Research Project: TESCO's Acquisition and Profitability in Romania

This research project examines TESCO's acquisition strategy in Romania, analyzing the concept of acquisition, its benefits, and its impact on profitability. The report begins with an overview and background of the research, including the aim, objectives, and research questions. A comprehensive literature review explores the concept of acquisition, the benefits for TESCO, and the effects on profitability. The research methodology is outlined, followed by data analysis and a research time plan. The report concludes with recommendations, a reflection, and a conclusion summarizing the findings. The study aims to provide insights into how acquisition affects profits, offering practical tactics and academic knowledge for learners and professionals in the retail industry. It covers various aspects such as market expansion, risk diversification, tax considerations, and the overall impact on TESCO's growth and customer base. The research highlights both the advantages and potential challenges of acquisition, such as conflicts and employee-related issues, while emphasizing the importance of effective management and strategic planning.

Research Project

Contents
Research Topic: “Acquisition in Romania and profits”. A case of TESCO. ..................................2
TASK 1............................................................................................................................................2
Overview and background of research...................................................................................2
Aim of research......................................................................................................................2
Objectives of the research......................................................................................................2
Research Questions................................................................................................................3
Rationale of research..............................................................................................................3
Significance of research.........................................................................................................3
LITERATURE REVIEW.......................................................................................................3
Concept of acquisition............................................................................................................3
The main benefits of acquisition for TESCO while expanding in Romania..........................5
Effects of acquisition on profitability of TESCO in Romania...............................................6
RESEARCH METHODOLOGY...........................................................................................8
TASK 2 .........................................................................................................................................13
Data Analysis........................................................................................................................13
RESEARCH TIME PLAN...................................................................................................29
TASK 3..........................................................................................................................................31
RECOMMENDATIONS.....................................................................................................31
TASK 4..........................................................................................................................................31
REFLECTION......................................................................................................................31
CONCLUSION....................................................................................................................32
REFERENCES..............................................................................................................................34
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Research Topic: “Acquisition in Romania and profits”. A case of TESCO. .
TASK 1
Overview and background of research
Acquisition refers to the situation in which a single company acquires maximum shares
and asset of another company for motive of taking control over it. It can be said that an
acquisition is highly successful when one business purchases 50 or more percentage of
ownership of another country that they have targeted earlier. In the present world, it becomes
necessary for business organisations to approach another country for expanding their business so
that they can survive longer in business world and maximise their profitability ratio (Bran, Balu
and Ioan, 2015). Acquisition is one of the common ways which are adopted by large scale
company when they plans to approach another country for main purpose of profit maximisation.
The present research report is based on TESCO, a well known retail company of United
Kingdom which is offering its services all over the world. The company is already having good
presence at international level but still it is requited by this company to adopt some effective
approach strategy through which they can enter into those country in which they have yet not
expanded. Now, top management team of TESCO have planned to expand their business in
Romania through the most popular way of acquisition. In this regard, management team of this
company have planned to conduct an effective research so that they can enhance their knowledge
on acquisition. The research will also help them in identify list of benefits in terms of profit
could be gained by them at the time going for acquisition in Romania. With reference to this,
below mentioned are aim and objectives that are prepared by investigator in order to conduct an
effective research.
Aim of research
The research aim for present study is “To identify how acquisition affects profits in
Romania” A case study on TESCO.
Objectives of the research
 To understand the concept of acquisition.
 To evaluate benefits of acquisition for TESCO while expanding in Romania.
 To determine how acquisition affects profitability of TESCO in Romania.
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Research Questions
 What is the concept of acquisition?
 What are the main benefits of acquisition for TESCO while expanding in Romania?
 How acquisition affects profitability of TESCO in Romania?
