grow bigger and expand in the mainstream. As the food retailing market has changed, the company has grown and developed, responding to new opportunities and pioneering many innovations. Tesco is currently Britain's leading food retailer.
Sir Jack Cohen was the founder of Tesco; he started selling groceries by in London's east end markets in 1919, by using his gratuity from his army service in the First World War.
The brand name of Tesco first ...
This is a preview of the whole essay
History of Tesco
Tesco was founded in 1924. Over the last seventy years, it has developed and took every opportunity to grow bigger and expand in the mainstream. As the food retailing market has changed, the company has grown and developed, responding to new opportunities and pioneering many innovations. Tesco is currently Britain's leading food retailer.
Sir Jack Cohen was the founder of Tesco; he started selling groceries by in London's east end markets in 1919, by using his gratuity from his army service in the First World War.
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.
The business prospered and grew in the years between the wars. In 1947 Tesco Stores (Holdings) Ltd was floated on the Stock Exchange, with a share price of 25p. The price at the beginning of February 2002 was around 2.42p.
Self-service supermarkets started in the USA in the 1930s during the depression. They soon realised that by selling a wider variety and larger volume of stock and employing fewer staff they could offer lower prices to the public.
Self-service stores came to Britain after the Second World War, 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 converted cinema in Maldon. By the early 1960s, Tesco had become a familiar name. As well as groceries, the stores sold fresh food, clothing and household goods. Tesco stores were located in the high streets of many towns. The Tesco store, which opened in Leicester in 1961, had 16,500 square feet of selling space and went into the Guinness Book of Records as the largest store in Europe.
By buying in bulk and keeping costs down, Tesco should have been able to sell at very competitive prices to its customers. Until 1964, however, suppliers were, by law, able to insist that retailers charged a set price for their products (the system known as Resale Price Maintenance), which meant that it was difficult to reduce prices. The intention was to protect small shops against the lower prices that big retailers could offer their customers.
Tesco introduced trading stamps so that it could bring lower prices to its customers. Customers collected stamps as they purchased their groceries and other items. When they had collected enough stamps to fill a book, they could exchange the book for cash or other gifts. Other retailers soon copied Tesco. Sir Jack was one of the leaders in persuading Parliament to abolish Resale Price Maintenance in 1964. After this, Tesco continued to offer trading stamps until 1977.
Apart from opening its own new stores, Tesco bought existing chains of stores. In 1960 it took over a chain of 212 stores in the north of England and added another 144 stores in 1964 and 1965. In 1968 the Victor Value chain became part of the company.
Tesco introduced the concept of a superstore in 1967 when it opened a 90,000 square feet store in Westbury, Wiltshire. The superstore was a new concept in retailing - a very large unit on the outskirts of a town, designed to provide ease of access to customers coming by car or public transport. The term superstore was first actually used when Tesco opened its store in Crawley, West Sussex in 1968.
By 1970, Tesco was 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 were becoming better off, they were starting to look for more expensive luxury items as well as everyday household 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. Many of the older, high street stores were closed and the company concentrated on developing bigger out-of-town superstores. The superstores sold a broader range of goods, and had wider aisles and better lighting. While still offering very competitive prices, the emphasis was also on quality, customer service and a customer-friendly environment. In 1974, the company opened its first filling stations at its major sites, selling petrol at very competitive prices. In line with its new image, 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.
In one year in the late 1970s, the Tesco market share increased from 7% to 12%, and in 1979 its annual turnover reached £1 billion for the first time.
During the 1980s, Tesco continued to build new superstores, opening its 100th in 1985. In 1987 it announced a £500 million programme to build another 29 stores. By 1991, the popularity of Tesco petrol filling stations at its superstores had made the company Britain's biggest independent petrol retailer.
In 1985 Tesco introduced its Healthy Eating initiative. Its own brand products carried nutritional advice and many were branded with the Healthy Eating symbol. The company was the first Major retailer to emphasise the nutritional value of its own brands, to customers.
By 1990, Tesco was a very different company from what it had been 20 years before. The Tesco superstore offered customers a very wide range of goods, a pleasant shopping environment, free car parking and an emphasis on customer service. Although many financial experts had not believed that the company could so radically change its image, the new approach saw sales and profits rise consistently. Existing customers took advantage of greater choice, and new customers discovered that Tesco could successfully match the offer of any of its retail competitors.
In the 1990s, the company built on its success by developing new store concepts and new customer-focused initiatives. In 1992, it opened the first Tesco Metro, a city centre store meeting the needs of high street shoppers and the local community. This was followed by Tesco Express, combining a petrol filling station with a local convenience store to give local communities a selected range of products and in 1997 the first Tesco Extra store opened in Pitsea, an 87,000 sq. ft. hypermarket selling an extensive range of food and non-food.
