Issuance of securities to raise long term financial resources

Introduction to the company

It is important in this very competent and corporate world to maintain a high rate of
longevity. For large businesses such as Tesco being among those which are top for their
revenues and high profit figures, it is much difficult as there are many challenges and
obstacles in their way where limited resources have very much competing utilities.

Getting a small start in 1929 with Tesco stores in Burnt Oak, Edgware, Middlesex today the
figure of its stores is in thousands and it is experiencing a reliable percentage of market share.
Although it focus on food and drinks but it has expand in a verity of products and services
such as electronics, financial services, telecoms, different type of insurance policies, renting
different electronics and some IT based services.

Worldwide functioning of Tesco

Tesco is working in worldwide with its stores in about fourteen countries spreading from
Asia, Europe and North America. But the most popular stores are in China, France, Japan,
Malaysia, Thailand and South Korea.

With a devoting performance tesco was on fourth position among the retailer businesses of
the world. Defeating Home Depot in 2007 it makes its position to third. Again defeating the
largest retailer businesses of USA when the currency value of US dollar was badly disturbed.
Today tesco is willing to offer 16000 new jobs with 9000 UK based while raising its profits
by 10.1% getting the figure of £3.4 billion

Strategic planning process

This description will explain the performance of the tesco’s financial securities at the
London stock exchange from 1998 till the current year. It will be helpful to make an effective
and efficient decision regarding the issuance of some new securities at the London Stock
Exchange to fulfil the long term financial needs which will arise while launching the product
designer baby wear into North Europe.

This also will enable both the management to understand why to issue new securities, as well
as top investors of the financial markets why to buy the securities offered by tesco.

The description will use SMARTER approach and SWOT analysis which will show a near by
result of the financial performance of the securities of tesco in the last decade.

Financial performance of tesco at the London stock exchange

London stock exchange is considered to be among the top stock exchanges of the world and it
has primary listings for the securities of tesco with the symbol TSCO. Although it has also
listing with other stock exchanges but they had secondary listings for tesco. Tesco is
generally respectable in financial markets as it always benefit its stockholders and each year
it increased their earning per share.

Here are some of the key figures for the yearly turnover, profit before taxes, and profit for the
year and earnings per share.

52/3 weeks Turnover (£m) Profit before Profit for year Basic earnings
ended tax (£m) (£m) per share (p)
27 February
62,500 3,200 29.02
2010
28 February
54,300 3,128 3,090 28.92
2009
23 February
47,298 2,803 2,130 26.95
2008
24 February
46,600 2,653 1,899 22.36
2007
25 February
38,300 2,210 1,576 19.70
2006
26 February
33,974 1,962 1,366 17.44
2005
28 February
30,814 1,600 1,100 15.05
2004
22 February
26,337 1,361 946 13.54
2003
23 February
23,653 1,201 830 12.05
2002
24 February
20,988 1,054 767 11.29
2001
26 February
18,796 933 674 10.07
2000
27 February
17,158 842 606 9.14
1999
28 February
16,452 760 532 8.12
1998
Strategic Aims and Objectives

The aims and objectives of the strategic plan along with Tesco are as;

 To fulfil long term financial needs

 To raise the market share in financial market of London
 To expend the business area of Tesco
 To raise sales while making finance for launching a new product
 To capture a large market share as to lead its competitors
 To maximize profits while raising sales and revenue
 To provide a better investment opportunity for those who are riskevers and still want
to invest for some margin.

Tesco has diversified its products and services from the growing point and come up to the
most leading competitors of the market through different strategic models which get
structured through strategic planning. Such strategic plans at different times set the terms and
conditions for tesco to link out the resources of the company to its aims and objectives.

Now if tesco has to raise a huge finance which will serve the launching of its new product
and the activities afterwards, it has to select the tools to make the plans active as well as to
conform the future of the tesco through strategise which will cut the cost of functioning,
expend the business and raise the profits.

So, here is where to get started. By issuing thousands of bonds to the investors at the same
time tesco will divide a large and long term into many small and transferable units. Through
the evaluation of the objectives and the goals

Specific- it tesco has to offer new securities than it is important to make the nature of the
securities specific. If it needs an amount of £10,00,000 than it have to issue 100,000 of
securities with a par value of £10. So that it would be able to get the required amount of
finance and also the investors would able to make a decision to invest in these securities as
current situation is risky. In this connection the targeted investors are those who are willing to
make investment but are afraid of investing due to the ups and downs in the financial
markets.

Measurable – if tesco has to raise funds for its new launching program, although the amount
is determined but still is has to make it measurable in terms and cost, for this tesco had either
get services of its financial managers or consult a servicing firm. If it wants to go with its
own financial managers than this task is to be done by some experienced managers. But for
this tesco had to make a lot of changes in terms of recruiting and hiring new employees. This
may raise its cost of working.

