Investigating Business. Tesco PLC. I will be describing the aims and objectives of this business and the external environmental factors

Authors Avatar by Asim9 (student)

        Unit 1: Investigating Business        Asim Ul-Haque

Task 1 Aims & Objectives

In this unit, I will be investigating into the major supermarket chain Tesco PLC. I will be describing the aims and objectives of this business and the external environmental factors which have affected the ability of this business to achieve their aims and objectives illustrating them with examples from the business.


Back in 1919, a person called Jack Cohen founded Tesco, at first he was selling groceries at a stall at Well Street Market, Hackney, in the East End of London. The Tesco brand then appeared in 1924. The first Tesco store was opened in 1929 in Burnt Oak, Edgware, and Middlesex. Tesco made its presence on the London Stock Exchange in 1947 as Tesco Stores (Holdings) Limited. During the 1950s and the 1960s Tesco grew organically, and also through acquisitions, until it owned more than 800 stores. Originally Tesco specialised in food and drink, now the business has broadened into different areas of retail such as clothing, electronics (Technika), financial services (Tesco Finance), telecoms (Tesco Mobile), home (Tesco Home Insurance, health, car, dental and pet insurance, retailing and renting DVDs, CDs, music downloads, Internet services and software. Today Tesco’s are making £67.6 million in sales, they have 492,714 people working at Tesco’s, they have 5,380 stores and they have over 200,000 shareholders. Tesco’s has 13 retail brands, 3 popular product brands (more to come in the foreseeable future) and 7 pillar brands.


In business, Aims are where the business wishes to see themselves in the future, in other words they are the long term intentions for a business, and it describes the overall goal that a business intends to achieve. Aims help a business measure whether or not they have been successful or not, should a business achieve or exceed their expectations then it is obvious that the business is successful, if an aim is not achieved by the business then the business may go bust. In May 2011, Tesco’s had launched their four-part vision to determine the future of the business, Tesco has four Aims and they are:

  1. To be the most highly valued business in the world
  2. remain a growth company
  3. be a modern and innovative company
  4. and win locally by applying our skills globally

To be the most highly valued business in the world

Their first aim “to be the most highly valued business in the world” basically means they want to be a very valued business everywhere in the world including in communities. Tesco’s wants to be highly valued by the customers they serve, what this means is that Tesco’s wants to be seen as a business that is valued by its customers they serve, the communities where Tesco is present, its shareholders and it employee’s. Tesco’s core purpose is to create value for customers to earn their Lifetime loyalty. This objective is part of one of their values “No one tries harder for their customers”, Tesco’s are aware that they are valued by their customers across all their markets: for example, Tesco’s have the most loyal customer base of the major grocery retailers because they know that groceries can be slightly cheaper at asda yet they remain loyal to Tesco’s as they are rewarding (Discounts, Coupons, Club Card Points....) and they have 82 years of retailing experience. Below is the graph of customer loyalty between Tesco’s and their competitors: as you can see Tesco is the market leader in customer loyalty followed by Asda, Sainsbury and Morrison’s.

Tesco also want to be highly valued by the communities in where they are present, Tesco’s have the idea if they are to be considered as a good organization which does no harm at all then they must be “good neighbour and a responsible member of society” – what this means is that Tesco’s needs to show what good things that they are capable of and that they can do to help the local community, for this Tesco’s has a community plan for each of their markets. In the community plan their promises relating to helping the environment such as providing recycling services, helping out communities such as local people whatever minorities and organising events such as a charity run, and most notably helping out local schools by raising money/ vouchers to buy school computers.

Tesco’s also wants to maintain their relationships with their “loyal and committed staff” as they know that if they look after their staff then it would be pretty obvious that the staff will look after Tesco’s customers, If Tesco’s customers aren’t looked after then it could mean that Tesco’s staff doesn’t think that they’re being looked after, Tesco believe that their people deserve an employer who cares as it is one of their values “Treat people how we like to be treated”. Tesco’s are committed in providing many opportunities to keep their employees happy such as for their employees to transform their jobs into careers, Tesco’s also offers a wide range of benefits across all of their markets – benefits such as medical, dental, prescription and optical treatment.

Tesco’s also wants their shareholders to value their business highly because these people have taken an interest in this business. Shareholders will be looking to make a lot of money in return for their investment and that is what Tesco’s are making sure that they can return them for their investments.

Remain a growth company

Tesco’s aim “remain a growth company” simply means that Tesco’s is a growth company and will remain a growth company. They continue to pursue growth in all parts of their business – in the UK & internationally, in all their services and their general merchandise such as clothing and/ or electricals.  