Tesco broke new ground in food retailing by introducing, in 1995, the first customer loyalty card, which offered benefits to regular shoppers whilst helping the company discover more about its customers' needs. Other customer services followed, including grocery home shopping, Tesco Direct for catalogue shoppers and the Tesco Babyclub for new parents, as well as the launch of Tesco Personal Finance a joint venture with the Royal Bank of Scotland.
Tesco has seen a steady increase in market share through a customer focused strategy including getting cheaper, offering better value and providing more choice and convenience for customers. Over the past 5 years Tesco have invested over £1.2bn in price reductions, making their prices 12.5% cheaper than they were 5 years ago.
Tesco constantly focuses on delivering the best possible service to its customers.
In 1993 Tesco launched first class service closely followed in 1994 by one in front, the first retailer to offer its customers a service commitment at the checkouts.
In 1995 Tesco launched would I buy it - an initiative that focused on ensuring product is always of the highest quality for the customer.
In 1996 Tesco launched customer assistants to make shopping even easier for customers.
Tesco continues to invest in service. Most recently in 2001/02 Tesco have introduced customer champions in many stores, and implemented a new labour scheduler to further improve service for customers.
Throughout the 90's Tesco has continued to develop its ranges, including its own branded products. In 1993 Tesco introduced value lines into its stores, these were products that will not be beaten on price; this heralded the start of the move to offering customers value. This has been followed by the development of the Finest range of premium products. In 2001 Tesco became the premier Organics retailer in the UK now stocking over 1100 organic products. Tesco continues to innovate through range development such as 'The food doctor', 'The nutricentre', 'olive bars', 'grab and go' and chilled ranges such as 'finest dips and Mediterranean'.
Recently Tesco have focused on developing the brand into non-food and now stock electrical items, home entertainment, toys, sports equipment, cookshop and even lighting and furnishing in many of its larger stores. Tesco also has its own brand on non-food, including value and finest ranges.
In September 2002 Tesco launched its exclusive new clothing brand 'Cherokee' in many of its UK stores.
In the 1990s, Tesco expanded into Scotland when it acquired a chain of 57 stores from William Low. In 1997 Tesco purchased 109 stores in the Republic of Ireland and Northern Ireland, which gave the company a market leadership both north and south of the border.
Tesco then started to expand its operations outside the UK. In Eastern Europe, it has met growing consumer aspirations by developing stores in Poland in 1995, Hungary in 1996, Slovakia in 1996 and the Czech Republic in 1996. Tesco has also expanded into Thailand in 1998 and South Korea in 1999 through a joint venture with Samsung Corporation. It opened in Taiwan in 2000, and in May 2002 Tesco opened its first store in Malaysia in a joint venture with Sime Darby Sdn Bhd.
In July 2002 Tesco acquired the 'HIT' chain of hypermarkets in Poland.
Tesco have also expanded into Retailing Services. In 1997 a joint venture was formed with the Royal Bank of Scotland to offer a broad range of financial services, closely followed by the launch of the Tesco Visa card, Insurance and other financial services. Tesco Personal Finance now offers a range of 15 different products and services; as well cheque deposits at the checkouts, and instant travel insurance. In August 2002 Tesco Personal Finance had over 3 million customer accounts.
In 2000 Tesco.com covering all Tesco e-commerce business for customers, was launched. 2000 also saw the start of Tesco Direct the grocery homeshopping service, which has since become the largest grocery homeshopping business in the world. In 2001 Tesco announced a strategic relationship with American supermarket Safeway Inc to take the Tesco.com homeshopping model to the US.
Tesco.com also operates in South Korea and the Republic of Ireland.
All four parts of the Tesco strategy, the core UK business, non-food, retailing services and International are accessing growth. We are now market leader in 5 of the 10 markets that we now operate in.
Tesco continues to research opportunities internationally and is constantly looking for ways of getting better for customers, simpler for staff and cheaper for Tesco.
Business Strategy
There are four parts to the Tesco Strategy
. Core UK business
Tesco continue to increase market share through our policy of getting cheaper, offering better value and providing more choice and convenience for our customers.
2. Non-food business
Tesco currently has over a 4% market share of a market worth £75bn in the UK, where our goal is to be as strong in non-food as in food. Our non-food offer now encompasses electrical, home entertainment, clothing, homeshop, cookshop and even white goods and furniture in our largest stores.