But if it consults a servicing firm then every thing is much determined here. After a month
tesco have just to take finance from this firm and whether its securities are sold out or not.
This is the most secure way of issuing securities as the servicing firm has expertise in this
field. This will again give some cost of hiring the servicing firm but in this connection the
cost will add the value to work done.
Achievable – If it has to start the launching program after three months than it should make it
clear to be done all the activities relating to the issuance of the securities and collecting the
finance with in a month. The servicing firm will make it sure regarding this one.

Realistic – for this tesco has to make some real acts. The aims and objectives set should be
very much real so that raising such a big amount would be possible. It’s very much realistic
as the concern servicing firm is responsible here for the work to be done and selling the
bonds to make the amount. Tesco would only be concerned to handover the amount after a
month.

Time related – each aim and objective is very much realistic to time frame with the reference
of the working conditions of London Stock Exchange. A period of 30 days is very much
favourable for this activity.

Evaluate – the whole task is assessable in terms of cost and value. It is very much ethical and
enjoyable to issue such securities.

Reachable – the whole activity is reachable for both cost and time. Concerning a servicing
firm will lead to better results. The cost of working would be defined earlier so there would
be no any matter of getting the task over time or over cost. The end results are very much
valuable to the contrast of the cost given to the work.

Core marketing approach for the strategic management

The Ansoff’s product/market matrix will define the directions for the Tesco’s strategic
development as concerned to the product and market and the belief of the investors to the
securities of Tesco.
Market Entry Strategy and Target Customers – Although tesco has a vide range of
securities listing on the London stock Exchange but here it is assumed that it is case of
product development as tesco is selling new securities in the current market. The existing
securities are performing well on the London stock exchange with raising Earning per Share
year by year. This will make it profitable while selling the new securities as it will attract
some solid investors. The history of the TESCO securities along with London stock exchange
and other stock exchanges such as NASDAQ is well appriatiated by all its stakeholders.

Objectives of the Market Strategy

 Raising long term funds

 Increase the share in the financial markets
 Increase the number of the investors to Tesco’s financial securities
 Increase the stakeholders’ value

It is very much clear and easy to make the market strategies practical as the aims and
objectives are set with SMARTER approach while specifying the need and the current
condition with respect to both the tesco and its future investors.

Marketing Strategy

Tesco has a very much enjoying strategy; make the profit figure as high as possible while
diversifying both markets and products. And the one angle of this diversification is the
availability of the products and services with a wide range of prices. This make possible to
capture the more market share year by year.

The marketing strategy will comprise the activities as;

 Analysing the market

 Determining the type of security to offer
 Par value of the security
 Time period of the security
 Paying period (interest rate payment)

As the world of financial markets is much volatile and the investors of the London stock
exchange are always on the move to seek a better security which will benefit them with
highest return. Thousands of securities are put to sale and buy point with a high return
prospect to their investment figure. Among the securities sold by the London Stock
Exchange, there are mostly common and preferred securities. These securities are under
practice of an existing business which has a large capital along with a good working
management.

However in this case tesco has to raise funds for one of its future operating programs and
there is only the name of the business Tesco to be used along with a bright past performance.
As there is a broad range available to choose a specific security from a number of securities
but still the current situation restricts Tesco to a limited options. For a business which want to
raise funds for it’s an up coming business program, the option mostly practiced is the
issuance of the bonds. This is a special type of security which is made functional in such
circumstances while making both the investors group and the business secure. As the rate of
return is fixed through out the life time of the security and the security is redeemable. Either
the business will perform better or not in the future the investors would be paid a specific rate
to their investment figure. This will also be helpful for those investors who are not willing to
take risk in the current market situation.

The market mix

Product- simply a product is the offerings by a business to the rest of the world. What ever is
offered, the most important is to how the offer is made and the event of the offering get to the
end. For such securities which are to be offered, the most important thing is the past
performance of the business. The financial investors get concern to the other existing
securities, their rate of earnings per year and yearly incline or decline of the earning per
share. The investors seek such securities which have a strong backup, the business is giving
value to both its stakeholders and stockholders, graph of the earning per share, and steady
rate of return.

Price- the price of the security is also one of the defining points. If the price of the securities
is set too high than it will be impossible to sell these securities in the market as they are
issued by tesco in the name of its future launching program. Mostly bonds are issued with a
price of £10 by the respective competitors in the financial markets. If the a high price is set
than this will not show a good picture so it is better to start with a price of £10 and adjust
later if some new offerings are made in future. The price is very much decisive here as if the
securities are not sold out than it is impossible to end the current activity that is to raise funds
as well as the related program of launching the new product of baby wear.