Tesco’s has more than doubled amount of sales and profit in their UK business over past ten years, maintain their status as the market leader. But there are still more and more opportunities for further growth of the business. The UK has the lowest grocery retail space per capital of any country in the EU; only 54% of customers are able to reach a Tesco Extra store in 15 minutes and Tesco’s only has a small share of the convenience sector. Other than groceries Tesco’s has developed a strong position in other products such as clothing, electricals and entertainment.

Not only does Tesco want to continue the growth of their company domestically, but they also want to improve the growth of their international markets. Statistically more than 2/3 of Tesco’s Profit comes from their international markets. Tesco’s had opened their first international store back in 1995 and now in present day they have 13 markets across the EU, Asia and North America. This shows that Tesco’s has made a successful business around the world as they have already developed market-leading and profitable business in a number of countries. In South Korea Tesco’s business Home plus is their largest international business because they generate £5 billion in revenue per year; this is one of the key factors that contribute to the profit Tesco’s receives internationally. Because Tesco’s has been successful in developing market-leading and profitable business in their markets in their first ten years of their international business, they now plan to over the next ten years to further develop their established markets across the world including in North America, China & India as they are three of the world’s largest economies; the main reason why Tesco’s intends to do this is because they want to bring the markets they have in these countries to the level of the market they have in South Korea so they can (like in the South Korean Market) generate billions of profit and continue growth of the company with more generated billions.

Another way Tesco’s intends to reach their aim “remain a growth company” is by pursing growth in all parts of their business, including the services they provide. Tesco’s customers trust and appreciate the value, simplicity and the good service that Tesco’s provides. This is Tesco’s approach in every product/ service they sell and it is the key to their success in providing new services to their customers, new services such as banking (Tesco Bank), petrol (Tesco Petrol) and telecommunications (Tesco Mobile).

Tesco Bank is a banking service that runs in the UK and it was created by Tesco Plc. It has over 6.5 million customers and the bank generates £264 million in their annual profits – this shows that this service is profitable. Tesco Bank is becoming more and more successful, they are making a considerable amount of progress in credit cards as in February 2011 one in eighth of MasterCard and visa credit card transactions were made from a Tesco credit card – as this has been a successful Tesco bank is now planning on introducing more financial services such as mortgages because Tesco’s aims to fulfil the financial needs of all their customers and they want to be the market leader in this sector.   Another example of their successful services is their Telecommunications business: Tesco Mobile. Tesco Mobile has more than 2.5 million customers.

Be a modern and innovative company

Their third aim “be a modern and innovative company”  means that Tesco’s want to be up-to-date with the current market, they’ll expect changes on the road but its something that they’ll have to adapt to and get used to for the sake of their staff and tesco’s valiable customers.

Tescos has many services in which they show that they are pushing the company in showing that they are modern and innovative. An example would be their online service where customer can shop for tesco products/ services wherever and whenever they want. And if this is not enough tesco’s provides a service for customers with smartphones (Especially Iphones) where they can scan barcodes of certain items, they provide them with the means of ordering from their phone (tesco’s customers can also do this online) and have their goods delivered to their home. Another example of this would be the self-checkout service – this service is modern and innovative because cutomers can checkout quickly as theyre doing it themselves and it saves them the hassle for waiting for staff on the till to checkout for them, plus all they have to do is scan the bar code of their product on the bar code scanner that is built in the self checkout machine and they simply selct what method of payment Cash/ card and simply pay and recieve a receipt. Now that there is new technology tesco use it to imporve their customers shopping experience and this is what helps them keep up to date with technology and shows that they are trying to be modern and be innovative.

Another Way tesco’s attempts to be a “modern and innovative company” is their Online retailing service, Tesco’s first launched this Online Grocery shoping eleven years ago

Another way in which tesco’s attempts to be a “modern and innovative company” is their take on the environement. Nowadays a lot of people are concerened and consious about the envrironment, As tesco’s is a global business they understand the seriousness of this matter and they have the idea that they can make a difference in tackiling global warming. As they are cutting down their own emmissions, working with their suppliers and helping their customers to cut their carbon footprint, Tesco’s realises the fact that a successful buiness needs to be green if it is to continue to grow. To show their committment to this, Tesco’s has a target of becoming a more zero-carbon business by 2050, they aim to achieve this through improved efficiency and by generating energy from

Renewable sources. Tesco’s has pledged to help their customers reduce their carbon footprints by 50% by the year 2020, Tesco’s has worked with organizations such as the carbon trust and other stakeholders to develop a universal carbon footprint label which describes the emissions associated with each of their products. Since January 2008, Tesco’s has more than 500+ carbon labelled products to help customers to be aware of what they are buying and if they should use a different product as opposed to the carbon product.

