Case Analysis: Ahold vs. Tesco
Ahold vs. Tesco Case Analysis
Group 5: Rayan Alqubaysi, Yuchen (Jason) Jin, Laura Payne, Lei Wang
Introduction of Case
● Alpha Plus Asset Management- investment decision
● Analyzed history, business strategy, recent performance and future goals
○
○
Differences in stock prices with similar ROEs
How should cash position be taken into account when assessing performance? Porter’s Five Forces of Competitive
Position
Ahold
Threat of new entrants (Market)
Bargaining power of customers
(Products)
Bargaining power of suppliers
(size)
Netherlands and U.S (94%)
Food, grocery and drug products
Previous strategy to lower cost base 3008 retail store
Tesco
U.K (66%)
Rest of Europe (15%)
Asian (17%)
Not only food and physical products, but also customer services.
6234 outlets
Porter’s Five Forces of
Competitive Position
Ahold
Intensity of competitive rivalry
(Strategy)
Threat of substitute products or services
(Business type)
“Reshaping retail” strategy
1. increasing customer loyalty
2. broadening offerings
3. expanding geographic reach Traditional retailer
Tesco
1.
2.
server customers with value-added products create jobs and deliver strong performance for shareholders With more expanded offerings Online stores
ROE DuPont Disaggregation Analysis
Methodology
1. ROE = Net Income/ Average Stockholders’ Equity = Profit
Margin * Asset Turnover * Financial Leverage
2. Profit Margin = Net Income / Sales
3. Asset Turnover = Sales / Average Total Assets
4. Financial Leverage = Average Total Assets / Average Total
Equity
ROE DuPont Disaggregation Analysis
ROE DuPont Disaggregation Analysis
ROE DuPont Disaggregation Analysis
Conclusions
1. Tesco has higher margins.
2. Ahold has a higher asset turnover ratio.
3. Tesco has higher financial leverage, less liquidity. ROE Operating/Non-operating
Disaggregation Analysis
Methodology
1.
ROE = Return on Net Operating Assets + Non Operating Return
2. Return on Net Operating Assets = Net Operating Profit After Tax / Net
Group 5: Rayan Alqubaysi, Yuchen (Jason) Jin, Laura Payne, Lei Wang
Introduction of Case
● Alpha Plus Asset Management- investment decision
● Analyzed history, business strategy, recent performance and future goals
○
○
Differences in stock prices with similar ROEs
How should cash position be taken into account when assessing performance? Porter’s Five Forces of Competitive
Position
Ahold
Threat of new entrants (Market)
Bargaining power of customers
(Products)
Bargaining power of suppliers
(size)
Netherlands and U.S (94%)
Food, grocery and drug products
Previous strategy to lower cost base 3008 retail store
Tesco
U.K (66%)
Rest of Europe (15%)
Asian (17%)
Not only food and physical products, but also customer services.
6234 outlets
Porter’s Five Forces of
Competitive Position
Ahold
Intensity of competitive rivalry
(Strategy)
Threat of substitute products or services
(Business type)
“Reshaping retail” strategy
1. increasing customer loyalty
2. broadening offerings
3. expanding geographic reach Traditional retailer
Tesco
1.
2.
server customers with value-added products create jobs and deliver strong performance for shareholders With more expanded offerings Online stores
ROE DuPont Disaggregation Analysis
Methodology
1. ROE = Net Income/ Average Stockholders’ Equity = Profit
Margin * Asset Turnover * Financial Leverage
2. Profit Margin = Net Income / Sales
3. Asset Turnover = Sales / Average Total Assets
4. Financial Leverage = Average Total Assets / Average Total
Equity
ROE DuPont Disaggregation Analysis
ROE DuPont Disaggregation Analysis
ROE DuPont Disaggregation Analysis
Conclusions
1. Tesco has higher margins.
2. Ahold has a higher asset turnover ratio.
3. Tesco has higher financial leverage, less liquidity. ROE Operating/Non-operating
Disaggregation Analysis
Methodology
1.
ROE = Return on Net Operating Assets + Non Operating Return
2. Return on Net Operating Assets = Net Operating Profit After Tax / Net