Tesco - Management and Financial Information for Decision Making

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  • Topic: Financial ratio, Tesco, Finance
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MANAGEMENT AND FINANCIAL INFORMATION FOR DECISION MAKING
MANAGEMENT AND FINANCIAL INFORMATION FOR DECISION MAKING

Maria del Mar Sanchez: 10044329
Tutor: Geraint Evans

Maria del Mar Sanchez: 10044329
Tutor: Geraint Evans

Contents
INTRODUCTION2
INTERNAL AND EXTERNAL USERS3
Customers3
Competitors3
Shareholders²4
Managers4
Suppliers4
Employees5
OBJECTIVES6
Maximize shareholders wealth6
Growth6
Satisfaction7
Profit maximization7
Maximize sales7
Ratios Analysis9
Return on Shareholders’ Funds (%)9
Return on Capital Employed (%)10
Stock Turnover (x)11
Current and liquidity ratio (x)12
Gearing (%)12
BUDGETING14
CONCLUSION17
REFERENCES18

INTRODUCTION

In 1919 Jack Cohen founded Tesco in the East End of London, selling groceries in a market stall. Nowadays, Tesco operates in 14 markets across Europe, Asia and North America; they are in United kingdom, Czech Republic, Turkey, Ireland, Poland, Slovakia, Hungary, India, China, Thailand, Malaysia, Japan and South Korea. Tesco is one or the world’s largest retailers employing over 492000 people and serving millions of customers every week. The organization has lived huge changes since the company was founded, for example opening different markets and sectors. Their vision is to be highly valued by the customers they serve, the communities in which they operate, to be loyal to their committed staff and shareholders; to be a growing company; a modern, innovative and winning locally, applying their skills globally. (Tesco webpage) This paper will develop the analysis of the internal and external users of Tesco and the importance of the financial information for their key decision-making, a critical discuss of the primary objective and four secondary objectives, the areas of strength and weaknesses by using appropriate ratios and the importance of the capital budgeting within Tesco.

INTERNAL AND EXTERNAL USERS

Customers
“Customer feedback is the key to helping us develop new services and initiatives to make the shopping trip easier and more enjoyable” (TESCO PLC)

For a company like Tesco it is strongly important to listen to customer feedback and meet their needs, as this will allow to recognize the critical factors that have impact in the customers satisfaction with financial services. Current trends indicate that British customers prefer to buy all the products in one shop, which is due to a variety of social changes. Tesco have, therefore, increased the amount of non-food items available for sale. The type of goods and services demanded by consumers is a function of their social conditioning and their consequent attitudes and beliefs. Another way the company has been successful early on is that were first to allow customers to pay in cheques and cash at the checkout, and this means more accessibility for customers.

Competitors
It is really important for Tesco’s to consider the strategies of the company’s that they are competing with. In order to do this and stay successful as a company they must analyze their own strengths and weaknesses against the competitors, eventually extracting conclusions to improve the strategy of the company. It is very important for the financial information to be analyzed as well as the competence; it is a vital part of strategic planning.  Therefore, the goal for Tesco´s management team is to focus their attention on the competition so not to be disadvantaged. One way Tesco have done this in competition with the company Asda who planned and then later followed the trend by promising customers to reduce the prices of 3000 everyday items, with a £500m investment in lower prices in September 2011 trying to lure shoppers and stem market share losses. Tesco had succeeded in this campaigned better than Asda because of their swiftness. Shareholders²

Shareholders are important figures in the financing, operation, governance and control aspects of...
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