Rationale of research
The purpose of conducting this research is to find out impact of acquisition on profits of
TESCO. The research will also provide different ways and tactics to management team of
TESCO that will help them in implementing their acquisition effectively in Romania without
facing much issue. With relation to academic criteria, main rationale of conducting this research
is to improve knowledge of learners so that they their professional skills can be improved. This
knowledge will also help learner in identifying emerging opportunities related to career which
could be gained by them in quick manner. In context to investigator, knowledge and skills of
researcher and its team members about TESCO and its operational activities. It will also aware
researcher about some core areas of TESCO where they can work in future. This can be seen as
the career opportunity for researcher that can be grabbed by them in future.
Significance of research
The present research will provide in depth knowledge of acquisition and its benefits to
the companies belonging to retail industry so that they can survive longer in same industry for
longer period of time. It will also open up several additional benefits for TESCO through which
they can easily expand in Romania effective without facing much issues. As a result, it will
enhance their growth and additional profitability in effective manner.
LITERATURE REVIEW
Concept of acquisition
According to the thoughts of EduPristine, (2015), Acquisition is considered as the situation
in which one company simply acquires another one effectively. The main purpose of acquisition
is to wealth maximization, identifying and grabbing opportunities available at market place.
Along with this, it can be said there are different type of structure of acquisition which are
mainly adopted by companies at global expansion. Some of the common types among them are
stock purchase, Asset purchase and Merger. In stock purchase, Buyer Company mainly focuses
on acquiring stock of targeted company from the one who holds its majority of stocks (Vinter,
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2018). In assert purchase, buyer company only concentrates on purchasing assets of chosen
company. And at last, merger is combination of two different legal companies for the common
aid of maximising their profits with the support of one another (Mergers and Acquisitions, 2015).
In this, companies engaged together do share their responsibilities, profitability and liabilities
with each other. As per evaluation, it has been analysed that there are numerous of reasons which
influences business organisation for going for acquisition. The main reason which influences
TESCO for going for expansion in Romania are elaborated as below:
 Diversification of high growth in market as well as products: This is the first and
foremost reason which influences business organisation as it provides them wider market
area from where they could approach their potential customers. This will ultimately
provide them opportunity for enhancing their profitability.
 Diversifying risk: Another reason that persuades TESCO for looking toward acquisition
is diversification of risk. It can be said that if TESCO is going for acquisition then they
will be having benefit that their risk will going to be shared with another shareholder
(Bachmann and et. al., 2016). This means it will be easier for TESCO to bear uncertain
situation as they are having more people to share their risk. This ultimately enhances their
chances of sustaining longer in industry.
 Tax consideration: All business organisations are required to pay taxes which are
compulsory for them. These tax vary from country to country or on the basis of type of
business. It can be said that business person who are wishing to enhance their profitably
are considering it as opportunity or reason by which they can raise profits. In this regard,
it can be said that business organisation always look forward toward that country where
they can get maximum tax relaxations. As a result, its easier for them to enter into best
geographic location from where maximum profit can be gained by them effectively with
minimal tax rate.
From the above mentioned different reason which are obtained by business organisation
in order to looking forward for acquisition, it can be said that main motive of all these reasons is
to enhance probability of company (Brown, 2017). Along with this, acquisition is also seen as
growth opportunity for company which helps them in enhancing their market share. At next, it
can be said acquisition also increases number of customers for company as they are able to reach
their desired region and its potential customers.
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Apart from this, another author named as du Jardin (2015), have stated that acquisition is
considered as the best way through one an organisation can enhance its growth in quick time. In
addition to this, it has also been seen that business organisation can acquire this methodology for
giving boost rise to their business with the support of another company. For instance: It can be
said that if TESCO, acquires method of acquisition at the time of enhancing their business at
international scale the it is highly beneficial for them in establishing their business. At further,
the author have stated that acquisition also have negative phase which affects business of this
company. Its negative influence can be seen as the enhancement of conflict (du Jardin, 2015).
This is because, when two or more company involve together them then it create chances of
conflicts and misconception among companies and employees. As a result, these conflicts might
affect company negatively and also affect their profits in negative manner.
