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

Investment Report - Essay Example Tesco is currently the world’s third largest retailer in the world measured by revenue and the second largest when measured by profits. The company is undoubtedly the largest in the retail industry in the UK, where it controls approximately 30% of the market. This places Tesco substantially ahead of ASDA its closest rival which is operated by Wal-Mart a U.S owned operation. However, BBC (2012) indicates that Tesco’s market share fell below 30% to 29.9% for the first time in seven years for the 12 week period to January 22, 2012. The company’s major competitors include Sainsbury which was number one until 1995, ASDA, Safeway and Morrison’s. Tesco’s size resulted from a series of acquisitions throughout the UK. The company is now an international group with operations in 14 countries – located in Asia, Europe, and the U.S. According to Tesco (2013) Tesco’s venture into the international arena started in 1995 when the company invested in Hungary. In 1998 the company entered Thailand under the Tesco Lotus brand and in 1999 though a partnership with Samsung made its entry into Korea where it now has 450 stores. The company took a break and continued its streak of expansion when it entered into a partnership with 30% stakeholder Darby in Malaysia. This was followed by the acquisition of the Kipa stores in Turkey in 2003 and entry into China in 2004 where the company established a network of over 100 stores in several Provinces along the Eastern Seaboard. The company entered the U.S in 2007 under the name Fresh & Easy and now has approximately 200 stores in several states including California. Tesco now has approximately 6,234 stores and is expected to continue growing as economic conditions improve. In fact, the company decided to reduce its planned investment in China as a result of uncertainties in the environment (Tesco 2012). The macroeconomic Environment in UK and Hong Kong An analysis of the macroeconomic environ ment of Tesco using PESTEL provides information about to opportunities and threats in the environment. In order to assess the impact of the environmental conditions of all these countries on Tesco’s, an environmental analysis needs to be done In the political environment the threat of terrorism is not as high as it was before. However, Tesco appears to be prepared as a major terrorist event would affect the company’s system and impact its ability to trade. The company has contingency plans in place as well as security systems and processes to deal with any such event (Tesco 2006). Tesco’s other international competitors - Wal-Mart and Carrefour face temporary price controls in Kunming, a southwestern Chinese city. (Bloomberg 2010; China Briefing 2010, CNNMoney 2010). However, incentives are being offered for investors to start business in the western region - the poorest region in China. The environment in the UK is getting better as the government has reduced t he corporation tax rate for 2012/13 from 24 per to 23 percent. The rate is expected to be reduced to 22% in 2013/2014. The political environment in Hong Kong as it relates to business is different as the country is considered to be a tax haven with a corporate tax rate of 16.5%. The company does not have value