Topic chosen This report analyses the business performance and financial position of Tesco. Tesco has been the market leader in UK grocery market for years and is still growing steadily. This analysis is made from an investor’s point of view. By both quantitative and qualitative analysis methods, in a way of comparison with itself before and it peer group in the same market in UK, the author presented a detailed analysis of it strength, weakness, opportunities and threats. Tesco is a company listed on London stock exchange. Reasons for choosing the topic
The reason why the author chose to study the topic of analysing the business performance and financial position of Tesco are as follows: 1. Major part of Tesco’s business is UK grocery market.
This is a market worth £133.3bn in the calendar year 2008 with an increase of 4.0%. Groceries account for 12.8% of all household spending, making it the third largest area of expenditure, first is housing and second is transport. The UK’s leading grocery operators create 10% of jobs. (IGD research 2007) From above date we can have an impression of how important is grocery sector’s contribution to economy and society. 2. Tesco has been the market leader in UK grocery market for many years.
Tesco has been keeping a faster growth pace than it competitor for a decade and widen the gap with its nearest runner ASDA. Although it lost some field to Morrison, Tesco still hold over 30% market share, nearly twice than its closest rival ASDA. This is a remarkable achievement in business world especially in a mature market like UK grocery sector. What strategies Tesco adopted to achieve and maintain its market share attract the author to choose this topic. 3. UK economical slowdown had many effects on grocery sector
Customers become more prices sensitive and tighten their spending. Competition is getting stiff, some of customers have tempted by discounted store such as ASDA, Morrison. Price campaigns in grocery sector have enormous pressure on Tesco’s profit margin.For last decade Tesco have proved its competence in booming period, however when economy slow down, can Tesco still keep its pole? 4. Personal experience The author has personal experience with Tesco both as a customer and a former employee. This allows the author to have a close look on how Tesco runs.The author has just take Paper P3 recently. Applying this relevant knowledge, skills, and exercising professional judgement in a business case would help author have a good understanding of the book knowledge. 5. Easy to gather information needed As a public listed company Tesco has to provide much more detailed financial information to its investor than other private and unlisted company. Tesco has made many efforts to ensure this information accessible,