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The Warwick MBA

Assignment Cover Sheet

Submitted by: 1168212

Date Sent: 6th December, 2012

Module Title: Accounting and Financial Management

Module Code: IB8010

Date/Year of Module: July 2012

Submission Deadline: 11:00 AM 6th December, 2012.

Word Count:1688

Number of Pages:13

Question: [Question Number and Title, or Description of Project]

“This is to certify that the work I am submitting is my own. All external references and sources are clearly acknowledged and identified within the contents. I am aware of the University of Warwick regulation concerning plagiarism and collusion.

No substantial part(s) of the work submitted here has also been submitted by me in other assessments for accredited courses of study, and I acknowledge that if this has been done an appropriate reduction in the mark I might otherwise have received will be made.”

Kesko Corporation: A performance and acquisition Analysis report. To: The Director of Strategy From: Strategic Action Analyst

Executive Summary
Kesko Corporation is a big player in Finland with ambitious plans outside the Eurozone. Even though the year 2011 has not been a good year, they look stable enough to weather the storm. Ahold NV is in a very good position for a take-over – we’ve had a better performance compared to them. However, if the bad performance has been a trend for the last couple of years, then another company may be a better option for a take-over.

Introduction
This report is carried out using CORE concept to analyze Kesko Corporation as a potential takeover target. · C-Context; the environment that Sainsbury operate in. Looking at both the external and internal environments. · O-Overview of the business, looking at the bigger picture of its balance sheet and income statements based on Sainsbury annual report 2011. · R-Ratios; This analysis uses accounting ratios such Performance, working capital, liquidity/solvency and shareholders. · E-Evaluation/Conclusion. The data for this analysis has been drawn from the published annual reports and other sources on the internet.

Context (External)
Kesko Corporation is a group of about 2,000 retail stores with Office in Finland.Kesko is 91st according to the Global Powers of Retailing report (Deloittes, 2012) behind S group which occupies the 85th position. The have a market share of 38% in Finland ( own estimate). Their major competetitors are Starkki, Kodin Terra, S-rauta, Lidl and S Group. They have international recognition for sustainability and responsibility.

According to the Global Powers of Retailing report (Deloitte, 2012 pp G5), the continued fiscal contractions in the Eurozone will see reduced consumer spending, squeezing profits for retailers. The stronger ones will seek growth outside of the Eurozone.

Context (Internal)
Kesko Corporation is a group of about 2,000 retail stores with Office in Helsinki. They have specialized deivisions in Food Trade,Home & Specialty Goods,Building & Home Improvement and Car & Machinery. They have operations in Finland, Sweden, Norway , Estonia, Latvia, Lithuania ,Russia and Belarus.

Figure 1. Division share of Kesko Corporation by Operating profit. Data from Annual reports 2011. Page 1.Their competitive strategy lies in the management of brands. They pride themselves of their competence in purchasing and logistics, international retailing. The 7-member board of directors is chaired by Heikki Takamaki who has over 32 years of retailing and an 8-member corporate management board who have the responsibility of managing operations in the group.

The board members hold between them less than 1% of the company's share capital, while the highest number of shares is owned by non-financial and housing corporations.(annual report 2011, pp 75). Kesko's strategy is to grow faster than their competition by seeking growth in nearby economies particularly in Russia, using ecommerce and by developing their store network.

Overview...
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