Tesco Plc.

Company Background
Tesco often called as Tesco plc is the worlds 3rd and UKs largest food retail chain of stores. Tesco is a bit younger then the era of Marks and Spencers and Sainsburys and was found in 1929 in the city of Westminster, London. By the time of late 90s in the 1960s the company was quite familiar among the people and have secured a comfortable position in the retail sector with its competitors like Sainsburys, ASDA, and Morrisons. Tesco was the first company to change the market trend in the UK food retail market of the large out of town supermarkets and in the next decade the company brought forward new techniques and marketing plans like opening up the in city retail store which could meet the needs and requirements of the local customers named as Tesco Metro and Tesco Express which was the 1st petrol refilling station convenience store. Five years later in 1995 the company released the customer loyalty cards named as Club card which were the very first cash back cards in UK. In the meantime the company formed the joint venture with the Royal bank of Scotland and started offering various financial services like the property loans, car loans, and insurance services. The new century 20K marked the evolution of Tesco.com providing the similar services and product offers shopping online which was a successful mark in the history of Tescos because the company has become a reliable position in the options for the customers providing good quality and service and same was carried online which save the time of the busy business professionals. 'No matter how fast we grew Sainsbury's were always in front of us. But slowly but surely we managed to grind them down and grind them out.' Tim Manson (3rd Managing Director of Tesco plc.).

Figure 1 : Market share retail food groups

'We have only got 5% of the non-food market in Britain, we've only got 6% of the convenience market and we have only got 2-3% of the banking market...In all those examples we could be much bigger' - Sir Terry Leahy. The new strategy for the company is to expand its business in overseas deviating from big revenue generating the clothing and financial services market merchandising a strong UK core business. The success strategy of Tesco is based on innovating new offers and price options, customer loyalty and services, and the banking services which are the most affordable and cheapest insurance services in whole of the UK, therefore it attracts most of the UK customers who cannot afford to have the car or the home insurance services with the banking companies like Barclays, HSBC and the other banking groups.

Review of Management Accounting

Management accounting concerns about assessing and reporting the financial and non financial data to the senior management department or directly to the managers which could help in making the decisions for the organisation which is generally used in satisfying the needs and requirements of the company for revenue generation. Management accounting is generally implemented by managers in any organisation for the selection, communication and implementation of plans and strategies helping in making profit for the organisation. Also management accounting aid in synchronizing the manufacturing and product design, production and marketing decisions. Management accounting report is critically important to for the company and should not be revealed to the public or any non-organisational person, because this could breach the confidentiality of the company plans and strategies for the future. Management accounting is generally information for the future purposes and serves as the guideline or the walkout for the future decisions and productions. The management accounting consists with the private information of the stakeholders of the company therefore it is limited to only the management department in any organisation and any amendments within or outside the organisation are reported to the managers in the form of Decision support systems. Management accounting plays a vital role in the success of any organisation as it deals with the cost analysis, profit and loss analysis, price modeling, data analysis, planning and financial forecasting about the about the market and company. The management accountant keeps an eye on the sales and profit made in the specific sector of the organisation which depicts the information about the consumer behavior or the change in trend in the market in sales and services. Therefore updating with this information to the managers in a structural format helps the organisation to review over their products as per the current market requirements. The data statistics of an organisation are accessed on the regular basis and are either sent to the managers or are amended by the management accountant himself depending on the priority of the situation.

