Q This report is valuable for extracting information about the financial management in Unilever for costing and budgeting Home, - Economics and Finance Assignment Part A Tesco Plc., commonly called as TESCO, is a multinational company from Britain that sells general merchandise and grocery products. Headquartered in Hertfordshire of England (United Kingdom), this company is one of the largest retailers around the globe (tescoplc.com, 2018). The firm presently employs more than 476000 employees and operates in different locations around the globe with around 6553 stores (tescoplc.com, 2018). Tesco has successfully attained the position of the third biggest retailer around the globe in terms of profitability along with being the ninth largest retail chain in terms of revenues. The firm operates in more than 12 countries in Europe, Asia and UK and the market leader in the UK grocery market. The market share of the company in UK is about 28.4% (tescoplc.com, 2018). Tesco has a high share price in the market with a present price earnings ratio of 37.82 (tescoplc.com, 2018). However, it is important to conduct a detailed research on the efficient market hypothesis on the stock prices of Tesco Plc. The efficient market hypothesis, commonly referred to as EMH, is one of the commonly used financial concepts (Burton and Shah, 2017). Efficient market hypothesis refers to a theory of investment, which states that it is not possible to “beat the market” because the prices of stock in the marketplace already incorporate as well as reflect all the relevant information that may be influencing a stock (Degutis and Novickyte, 2014). An economist named Eugene Fama had developed the theory of efficient market hypothesis during the period of 1960s. In simple words, the efficient market hypothesis theory can be explained as a theory, which states that the asset prices completely reflect all information available (Jovanovic, Andreadakis and Schinckus, 2016). This theory fully supports the faith of no point in looking for undervalued stocks and predicting trends in the marketplace by forms of technical or fundamental analysis because the price of stock already reflects all information related to the stock price. The efficient market hypothesis is of different degrees and exists in mainly three forms – weak, strong and semi-strong (Boboc and Dinica, 2013). These forms or degrees represent the level of non-public data and information, which have been incorporated in the stock prices available to public. If the form of efficient market hypothesis is “weak”, it can be analyzed that the present stocks reflect all information that is presently available in the market (Westerlund, Norkute and Narayan, 2015). The weak form of EMH is based on a theory that data volume and past prices have are in no relation with future directions of stock price. On the other hand, the “semi-strong” form of an efficient market hypothesis means that the market reflects all the information that is available publicly and the marketplace is efficient in nature (David, Oosterlinck and Szafarz, 2013). This kind of a hypothesis assumes that the stock quickly adjust in order to absorb new information. Lastly, the “strong” form of efficient market hypothesis implies that the marketplace is efficient in nature and it reflects all the information both private and public by nature, incorporating and building the weak form and semi-strong form of EMH (Naseer and Bin Tariq, 2015). Tesco Plc is one of the largest companies listed under the LSE or the London Stock Exchange (tescoplc.com, 2018). The analysis of the share prices of the two preceding years 2016 and 2017 shows the movements in the stock prices of the company. The share prices of Tesco Plc during the financial years 2016 and 2017. From the table the movements in the share prices of Tesco Plc can be analyzed. It can be seen that the share prices of Tesco Plc have increased by £21.20 from the beginning of 2016 to the end of 2016. This means that the share prices of Tesco Plc have increased by a proportion of 12.23% (tescoplc.com, 2018). However, there have been various fluctuations in the share prices during the year. For example, the share price of Tesco Plc was 173.40 pounds in January 2016, which increased to 190.78 pounds by February 2016. However, this share price fell down to 165.10 pounds at the end of March 2016. Similarly, there have been different fluctuations during the two years but none of the fluctuations was abnormal. The fluctuations took at a normal pace, which means that there was neither an abnormal increase nor an abnormal decrease in the share prices of Tesco Plc. Similarly, if the share prices of Tesco Plc during 2017 is analyzed, it can be seen that the share prices of Tesco Plc during the beginning of the year was 194.60 pounds, which ended to an amount of 209.25 pounds at the end of the year 2017. This shows that the share prices of the company have increased by an amount of £14.65 during the entire year 2017. Thus, it can be analyzed that the share prices of Tesco Plc have increased by only 7.53 % in 2017 (tescoplc.com, 2018). Similar to the year 2016, there have been fluctuations in the prices of shares during 2017 but none of the months had an abnormal increase or decrease in the share prices. Hence, from the analysis of the share prices of Tesco Plc during 2016 and 2017, it can be analyzed that the percentage of increase in the share prices of the company was better during 2016 even though the company has its highest share price at the end of 2017. The picture below shows an illustration of the movements in the share prices of Tesco Plc. The share prices of Tesco Plc and if the share prices of the company are evaluated as per EMH (efficient market hypothesis), it can be analyzed that the efficient market hypothesis of the company is semi-strong. This is because the share prices reflect almost all information both private and public and none can earn any excess