Impact of these strategies on financial performance (Asia expansion) The expansion has had a positive impact on the overall sales and markets share of Tesco. But, whether it is helped in increases the share value is still not clear. Impact on share price Source: yahoofinance.com Sainsbury Sainsbury corporate strategy is totally different from Tesco. They want to recover from loses in 2005 and grow within the home market.According to Sainsbury’s website the company plans to accelerate the growth of complementary non-food ranges: To continue to develop and accelerate the development of non-food ranges following the same principles of quality, value and innovation and to provide a broader shopping experience for customers, reaching more customers through additional channels and to extend the reach of Sainsbury’s brand by opening new convenience stores, developing the online home delivery operation and growing Sainsbury’s Bank.
Sainsbury’s strategy can be defined by the 3c’s model where Sainsbury is planning to improve its services for the customers by adding new channels. They should have done this much ahead of competition as Tesco introduced inline retailing much before Sainsbury. Therefore, this model implies that Sainsbury is in the growth stage of the life cycle mainly domestic growth. Effect on the financial performance Share price Source: yahoofinance.com The share price of the company seems to have been steady in 2007, meaning their MSRG strategy is working and investors are gaining confidence in the company, organic growth for the company is important.After evaluating both the companies it is recommended that bank’s fund managers should invest in Tesco plc if they are looking for growth in their stocks. The company’s size and market capitalization is much greater than Sainsbury.
According to the financial performance Tesco has increased its international market share as home market is saturated. Tesco has expanded its operations to Asia and Europe whereas Sainsbury is still recovering from heavy loses of 2005 to grow in the home market. Tesco expansion plans are based on utilizing the surplus funds in investment of positive NPV projects to increase the value of the firm. The company did not pay dividends over the last year, but, has made consistent share buybacks over the last 2 years, sending a strong signal to the market and showing confidence in the management.References:Bender. R and Ward. K, (1993).
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