Capital Discipline and Financial Market Relations †Free Samples

Question: Discuss about the Capital Discipline and Financial Market Relations. Answer: The retail market in UK is sailing into a perfect storm. This is because of recession stricken times when there was fall in profits and cutting jobs. Tesco Multinational Corporation had diversified its operations in terms of geography as well as products or services as it is provided to the customers. The supermarket retail chain in UK operates in 14 countries with more than 4811 stores. The employees who are working under Tesco Multinational Corporation are 4,72,000 (Sparrow, Hird Cooper, 2015). From the above pie-chart, it is quite easy to understand that Tesco Multinational Corporation has the highest market share and that is followed by Sainsbury (2nd position). The other company is Morrison, ASDA and other retailing supermarket chain hat operates in UK. Tesco Multinational Corporation dominates the UK market with a market share of around 30.5%. This company was the first company who had launch self-service system in their stores so that they can avoid long queues as it leads to high waiting time. In addition, the company had even arranged for in-store cameras for security purpose. In order to attain competitive advantage over their competitors, Tesco Multinational Corporation manufactures as well as sells its own labeled products (Rosenbaum-Elliott, Percy Pervan, 2015). Financial and Corporate Performance Tesco Multinational Corporation is one of the international companies that have strong reputation in the retail market where they aim at providing quality products as well as services. The supermarket retail giant seek to deliver the best results by providing highest returns to the shareholders as well as beneficial services to the customers and provide safe work environment for the employees (Peppard Ward, 2016). Ethical conduct means performing activities that is morally correct as well as honorable. In order to maintain valuation reputation and build on success, Tesco Multinational Corporation need to conduct the business in a way that is both legal as well as ethical. The corporate governance policies of Tesco Multinational Corporation believe in maintaining level of commitment by conducting ethical business practices. The company gives proper details about the business that comprises of ethical business behavior as well as defining the responsibilities of all the employee and company executives and representatives (Payne Frow, 2013). In addition to that, there were several governance issues that take place at Tesco Multinational Corporation. It was noted that companys admission had overstated figures at the time of half-year profit by 250 million Euros and there was even problem with the composition of Board of Directors and the company was claimed that they were using inappropriate accounting policies (zman, 2017). Ethics plays an important role for determining the level of success of any business enterprise. For instance, when an organization carry out its business operations by using ethical ways, then the company will increase their reputation in the market and finally have positive impact on the business activities. Ethics should be embedded in strategy adopted by company and at the time of decision-making process. However, Tesco Multinational Corporation is corporate social responsible business as well as had made Corporate Social Responsibility as a major role and properly publishes it in the annual report (Jenkins Williamson, 2015). Strategic options Tesco Multinational Corporation had already expanded in countries like UK, Asia, USA and Europe as we as has 6531 stores in and across the world. The supermarket retail chain still continues to open new markets for increasing their current market share as well as market growth (Hubbard, Rice Galvin, 2014). Diversification- It is important to consider the fact that diversification is the most risky strategy where a particular business enterprise enters and there is no information or facts available and has less experience to it. The risk can be a failure of acceptance of products by the consumers for not making enough of sales. However, Tesco Multinational Corporation had diversified their market by launching various non-food products into new market segments. Tesco Multinational Corporation enjoys long-term success because of which the companies remains focus and has main core vision that remain same at the time of implementing corporate strategy change based in changing scenario. It is because of the competitive global environment, if any business enterprise does not have clear vision, then the company actually has direction and may not be able to sustain in the near future. However, Tesco Multinational Corporation had established business strategies so that they can attain or achieve vision and mission statement stated by the company (Hensmans, Johnson Yip, 2013). The strategic management of Tesco Multinational Corporation is of the opinion that the mission statement, vision statement as well as strategic objectives plays major role towards attainment of success and make use of key performance indicators for measuring the level of performance in an organization. The Key performance that can be used by Tesco Multinational Corporation is the Balanced Scorecard approach as it measures both financial and non-financial aspects. There are four major perspectives of balanced scorecard that are addressed properly and these are customer perspective, business process perspective, learning growth perspective and financial perspective. Currently, Tesco Multinational Corporation follows a strategy that will help in maximizing customer value by using market-orientation strategy. The supermarket retail chain aims at providing quality products at a competitive price based on needs as well as preferences of customers. The above diagram shows the Porters generic strategic options adopted by Tesco Multinational Corporation within the next 5 years of time span. It is recommended to Tesco Multinational Corporation for following the generic strategies that had been proposed by Porter as it will help in gaining competitive advantage within next 5 years time frame. However, Tesco Multinational Corporation already has a reputed background where the company provides best quality products at affordable prices to the customers in order to achieve cost leadership with little efforts as it focus more on own label products sell by reducing production costs. Therefore, clearly defined market segment will help Tesco Multinational Corporation to target differentiated range of product lines to specific markets or positioning of few products on wide range of market segments (Goodman Dingli, 2017). Implementation of final strategy After using suitable criteria, three strategic options are determined and it is needed to select the best one for the company that they will follow in the near future. The three strategic options are criteria for suitability as well as acceptability and feasibility and it is needed to be judged for each of the options (Frynas Mellahi, 2015). Suitability- Here, the suitability criteria explain how the organization environment help in measuring the strategic implications of the business enterprise in a given surroundings. It is mainly used for integrating the strengths as well as weakness for efficient implementation of best strategies. The operational aspects of Tesco Multinational Corporation are continuously updated so that they can cope with the fast-changing environmental dynamics. Therefore, the environment as well as the market oriented operations of Tesco Multinational Corporation provide proper platform for implementing the strategies of cost leadership as well as product development largely. Feasibility- Here, feasibility means the scope of Tesco Multinational Corporation for operating in an environment after application of any of the above-listed strategies that need to be evaluated based on financial viability and time duration for implementing the strategy and other important factors such as internal skills as well as competencies that support the strategy option. However, Tesco Multinational Corporation already has a strong financial background as well as huge capital invested in technology that mainly focus more on product development, imitability or leadership strategies options that make Tesco Multinational Corporation occupy the leading position in and across the world. In order to implement these strategies, it is important for Tesco Multinational Corporation to focus on its core competencies and this is possible if the company start recruiting more skilled professionals. Acceptability- Tesco Multinational Corporation already has high brand recognition in the UK market but the company would not take long to implement the strategies in successful ways. The financials of Tesco Multinational Corporation are expected to increase rapidly after they start implementing the suitable strategic option. However, the cost benefit analysis shows benefit in a case where the company had already had upgraded technology operating in their stores as well as opted market oriented strategies that will retain customer loyalty. Therefore, product development as well as cost leadership would be considered as less risky and less costly venture that should be enforced. Monitoring and control of Future Performance The environmental factors as well as operational efficiencies of Tesco Multinational Corporation show the strategy of cost leadership to be best for creation of strategic fit for the company. In addition, the product development strategy had been discarded as compared to other strategies as the supermarket chain deals in wide variety of products as well as services (Frow et al., 2016). The cost leadership strategy mainly covers wide range of products as well as service that provide a boost to the customer purchase rate. 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