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Business Activity & PLC

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Introduction

Business Activity Tesco specialises in food and drink as their core product and this helps them to concentrate in one major area. This also helps them purchase a large number of products in bulk and therefore gain huge discounts as they are benefiting from economies of scale. Tesco sells other types of products apart from breakfast cereals, toiletries and snacks. They do this because over the years they have realised that their customers want to do all their shopping under 1 roof rather than in 10 different shops. A few years ago Tesco decided to start selling other type of goods like foreign food, halal food, low G.I, organic and low fat food. Selling different types of products will benefit customers because they will be getting what they have in their normal diet but at cheaper prices. This shows that Tesco responds to the latest trends in the U.K., and thus satisfies everyone. The reason Tesco sells their products so cheap is because they buy them in bulk and gain low prices. ...read more.

Middle

This meant spending power in the UK is also high. This would result in people being able to afford credit cards at ease and they would invest in financial services. I think financial services are a successful diversification, as millions have been made in the last five years, which has given them �280 million in profit. Tesco already had loyalty, so their customers know they can trust their new services. This makes it easier for Tesco to sell new products and services without paying lots on promotion and marketing schemes. What is a PLC? A Plc or more commonly known as a public limited company. It is a business that is owned by the public through shares. This type of company is broken into different parts called shares. These shares are bought by the public and are available to anyone in the public that is over the age of 18. The members of the public that buy the shares are then given the title of a 'shareholder'. ...read more.

Conclusion

Because of being a PLC, they receive a good credit rating; therefore they can receive loans if needed in the future. As Tesco have 1000's of investors, the business receives good investment, which can be used for diversification or expansion in the business. Finally, as a result of limited liability, shareholders are financially secure and can not be held responsible for debts. The disadvantages include the fact that the minimum share capital is �50 000, so it is not really that easy to buy a share in Tesco. The ownership can be changed quickly, as other companies can achieve takeover bids. Another downside is the fact that the company's annual accounts have to be published for public inspection. The final drawback is the difficulty faced when starting a PLC; it is rather complicated, as there is lots of paperwork to sort out. Also there are many expenses to cover when starting a Public limited company. Tesco has published their profits and showed how they have gone up, from �1.7 billion to �2.2 billion; Tesco also has the highest market share which shows they have the most shareholders when compared with other leading supermarkets, this shows how they have invested their shareholders money wisely. ...read more.

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Response to the question

In summary, the report is quite good. The report states how Tesco sells a number of their products to consumers. In addition, the student describes what a PLC is with a little information regrading the process. However some area's are ...

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Response to the question

In summary, the report is quite good. The report states how Tesco sells a number of their products to consumers. In addition, the student describes what a PLC is with a little information regrading the process. However some area's are not justified along with areas which show a lack of understanding. The report states that Tesco has 'huge profits', although how much did Tesco make within the last financial year? This information could be found on their website, and could be included within the report. The report states the term 'PLC', and explains this quite well. However the student has stated the number of shares in issue with regards to Tesco, and how much 1 share sells for. This would show a clear link between from an academic view point towards a commercial environment. I believe that the student hasn't fully understood one aspect of the report. The report states 'The disadvantages include the fact that the minimum share capital is £50 000, so it is not really that easy to buy a share in Tesco'. However this is in-correct, the business needs a minmum of £50,000 in cash to be able to list on the stock exchange. The shareholder can purchase only one share which may be as little as £0.01. The student has got a little confused here, which shows poor understanding.

Level of analysis

The report states that Tesco is able to purchase in 'bulk', however this isn't explained how Tesco can do this. The report could include 'Tesco is able to purchase in bulk, as there have a large purchasing power. This is due to the amount of units / products there are able to buy, and this allows Tesco to negotiate with price if the order is large.' The report states that Tesco is able to sell other products that are non-food. Although the report fails to understand the reason for this. Tesco are able to undertake this, as consumer trust their brand.

Quality of writing

The report states the business 'Tesco', however there haven't included an image, to allow the examiner to visualize the report/brand. The report states a number of technical terms such as 'economies of scale', however there haven't explained this within the report. All technical terms should be explained, to allow the examiner to understand. On the flip side, the report states 'PLC', and has explained this with detail.


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