Assessing the performance of tesco
TESCO plc is a United Kingdom based group specialised in food retailing, it operates as a grocery and general merchandising chain in the United Kingdom and across the world.
So far, it is the largest British retailer in term of sales and market share with, according to Thomson one banker, a total net income of £ 2,161.00 for the year 2009. It is also the third largest global retailer group in term of revenue after the American group Wal-Mart and the French group Carrefour.
With a main activity of food global retailer, it has diversified his activity into clothing, home, financial services, car insurance, health, telecoms and internet services and ...view middle of the document...
It also helps this business unit to develop its strategic capabilities and helps all the business units to facilitate relation and cooperation between themselves and encourage them to share the same skills, competences, and to adopt and to keep the same and main policy which is the corporate parent Tesco plc main policy.
Also Tesco plc remains the main supplier of funds or capital and central services like human resources, treasury, they also take profit of the corporate parent’s distribution network and notoriety which is really important for a strategic business unit as a new entrant in a market segment.
Tesco plc intervene within its business units, to make sure they can operate properly and they are profitable, as well it must require a clear level of performance from all its business units to keep the overall business performance at a high standard.
As a proof that Tesco plc’s business unit, Tesco clothes retailing is fitting well with the others like Tesco banking, home, food, car insurance, health; customers can use the Tesco “clubcard” over whatever service and earn discount points to be use as it suits to them for example they could spend their earned points over foods stores as discounts on online clothing.
Also when purchasing on Tesco clothing website customers can even use the financial services like Tesco credit cards or other financial services.
Then the data collected when customers subscribe to Tesco “Clubcard” are shared by all the business units in order to find out whether the others could take profit by offering extras services like dental care service or car insurance or extras discount on foods purchases.
Therefore, Tesco plc constantly works in order to bring consistency into its business units, the same as synergy between them, thus it can enhance value across business units.
Tesco plc which is the portfolio manager considers as an advantage the fact to mix his portfolio with different kind of activities which will help the global business to lower risks and also to grow the corporate market share and even extract profits that can be use to support another business unit.
As a profitable business unit, Tesco clothes retailer produce a huge amount of money, by his spectacular market growth and between third or fourth place in term of total market share, which allow his corporate parent to fix the others or to launch a new business.
However performance studies show that , related diversification pays better than unrelated extensive diversification, that why Tesco plc will always need rigorous questioning before starting any diversification in any area.
So the graph below shows the link between performance and diversification.
(Johnson, G., Scholes, K. And Whittington, R. 2008, P 270)
Tesco plc operates a growth method by enlarging his portfolio, but still keeps it limited, then by the permanent motivation to increase his market share and sales volume.
As a study carried out by the group CACI 12 for the Sunday...