Place- as defined earlier, the place where the security to be exposed is the London Stock
Exchange. But the channel of distribution is the most important thing. The offering should be
made at the right time and between the right investors. For this purpose a little investigation
regarding the investors of the financial market would add value to the whole act. There are a
number of investors in this market. Some are favourable to a high return while taking a high
risk. Some are satisfied with a little return but want no risk in their investment and some
prefer a steady and determined rate of return. It is important to specify the target area so that
the efforts which are made would give value to the business.

Promotion- in case if there arises the need of more funds in future and wants to issue more
securities than the concept of promotion will help out here. This will make possible the
approach of the right investors for the securities. Effective and efficient promotional activities
are much important to make possible the sales of such securities. But this would be made
possible through active agents who will market the securities among the strong and targeted
investors.

These bonds will make it comfort for such investors as will be giving a determined level of
return to them.
SWOT ANALYSIS

As tesco is a well managed business with diversified products and services. The business is
very competent to other businesses and challenges faced. However having a strong base in
UK it is expanding through a verity of offerings. Different needs and wants of the world are
making it possible to achieve its aims and objectives but still there are some weaknesses and
threats for Tesco which should be considered in any type of strategic planning.

At the most following are the most of the striking strengths, weaknesses, opportunities and
threats.

Strengths

Increasing market share- the yearly performance of tesco is meaningful to its all
stakeholders. Tesco is among those who are enjoying the highest market shares of the world
market. As it is diversifying in both new products and new markets, the high competent
management is making it possible to increase its market share day by day.

Competent management- today there is a very competent management with tesco which is
working through determination and willingness to raise its profits and this is the most
benefiting strength.

Primary listing of Securities- the securities of Tesco are listed as primary securities by the
London Stock Exchange. This is among one of the major strengths of tesco. It is considered
to be the leading among the corporations of the current corporate world.

International operations- tesco has help a lot of localities in many countries through its
international operations. It is welcomed by different businesses as a joint venture and
other partnership programs.

Advertising- in a decade tesco has make its position in the market through different
approaches of media.

Weaknesses

Tesco litigation- As the area of tesco is broad. It is involved in litigation from customers,
staff, workers and other environmental and economical matters.

Opportunities

Insatiable album- a new album by Nadine Coyle entrusts to tesco is to be launched near by
in future. This is a great opportunity to make the way towards number one business of the
world as it will reinforce the act of attempt to promote the society’s way of spending for its
specific products and services.
Verity of products- as tesco is a food retailer but the current products which are offered by
tesco are diversified. From food items to financial services, clothing to housing, IT base
services to electronics tesco is having fun with all these and many other goods and services.

Threats

Criticism - Tesco has been criticized by its opponents forcefully in past. For this purpose
many cases are noticed which lead to be jailed or getting under claims by many personalities.

Opposition to tesco expansion – the largest threat for tesco is the hurdle in the way of the
expansion programs. But for many cases there is active opposition for these programs in past
which decelerate the process of expansion with time and cost. But in this case there is no any
such threat for which work to be done as the London stock exchange is always welcoming the
securities issued by the Tesco.

Implementation of the strategic plan

Issuing these bonds in an existing market will benefit tesco from the financial market and
also will help to raise the profit indirectly and will able to compete with its competitors in a
professional way.

Tesco will enter the financial market with a backup of a firm which would be expertise in
financial services. New offerings exposed at the London stock exchange by active agents of
the servicing firm and with the name of tesco will attract the investors which will make the
sales of the securities possible. The investors of this financial market are very much
interested in the securities issued by tesco as the earning per share is increasing and the future
of tesco is also much secure. The good will of the investors and the high performance graph
of tesco will lead to on time sales of the bonds and again this will result in raising the
required fund for the expansion of the business.

Sale of securities- the sale of the securities would be in the responsibility of the servicing
firm. However tesco will make marketing attempts in this connection. The servicing firm will
guarantee the selling of bonds at a specific price and assures tesco that the entire bond will be
sold without delay and that the entire amount of the proceeds will be available at a specific
date.

Issuing certificates to the investors- the investors who will buy the securities of tesco will
be given certificates. Certificates would not be issued for each bond but a single certificate
will be given to each investor representing the number of bonds brought by that investor.

Life time- the life time of the securities would be 40 years. The investors have right to sell
the bond to any other party in the financial market if they want.

Redeemable- the bonds are redeemable that is the principle amount would be returned back
to the investor. The principle amount would be retuned at the end of the life time of the bond.

Payment- the payment of the return to investors would be done semi annually. After
completing of six months the payment would be done through electronic accounts. After the
last payment the certificates would be valued to zero. The last payment would be done of
both the principle amount and the rate of return.

The advantage of issuing bonds instead of capital stock is that interest payments to
bondholders are deductible in determining taxable income, whereas dividend payments to
stockholders are not deducted.

The way of financing the future projects by issuing such securities will benefit Tesco as there
won’t be any legal obligations which occurred if the same amount was financed by a loan
from a bank or other financial institution.
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