Its negative influence can be seen as if a company having negative image at marketplace,
brand image and goodwill of the company can be reduced. When two or more organisation come
together, employees of the both companies have insecurity about their job. It is very difficult to
have same cultural background for any organisation. As a result, conflicts and dissatisfaction
increases between the employees of both organisation. When employees faces such insecure
working environment, they become competitive with each other. For avoiding such situation, it
the responsibility of HR manager of the company to provide opportunities. With the help of
group task and working together employees of the company can reduce their differences.
The main benefits of acquisition for TESCO while expanding in Romania
On the basis of thoughts published by Globe Business Media Group, (2018), it has been
analysed that business organisations are gaining numerous of benefits by acquiring methodology
of acquisition. It can be said that if an organisation go for acquisition then they surely gets
benefits in terms of monetary growth. Along with monetary growth, there are various factors
which benefits the company (Hansen and Bratt, 2015). Some of the main benefits of acquisition
includes high speed of opportunities in comparison to competitors, enhancing power at market
place, quick availability of new resources and competencies, financial gains, quick fulfilment of
stakeholders prospects and last but not the least minimisation of entry barrier while entering into
new country. For instance, if TESCO is entering into Romania with acquisition, then the
company will surely get some additional benefits which will increase the market share of the
company. It has been analysed that Romania is technological developed place which helps
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company in operating their business in this country effectively without facing any issue (M&A in
Romania, 2019). Along with this, another benefit that might be gained by TESCO is that this
country is economically developed which make it possible for the company to operate effectively
in Romania. Another benefits a company might gain is that they can easily attract fresh talent,
and acquire skilled and capable employees, which will increase the performance of the company.
If a company have good management staff, profitability and performance will be increased. With
the help of effective management of team, company can reduce their conflicts and difference and
improve their productivity by working together in a team rather than individual (Li, and et. al.,
2016). Apart from this, some benefits face by Tesco include good quality of resources. With the
help of acquisition company can acquire resources and increase their competitive advantage at
marketplace. Company can produce good quality products with the help of effective raw
materials, as a result company can easily satisfy requirements and needs of customers. Company
can retain and attract customers, by satisfying the wants and demands of customers. Along with
all these, one of the main factor which affects the growth, brand image and market share of the
company while expanding its business with the help of acquisition. If a company is already
operating its business activities in an effective manner and Tesco wants to acquire it. As a result,
Tesco gain the advantages while operating its activities.
In addition to this, it has also been analysed that if TESCO is going with acquisition in
Romania then it would definitely help the company in improving its profitability as the company
can have more number of opportunities to influence customers available in Romania. Along with
this, it can be said that in Romania TESCO also gets business opportunities to interact with other
available companies with the help of which they can easily approach new businesses and could
maximise their profits.
Effects of acquisition on profitability of TESCO in Romania
As per the views given by Fantana, (2015) it has been evaluated that acquisition simplifies
the work of company which is enhancing their business in another country. This can also be
stated that a strategic acquisition is one of the most important means for enhancing the
productivity, growth and profitability of a firm. In this the growth of the company can be
enhanced by increase in market share and their sale. This process provides a host of advantages
which includes the finance for upcoming future undertaking and the savings due to the
economics sale. It can be said that main benefits which are gained by business organisation
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during their global expansion is monetary benefits that is profits. Acquisition helps an
organisation in entering into new sector or nation with support of their other stockholders. It
means that company is also having back support of other shareholders who could guide or assist
company performing business effectively (Ma, Cai and Zou, 2017). With reference to TESCO, it
can be said that acquisition in Romania will provide additional business opportunity to TESCO
this will also help them in enhancing their market share and ultimately contributes in increasing
their profits.
The firm TESCO can also gain more profits by acquiring the more and more customers
using the creativity and efficiency, the firm can also reduce the acquisition cost and therefore can
Improve the ROI, this can benefit the firm from a previously unexploited profit center. TESCO
has decided to acquire the shares of any business enterprise in Romania, which is a south-eastern
European country, the process of acquisition is one of the largest decision which the business
owners take, after knowing this that all the future of their company lies on this one decision only.
