One of the objectives of the financial communication of Tesco PLC is the attaining and maintaining investor interest in the company. The financial information offered through the financial communications of the company seems to be intended to generate investor interest in the company by creating a positive picture about the financial position of the company through the issue of financial reports and a statement from the group chief executive which not only evaluates the company’s immediate performance but also makes positive projections about the future performance of the company. This communiqué about the positive future prospects of the company is supposed to create interest by both existing and potential investors. The promise of a positive future performance is meant to maintain this interest in the company since investors will keep making references to the financial communications of the company as a way of monitoring the performance of their investments. Potential investors will maintain interest in the performance of the company as a way of informing themselves appropriately on whether or not to invest in the company.
Another objective of the financial communication of Tesco PLC is the meeting of the set financial regulations and standards. Regulatory bodies require that companies make particular disclosures of their financial performance public after particular time periods. The financial communication by Tesco seeks to achieve this objective by making public its financial records and statements. All the disclosures required by regulatory bodies are made by Tesco PLC in its financial reports which are issued to shareholders and other stakeholders in the company.
Another objective of financial communication by Tesco PLC is the support for optimal pricing of the company’s shares in the stock market. The information provided by the company in its financial communications is intended to furnish all the stakeholders who may have interest in the company with the relevant information to ensure that the pricing of shares is carried out in the most optimal manner. Pricing of shares is highly dependent on the information available about a company, and this influences the demand and supply of the company’s shares in the stock market. The information provided should therefore give all the relevant information that can influence the pricing of the company’s shares in the stock market.
Creating of demand for the company’s shares in the stock market is also another objective of the financial communication by Tesco PLC. A company’s reputation is usually dependent on the demand that its shares have in the stock market. One of the ways of influencing the demand for a company’s shares is by issuing positive information through financial communication about the future prospects of the company. Tesco PLC thus has an objective of influencing the demand for its shares in the stock market as one of the objectives of its financial communication.
Another objective of Tesco PLC’s financial communication is the creation of confidence among other stakeholders in the company such as customers and creditors. These are very important stakeholders and the success of the company is highly dependent on their support. Customers need have confidence in the financial soundness of the company since this means that they are assured of getting value for their purchases both in the short term and in the long term. Creditors need to be assured of the ability of the company to meet its short term and long term financial obligations, and thus assure them that any obligations that the company has to them will be met fully and timely when they fall due. Assurance of the company’s financial position ensures that it has the support of customers which is essential for the maintenance and growth of the company’s sales and revenues. Support from creditors is important because it ensures that the company has a steady source of financing for its operations and long term projects.
Another objective of financial communication is the evaluation of the company’s performance against that of its competitors in the industry. Through the use of financial ratios, the performance of the company is evaluated against its competitors to enable investors make informed decisions about the competitive ability of the company in the industry within which it operates. Through the financial communication, Tesco PLC intends to indicate to its stakeholders its superior competitive position that the company enjoys in the industry and thus reaffirm to its financial stability.
Evaluation of the extent to which the financial Communications meet the objectives
Tesco PLC has been partly successful in achieving the objectives of its financial communications. Through its financial communication, the company has been able to meet all the financial disclosure requirements from regulatory bodies. The company has posted all the financial reports and statements which are required to be disclosed by the companies act and by the stock market governing body. The company’s financial reports and statements have not been subjected to any protestation from external auditors and from the stock exchange governing authority. This indicates that the company has been successful in achieving the objective of meeting all the regulatory disclosure requirements in its financial communication.
The company has also been able to meet the objective of creating investor confidence in the company. This is due to the positive performance of the company’s shares in the stock market. this is a reflection of the company’s success in creating confidence in investors that their investments in the company are bound to grow due to the positive projections about future performance of the company that have been made in the company’s financial communication.
The pricing of shares of Tesco PLC have also been influenced by the financial communication from the company. This is reflected by the rise in the price of the company’s shares as a result of the company’s release of the financial communication. The company has thus been able to positively influence the pricing of its shares in the stock market through the effect of the information contained in the financial communication.
Creation of customer and creditor confidence has also been achieved through the use of financial communication. This is reflected by the increase in the volume of sales made by the Tesco PLC group in the last quarter as compared to a similar period last year. This indicates that customers have more confidence in the financial soundness of the company and its ability to provide them with the products and services that they require in the foreseeable future. The company’s credit rating has also increased, indicating that that company has also achieved the objective of creating confidence among creditors about its ability to meet both its short term and long term financial obligations.
References
Cole, Benjamin Mark The New Investor Relations: Expert Perspectives on the State of the Art. Bloomberg Press: London, 2004. Print.
Phillips, David. Online Public Relations. Kogan Page: London, 2009. Print.
