This acquisition of Tesco over the 50% stake of RBS coming as a direct challenge for the high street financial institutions which currently are on the stormy side of the economic recession tide and presently are in-waiting for the bank charges decision by the High Court.
The acquisition will help Tesco to make its expansion from financial services that revolved around an assortment of popular financial services and products to full-fledged retail banking offering more preference, innovation and value to customers and better returns to its shareholders. It is a part of Tesco's strategy through which Tesco will be able to further enhance its growth in the services market sector that includes telecoms and internet/home shopping as well. According to Tesco's estimation for the year 2008, by taking the full ownership of the TPF, Tesco would be able to increase its annual profits to 1 billion from 240 million (News Release, 2008).
This acquisition clearly reflects that Tesco has identified considerable scope for further possible developments and advancements in the financial sector which is itself a very extensive and a dynamic sector. Hence by taking the full ownership, Tesco will be better equipped to be able to exploit the prospective offered by the TPF in the more basic version of banking.
This second half of the paper examines the strengths and weaknesses of Tesco hence offering an analysation of the resources and capabilities that Tesco can muster up to compete effectively and develop TPF into a full service retail bank making a success of full- fledged consumer banking.
Tesco's Expansion to Full Service Consumer Banking
On the acquisition of RBS stake and TPF's expansion into full- fledged retail banking in the coming years, Sir Ted Leahy, the COE of Tesco plc reflected, "As consumers look to make every pound work harder it is a good time for Tesco to expand its presence" (BBC, 2008). The phrase "good time" refers to the current financial turmoil, which in recent times has revealed the shaky foundations of many a high profile financial institution, and ironically has presented an opportunity for TPF to move into full service banking. As a result of the financial depression many of the TPF's would be competitors will be at their weakest, hence competition that will be on offer will also be comparatively less.
In order to make the expansion into the more core-sphere of banking, the management of Tesco will need to rally up their strengths comprising its assets and resources identify with the current financial trends the opportunities or threats presented by it and also realise their own weaknesses and accordingly create business objectives and strategies which will allow the optimum use of resources and strengths, maximum exploitation of opportunities, stablisation of threats and minimisation of weaknesses and other draw backs for the overall success Tesco's expansion endeavor.
For the present short time frame, Tesco's strategic objective for the future development of TPF is to broaden the horizons of the existing financial services rendered by TPF, which includes services and products like savings accounts, credit card accounts and insurances and moreover increase its presence in the Tesco stores. However, on