Additional Question 10 answer
Again, we have a number of possible ways of analysing the data we were given. We could have prepared some graphs and ratios but this time we have chosen to compare the total with the UK by deriving simple ratios: Total ÷ UK for each relevant heading. These ratios provide us with an idea of how stable the relationships are as between the entire group and the UK operations.
To highlight exceptional relationships this time, we have set the threshold at the ratio of 1.2. That is if the group: UK ratio is greater than 1.2, we see that as exception ... we could have chosen 1.1 or 1.5 ... Similarly, if the ratio has fallen below 1, we have highlighted that too.
The figures in red, greater than 1.2, show that the UK is falling behind the rest of the group in terms of the numbers of stores and so on. Of course, this is not necessarily a bad thing since the business is diversifying now and would like to see Europe and Asia becoming more important. These ratios do show, though, that Tesco is undergoing significant change over the five year period.
| Ratio of Group to UK | 1998 | 1999 | 2000 | 2001 | 2002 |
|---|---|---|---|---|---|
| Number of stores | 1.264 | 1.285 | 1.282 | 1.311 | 1.343 |
| Total sales area - 000 sq ft | 1.200 | 1.337 | 1.423 | 1.579 | 1.726 |
| Average store size (sales area - sq ft) | 0.917 | 1.015 | 1.068 | 1.131 | 1.161 |
| Full time equivalent employees | 1.192 | 1.211 | 1.244 | 1.335 | 1.417 |
| UK retail productivity £ | |||||
| Turnover per employee | 149,798 | 151,138 | 156,426 | 161,161 | 165,347 |
| Profit per employee | 8,755 | 8,771 | 9,160 | 9,649 | 10,002 |
| Weekly sales per sq ft | 18.92 | 19.06 | 19.30 | 19.67 | 20.49 |
| Wages per employee | 15,079 | 15,271 | 15,600 | 16,087 | 16,821 |
| Growth rates: UK productivity | 1998 - 99 | 1999 - 2000 | 2000 - 01 | 2001 - 02 | |
| Turnover per employee | 0.89% | 3.50% | 3.03% | 2.60% | |
| Profit per employee | 0.19% | 4.43% | 5.34% | 3.66% | |
| Weekly sales per sq ft | 0.74% | 1.26% | 1.89% | 4.17% | |
| Wages per employee | 1.27% | 2.15% | 3.12% | 4.56% |
We should all be able to agree with the UK retail productivity figures we were asked to provide. Here is how we got these results:
| Turnover per employee | UK turnover ÷ UK full time equivalent employees |
| Profit per employee | UK profit ÷ UK full time equivalent employees |
| Weekly turnover per sq ft | UK turnover ÷ total square feet ÷ 52 weeks |
Finally, the growth rates derived from the UK productivity figures give us a good idea of how well the UK's operations are doing vis-a-vis the group and so on.
Back to additional question 10.
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