Win locally by applying our skills globally

Their fourth aim “win locally by applying our skills globally” simply means that Tesco’s wants to be the number one local retailer for all their valuable customers and also at a global scale. All of Tesco’s retailing is local. Their famed Clubcard is one of their ways in which they can be responsive to the needs of their local customers. In addition to rewarding customer loyalty, the clubcard provides Tesco’s with an insight from the millions, and the millions of customer transactions this has benefited Tesco’s as they have the knowledge of what their valuable customers purchase, plus they can find out which products sells the most and which sells the least, which ones popular and which ones least popular and what brands customers usually go for and purchase.  From this Information Tesco’s can use this data and research into customer habits and develop ranges of products, discounts, promotions etc. Because the clubcard has been successful in the UK it has been introduced to the Tesco’s markets across the world which has garnered more members in Europe and Asia than members in the UK.


Every business also needs objectives if they want to succeed; business objectives need to be SMART objectives. SMART is an acronym which stands for specific, measurable, achievable, relevant and time specific. Smart Objectives are practical objectives that can be monitored and achieved.

Tesco Plc has a seven part strategy to broaden their business, to make sure the business can grow in the long term, each of these strategies are classed as objectives:

 1.        To grow the UK core

 2.        To be an outstanding international retailer in stores and online

 3.        To be as strong in everything we sell as we are in food

 4.        To grow retail services in all our markets

 5.        To put our responsibilities to the communities we serve at the heart of what we do

 6.        To be a creator of highly valued brands

 7.        To build our team so that we create more value

To Grow the UK core

Some these objectives prove to be important for Tesco plc. The first objective is “To grow the UK core” The objective is just as relevant in present day as much as it was back in 1997. Tesco is the largest business group UK and is a key driver in making sales and profit. There are many opportunities for the company to achieve their aim by furthering the growth of the company and continue to grow the business as a whole. To achieve this objective, Tesco may want to open more stores around the UK, such as opening big stores such as a superstore in big cities like London, Birmingham, Manchester...., they could also open Express stores in City Centres to serve the needs of heavy shoppers, they can also open Metro stores in inner city towns to serve the needs of the local community.

Another way Tesco’s achieves this objective is by generate outstanding financial performance; Tesco’s operate an approach to managing the business based on the 'Steering Wheel' segments: Customer, Community, Operations, People, and Finance. In order to achieve sustainable profitable growth over the long term they deliver on all these segments.

This approach means that they deliver strong financial performance each year, which has led to remarkable performance when looking over a number of years – showing the effect of consistent growth. The chart on below shows the generated revenue of Tesco’s compared to their competitors, it shows the company’s growth:

Tesco’s has continually delivered superior financial performance to their peers in terms of profit margin and return on capital, which has helped them invest in their customer needs and further expansion of the business such as  new stores, new businesses (e.g. banking and telecoms), new channels (e.g etc.

To be an outstanding international retailer in stores and online

Their second objective is “To be an outstanding international retailer in stores and online”, back in 1997, Tesco’s international businesses generated 1.8% of the Group’s profits. Today they represent 25% and they’re now either number one or number two in eight of their 13 markets outside the UK. Their next step is to be the best international retailer in stores and online. Currently the sales their markets in Asia generate a total of £11 billion in sales and the sales their markets in Europe generate a total of £10.6 billion.

To be as strong in everything we sell as we are in food

Their third objective is “To be as strong in everything we sell as we are in food”, what this objective means is Tesco’s wants to be strong in everything they sell, as they are mainly a foods retailer they want to also be strong in selling non-foods as well because they are a business that mainly specialises in selling foods, e.g. their F&F clothing brand they want this brand to gain more recognition and gain profits from the sales, another brand of Tesco is technika which specializes in technology such as Televisions, Speakers, MP3’s etc. They want to meet the needs of all their audiences so they can maintain customer loyalty and gain more customers – so if Tesco sells non-foods then they are entering a different market whilst maintaining their position in the foods market so it helps them maintain in being “strong in everything” they sell other than just foods.

To grow retail services in all our markets

Their fourth objective is “To grow retail services in all our markets”, what this objective means that Tesco’s wants to develop their retail in all their other markets such as in clothing and Electronics, today these markets generate £583 million in profit for Tesco, so if they want to grow more in their retail services then they would be making twice the amount of £583 million – this would make Tesco’s super rich and it can help them as they can use this money to invest back into the business and expand their other International markets  because their international markets have established well-known brands in their local market respectively so Tesco’s can use their earnings and help grow not only their domestic business but their international market, this ensures that they are growing retail services in ALL their markets.

To put our responsibilities to the communities we serve at the heart of what we do

Their Fifth objective is “To put our responsibilities to the communities we serve at the heart of what we do” means That Tesco is taking their initiative and making their presence in helping their local communities. The ways they help their local communities is by rewarding customers with vouchers and with a certain amount of vouchers it can help buy computers for local schools – this shows Tesco’s dedication in helping and improving communities especially helping government schools. Tesco also show their support for their environment and they provide their customers and members of the community with recycling facilities such as recycling bottles, Cardboard, Shoes and unwanted clothes, this how they show their responsibility in helping the environment as they are providing services to their customers and the community to help them play their role in helping the environment. This shows that Tesco’s is putting their “responsibilities to the communities” they serve as they funding computers for school children which can be used to assist their education, and that they are offering free recycling services to show that they want to see a safe environment for a better future thus they are meeting this objective.