The firm like TESCO are engaged in the process of Acquisition just to became bigger, as this
method will help the TESCO to grow in size and progress their competitors, they use this
method to enhance their growth so that they can gain more profits as it takes the many years to
double the size of the firm through the organic growth (Marques and et. al., 2015). Apart from
this, when a company acquire another company, the prices of the stock of the targeted company
rises while the stock price of the company which is acquiring declines. The stock price of
targeted company rises because the company who is acquiring it has to pay premium for the
acquisition.
Along with this, when a company acquire the business of another company then this also
affects its income statement, as it is known that the balance sheet shows the assets and liabilities
of the organisation, so when the business is first acquired the impact is on the balance sheet and
not on the income statement, the profit which is gain from the acquisition is added to the assets
of the business. The balance sheet of TESCO will get positive result, as because the profits
which is gained by them by acquiring the business of another company in Romania will assist
them to increase their profit level. This is also stated that when any enterprise engaged in the
process of acquisition then that means they are buying more shares of that company which the
firm itself have, and then the firm which acquire the shares of that company can get as much
profit which is gained by that firm which is acquired (Taniguchi and et. al., 2017). The firm can
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also add and sell the products and brand of its company in the acquiring company, they can run
and operate the business of acquired co0mpany as they want and gain that much profit from that
company, as they have acquire.
For example- TESCO has acquire the 60% shares of a company in Romania, then whatever
profit the acquired company gain will give the 60% part of that profit to TESCO, as this has own
its 60% shares. The process of Acquisition is all about to enhance the profitability, business
growth and diversify the risks, along with limits the intensity of competition (Thill and Twomey,
2016). Apart from this, the number of employees also gained by the process of acquisition, as it
is stated that the employees of acquiring company and the workers of the company who is
acquiring the another company, the employees of both the company will do the work in
collaboration which leads to profit maximization, also the company can sell the customer s the
product of targeted company, as this also leads to gain more profits.
RESEARCH METHODOLOGY
In the current study, research onion is used by researcher in order to provide effective
knowledge on research methodology. Research onion is seen as the framework which provide
effective evolution by which designing of research methodology can be done in an effective
manner. The framework describes each and every stage in detailed manner. Research onion is
also considered as the effective progression with the help of which an effective methodology can
be formulated for investigation. It mainly consist of several layers that are named as research
philosophies, research approaches, research strategy, choices, time horizon, techniques and
procedure. Some of the essential layers of research onion are described as below:
Research Philosophy: It is considered as the belief which states that in which manner data
is gathered, evaluated and used effectively for attaining true outcome of research. Research
philosophies are mainly of two types that is positivism and interpretivism and these are explained
beneath:
Positivism research philosophy: This is being considered as a crucial research philosophy
that can be used by research at the time of gathering data from natural phenomena, and this helps
in doing further analysis on a particular topic with logics and reasons (Dabija and Abrudan,
2015).
Interpretivism research philosophy: It can be defined as philosophy which basically rely
upon human oriented qualitative method. In this context, researchers basically assumes that
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access to reality is only through social constructions which could be from shared meanings,
language, instruments and consciousness”.
In current research, investigator have used interpretivism research philosophy in order to
attain research outcome by interpreting information collected from human beings. This kind of
philosophy is helpful in obtaining outcome of investigation according to respondents
perceptions.
Research Approach
Deductive type of approach is based quantitative method. This is completely based on
logics and facts. Deductive approach is helpful in developing a hypothesis that is effectively
based on already existing theories. In this research investigator have used deductive type of
research approach as it is helpful for them in completing research with logics and facts. This
approach is also helpful in approaching specific conclusion for the study
Research Methods
Quantitative Research: It is designed to collect all those facts which is related to
statistics and numbers. If there is no numerical data involved, it is not quantitative research in
nature. Collection of data in this method includes paper survey, telephonic interview, face to face
interviews and many more. Generally all the statistical data is in the form of table and findings
are in descriptive form.
Along with this, Quantitative method of data analysis have been adopted as it is easier
for investigator to use this methodology with the help statistical formulas. Another benefits of
this method is that it provides clear and measurable outcome for the specific study.
