MANAGEMENT OF FINANCIAL RESOURCES & PERFORMANCE IN TESCO

Management of Financial Resources & Performance in Tesco



MANAGEMENT OF FINANCIAL RESOURCES & PERFORMANCE IN TESCO

Mr. ABCManaging DirectorTesco Plc123 StreetAndover

24th November 2010

Subject: Management of Financial Resources & Performance in Tesco

Dear Mr. ABC,

As you mentioned earlier, we need to discuss the strategies, financial resources of the organisation. I will be discussing human resource, marketing, operation, IT, financial performance which is as follows:

Financial Resources

The discussions will provide a clear indication as to whether Tesco is able to support any future strategic initiatives. Early reports on the company have indicated that they have broken the billion dollar mark with quotation to their profits. This has been substantiated in the 2009 annual report of the company as it indicated that it has accumulated over two billion pounds worth of profit. Basically, this is a hands-down suggestion that the company is more than financially adept in funding its strategic endeavours.   

 

Tesco's Profit and Loss Account, 2009

 

2009 (£m)

2008 (£m)

Sales at snare selling prices

37,070

33,557

Turnover encompassing share of joint ventures

34,353

31,050

Less: share of joint projects' turnover

(379)

(236)

Group turnover excluding worth supplemented tax

33,974

30,814

Normal operating expenses

(31,845)

(28,925)

Employee profit-sharing

(65)

(57)

Integration costs

(53)

(45)

Goodwill amortization

(62)

(52)

Operating profit/(loss)

1,949

1,735

Share of operating profit/(loss) of joint ventures and associates

130

97

Net profit/(loss) on disposal of repaired assets

53

(9)

Profit/(loss) on commonplace activities before interest and taxation

2,132

1,823

Net interest payable

(170)

(223)

Profit on commonplace activities before taxation

1,962

1,600

Underlying profit before net profit/(loss) on disposal of fixed assets,

2,029

1,708

Source Tesco PLC, 2009

The table above summarises the profit and loss incurred by the company in 2008 and 2009. Looking closely at the facts and figures above, one could notice that there were rather a couple of localities where the losses of the business have increased considerably, like that of the operation costs of Tesco. However, these losses are rather justifiable as it could be an outcome of economic undertakings like inflation and other shifts in the exchange rate. Moreover, the glimpsing the profits and concurrent effects on the shareholders as well as with the other aspects of the business, it still strengthens the detail that Tesco is not only financially steady but furthermore instructing in this area.   

Human Resources

In UK, Tesco employs over 270,000 employees. (Tesco Plc 2008b) With the training and career opportunities provided by the company, they have achieved an 84.1% of retention which basically shows that the company is taking good care of their employees. The website furthermore demonstrated that in the past years, they have “appointed 27 Directors, 200 shop Managers and 8,000 Department Managers” all of which are from the pool of employees that they have in their organisation.  

Marketing

Tesco is considered as among the world's top organisations that manage a loyalty system with their core customers just because of their marketing campaigns. In accordance with their website, there are more than thirteen million individuals in UK who owns a Tesco club card. This denotes that Tesco have this allowance of persons guaranteed to purchase in their stores in the future. Therefore, it seems that the administration has established its edge over the Sainsbury's, Safeway, Asda and Somerfield as seen in ...