Tesco Stratagy Management

Introduction:

Tesco was founded in 1919 by Jack Cohen. Their own brand product namely Tesco tea was launched in 1924. Tesco stores Limited became a PLC (Private Limited Company) in 1932 and from there on they just started to mount higher and higher. In 1947 Tesco was floated on the London Stock Exchange as Tesco Stores (Holdings) Limited with a share price of 25p.

At present Tesco have various activities in which it is involved. The main activity of this organisation is the retail of groceries in the UK as well as the international market. Furthermore it also has good sales in the non-food department [4]. Other activities of the organisation involve telecom and financial services as well as life and pet insurances. Tesco is also involved in petroleum activities. They have set up their own petrol stations in various stores.

The main share of profits in the market for Tesco comes from the UK market. However they do get a good share in the international markets as well such as Central Europe, Asia and very recently United States [5]. International sales contribute to about 22% of Tesco whole group sales. The details of the sales include 42.3, 10.0, 9.1 and 0.4 billion pounds in the UK, Europe, Asia and the US respectively.

Tesco is dealing in retail products. Main competitor of Tesco is Asda, Sainsbury and other small super market who deals in retail products. The main value of Tesco is to put the customer first and understand what they need and meet their demands while acting responsibly for the community. They also aim at making the staff to respect each other and work as a team. The directors reckon that the success of the business is coming by implementing these values which helps the strategy they planned to be successful. Every age group are using Tesco retail products so they need to set their standard to match all age group demand. In the current era, Tesco has 472,000 people who work under it [7]. There are 4811 active stores across 14 countries. As it happens every year the company has recorded record sales which groups to 62.5 billion pounds resulting in a net profit of 3.4 billion pounds. Since 2006 there has been a considerable increase in group sales as shown in chart 1 below. An increase of 8.5% in Group sales has been calculated.

Chart 1: figures of group sales since 2006

Increase in profits has led to an increase in dividend payout per share. This has also been increased since 2008 and summarised in table 1 below.

Table 1: Dividend pay-out per share since 2008

The major notable highlights of this year's progress are [8]:

1. There has also been a 12.3% growth in Group trading profit and 10.1% rise in underlying profit before tax.

2. Net debt reduction