Research Strategies
Research strategy is seen as the overall plan of particular research, it includes conduction
of investigation according to the planning. This strategy simply guides investigator in planning,
conducting and monitoring of research in a specific pattern.
Survey : This is field of applied statistics of human research surveys. This methodology
examine the sampling of particular units from a group of individuals and connected techniques of
survey data collection, such as questionnaire and methods for improving the number and quality
of outcomes to surveys.
Sampling: Sampling is mainly referred as process that is being used by research for
selecting number of observations from total number of large population (He, 2015). There are
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mainly two types of sampling technique that is random sampling and non random sampling
through which researcher selects sample population for survey. In the current research,
investigator have selected sampling technique in order to find out appropriate outcome of
research without being bias with anyone.
Types of Survey Techniques – There are many types of surveys, from which some are
outlined below :
1. Postal Survey – This technique of survey is very cost effective and used for collecting
huge amount of data and information. This allow time to respondents to reply each
question.
2. Telephone Survey – This is type of survey which is used to gather and collect data from
huge number of general population or targeted population (Ayden, Demirbag and
Tatoglu, 2018). The numbers of telephone are used to assemble the information from the
possible respondents.
3. Internet Survey – The online survey is defined as an questionnaire which the general
population can complete over the internet.
4. Personally administrated Survey – This is related to the self administrated questionnaire
that has been planned to be completed by the respondents without any involvement of the
investigator
Time Horizons
Time Horizon refers to framework which shows approximate time limit of whole
research which is going to be taken by investigator while completing it in an effective manner.
Time horizons are mainly of two types that Cross sectional and Longitudinal studies.
Cross sectional studies: In this method, information is collected only once within a specific
period of time. This could be of some days, weeks or months. This data is especially collected in
order to answer research questions. With reference to the current study, cross sectional kind of
time horizon have been considered as it is helpful in answering all research questions effectively
within the chosen time period that is of approximate 3 months.
Data collection refers to the way through which investigator collects information from
sample population or already available information in order to find out feasible outcome for the
topic. In current investigation, researcher have collected information from both primary as well
as secondary method for completing this research with authenticity.
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Primary data- Data collection method for research is primary data. This refers to data
collected for first time by researcher for himself. It is real time data. Primary data is the data
collected by researcher himself for specific purpose. Collection of primary data is expensive and
time consuming task. The collected data provides accurate and reliable data for research
problem. In primary data results are tailored as per research needs (Page and Siemroth, 2017). A
drawback of this method is that to collect data through this method is expensive Their are
various methods for collection of primary data are surveys, observations, experiments,
questionnaire, personal interview etc.
Secondary data – It refers to already collected or second hand data by some other
researcher or user. This data is based on past data and found in refined form. The already
published data may or may not be specific to researcher's need. Collecting data through this
method is economical but accuracy and reliability is not maintained. Various methods for
collection of secondary data are public records, reports, unpublished diaries, government
publications, etc.
In primary method of data collection, investigator have used questionnaire in which 15
questions along with their feasible answers were prepared by the investigator. This questionnaire
was filled up by selected 30 respondent according to their knowledge and perception. The main
benefit of this method is that it is helpful in collecting authentic data. Along with this, the
method is free from bias which is helpful in obtained valuable outcome of the similar research.
On the other hand, the limitation of this data collection approach is that it is time consuming and
expensive process which consumes valuable time of investigator. The pitfall of questionnaire
method can be seen in the lack of interest of respondents. It has been analysed that it was
difficult for investigator to convince respondents to fill questionnaire as many respondents
believes that it is time wasting activities.
Critical evaluation of methodologies
On the basis of above methodologies, it has been analysed that investigator have used
deductive research rte
Questionnaire : This is a instrument which includes a series or set of questions for
gathering and collecting the information from many responders (Wojenski, and et. al., 2016).
This is designed for the statistical analysis, and 30 respondents are taken to answers these sets of
questions.
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