Tesco PLC the History, Areas of Operation, Trading Links, and Financial Structure - Case Study Example

Running head: british company profile 11th April Tesco PLC History of the company Tesco Corporation is a British based supermarket headquartered at Cheshunt, Hertfordshire. The firm was founded in 1919 by Jack Cohen, a son of Jewish emigrants from Poland. Tesco started to sell surplus groceries from a stall in street market but later in 1924 the first brand appeared in the market. The name of the company came after Thomas Edward Stockwell brought a shipment of a tea and thus described the tea from the supplier as TES coming from the first three name of the supplier and the last letters came from the surname of the founder (CO). The combination of the two words came up with the word Tesco. The first store to be opened was in 1929 in Burnt Oak, and the first self service store was later opened in St Albans in 1956 making it the first and self service which was operational up to 2010. Due to the need to expand and the customers and products being congested, the management saw the need to relocate to a larger premise on the same street. During 1950s, Tesco grew bigger and the management started to expand more thus acquiring more than 800 stores in London (Simms, 2007). For example, in 1957 the company bought 70 Williamsons stores, in 1959 other 200 Harrow stores outlet stores were opened and in 1960, 212 Irwin stores among others. The motto of the business was to pile it high and sell it cheap and this made the customers to flock in the supermarket. The company kept on expanding and in 1995, Tesco introduced a loyalty card and later in the same year an internet shopping services were also available for the customers. In 2006, Tesco announced the need to move into United States making sure that grocery stores were opened in the western states making it to have an idea to expand globally. Main product The main section that Tesco usually deals with is Tesco Superstores. This is a supermarket that is stocked with groceries and other non food goods and the stores are normally branded as Tesco. The supermarket usually deals with groceries and the store first operated in Liverpool. Tesco express to provide food stuffs to the customers and shopping is done at Tesco express and later the food stuffs are packed. The stores are found in busy districts and in residential areas where the customers get access to the products (Nash, 2006). Tesco Extra stores are hypermarkets that provide all kind of product ranges. These are largest supermarkets and they are stocked with food, clothing, electronic gargets and entertainment systems. The hypermarket is usually on two floors to make sure that all range of products is available to the consumers. Currently, Tesco is more concerned with biofuel and not pure petrol and diesel. Internet services are also available in the company and Tesco normally operate mobile phone, home phone and broadband business (Finch, 2010). The consumers in the residential areas can purchase from Tesco stores alternatively they can do it online through Tesco website. What Tesco does is that they work along with telecoms operators thus pairing the market strength and later they sell it to the customers. Tesco has a kind of laboratory where photo processing is done and recently they are using the digital cameras to print photos of the customers and this makes the company to provide different varieties of products to the customers. Company structure and organization Tesco adopts a hierarchical structure since the company has a lot of workers who report to more than one person before the required information reaches the top management. The structure is based on the departments which Tesco operate with and each level or department has a person who controls it. Tesco Incorporation has employed a lot of workers and thus there is need to have a chain of command from each department that has a supervisor. The supervisor is answerable to the manager and thus daily reports have to be given to the manager of the company. Since the company is large , operational managers must submit reports to the chief executive officer (CEO).The company has expanded in the recent years and thus financial managers are hired to make sure that all the finance is accounted for and transparency as a culture is emulated in all the stores and offices. The top ranking officer in Tesco is the CEO, Terry Leahy and everyone who is employed by Tesco is answerable to the commands given by the CEO (John, 2007). The managing director who is the chairman of the board is Sir Richard Broadbent and the mangers and the supervisors are answerable to him. The board comprises of two other executive directors and nine other independent non executive directors (Thompson, 2011). The use of hierarchical structure in Tesco helps the top management