International Investment Analysis Essay Example | Topics and Well Written Essays - 2000 words

International Investment Analysis - Essay Example Present Situation of TESCO The company has a worldwide presence in China, India, Hungary, Slovakia, Czech Republic, Poland, Ireland, North America and many other countries. The company employs 300,000 people and operates 3,000 stores worldwide (TESCO Plc, 2013b). The company operates 200 stores in UK itself and offers a varied range of food items (Gargeya, V.B. et al., 2012). It is the leading brand of food retailing in UK followed by Everyday Value. Tesco has always believed that the strategy of the company needs to be revised as per the changing taste and preference of consumers. The company earns 25 percent of its revenue from countries outside UK (Martin and Thompson, 2010). The underlying objective of the company is to earn higher amount of profits but their strategies are usually customer oriented. Tesco believes in improving the customer service by responding to the customer needs and wants. TESCO believes in innovation and expansion in the UK grocery market and convenience st ores electronics, clothing, beauty health and wellness and retail services like personal finance and telecom products. These strategies are followed by TESCO to strengthen its market position in UK and other countries. The stores are usually renovated from time to time, in order to give customers a warmer and refreshing feel in the stores. TESCO products are usually low priced and of better quality. The company believes in undertaking environmental and social responsibilities. It publishes its corporate social responsibility charter every year. Macroeconomic situation Prior to recession, TESCO’s sales were ?42 billion in the year 2006, which was an increase in profit by 13.2 percent from the financial year 2010-2011. The market share of TESCO was 31.4 percent, which was even more than the market share of ASDA Walmart that was 16.7 percent (Henry, 2008). Figure 1: Market share of UK supermarkets in the year 2006 (Source: Henry, 2008) The company was reaping profits and was mak ing considerable amount of sales before recession. This was mainly due to the marketing team of TESCO which monitored the trend of external environment and provided innovative products and solutions to customers. The brand became so popular among the residents of UK that customers had created a brand loyalty towards the company (Haerifar, 2011). From the above graph, we can observe that the dominant supermarket was TESCO in the year 2006 followed by ASDA Walmart and Sainsbury. After recession had penetrated into the markets of USA and UK in the year 2008, the company TESCO witnessed a slow growth (English, 2009). Majority of its revenue was coming from the overseas markets and it was facing a stiff competition from the supermarkets of UK like ASDA Walmart, Morrisons and Aldi. Although, TESCO claimed that there was an increase in sales by 11.7 percent in the fourth quarter of the year 2008 (Thompson, 2008) economist believed that TESCO was not able to reach its sales target. To add t o the woes of TESCO, the government had also increased the Value Added Tax (VAT) rate and excise duty (Peston, 2012). The net sales of TESCO was ?51.77 billion in the year 2008 compared to ?59.46 billion in the year 2009 (TESCO Plc, 2013a). TESCO is slowly recovering from the recession and