In the 1990s, Tesco started to expand its operations outside the UK. In Eastern Europe, it has met growing consumer aspirations by developing stores in Poland, Hungary, Slovakia and the Czech Republic.
Closer to home, in 1997 Tesco purchased 109 stores in Ireland, which gave the company a market leadership both north and south of the border.
Sir Jack Cohen 1947-1979
Sir Leslie Porter 1979-1985
Sir Ian MacLaurin (Lord MacLaurin from 1996) 1985-1998
John Gardiner 1997
Chief Executive Terry Leahy 1997
The letters ‘plc’ at the end of its name distinguishes a public limited company from a private limited company. Most of Britain’s famous businesses such as Marks and Spencer, ICI, BP, and Manchester United are public limited companies. All companies with share prices quoted n the London Stock Exchange are public limited companies.
To become a public limited company, a business must have an issued share capital of at least £50,000 and the company must have received at least 25 per cent of the nominal value of the shares. Public limited companies must also:
· be a company limited by shares
· have a memorandum of association with a separate clause stating that it is a public company
· publish an annual report and balance sheet
· ensure that its shares are freely transferable – they can be bought and sold.
Benefits:
· All members have limited liability.
· The firm continues to trade if one of the owners dies.
· Huge amount of money can be raised fom the sale of shares to the public.
· Production costs may be lower as firm may gain economies of scale.
· Because of their size plcs can often dominate the market.
· It becomes easier to raise finance as financial institutions are more willing to lend to plcs.
Constraints:
· The setting up costs can be very expensive – running into millions of pounds in some cases.
· Since anyone can buy their shares, it is possible for an outside interest to take control of the company.
· All of the company’s accounts can be inspected by members of the public. Competitors may be able to use some of this information to their advantage. They have to publish more information than private limited companies.
· Because of their size they are not able to deal with their customers at a personal level.
· The way they operate is controlled by various Company Acts which aim to protect shareholders.
· There may b a divorce of ownership and control which might lead to the interests of the owners being ignored to some extent.
· It is argued that many of these companies are inflexible due to their size. For example they find change difficult to cope with.
Tesco plc. is large, private sector organisation. As it is providing-service organisation I can classify it as tertiary sector organisation. Tesco plc. is a national company, but it is becoming to multinational. Main objective is to make a profit.
As Tesco is a limited company that means all owners have limited liability. If a company has debts, the owners can only lose the money they have invested in the firm.
Main source of finance is selling shares and borrowing from the banks. Tesco has a thousands of owners, every man who has any shares is owner; but these people can’t control the company, so company has a board of directors and chairman who control the company.
Tesco has a heavy programme of capital expenditure, investing in new stores and upgrading existing ones. In the year ending 28th February 1998, the group capital expenditure was £841 million, compared to £758 million in the year ending 28th February 1997. This £841 million was divided into £737 million spend in the Great Britain, £63 million in Ireland, north and south, and £41 million in Europe. Tesco anticipates that in the 1998-9 financial year, capital spending will rise to about £950 million, with most of the extra spending being concentrated in Ireland and Central Europe.
Profit is also distributed to shareholders in the form of dividends.
For example, in 1998 the profits from Tesco after tax were £505 million. About 50% of the profits were distributed to shareholders as dividends. Subsequently approximately £250 million was retained by the company for investment in new stores and improving their service to customers.
E2
Objectives of the business.
The objectives of the business can vary enormously A charity’s overriding objective might be to alleviate poverty in the developing world; on the other hand many companies’ major objective is to generate the maximum profits possible. An organisation’s mission statement gives an indication of the purpose of the business and dovetails with the objectives the organisation set itself.
Mission statement.
Many organisations attempt to express the purpose of their being within a few sentences. The mission statements are intended to provide a sense of common purpose to direct and stimulate the organisation. This statement represents the vision or mission of the organisation. Mission statements change over time to reflect the changing competitive nature of the markets in which business sell.
Mission statement normally set out to answer the following questions:
- What business is the organisation in?
- Who is to be served?
- What benefits are to be provided?
- How are consumers to be satisfied?
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Figure 1.1 illustrates the interrelationship between a company’s mission statement and its objectives.
Figure 1.1: The hierarchy of objectives
The goals pursued by any business can be separated into primary and secondary objectives.
· Primary objectives are those that must be achieved if the business is to survive and be successful. These relate to issues such as profit levels and market share.
· Secondary objectives tend to measure the efficiency of the organisation. They may affect the chances of success, but only in the long term. Examples include administrative efficiency and labour turnover rates.
Profit maximisation.
Profit maximisation one of the most important objective for companies which are owned by shareholders. Profit, at is simplest, refers to the extent to which revenues exceed costs, so profit maximisation occurs when the difference between sales revenue and total cost is greatest.
Survival.
Survival is an important objective for many businesses. It is particularly important when businesses are vulnerable such as:
· during their first few years of trading
· during periods of recession or intense competition
· at a time of crisis such as a hostile takeover.
Most recently established businesses have survival as an objective.
Increasing sales or market share.
Growth increases the scale of a business, resulting in higher levels of output and more sales. Many businesses pursue growth strategies because their managers believe that this is essential for survival. If a firm grows, it might be able to attract more customers, earn higher profits and begin to establish itself in the market.
Growth offers:
- increased returns for the owners of the business
- higher salaries for employees of the business
- a wider range of products for the business’s existing and potential customers.
Growth can be important target for managers. It is increasingly common for managers’ pay packages to be a combination of shares and salary.
Providing social or community service.