returns. This can be analyzed from the different events that took place in the company during 2016 and 2017. For example, during 2016, Tesco Plc has undertaken several good steps such as acceptance of the reports of GCA and committing towards building of trusted partnerships with suppliers. Another instance is that Tesco has cut of its fuel prices by almost 2ppl during August 2016 and offered free fruits to kids for pushing healthy eating (tescoplc.com, 2018). The company also appointed an independent non-executive director during July 2016. These three events led to an increase of share price from 165.46 to 181.97 pounds, showing a proper EMH of Tesco Plc (tescoplc.com, 2018). Several events have also taken place during 2017 such as launching of authentic tasting new range due to low demand of wines during November 2017, crumbing of world bread awards during October 2017, cutting off diesel and petrol prices up to 3ppl, etc. (tescoplc.com, 2018). However, none of these has had a major effect on the share prices of Tesco Plc, which yet again proves a strong level of EMH. However, the new releases of Tesco Plc during the last year such as “secret Santa sales” from 18 December 2017, launch of “England’s fantastic festive fizz”, exclusive sale of Olaf Disney in Tesco Plc, etc. have helped Tesco Plc in increasing its share prices from £194.05 to £209.25 from November 2017 to December 2017 (tescoplc.com, 2018). Thus, from all the analysis, it can be concluded that the EMH of Tesco Plc is quite strong. Hence, from all the above discussions, a great insight has been developed on analysis of share prices. The analysis helps in developing knowledge about the concept of efficient market hypothesis (EMH). It also helped in understanding how to analyze share prices and how the analysis can be used for evaluating the efficient market hypothesis of a company. The discussion on Tesco and its share prices has been useful for development of a practical knowledge on how to test the efficient market hypothesis of a company. Thus, in simple words, it can be said that the discussion has helped in the application as well as critical evaluation of efficient market hypothesis (EMH). Part-B Introduction This report will be unfolding an effective application and information regarding cost and budgeting policies in an organization that is selected as Amazon. Analysis of the organizational structure of this company as well as the product portfolio discussion would be there in this report (MacMillan, 2014). Along with this information, nature of this company will be explained for unfolding a clear cut understanding of this company. Better company insight would be achieved through the analysis and evaluation stated in this report regarding cost and budgeting policies and structures. a. Nature of the business in which the company operates and the company´s current situation This organization is an American electronic commerce as well as cloud computing organization based in Seattle, Washington. This tech giant is one of the leading internet retailers around the globe as per their current organizational revenue and market capitalization. Starting business as an online bookstore, this company has now diversified its services into selling video, audiobook facilities, video games, electronics, Fire TV and others (Amazon.com, 2018). Certain low-end items like USB cables are also produced and sold by this organization. The total equity of this company is US$19.285 billion and number of employees increase to around 541,900. b. Organizational structure Organizational structure is important to highlight and define ways in which various components and functions of a company coordinate to attain goals of that particular company. Having this kind of organizational structure, this company is well capable of supporting diversified international operations. It is noticed that despite being a large organization, unlike other organizations with a hierarchical structure, Amazon retains its image a highly flexible one to adapt to recurrent changes in its external marketplace (Martin and Siebert, 2016). Along with this, the organizational management keeps changing the external business environment to achieve success as per the current demand and expectation of their customers. This resulted in a disruptive innovation in international logistics sector. C. Products Portfolio The product portfolio of this company is not static. Nature of this kind of product portfolio could be assessed as innovation and change according to the recent consumer expectations and demand. Current product portfolio of Amazon reflects changing and developing the previous product range and bringing up more customized products (Peppard and Ward, 2016). This change could be addressed as "Amazon has released a smartphone and tablet add-on that can be used to swipe debit and credit cards to allow payments. The Local Register device is targeted at small businesses as an alternative to a cash-register system" (Hussain et al., 2017). Different types of costing strategies of this organization include fixed cost, variable cost, semi fixed and semi variable costs. Fixed cost: The Fixed costs are required to build up and process the organizational innovative technology infrastructure; to make, create, develop and add features that are necessary to this organization’s websites as well as web services (Liu and Tyagi, 2017). This cost level is also determined through cost per electronic devices, digital offerings along with making and optimizing Amazon’s fulfillment centers. Variable cost: The variable cost of this organization involves product as well as content costs, picking, packaging and organizing orders for shipment, payment processing, customer service support and costs that are required to run AWS along with a portion of their marketing expenses (www.sec.gov, 2018). Semi fixed: This type of cost reflects cost, which includes both fixed and variable elements. This