In this report I intend to create a detailed report of Tesco's.

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In this report I intend to create a detailed report of Tesco’s.  I want to see what they have done to get to where they are today and to try to evaluate why what they did worked.  I want to get as much information as possible, although some information may not be accessible to the public as it could be sensitive.  

After the First World War, Jack Cohen received a £40 gratuity.  With this he set up his own East end fruit and veg store.  Later he joined with another man T. E Stockwell to create a partnership. They then formed a limited company and now Tesco is a public limited company (PLC) with an annual turn over of around £30,814 million pounds.

When Cohen set up Tesco, he was a sole trader, he would have had unlimited liability.  This means that if he went bust and unable to pay his debts he would have his personal belongings sold by the bank to pay off his debts.  His only source of finance was his £40 war gratuity.  However nowadays there are many different sources of finance from bank loans to business angles to loan sharks as well as personal savings and family and friends.  

Being a sole trader has many advantages as there aren’t many forms to fill in.  You can take holidays when you want and all the money that is made in the form of profit is yours for the keeping.

Being a sole trader means that he had total control over his business all profit made goes straight to him and doesn’t need to be split up.  When he merged to form a partnership he would have had to sign a deed of partnership.  This outlines all main points about the partnership from money salaries to working hours.  He would now have to consult his partner before making any decisions about the business.  However there are good points about being in a partnership. It means that there are two or more people to help think a way around a problem should one occur.  It would bring added finance as the other partner would have personal savings and maybe family money.  If the partnership were to go bust the deed of partnership would outline who had to pay what debts.  

After the partnership became successful Cohen and Stockwell became an ltd company.  This means that they had shares which could be sold to employees and friends and family of the owners.  They effectively own a small part of the company.  They now have Limited liability this means that should the business go bust their private possessions are now safe and wouldn’t be sold to level debts.  Yet all the share holders would loose the amount of money they put in.  There are also disadvantages to go with the benefits; these are that accurate accounts now have to be published for company house.  This means spending money on an accountant.      

Tesco’s then became a plc or public limited company, it floated on the stock market in 1947 the share price was 25p.  The business is now controlled by the share holders as every share gives you a say in the company.  The profit is also split so that a dividend can be given to the share holders; this is a small percentage of profit given to share holders, and the more shares the more money they will receive.  The legal liabilities are the same as when they were an ltd.  The main difference is that shares can be bought and sold by the public on the stock exchange.

On the way up Tesco’s has been through many of the different types of businesses.  It has been a sole trader business a partnership an ltd company and now it’s a plc.  However there are a few types of business that Tesco’s hasn’t been.  

  • A charity:  this is obviously because Tesco’s is a profit organisation and wouldn’t want to give away all there profit.

  • A co-operative: this is when everyone in the business has an equal say in what happens.  So the managers have rights equal to the cleaners.  This wouldn’t suit Tesco’s as they have trained people to decide what should happen with in the business.  

  • A franchise:  a franchise is when the company sells their logos and products to a person.  This person then sells their things.  Every month the profits are split and some is sent back to the original company.  So basically Tesco would be making money with out actually doing anything.  This is a good idea but it means that Tesco managers aren’t in as much contact with the shops as they were before.  Also as Tesco’s sells so many different things it would be very complicated organising all of there things.

Tesco’s is a multinational company.  It has stores in Ireland, Poland, the Czech Republic, Slovakia, Hungary, Turkey Japan, Malaysia, South Korea, Taiwan, Thailand and of course the United Kingdom.  This means that they have to diversify into many different tastes as these countries differ considerably.  However they are obviously pleasing the markets as total profit in Europe in 2004 including the United Kingdom were £1710 million.  The total profit made in Asia is £122 million.  As far as Tesco’s goes it still says that the UK is there main market and that they will never become a multinational company they will always remain a local shop.  

