This is another change in the business activity and this became Tesco’s latest aim and something that they put all their strength into. This is because when trends changed Tesco changed with them to provide everything under one roof and meet their aims and objectives of retaining loyalty. Tesco also diversified because they wanted to accomplish their aims and objectives of maximising sales and having a bigger market share. Which leads on to more profit and that again helps Tesco achieve their objectives.Also when Tesco did introduce their own clothing brands (Cherokee, Florence and Fred), it over took Asda in that market. And only recently Tesco’s clothing and foot ware market share increased from 10% to 14%, and has been “The fastest growing clothing offer in the UK”.
Diversifying will also spread the risks. This means that Tesco won’t become dependant on one section in the store, such as the food and drinks department. But can spread the risks by having a non-food department and help them to compete better.
This will also make Tesco a trusted household name because they are making it even more convenient by having everything under one roof. Having everything under one roof helps many people. As some people will not have time to go from shop to shop to get all necessary things that they need. So instead they can go to Tesco and find everything that they need, all under one roof. Since Tesco diversified their store and started selling non-food products, their non-food’s market share has gone up by 5%. This year they have attained a 16% share of chart music sales and their clothing range has driven sales increase of almost four times the market rate; all this helps Tesco to achieve their aims and objectives.
Also the market department announced that Tesco sells more toiletries and medicines than Boots and Superdurgs combined, and sells more CD’s than HMV and Woolworth’s. Despite this Tesco’s only have 5% of the non-food market. But if all goes to plan for Tesco this should all change as their aims have now changed because Tesco is now planning on opening 10 new huge stores that only sell non-food products, such as furniture.Financial ServicesTesco also offers a large range of financial services. By doing this Tesco will now attract a bigger market, which will increase profits. The reason that they diversified into financial services was because there was a change in the business activity so Tesco had to respond to this changes that’s why they introduced financial services.
Tesco already has a large number of loyal customers, so what Tesco has done is taken advantage of this and simply started offering financial services, which would help gain customer loyalty.Nowadays people are working more and have a steady income. People are also using credit cards more then they use to as they have a higher spending power. This is one of the main reasons why they can afford and why they use Tesco’s financial services for their own benefit. Nowadays people even buy their motor insurance from Tesco because they trust the company. So this all goes to show that diversifying by selling financial services Tesco has made a successful move, as this has increased sales and have help meet aims and objectives.
Also, as a summary the whole idea and experience of diversification into the non-food sector for Tesco has shown to be a very successful and profitable. Tesco wants every penny from there customers they don’t want them to go anywhere else other then Tesco. They are now all the time going forward, which shows to us that diversifying into to non-food and into selling financial services was an excellent decision. All their profits and their increase of the market share reflect their success. In Slough Tesco has responded to the local needs by stocking a wide range of market orientated products so people are able to by all they need from one place.
This shows that Tesco are determined to capture every single consumer in the UK market.Selling thousands of items that people want to buy gives Tesco have increased their sales and profit, and so they can afford to give their shareholders higher dividend. Giving their shareholders more dividends keeps them happy and so they may invest Tesco done this all to meet their aims and objectives Why shareholders want to invest in Tesco? Tesco will not refuse to sell shares to anyone. This is simply because if Tesco did they will be refusing money. This makes no sense, as they are trying to make money! The shareholders in return for their investment receive dividends from Tesco.
When Tesco became a PLC they did so because they are forward thinking. They knew it was a good step for them to take; they turned into a PLC to diversify. The public invested in Tesco because they know that any PLC is successful, they know that the company has limited liability so they don’t have much to lose. The public are prepared to invest their money, as they trust Tesco and their good reputation and loyalty to customers. Tesco encourages shareholders to invest by their dividends; they have a log of their previous dividends this persuades the public to think that investing in Tesco is a good idea.Seeing as it became crucial for Tesco to retain loyal customers so that they would continue to do all their shopping in Tesco, if customers buy their clothes from their competitors they will also buy their food from them.
Internet: Tesco changed their aim to suit the technology change. Internet has become more and more popular, and is now a popular trend in every household. Tesco exploited this and created a website which sells food items and financial services. Thus by using the Internet changed its objectives from not only having the local market but each and every customer in the UK.
They realised 91% of the customers have internet and therefore took the advantage of selling products online. They have gained ï¿½250 million in profit and have created 6000 jobs in the country. This shows how successful they are in meeting their aims and objectives in retaining customers and improving profits for their shareholders.
Fashion and Tastes: Another reason Tesco changed their aims and objectives because people developed different tastes in food and clothes. The latest trend is in organic food and Asian spicy food. Tesco had to adopt a new aim of satisfying customers in this area and therefore they have been very successful in gaining customer loyalty. They have increased their range of organic products and have made 20 million profit. This has been a good investment and shows Tesco care about the needs of customers and at the same time have a good return themselves It shows that companies have to change aims and objectives from time to time in order to be successful.
Tesco have definitely adopted this strategy in order to stay as the leading supermarket in the UK.