Retailing market
Tesco PLC is a public owned company. The major shareholders are:- 1. Merrill Lynch Investment Managers 2. Schroder Investment Management Limited 3. M and G Investment Management Limited 4. Barclays Global Investors 5. Axa Investment Managers 6. Legal and General 7. Scottish Widows 8. Morley Fund Management 9. Standard Life Investors 10. Scudder Theadneedle Different shareholders own different amounts of shares in the company. Averagely, each shareholder got an increase of 12. 4% in their dividends last year. Benefits of being a PLC.
Since Tesco is a big company, it will need large sums of money for capital, expansion and investment and being a PLC, it’s able to achieve to do this since PLC’s can raise more money than any other business. 2. Tesco can continue operating even if any of the share holders dies. 3. Since it has many shareholders, many ideas are brought into the business and the best ones are chosen on how to operate the company. 4. It has unlimited liability 5. Its large size enables it to enjoy economies of scale such as being able to buy in bulk.
Its size will also enable them buy special equipment and machinery which will save in labour and expenses 7. It can find it easier to borrow money than smaller businesses during financial difficulties because they are at less risk of going bankrupt than smaller firms. Disadvantages of being a PLC 1. Each of Tesco’s shareholders has very little say on how to run the business unless they own a lot of shares. 2. it’s easy for someone to buy enough shares to take over the business if they think they can make more profit which means the current shareowners loose out.
This means unlike other businesses, a PLC find it hard to sacrifice profit to other objectives like helping the environment. 4. formation involves considerable documentation and expense 5. The company’s employees and shareholders become too detached from one another because of large size which might result into low productivity of the company 6. Since its too big, it tends to develop many rules 7. The company’s annual accounts are open to public inspection which reduces confidentiality of the firm 8. Ease of share ownership can lead to takeover bids for the company
JUDGEMENT I think Tesco is doing very well with the fact that it’s the leading food retailer in the country with 639 stores. Its profits have risen to i?? 481 million, a 14% increase compared to last years. It also has a very good future because it’s always expanding outside the UK like in central Europe and the Far East and its highly competitive in these foreign markets with fact that 10% of all the profits are from them so very soon it will be the leading food retailer in them as long as it achieves its objectives and aims.
The customers are happy with its products and I think they will continue supporting it since it also gives back by donating money to charities and also helping preserve the environment in a way that it gives recyclable carrier bags, fund for environment protection agencies etc. It has also started selling non-food products like electronics, DVDs, health and beauty products which shows that it is indeed investing in other markets. Non food products have also had a 300% increase in sales.
It’s making it easier for customers to shop by having online ordering where they can order the goods and get them delivered to their door steps free of charge. This increases sales and Tesco tries to make it popular by offering free delivery. Generally looking at the chairman’s statement I obtained from the internet, financial group sales increased by 10. 6% to i?? 12. 7bn (2001-i?? 11. 5bn), profit before tax increased by 13. 3% to i?? 545m, UK sales alone grew by 6. 8% to i?? 10. 5bn (2001-i?? 9. 8bn) of which 3. 9% came from existing stores and 2. 9% from new net stores which shows that internet is booming.
