Case Study on Tesco Limited

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When the proprietor of Tesco limited began selling groceries in a stall in North London 1919, no one including himself would have thought that this would become of one the greatest success stories to be made. Tesco limited was incorporated by Jack Cohen, who invested some surplus funds amounting to £30. Currently, the firm market share is worth £13billion ($223 million) according to Yahoo Finance (Ycharts.com, 2016) making it one of the biggest retailers in the world. According to statista.com, Tesco limited is the leading grocer in terms of market share in Britain holding more than 28% of UK grocery market (Statista, 2016). Tesco limited has its operations as far as Malaysia and China, which is far from its country of origin having its presence in more than 11 countries (Tesco Plc., 2016). The company has invested in different kinds of industries from clothing markets, Insurance, banking and its main line of operation being supermarkets.
Tesco’s strategy
According to forbes.com, close to 70% of a company’s stakeholders fail to understand and interpret what the CEO and management of the company have planned at the beginning of every year (Forbes.com, 2016). 70% is a significant number that may affect a company’s performance if not properly checked. In company stakeholders, employees fall as one of the most important individuals. They play a critical role in company performance. According to a recent survey by a research group, close to 29% of employees were only able to identify clearly with the business’s strategy. With that in mind, the newly appointed CEO
With the increased competition globally, Tesco Plc. has not been left out of the matrix as witnessed by its operations in the 2015 financial year. The company has been experiencing tremendous pressure from the market, shareholders and internally but has struggled to keep its operations a fit. Tesco Plc. In line with the plan to revive the company to its former glory new appointments and elections were done. A new management team that comprises of a new Board Chairman, CEO, executive directors and non-executive directors was set in place. The company’s strategy outlined in the strategic report falls under three main themes that revolve on regaining competitiveness, protect financial position and rebuild trust.
Regaining competitiveness
Tesco Plc. Plans to increase much of the lost market share in its home market of UK that accounts close to two-thirds of its total sales. To improve these sales the company plans to improve its service platform to a whole new level. The firm has increased its customer attendants by 4652 that will ensure customer needs are attended to effectively. On the goods, the enterprise has increased the range of goods in its shelves and also categorized goods to enhance the process of locating products.
The company has reduced the prices of most of its products to make them affordable and attractive to its customers. It is expected to increase its sales and attract more consumers with the same move. The availability of goods has been improved by the company increasing the variety of products in the shelves to suit the needs and preferences of different customers. The firm has endeavored to enhance its profitability by closing the unprofitable stores worldwide.
Protecting and strengthening financial position
Tesco Plc. is planning to reduce the high gearing level brought by too much debt finance on its balance sheet. Relieving itself from high debt will free cash flows used in paying interest to creditors and also improve its financial outlook for potential investors. Many shareholders got a kick in the head after the company decided to thwart its efforts of paying the 2014-15 dividends in a bid to improve company cash flows.
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