Every business has a business plan.  In this plan they will out line their business objectives, their cash flow (a prediction of how much money will be coming in and going out and the sources of this.)  It lists all properties and places where they want to expand to, it will also list equipment.  Now obviously a company like Tesco’s is huge so would have a very long list of property and equipment but in principle they do have the same kind of plan.  Each store has a plan and so do all of the factories.  They predict their finances so they know what will happen in the next 12 months.  They also have a list of key objectives.  This list will inevitably change maybe even on a monthly basis.  When Tesco’s was set up one of its first aims would have been:-

  • To survive, basically they want to breakeven so they may not make a profit but they will not be in debt.
  • After this is accomplished it would be to make say £1000 pounds profit.
  • To increase market share so that they are getting more money than their competitors.
  • To become an ltd (private limited company).
  • To give good customer service
  • To diversify into new products such as furniture or clothes.
  • To expand into new country’s and other markets.

Tesco’s has done well in achieving all these targets, but they have never stopped setting them self new targets this is key to a prospering business.  

In 2000 the sales were 20,189 million now in 2004 the sales are 33,557 million.  Tesco’s is gradually becoming bigger and bigger they are already selling in over 6 European countries and around 6 different countries in Asia,  they are trying to increase these to make Tesco a even bigger multi national corporation.  As well as expanding into other countries Tesco is also expanding into new ranges such as clothes furniture finance and mobile phones.  All of these sections have been doing well this probably because of there good planning and research.  

Soon you will be able to buy pretty much every thing you need under one roof.  Tesco’s is also a internet grocer, you select the products that you want to buy off the internet and  Tesco will deliver them to your door in a time slot that you select.  This is a new ideal that only a few supermarkets have adopted although they haven’t actually started to make a profit from this service yet they predict that they will by next year and are already viewing it as a highly successful part of the business.

The big six

Tesco has based its main objectives in six categories. These are known, as the big six. The six objectives below show what the big six are.

  • Be as good in non-food as in food-expansion on non-food products e.g. Computers.

This is a critical objective for Tesco who base those selves on selling everything you need in one place. Having a various range of products that are bought everyday must be the best. Tesco must keep there standards of there products to the highest if they want to keep a high standard.

Tesco is renowned for selling quality food at good prices and maintains that. However, Tesco now sells other products that non-food. So now, Tesco have to concentrate on selecting a good quality section and maintaining this standard. This is now a known standard for Tesco, but what customers really want is option. This is why Tesco try opening new areas for new types of products. Items like microwaves and fridges are now on sale, Tesco must compete on the fashions, and standards of other shops in order for customers to buy from there shop.

  • To improve the bakery-in store

On of Tesco’s main selling points is the bakery. One of the reasons families shop at Tesco, is they have the options of buying fresh food. Food counters like the fish stall, meat section and fresh bread from the bakery. Tesco sells fresh bakery products on demand. Customers want fresh bread and rolls, so Tesco bake fresh bread so the customers will have that option. Tesco will put the breads and rolls on sale for 24 hours. This is a big advantage to shops selling rapped bread. Most customers prefer fresh to rapped, as they know what going into it. Therefore, by offering the best of both worlds Tesco is covering the market. All Tesco can do is improve the range and offer a bigger bakery.

  • To better the up range markets-finest range

Tesco has a problem selling it self as an up range market. Tesco is still classed as a supermarket. This causes a problem in selling clothes. Adults and children will be happy to buy clothes from Tesco but persuading teenagers and young adults to buy from the store is difficult. Tesco now has to try to produce a higher quality and look for teenagers and young adults in order to get that sector.  

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Number one retailer

Tesco aim is to be the number one retailer in the world. Currently standing number one in the UK and fourth in the world Tesco goal or aim is to become number across the globe. This means that profits must increase also number of shops in the world. Overall, the business must expand globally in order to reach these heights.  They must also get more loyal customers than any other competitors

Objectives of Tesco’s as a whole corporation

  • To increase the profit of the business
  • To have more stores ...

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