A number of organisations provide services to the community. These organisations are part of the public sector – they are managed, directly or indirectly, on behalf of the government – yet they are a form of business. Their overriding objective is to provide the best positive service to the local community.
Charitable and non-profit objectives.
Charities have a high profile in the UK. Charities have a number of clear objectives:
- to rise the public’s awareness of the cause that thy support.
- To rise funds to support their projects.
Charities trade with the intention of earning as much revenue as possible to spend on their particular causes.
Producing high quality products.
Just as many businesses seek to provide high quality service, a large number of businesses also have the provision of high quality product as an important objective. Acquiring reputation for top quality can allow businesses to charge a premium price and to enjoy higher profits. Reputations for supplying quality products are jealously guarded.
Tesco is committed to retaining its position as the UK’s largest supermarket retailer. Customer feedback forms, in-store discussion groups and a continuous analysis of sales figures has enabled Tesco to recognise the importance of the key principles of price, quality and service.
The company owes its success to its emphasis on meeting changing customer needs through service and innovation, while maintaining its commitment to value and quality.
Underlying its business success is a commitment to upholding certain values and working and working principles and seeking continuous improvement in its ethical performance.
Companies are part of the society in which they operate and must take note of the interests and concerns of many different groups. For Tesco these includes its customers, its stuff, its shareholders, its suppliers and people in the local communities close to its stores and in the world beyond. Each group has expectations of the company which Tesco has to meet and manage if it is to maintain its position as a leading and successful retailer.
Tesco must serve its customers by providing the goods they want and the service they expect. By meeting customers needs better than its competitors, Tesco earns profits and creates value for its shareholders.
Tesco, like other large companies, however, recognises that its wider reputation depends on other things such as its stuff relations, its attitude to the environment, its support to the community, and its relationships with suppliers. Also as a leading food retailer, the company must ensure that its provides products which are safe to eat or use, as well as giving customers advice on matters such as healthy diets.
Tesco’s main business objectives:
· to provide customers with outstanding, naturally delivered, personal service
· to earn the respect of its stuff for the values and appreciate their contribution
· to understand customers better than anyone
· to be competitive even on the basics
· give customers a broad range of strong relevant promotions in all departments of the store
· give customers what they want under one roof
· provide an environment that is easy and pleasant to shop in
· upgrade existing stores to the standards that is expected from Tesco
· to recognise Tesco has brilliant people, use this strength to make customers’ shopping enjoyable in a way no competitor can
· use intelligence, scale and technology to deliver unbeatable value to customers in everything Tesco does
· to maximise profits to provide high returns for shareholders
· to increase sales or market share as much as possible
· advertising should appeal to all customers in a relevant
Tesco’s main mission statements:
- To be world’s best and largest supermarket retailer.
- Completely increase value for customers, and to earn their time loyalty.
How Tesco is going to achieve these objectives?
What Tesco expects from its staff in order to achieve this?
Tesco staff:
- Are all retailers, working as a one team.
- Trust and respect each other.
- Respect all customers, the community, suppliers and the competition.
- Strive for personal excellence in everything they do, leaving no stone unturned in order to get it right.
- Are encouraged to take risks, give support and do not blame others.
- Are rewarded for creating value for customers.
- Are talked and listened to: and their knowledge is shared, so that it can be used.
- Have fun, celebrate success and learn from failure.
What is the comment Tesco has to its customers?
Tesco customers want the best possible value for their money. Tesco is determined to offer its customers quality products, good service, attractive stores and low prices.
To meet this aims, Tesco:
- works closely with suppliers to ensure products are of the highest quality and are delivered to stores in the best possible condition.
- makes sure that its staff are committed to giving the best possible quality of service.
- aims to create in its stores an environment which makes shopping easy, interesting and comfortable.
For example, in 1993 Tesco introduced Value lines, which offer exceptional value for money, followed by New Deal Pricing on leading commodities and brands in 1994. In 1996, Tesco introduced Unbeatable Value with the pledge that nobody would sell the equivalent product for less price.
E3
Organisational functions.
All organisations require resources to carry out their functions. One way of judging the success of a business is to compare the resources it uses with the value of the product that results. For example if it is a small business running by it’s owner, for example small shop, so it doesn’t need any workers, large piece of land and big capital, owner can work alone. But if it is a very large business like car manufacturing so it requires a lot of workers, very large piece of land and big capital.
The resources of the business.
One way of considering the resources used by a business is to classify them into the factors of production. The main capital of production are capital, labour and land.
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CAPITAL
refers to any manufactured product used by the business to make other products. This category therefore includes all machinery, vehicles and office equipment used in businesses. It also includes the company’s buildings.- 
LABOUR
is the human resources used by business organisations during production.
- LAND
– site on which the business is located and natural resources it might use.
- ENTERPRISE
– owners and shareholders.
Functional areas.
All businesses combine factors of production as an essential part of their production activities. To combine these factors, to engage in production and to achieve their objectives organisations undertake a number of functions. The major business functions include:
· finance
· production
· human resources
· administration
· research and development
Business requirements for functional areas depends on its size, for example small business might merge many of these functions within their administration department, with responsibility in the hand of one or two people. As a business grows the number of people required to carry out these functions increases.
The financial function.
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Produces standards
cost data
Customers Auditors Inland Revenue and
(price list) (accounts) Custom & Excise
(information relating
to tax liability)
Figure 1.3: The financial function
A separate department normally carries out the finance function of the business. The finance department carries out a number of key activities:
· records all financial data
· chases up slow payers
· collects payments from customers
· provides information
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