to closely control the workers and thus the workers in different departments know their work and thus no wasting of time waiting to be given the responsibilities (Leahy, 2012). The hierarchical structure that is used by Tesco has advantage to the company since they have clear authority and responsibility and this makes the employees to know what they are doing and know the consequences if the rules are not followed. Areas of operation and main trading links Tesco is an international company since it has expanded in many regions. The company has entered other countries for a joint venture with the local partners like in Korea, Tesco usually venture with Samsung group that provides Samsung-Tesco Home Plus. In Thailand, there is Tesco Lotus this is one of the acquisitions strategies that the company has adopted (Ian, 2008). Tesco has been operating in United Kingdom as the main operational area and this is where the first market was established back in 1919. The United Kingdom accounted for 75% revenue though lower sales have been experienced outside the areas of United Kingdom (MacLaurin, 1999). The company has expanded to Europe where in Czech Republic 84 stores are available where non food items are sold and a petrol station that offer personal finance services. In Asia, Tesco stores are available and they do provide different products. For example, in China 120 stores have been operating while Japan has 121 stores available. In the United States, Tesco entered the market in 2007 through the opening of convenience stores that are known as Fresh and Easy in California. The first store was opened in Hemet in California in 2007 and currently Tesco has more than 182 stores across Arizona and the performance of the store is on peak (Humby, 2006). Tesco entered Turkey in 2003 and the company first started by building infrastructure so that expansion would be easier and this meant that revenue is generated to the countries that are working along with Tesco. In Thailand, Tesco has more than 380 stores and the first operation started in 1998 with a join venture with Charoen Pokphand. The range of products varies from food products to electronic products among other services. Tesco lotus claim to serve more than 20 million customers every month with Thailand being the major trading area with 97% sales of goods. Financial structure The year 2010 is when Tesco increased the pre-tax profits with 10.1% to $3.4 billion. In 2011, the retailer reported that in United Kingdom the sales were going down as time went by and for the past 20 years the sales were lower compared with other stores that have expanded internationally. This was because United Kingdom consumers reduced non- food spending. Below is a table that show Tesco financial years in 2011, 2012 and 2013 and comprises of United Kingdom and Ireland results. year Profit before tax ($m) Profit for year ($m) basic earning per share ($) 2013 3,549 3,453 35.6 2012 3,985 2,814 34.98 2011 3,535 2,671 33.10 The year 2013 recorded the highest profit that stood at $3,453 million due to expansive marketing strategies that the company undertaken globally (Kirby, 2007). During the three years of financial accounting, Tesco did not have any debtors who were associated with the company. In terms of assets, the company was recorded to have a high number of assets for the 3 years. The company is working along with other countries making it easier to grow in those countries that Tesco is expanding thus generating revenue in the countries thus increasing the gross domestic products (GDP) home country as well as the countries in which it has branches. The rate of employment is going to be high in the different segments that Tesco is in operation since Tesco is planning to create 16,000 new jobs though 9, 000 jobs will be made available to the United Kingdom residents. References Finch, J. 2010. Tesco opens its first zero carbon store. New York: New York Press. Humby, C. 2006. Scoring points: How Tesco continues to win customer loyalty. Philadelphia: Kogan Page. Ian, M. 2008. Tesco sues critic of its expansion in Thailand for £16.4m damages. New York: New York Press. John, T. 2007. Business as Usual For Sir Terry after 10 Years in Charge. Birmingham: Birmingham Press. Kirby, T. 2007. Teetotal Bourneville Takes Pledge against Tesco .London: Kogan Page. Leahy, T. 2012. Management in 10 Words. London: Random House. MacLaurin, S. 1999. Tiger by the Tail: A Life in Business from Tesco to Test Cricket. London: Pan Books. Nash, B. 2006. Fair-Trade and the growth of ethical consumerism within the mainstream: an investigation into the Tesco consumer. Leeds: Leeds University. Simms, A.2007. Tescopoly: How one shop came out on top and why it matters. London: Constable. Thompson, J. 2011. Dominos Pizza lines up Lance Batchelor as next chief executive. New York: New York press. Read More