Impact of Financial Information on Tesco

Running head: IMPACT OF FINANCIAL INFORMATION ON TESCO
Impact of financial information on Tesco
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1IMPACT OF FINANCIAL INFORMATION ON TESCO
Abstract
The thesis structure explains the framework which has been followed by the
researcher thereby concluding the thesis in the stipulated timeframe. The first section of the
research consists of the introduction where a background of Tesco along with the financial
scenario of the company has been highlighted. The research aims and objectives have been
framed with respect to which the research questions have been constructed. The research
questions provide an idea about the issues that needs to be covered in this paper and thereby
concluding the research efficiently. The succeeding section of the thesis comprises of the
literature review where the variables that have been used in this paper can be highlighted. The
assessment that has been done by the previous researchers would be evaluated and thereby
the variables that are pertinent to the paper would be taken into consideration. The next
section of the paper is the research methodology where the process of data collection will be
highlighted. The various kinds of data that are available and the most precise data that is
useful for this paper would be used for the completion of the paper. The data analysis would
determine the findings attained from the data and this assessment would be used for the
purpose constructing the conclusion and the recommendation that can be given to the reader
in accordance to the effect of financial performance in Tesco.

2IMPACT OF FINANCIAL INFORMATION ON TESCO
Table of Contents
Chapter 1: Introduction..............................................................................................................5
1.1 Background of the Study..................................................................................................6
1.1.1 Mission and value statements....................................................................................7
1.2 Statement of the Problem.................................................................................................8
1.3 Rationale of the paper......................................................................................................9
1.4 Aims and objectives of the research...............................................................................10
1.5 Research Questions........................................................................................................10
1.6 Structure of the Thesis...................................................................................................11
Chapter 2: Literature Review...................................................................................................12
2.1 Introduction....................................................................................................................12
2.2 Growth Strategy.............................................................................................................12
2.3 Recession Strategies.......................................................................................................13
2.4 Employment Policies.....................................................................................................14
2.5 General Systems Theory and Tesco...............................................................................14
2.6 Environment...................................................................................................................16
2.7 Diversification................................................................................................................17
2.8 Financial Scenario..........................................................................................................18
2.9 Shareholder Information................................................................................................19
2.10 Dividend Policy............................................................................................................19
2.11 Bad Credibility.............................................................................................................20
2.12 Competition..................................................................................................................21

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2.13 Summary of the Literature Review..............................................................................22
Chapter 3: Research Methodology...........................................................................................23
3.1 Introduction....................................................................................................................23
3.2 Outline of the method.....................................................................................................23
3.3 Research Approach........................................................................................................23
3.4 Research Design.............................................................................................................24
3.5 Data Collection Process.................................................................................................25
3.6 Data Analysis Plan.........................................................................................................25
3.7 Ethical Consideration.....................................................................................................26
Chapter 4: Data Analysis and Discussion................................................................................27
4.1 Introduction....................................................................................................................27
4.2 Analysis of the data........................................................................................................27
4.2.1 Probability Ratio.....................................................................................................27
4.2.2 Liquidity ratios........................................................................................................29
4.2.3 Financial Leverage Ratio........................................................................................31
4.2.4 Efficiency Ratio......................................................................................................32
4.2.5 Market Value Ratio.................................................................................................34
4.3 Discussion of the Analysis.............................................................................................35
Chapter 5: Conclusion, Recommendation, Future Work and Limitations...............................37
5.1 Conclusion......................................................................................................................37
5.1.1 Addressing the research objectives.........................................................................38

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5.2 Recommendation............................................................................................................39
5.3 Future Work...................................................................................................................41
5.4 Limitations.....................................................................................................................41
Reference List..........................................................................................................................42
Bibliography.............................................................................................................................49