To be a creator of highly valued brands

Their sixth objective is “To be a creator of highly valued brands” means Tesco’s wants to create more brands just like they have in the past, in which they have been successful at. Tesco’s believe that Building brands gives their business more meaning with their customer’s because it they have certain brands that relate to customer segments e.g. the technika brand is especially for technology geeks or people who have lives that are primary dominated by technology, also the F&F brand primarily sells cloths for all sexes but they heavily market their female clothes as the F&F name has a heavy correlation to the word female so it attracts female customers. Not only do they have brands in non-foods but they do have brands in foods such as the Tesco Finest range which consists of baked foods/ bakery food like cookies, croissants muffins etc. They also have their famous Tesco Value brand which is basically a cheaper alternative to high quality brands. All of these brands have been successful and it shows that Tesco have history when it come to making new brands, so their rich history may help Tesco to reach their objective of creating more “highly valued brands”.

To build our team so that we create more value

Their seventh Objective is “To build our team so that we create more value” means As Tesco’s is growing they need more leaders to run the many aspects of the business and support its functions, not only do they have a very important role but they also have the responsibility in helping to build a bigger and better team for the future. Tesco’s treats their employee’s they way their superiors like to be treated with tolerance and respect; the business wants their employees to enjoy every aspect of working at Tesco. Their employees receive a lot of recognition as they provide excellent customer service. Tesco’s supports their employee’s, trusting in their abilities to perform well while they help them reach their true potential. Tesco’s encourages its employee’s to learn on the job to improve their abilities in working and take responsibilities (so they can build confidence in themselves) from the moment they have started working here.  Every Year Tesco’s creates plans for the year around their employee’s, they wish for all their employees from all their markets to be treated with respect, receive an opportunity to get on, have a manager who is influential and have an interesting job. Because of this promise and the benefits Tesco’s provides, Tesco’s can without a doubt say that they receive a lot loyalty from their employee’s as they stay with the business for a long period of time, Nearly half of their Director population have at least 12 years experience.

Task 2: External Factors

In this task I will be explaining how the current low level of economic activity may affect Tesco PLC. I will give realistic examples of how Tesco’s may be affected economic wise, I will be also be talking about  the Social & ethical issues that the customers of Tesco’s has, I’ll be talking about legal issues and I will also be talking about how competition affects Tesco. I will describe how it affects Tesco’s in achieving its aims and objectives. I will link my research back to the aims & objectives of Tesco’s.

Economic activity is the production and distribution of goods and services. Economic activity can have an impact on how a business meets its aims and objectives; it can be measured in the level of employment, and average wages, business’s opening compared to business’s closing down and house prices. With High levels of economic activity it can benefit businesses and people that are in employment, it can also get people to build high confidence in the future of business/ economy and owners will have no hesitation in expanding their business’s. There are a lot of effects that a high level of economic activity can have such on businesses such as increased consumer spending, more sales etc.  In Tesco’s scenario, High levels of economic activity can benefit Tesco’s as it can aid them in achieving their aims and objectives. With high levels of economic activity Tesco’s would have a lot of their customers spending and purchasing Tesco’s products and services, this would lead to a lot of sales and more profit for Tesco’s – this ensures that Tesco’s meets their aim “to remain a growth company” , Tesco’s is the market leader as they continuously make profits, and if the economic activity is high then consumers would be spending more as they have no worry about the costs so then in turn Tesco’s would be making a lot of sales and that leads to profits which Tesco’s can use to re-invest into the business and maintain growth in all parts of their business.

At the moment, today’s economy is in the recovery stage as it had suffered economic recession back in 2009, so right now the economy is in the state of low economic activity. low levels of economic activity can do the exact opposite and can heavily affect businesses – some business’s may close down or relocate to another area, unemployment may increase if business’s close down, consumer spending will be low due to costs – as a result of this consumers would tend to purchase cheap products rather than premium products from a business so that they save money, consumers would then want lower prices to meet their financial needs.

Join now!

Low levels of economic activity can have a negative affect on Tesco’s. when the economic activity is low then consumers would be tight on their budgets and would cut back on luxuries, luxuries would be premium brands that Tesco’s sell which are pricey, so then consumers would go for cheaper alternatives such as Tesco Value brand which offers the same products as the high quality products except they are cheaper and have less quality. This can be bad for Tesco’s as they pay a lot for their suppliers to sell their premium brands and if no customers are purchasing them ...

This is a preview of the whole essay