Business Valuation of Tesco Research Paper Example | Topics and Well Written Essays - 1000 words

Business Valuation of Tesco - Research Paper Example The paper discusses reasons resulting in the declining performance of Tesco. In the recession time, when other competitors like Wal-Mart, Sainsbury’s, and Carrefour have been facing severe problems, Tesco has adopted strong strategic plans to cope with the financial crisis. In the years following the financial crisis period, the company has reported a declining profit, despite the fact that profits yielding from its operations were greater, but the consumers’ behavior remained ineffective. Tough competition among competitive companies led by low-profit margin pricing and marketing activities has been observed during 2012-2013. The company has maintained strong policies and strategies to overcome obstacles (Miller, 2005). The analysis of the performance of Tesco shows that the competition has led the company to initiate steps to minimize its costs. It has enabled the company to increase its profit margin when consumers hesitate to spend. On the other hand, an effective a nd innovative platform in the operational side of the business has been observed (Naunheim, 2011).  As the consumer’s behavior model has changed in recent years, this strategy of Tesco has regained the confidence of consumers and has increased its sales volume. The analysis of the five-year financial information (see Table 1) depicts that the company’s stock price has been fluctuating with the changes under economic circumstances (Naunheim, 2011). Tesco’s stock price peaked during 2009-2010, whereas a gradual fall was observed in 2010-2011, but a major decline in stock prices was in 2012-2013 (Dinkhoff, 2009). According to financial data, there has been a major decline in 2012. Amongst competitors in the retailing and grocery merchandising industry, Sainsbury’s stock value has been gradually increased during 2009-2011. By the end of 2011, the company’s stock peaked, and after 2011 a gradual decline in the Sainsbury’s stock prices has been observed (Dinkhoff, 2009). Sainsbury’s market price has not fluctuated like that of Tesco during 2011-2012.