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Chapter 1: Introduction
The world as we know it is changing and in the same way there has been development
of science and technologies that has made life easier all over the globe. The companies that
are operational in the modern world in the similar manner have been changing their ways of
operating in the economy in order to improve their performance and operational activities.
This development is significantly observed in the retail sector and especially in the European
market as the demand for retail products has increased in the market by a significant margin.
The rise in the level of demand has led to the entry of several new companies into the retail
sector and the main reason has been to share the profit and the customer base that is available
in the retail sector. The retail sector has been developing with the advent of time as the sector
has been looking to meet the desires and the needs of the customers who are coming from
different cultures. Similarly, Tesco, which is one of the leading retail sector chains in United
Kingdom and all over Europe, has been looking to expand their business and create their own
customer base and significant level of market share. Yu, Ramanathan and Nath (2014)
addressed that even though there have been several developments that are incorporated within
the operational structure of the companies, the process of gaining an understanding of the
effectiveness of a company is still dependent on assessing their financial performance in an
individual year. The companies that are operational in the economy has effective level of
accounting software system that is used by them in order to record all their transactions and
accordingly maintain construct a financial statement that can be looked down upon in order to
create a better working environment for the companies in the near future (Fornell, Morgeson
III and Hult 2016).
The paper that has been taken into consideration has the intention of analysis the
financial performance of Tesco and accordingly understands their level of effectiveness with
the help of which the company is able to operate in the economy. The effectiveness of their

6IMPACT OF FINANCIAL INFORMATION ON TESCO
financial performance can even understood in a better way if their financial performance is
compared with other competitive companies of Tesco as well and therefore this paper in
order to undertake a comparison of the financial performance of Tesco, has even analysed the
financial performance of Sainsbury and Morrisons, which are two other retail chain
companies and thereby understand the actual position of Tesco in the economy. The financial
performance is understood in a better way with the help of computing the financial ratios of
the companies and therefore in the future course of this dissertation, construction of the same
would be done in order to complete this paper in an effective way.
1.1 Background of the Study
The extent of impact that takes places in the retail sector comprises of the several
factors that is related to every organization that are within this sector. Aguirre et al. (2015)
addressed that assessment of these factors are essential as these factors are helpful in creating
an understanding of how the retail sector companies are able to operate in the business and
how the companies are taking care of these issues in order to develop their business. The
development of a company is entirely dependent on the loyalty of the customers and the
development of customer loyalty is entirely dependent on the actions and the services that are
given out by the companies. The retail sector with the help of several sources has been able to
identify the features and the needs of the customers that need to be fulfilled in order to attain
customer loyalty as well as satisfaction. A customer remains loyal to an organization till the
time the companies are able to satisfy the customer needs and desires. In order to address to
these objectives, the organizations have developed the strategy of corporate social
responsibility with the help of which the companies try to take care of external stakeholders
and even create a sustainable plan that looks to take care of the environment and even the
community where the companies operate. Shin and Eksioglu (2015) explained that product
and service quality are essential features that are developed by the companies that are

7IMPACT OF FINANCIAL INFORMATION ON TESCO
operational in the economy in order to develop their business. The extent to which the
companies are able to maintain customer satisfaction is understood when their financial
performance is analysed and in the same way the profit margin the extent of customer
satisfaction can be understood. The functional quality of any product assesses the behavioural
perspective and the use of the home furniture. The technical quality of a product associates to
the final utilisation of the products manufactured and these are the aspects with respect to
which the operational and the financial performance of Tesco can be understood that would
be used in order to complete this paper in a precise way.
Tesco is a worldwide general merchandising and grocery retailer that performs in
more than 4000 stores in the current scenario. The company has been functioning and
marketing in more than 13 markets globally and has been able to attain profit and competitive
edge. The company has multi format and flexible approaches and well established and unique
consistent strategy for the development, which aids Tesco in the rise in the total revenue.
It is seen that there has been a rise in the stores of Tesco during the time period of
2011 to 2017 and it is seen that there are over 3739 stores. The multinational shops and the
shops selling general merchandise of Tesco Plc were established in the year 1919 and the
company has a large number of employees all over the globe. The portfolio of the product of
Tesco is inclusive of the beverages and foods, financial services and home appliances. Tesco
is one of the renowned supermarket companies in UK and has been ranked with respect to the
share of the retail market.
1.1.1 Mission and value statements
Tesco is has the idea of establishing values for the customers to gain their lifetime
loyalty by gaining knowledge about the customers and be accountable to the societies and
even able be the first to satisfy the wants and the desires of the customers. Furthermore,