Recommendations and Analysis

Assessment and combination of the company background and the management accounting strategies results to the analysis of the company highlights the dodges that the company is facing or might face in future, the recommendations for the company assessed through the issues Tesco is working on may be described as follows: 1. Wal-Mart/ASDA challenge: With the over taken of ASDA by Wal-Mart in 2004, ASDA has been emerging as the real tough competitor for Tesco, it can compete with Tesco the price and range of products. ASDA is now UKs second most powerful food retailer with only a margin of 10% share difference in the market between ASDA and Tesco, ASDA has also left competitors like Sainsbury and M&S far behind in terms of sales. Wal-Mart strategy is to take over the market of Tesco and make dominance in UK market as well after being the worlds largest shopping giant. Tesco should be aware about this and should increase its purchasing parity in UK to secure its dominating position in UK market. 2. Expanding Internationally: International Expansion of the company would cost the company a huge capital as gaining license, land and purchasing products may be expensive along with the marketing of the new company products and offers. Expansion of the company business overseas require heavy marketing as to maintain the standard of the Brand thus the plans should be dropped until the company deals with the emerging of the new market giants in UK or the debt of the company went on increasing and the economy begins to decline. 3. Price War: The market trend change could ignite the spark for a price war in UK as the preceding market retailers which are trying to raise their profits could decrease the Safeway prices may be up to 10% of the Tescos as like Morrison has reduced the Safeway prices by 7% and Sainsbury is looking ahead to lower down its price menu as to recover from the loss and secure a good hold in the market. Along with Tesco and Asda who works on the strategy of price leadership, the decrease in the Safeway prices could bring tough competitions between the retail giants resulting in loss to the retail industry of the country and the lowed prices may increase the expectations and standards prices in the market for the customers. 4. Offering potential access in the market: The competitive environment and the future plans and strategies for business may lead the company to bring the new products

and offers for the customers alike the earlier times when Marks and Spencers used to rule the market, Tesco emerged as an Entrepreneur in Retail supermarkets which made it distinctive and made its brand proposition different from others. Tesco is now believed to be reliable company by customers for its customer service, relationship and loyalty therefore the should focus on the customer service which is its USP and try to eradicate the issues having a feedback from the customers in from of competition for prizes and in store offers.

Strengths and Weakness

Strengths: The report briefly represents the current market hold of Tesco which could be used in the management accounting, some of the strengths that have been discussed in the report are: 1. Increased market share: Tesco is the UK market leader in Retail and food supermarkets since 1995 and has earned the trust and reliability of the customers towards them, which is the results for the maximum sales and profits for the company compared to its other competitors. 2. Insurance: The Tesco insurance is the cheapest insurance in UK providing the cheapest and affordable home and car insurance for the middle class families. 3. Tesco Online: Tesco was the first supermarket retailer to release the online shopping facility to its customers offering free delivery of the shopping on a certain purchase which was resulted to be a success for the company. 4. Brand Value: The customer Services, loyalty and trust on their products have built a strong brand value of the company, also the company have been near a century in the market and has made the respect in the hearts of the customers.

Weakness: The weakness in the report were the PELTEL and SWOT analysis of the company as these are the most vital requirement of any report which highlights the current problems and issues that company is coping up at present and the future outcomes of these problems because of the word limit. But some of the weaknesses that have been analyzed in the report are:

1. Focus on the reliance upon the UK market: The report has focused on the expansion of its subsidiaries overseas and given justifications of generating profits from them rather than focusing on the UK market. 2. Debt Reduction: The report also focused on providing the strategies and plans for fighting the competition with the emerging retail giants rather than looking to recover the loss that the company has faced from its marketing and expansion of group overseas. 3. Non- food retail: The report only describes the food retail market in brief and the market completion and the companys plans and policies in future rather than the clothing and housewares that the company does. 4. Further International Growth: The report does not give the information about the international market establishment and success as like the Wal-Mart and the future prospectus of the company except the expansion of the group in Paris.

References:

Company Profile, http://innovationleaders.org/tes_company_profile.html, retrieved on 2nd July, 2012. Background, http://www.corporatewatch.org/?lid=252, retrieved on 2nd July, 2012. Figure 1 : http://www.mirror.co.uk/money/city-news/tesco-suffers-23-sales-drop-171948,

retrieved on 2nd July, 2012. Management accounting, http://management.blurtit.com/q514965.html, retrieved on 3rd July, 2012. Bhattacharyya Debarshi, Management Accounting, Ace Pro India Binding House New Delhi. Analysis, http://www.ivoryresearch.com/sample5.php, retrieved on 4th July, 2012. Recommendations, http://www.tesco-graduates.com/home/programmes/office/research-

and-analysis/, retrieved on 4th July, 2012. Future prospective, http://www.just-food.com/companies/tesco_id40, retrieved on 4th July, 2012.