The two businesses I will be comparing will be Tesco’s and Shell. They are both registered in the UK as their main business registration. Tesco was founded in 1919 and has been in existence ever since for 91 years. Shell was founded in 1907 which means it has been in existence for 103 years. Up to2009, Shell has a total amount of revenue which stands at $278. 188 billion. Since 2010, Tesco has a revenue amount of £62. 54billion. I have chosen these as they have a few similarities but have lots of differences.
These businesses are different market types as Tesco’s is a supermarket and provides customers with a range of products such as groceries all the way to electrical products. Shell is a fuel company and sells fuel and other energy sources such as oil. It also deals with the extraction of the fuel. Both Shell and Tesco’s are international companies and this means that they are able to sell their products globally across the world. Tesco has stores located across over 14 countries which include the North American region and also the Asia Region.
Shell on the other hand deals with around 90 countries which is a significant difference than Tesco. This makes Shell the largest energy source country in the world. Being an international country is better than being a European company as they can increase their profits as they can expand their market size across many different countries and regions rather than just one. Both companies are in the tertiary sector of business as they both provide a service to its customers however, Shell is also in the Primary and Secondary Sector of business as they go out and find the oil, and then they extract the raw materials.
They then refine the oil down to make it into fuel and proceed in selling it on to their customers and other companies. This gives Shell and edge over Tesco as they deal in all three sectors of business so are much more likely do well and increase their profits. The target market is similar for these companies. Tesco’s target market is everyone. This is because they offer a range of products from groceries and drink to electrical and furniture, this means that Tesco offers something for everyone and any age person.
This is good as profits and market size will be maximised. Shell, like Tesco also have a target market which is everyone. People assume that Shell only deal with selling fuel and oil to people so their market is limited in comparison to Tesco as they can only sell fuel to anyone over 17 who owns a vehicle. This is wrong as there is much more to Shell as a business. Selling fuel is done through a franchised part of the business where people open up fuel stations and become franchisees for Shell so that they can legally trade under the trademarked name of Shell.
Shell also deal with providing different typed of energy, and a big one now is supplying natural gas to businesses as an alternative to using “national grid” a leading supplier of gas to homes and businesses. Shell also provides their services to marine products and also in aviation. They have also researched extensively into cutting carbon emissions and trading more environmentally friendly. This has meant that Shell have been able to expand their business globally by franchising to other companies. This gets Shell’s name seen and therefore gets their company known.
By moving into other products they have been able to increase their market share over competitors and this then gives them a massive advantage. Tesco and Shell are both a PLC company. PLC is a Public Limited Company. This means that both companies have to show a report of their turnover and other figures of business annually to the public. The public are also able to take out shares in the business and sell or transfer them whenever they want. An advantage to being this type of company means that they can raise capital when needed to by selling more shares of the company.
The biggest advantage is that the company has limited liability. This means that if anything went wrong and the company was losing money then shareholders wouldn’t lose any personal belongings or personal money, only the shares they have taken out within the business and these can then be paid back into the business. Tesco’s current share price is 399. 25p and Shells is 2171. 50p. By looking at each company’s share price chart it is clear to see that Shell seems to be performing much better than Tesco. Shells performance has kept increasing over a 3 year period after taking bit of a dive in September 2009.
Tesco has also increased in performance slowly over the period of time but it also dives more frequently than Shell. Both Tesco and Shell have the same aims and objectives, they are fairly straight forward and are to make a profit and to keep increasing it and to also provide a good service to its customers. They are both similar aims and I think they have already been achieved. Both companies have made a substantial amount of money since the time they have been formed and they will continue to increase their profits year after year. They both appear to provide a good service to customers and offer them incentives.
Tesco offer a “clubcard” which gives customers money off vouchers and points each time they shop at a Tesco branch and Shell have a similar incentive which is called a “drivers club card”. This rewards customers with points each time they fill their car up at a shell fuel station. This also rewards them with vouchers from time to time. These are both similar incentives which they offer to their customers and this shows good customer service. Another objective which I feel both companies would set would be to appeal to a global market.
They have both reached this objective as they both operate around the world on a large scale and increase their profits efficiently. Each company has competition from other rivalling companies. Tesco has a huge domestic competition with other big branded supermarkets such as Sainsburys and ASDA. These are both two big competitors in the Supermarket chain market and both turn over huge amounts of money. Sainsburys has created a total revenue amount of ? 18,911 million since 2009 and profits are increasing quickly. ASDA is a domestic competitor but its parent company owner Wal-Mart is a huge overseas competitor.
Since 2009, Wal-Mart’s total revenue is $408. 21billion which is a significant amount more than Tesco. Shell’s competition comes from BP, TOTAL and Texaco. TOTAL is a French fuel company and is a big overseas competitor that boasts a total revenue amount of €131. 3billion. BP is another major domestic competitor based in the UK as it is the third biggest energy company in the world and has a total revenue amount of $246. 1billion. Another major overseas competitor is ExxonMobil. This is a big American fuel company that is ranked 4th in the world for fuel companies and has made a total revenue amount of $310. 8billion. Tesco and Shell also have competition between the two of them.
Tesco also provide fuel to their customers through a franchised means of way and also through their own brand. Tesco have fuel stations next to their supermarkets as they believe it cuts fuel emissions and it is simpler for customers as they don’t have to travel for their fuel. They also run a 5p off every litre voucher when you spend ? 50 in store. This beats any other competitor’s fuel prices including Shells so it impossible to compete with.
Tesco have also set up a Tesco Express which is a small shop with the fuel stations however these are franchised petrol stations compared to Tesco’s own stations. This means that the supplier can charge whatever price they want and this can significantly increase so Shell are able to compete with these fuel prices. In the current day, Shells fuel prices are 126. 9 a litre and in Tesco Express they are 127. 9. This shows that Shell is better on petrol prices against Tesco express and can therefore compete with them although they are still unable to compete with Tesco’s own brand fuel.