Ahold vs Tesco Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

INTRODUCTION:

Mary King, MBA qualified was a European equity analyst at Alpha Plus Asset Management. Mary King’s task is to analyze the investment decision in two retail stores. One is Netherland based retail store name Koninlijike Ahold (Ahold) and the otheris Tesco PLC (Tesco), which hasheadquarters in the United Kingdom.Mary understands the business structure of both the retail store from different resources; her main focus is on the current strategies of both the retail stores.

ahold vs tesco case solution

Ahold is the Dutch grocery store in Netherland, and is the leading food retailers in the country. Ahold is the family business of the AlbertHeijin then his family expands the business and Ahold achieves the success as one the leading retail business in Netherland. Ahold not only sales food items onthe other, but it has also produced products of food items on its own name and also saleready-made food items. After the growth of the business Albert Heijin also introduce the non-food items for sale lie beauty items, health and liquor in their products for sale. Ahold opens the international retail stores in two other countries that is Spain and thenit moves to the United States for their retail stores. After their success in these countries hold looking to open their retail stores in Latin America, Eastern Europe and some part Asia also. Ahold also focuses on the retail business leader through their strong business strategies that they are more focusing is on their own brand product at low cost and quality product to the customer.

Ahold primary business is in the Netherland while Ahold is also selling some leading brands in United States. Ahold operates its retail stores as super stores, supermarket at huge volume as the leading retail business. Location choose by Albert for supermarket and superstores are very attracted to the customers as they are convenient to the customers, they are located at a nearby location of public places such as bus stops, train station and other convenientplaces for the customers. As the increasing number of customers of Ahold, Albert decided for online retail business for Ahold with a different brand name in the United States as well as Netherland. Ahold follow the strategy was the cost reduction technique to attract its customer through its high quality service and products.

Tesco the other retailer located in East End London, which is run by Jack Cohen. Tesco is one of the successful grocery retailers in the business world. After its first successful opening Tesco spread over the United Kingdom and open their store all over the United Kingdom, most of the groceries of Tesco are self-made. Cohan focus is to sell its product and services at low cost to attract the customers. Tesco made its name for international retail business and open their first international outlet in the mid-nineties. Tesco opened its international stores inEurope, US and some part of Asia. Tesco increases its product to vast it product line from grocery to non-food items, household electronics, online services, clothing and many other services they offered after they opened their stores worldwide. Tesco is operating different stores in different part of the city and in different product line. Tesco also opens their store at convenient places for the public near to residential areas and public places. Tesco also offers financial services to the customers and also offering online customer services and product via internet to its customers.

PROBLEM STATEMENT:

Mary is going to analyze the income statement and balancesheet of both the retailers that is Ahold and Tesco. So that Mary can decide the investment decision that in which retail store to invest. To take the investment decision Mary performs the ratio analysis of the financial statement of the Ahold as well as Tesco for decision making, and there are different types of ratio analysis are available for Mary to perform that is liquidity ratios, profitability ratios, gearing ratios and turnover ratios.

ANALYSIS:

This analysis is done on the basis of different types of ratios of financial management. All the ratios are calculated from the data available in case exhibits. Key financial ratios of the income statement and balance sheet are profitability ratios, liquidity ratios,gearing ratios and turnover ratios.

Profitability ratios indicated that how much organization has earned over the sales the company. Profitability ratios include gross profit on sale, the net profiton sale, return on asset, and return on investment. Gross profit to sale shows the gross profit earned on the net sale of the organization.Graph representing a gross profit to sale ratio shown in Exhibit 1 of both retailers.Gross profit to sale percentage of Ahold shows that its gross profit decreases in first two years, but it slightly increasesin 2011. Decrease in gross profit is may be due to increase in cost of goods sold or it may be due to decrease in sales volume. Meanwhile, Tesco gross profit percentage increases in the first two years.............

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