How do cornershops survive against Tesco?

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How do corner shops survive against Tesco?

My name is Anees Ahmed, I am a year 10 student at slough and Eton C of E School and I am studying a course based on GCSE business studies. Over the next few months, I will be researching on how a small corner shop survives against Tesco and I will research on what methods the corner shops use to survive against Tesco.

The question I will be investigating is:

In this business, studies course work I will be researching by doing a price survey, which will involve me, comparing a corner shop against Tesco. I will be using different techniques to find research. I will be comparing the two businesses finance, liability, location, doing a price survey, advertising, specialist and extra services. I will be analysing the good and the weak points of the two different businesses.

History of Tesco

In the year, 1919 just after world war one Tesco was founded by a man called Jack Cohen who was at that time a sole trader. The only products he sold were simple groceries on a market stall in east London. In the year 1924 Tesco sold their first ever brand called Tesco Teas, which was supplied by a man called T.E. Stockwell. Later on in that year, Mr. Cohen went into partnership with T.E. Stockwell his supplier. In the year 1932 the two partners did not like working as a partnership and were worried about the disadvantages of being in a partnership and wanted little more protection so they decided to change into a private limited company- Tesco stores Ltd.

In 1947, the two partners were finding it quite hard to raise finance, as it was just two people so they decided to change into a Plc because in that way they can raise money through the public by selling part of company to the public called a share, which was at that time 25p.

Tesco PLC

A Public Limited Company is a company, which sells its shares on the stock exchange. By doing this, this gives them the ability to raise millions of pounds from all over the world. Firstly, to set up a PLC one shareholder has to invest £50,000, and sometimes it can be quite difficult to find someone who can invest the money.

Another problem is that several legal documents have to be produced in order to set up a PLC.

The stock exchange is a huge gain for selling shares to people from all over the world. Nevertheless, shareholders also expect to get high dividends. PLCs have to legally publish their accounts to the public who can access their performance and company, and therefore make their own decisions into investing into the company.

Another advantage, which has helped the company promote its shares, is the media e.g. the media has encouraged people to invest into the company. Shareholders have limited liability when they invest in PLC like Tesco, and this helps to safeguard their investment, which means that the shareholders do not lose their funds even if the company goes bankrupt therefore, this allows the shareholders to be more secure about their personal possessions.

Tesco have been very beneficial through their stock exchange and showing the public their high profits from 1.7 in 2004 to 2.2 billion in 2006. This shows that Tesco have increased their profits vividly in the two years.  This also shows that Tesco’s performance has been excellent in comparison to Asda’s £485 million. Due to this, it has encouraged the public to invest into the company and therefore giving Tesco extra capital to help expand into the on line/club card and a number of other services e.g. non-food and financial services, as a result, making the public’s life easier by having everything under one roof. All this has led to Tesco to gain a market share of 29% and become the number one U.K supermarket.

        

Another service, which makes the public’s life easier, is the Tesco.com website, which encourages people to shop from the comfort of their homes and therefore helped to raise their sales and profit. This service has been developed because of shareholders investment into the company. In the year 2005, Tesco made £280 million profit. This definitely has helped people whose lifestyles are very busy, ill or disabled. The public benefit and this has definitely helped the society because the goods can be delivered within 24 hours with a charge of £5.

Club card is another financial service and a loyalty system, which means that every time a customer makes a purchase he/she gains points for every £1 they spend in the store. In return for their points, they receive vouchers for their favourite products. This has encouraged thousands of people to shop at Tesco and as a result helped increase their sales revenue.

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With the success of Tesco’s £2.2 Billion profit, it shows that they have been able to invest in various areas wisely and as a result, with their high profit, they are able to pass on high dividends to their shareholders allowing them to invest more and allowing new shareholders to invest. 

Tesco Plc

A Plc stands for a public limited company, which is usually a large company owned by shareholders who own shares in a company. The more shares you own the more control you have. The first word in a PLC is ...

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