means in Amazon both the above mentioned cost elements for fixed and variable costs are included in the semi-fixed cost level (Bragg and Bragg, 2018). For instance, the yearly fixed cost that this organization pays for their external as well as internal business activities as well as a variable cost if the organization needs sudden change or development in their processes. This variable cost will be counted as the extra charge upon the fixed costs of the organization. Semi variable cost: The semi variable cost also includes fixed costs as well as the variable cost level of an organization. In this case, the fixed cost related to various product and entire sales along with extra relative costs could be counted as the semi-variable cost in this organization (Waldman and Jensen, 2016). e. Budgeting This organization is taking their share of dollar from various channels. On the other hand, the current scenario is projecting the fact that other brands are searching at the overall promotional, marketing and advertising pictures as well as deliberately treating this as an incremental. The budgeting process in this organization follows a top-down approach as for their hierarchical organizational structure (Kim et al., 2014). This kind of budget is drafted and initiated in firstly at the head office of this organization with complete contribution from the organizational board of directors. This decision then passed down for agreement and comment. This kind of budgeting planning helps the technical department on the lower level organizational management in Amazon to come up with a budget that is useful in standardize budgets in different target markets. f. Management control practices This organization has an immovable control experience that is settled as well as frequently evaluated by the boards of directors in this company. Amazon’s e-commerce success relies on the high competence attained in their operation management policies that in a direct manner determines their overall organizational productivity (Ferguson, 2018) This organization applies advanced communication and information technologies to make sure that their online retailing business are effective for target consumers. The quality management policies are centred round maximizing quality related to operational outputs in order to satisfy the expectations of their target consumers. In case of the locational strategies, Amazon, board of directors selects accessibility of organizational resources as well as markets that are accounted in the strategic decision-making area of operational management (Fernie et al., 2015). Lastly, the supply chain management processes in this organization happens through enabling their suppliers and automation along with their buyers to contact some of their IT assets. Critically evaluate the organization’s current budgeting and management control Practices From the above analysis regarding the cost and budgeting factors, policies, roles and organizational structure in Amazon, it could be said that the hierarchical organization structure allows this organization to impose an authority figure that effectively delegates various as well as difficult tasks among the team members and there is a clear indication regarding a promotional hierarchy that keeps workers in this organization motivated for achieving all the target objectives. On the other hand, the developing cost levels that are associated with the electronic industry, specifically in the manufacturing of technologies, could influence the organizational annual revenues generated by Amazon (Mithas et al., 2017). On the other hand, current financial recession faced by United Kingdom as well as other European countries also has an impact on the development of Amazon, since it has leading marketing presence across major European countries in the world. The present and highlighted budgeting practice of this organization that is a top-down approach is standing as an advantage as the budget is pre-planned by the higher management and is then passed to the lower management level. One valuable suggestion would be develop standardization approach in their upcoming business plans for different countries (Mithas et al., 2017). Recommendations for future growth in costing and budgeting purposes Sourcing different suppliers for their organization, who are practical, experienced and effective in providing better quality should be ensured by higher management of Amazon to manage more cost effective costing and budgeting methods. Switch to digitalization could be another effective marketing process for this company, since current market trends and demands are developing centering round this area. On the other hand, the organizational management should adopt AWS Budgets that provides an organization the ability to set custom budgets, which alert organization at the time of costs or usage exceed. This kind of budgeting policies could be used to track at a monthly or quarterly basis the cost levels or an organization and an organization like Amazon could set custom reservation utilization in order to receive as well as target information the organizational cost utilization level drops below the limit defined. Conclusion This report is valuable for extracting information about the financial management in Unilever as well as explains ways through which costing and budgeting policies in this company acts. This above report is informative as well as important for understanding financial management processes and ways in which share prices of an organization reacts in the changing organizational situation. Standing in the midst of digitalization as well as Amazon plays a pivotal role in bringing and carry forward change in their product line as outlined in this report. As well as recommendations regarding cost and budgeting policies are valuable to achieve a change approach in this section as they are changing present product line continuously to meet consumer satisfaction.