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Corporate Finance: Tesco acquisition strategy - Essay Example

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Acquisition has been one of the strategies that the organisations in different parts of the world use to expand their market share, increase their customer base, enter into a new market, capitalise on the opportunities from the markets and for several other reasons. …
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Corporate Finance: Tesco acquisition strategy
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Download file to see previous pages Besides this, organisations also acquire other firms in order to reduce their costs, improve their profitability, and strengthen its position in the market (Johnson, & Turner, 2010).
Acquisition has been one of strategies that have been used by organisations for so many important purposes (Verbeke, 2013). Acquisition helps organisation to grow and enter markets where it is not already present. This report analyses one of the retailers of United Kingdom, Tesco. The report identifies and analyses the acquisition that the company has undergone from the year 2003 to 2009. The report also discusses reasons and objectives of these acquisitions. The report then also assesses whether the acquisitions have been able to achieve their objectives or not and whether these acquisitions have been successful or not. At the end, the report provides the conclusion of the overall topic.
TESCO ACQUISITION STRATEGY IN HISTORIC PERSPECTIVE
Tesco has been growing over the years. The company is not only penetrating itself in the markets where it is operating but the company is also adapting the market development strategy. The company has used different strategies to expand its offerings in other markets. Acquisition or acquiring another firm is one of the strategies that the company has acquired to not only expand its offerings in new markets but also to penetrate in the markets where it is already operating (Hill, & Jain, 2007). ...
The objective of this acquisition was to introduce and start telecom division in Japan. The idea of this acquisition was to offer mobile as well as home phone services so that the services could harmonise with the existing Internet service offered by the company. (BBC, 2004). So the aim was to further capitalise on the opportunities prevailing in the market with a new product. Such a strategy is known as product development as the company offers the new product in the same market. Acquiring Kipa in Turkey In addition to acquiring C Two Network, the company had also acquired most of the shares of Kipa which is Turkish supermarket chain. The idea was to enter Turkey and further use this acquisition as the base to capitalise on the opportunities in Turkey. With the passage of time, the company had grown its number of stores in Turkey (Tescopoly, 2007). Acquisitions in 2004 Acquisition of Adminstore Tesco acquired Adminstore which included 45 stores of Cullens, Europa and Harts in different parts of London (BBC, 2004). The idea was to capture a higher market share in London and to reduce the competition. Acquiring Fre’c In the year 2004, 25 stores of Fre’c were also acquired by Tesco in Japan. This allowed the company to strengthen its position in the competitive market of Japan (Finch, 2004). Even though Japan has been a difficult and a challenging market for the firms from Britain, however there are many opportunities for companies in Japan as it is one of the biggest markets for retailers. Therefore to capitalise on these opportunities Tesco acquired Fre’c. Acquisitions in 2005 Acquriring Safeway /BP Tesco had acquired 21 remaining stores of Safeway/BP as their partnership was dissolved with Morrison in the year 2005. (Tran, 2005) ...Download file to see next pagesRead More
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