3. Retailing services
As customers' shopping habits change we change and respond by providing new products and services. Our e-commerce business has grown rapidly. We are the world's largest grocery retailers. Both tesco.com and Tesco Personal Finance demonstrate the ability to extend the Tesco brand. Tesco Personal Finance continues to grow and develop excellent products offering value and choice
4. International
Tesco has been successful in opening up new growth markets in Central Europe and Asia. The proportion of total Group space outside of the UK was 47% at the half year. We now operate in Hungary, Poland, Czech Republic, Slovak Republic, Thailand, South Korea, Taiwan and the Republic of Ireland. In May 2002 we opened our first store in Malaysia.
Tesco Purpose & Values
Our Core Purpose is all about customers.
"To create value for our customers, to earn their lifetime loyalty".
This statement is at the centre of all we do.
Our two values drive the whole way we do business.
No one tries harder for customers:
* Understand customers better than anyone
* Be energetic, be innovative and be first for customers
* Use our strengths to deliver unbeatable values to our customers
* Look after our people so they can look after our customers
Treat people how we like to be treated:
* All retailers, there's one team ... The Tesco Team
* Trust and respect each other
* Strive to do our very best
* Give support to each other and praise more than criticise
* Ask more than tell and share knowledge so that it can be used
* Enjoy work, celebrate success and learn from experience
UK Stores
In August 2002 Tesco had 759 stores and remains the largest food retailer in the United Kingdom.
Tesco operates 4 store formats in the United Kingdom.
Store formats at February 2002
UK Market Share
Our share of the UK market has grown steadily since the early nineties as a result of our customer focused strategy: our market share is now over 16.5%.
This is how we compare with our competitors (based on IGD data)
In total Tesco have 1,023 stores in ten countries.
As of August 2002 Tesco had the following stores.
Hungary
50
Poland
47
Czech Republic
5
Slovak Republic
3
TOTAL Central Europe
25
Republic of Ireland
76
France
TOTAL Europe
202
Thailand
43
Taiwan
2
South Korea
6
Malaysia
TOTAL Asia
62
TOTAL International
264
Employees
Tesco employs over 260,000 people worldwide 195,000 people in the UK and 65,000 overseas. Full and part time UK employees have harmonised benefits, competitive salaries, discount on Tesco purchases, pensions, profit share and Save and Buy As You Earn schemes.
Community & Charity Involvement
Computers for Schools goes from strength to strength and is in its 11th consecutive year. To date, over £77m worth of PC's and computer related equipment have been donated to over 20,000 schools in local communities around our stores. For more information on this area visit our Corporate Social Responsibility website.
In 2001, the Alzheimer's Society and Alzheimer Scotland were Tesco Charities of the year. Cystic Fibrosis is the Tesco Charity of the year in 2002. Additionally, Tesco is the national sponsor for Race for Life, in aid of the Imperial Cancer Research Fund. Over 250,000 women have participated raising over £15m.
Price Position
We have continued to bring value to our customers and have now established a competitive price position against all of our competitors. In the last 5 years we have invested over £1.2 billion in price, making prices 12.5% cheaper than they were 5 years ago.
Product Offer
Typically Tesco sells 40,000 food products in a superstore, as well as clothing and other non-food lines. Tesco sells branded products and own brand products. Our own label products are at three levels, Value normal and Finest products. Own brand accounts for approximately 50% of sales. In 2001/02 we introduced over 3,500 new food lines. Tesco also stocks over 1,100 organic lines. Tesco own brand can now be found in many of the Groups International Stores.
Tesco Petrol
Tesco is one of Britain's largest independent retailers, with over 340 petrol stations, including Express sites and sells one in every 8 gallons (12.5%) of petrol sold in the UK. Within the next 2 years Tesco/Esso will complete its role out of more than 150 Tesco Express stores.
Tesco was the first petrol retailer to introduce low benzene unleaded petrol in line with the Royal Commission on environmental pollution.
Tesco Personal Finance
Tesco Personal Finance (TPF) was launched in July 1997 and is a joint venture with Royal Bank of Scotland. Products include Clubcard Plus, a grocery budgeting account. A Tesco Visa Card was launched in July 1997, Tesco Instant Access Savings Account in September 1997, Home Insurance in April 1998, Loans in May 1998, Pensions in June 1998, Travel Insurance in July 1998, ISAs in April 1999, Pet Insurance in October 1999 and mortgages in June 2000. The joint venture has over 1 million-customer credit cards and 3m customer accounts. Tesco Personal Finance delivered a profit of £34m of which the Tesco share was £17m in the first half of 2002/03.
Tesco.com
Tesco is the largest grocery homeshopping business in the world. Annualised sales are £300m and we now cover 95% of the UK population. We already have homeshopping in the Republic of Ireland and South Korea. In June 2001 Tesco took its grocery homeshopping model to the USA through a partnership with Safeway Inc, this has now been rolled out to over 20 stores.
Tesco.com also offers online shopping for electrical, books, home entertainment and wine delivered direct to your door.
