Procedure: to describe the influence of two economic environments on business activities within a selected organisation. Also to compare the challenges to selected business activities within a selected organisation in different economic sectors. This report will consist of information about the economy in the countries. China and UK. Also there will be information about Tesco in both of these countries and why is there a major difference in the markets. There are 4 fundamental things which are part of economics. They are the inflation rate, unemployment rate, economic growth and interest rate.
UK: The government recently announced that UK is coming out of recession, which is a positive factor for the UK, which means this has had an impact on the inflation rate which has increased , the unemployment rate which will also decrease, the interest rates have changed, and there is growth in the economy. Inflation is the general rise in price of the products for the economy. The inflation rate in the UK is 2. 7%, thinking about the economic climate the UK was in. if you look at the bigger picture the inflation rate has decreased in numbers compared to when it went up to 8%.
It is measured by the consumer price index. A rise in inflation rate means consumers will think carefully before spending. As it is a setback for both consumer and business, as businesses will have to pay out more money due to employees, suppliers etc. demanding more money to keep going and pay for essential daily needs. There are certain things which will be problems, for example the price of materials will be expensive also fuel will be a major factor as fuel prices are consistently rising and it is also non-renewable, which means there is only a certain period of time left before it runs out.
This is why the prices are rising. It is a problem for both consumers and business. The unemployment rate in the United Kingdom was last reported at 7. 8% in September of 2012. Historically, from 1971 until 2012, the United Kingdom Unemployment Rate averaged 7. 3 %reaching an all-time high of 12. 0% in February of 1984 and a record low of 3. 4% in November of 1973. The unemployment rate can be defined as the number of people actively looking for a job as a percentage of the labour force. The Gross Domestic Product (GDP) in the United Kingdom expanded 1. 00 %t in the third quarter of 2012 over the previous quarter.
Historically, from 1955 until 2012, the United Kingdom GDP Growth Rate averaged 0. 62 % reaching an all-time high of 5. 30 % in March of 1973 and a record low of -2. 50 % in June of 1958. The Gross Domestic Product (GDP) growth rate provides an aggregated measure of changes in value of the goods and services produced by an economy. The United Kingdom is among the world’s most developed economies. Services, particularly banking, insurance, and business services, account by far for the largest proportion of GDP while industry continues to decline in importance.
Over the past two decades, the government has greatly reduced public ownership and contained the growth of social welfare programs. The benchmark interest rate in the United Kingdom was last reported at 0. 50%. Historically, from 1971 until 2012, the United Kingdom Interest Rate averaged 8. 29 % reaching an all-time high of 17. 00% in December of 1979 and a record low of 0. 50% in March of 2009. In the United Kingdom, the Bank of England has operational independence. Decisions on interest rates are taken by the Monetary Policy Committee (MPC).
The Bank of England official interest rate is the repo rate. This repo rate applies to open market operations of the Bank of England with a group of counterparties (banks, building societies, securities firms). China: the Chinese inflation rate has decreased since last year, when it was averaging 6. 0%. The inflation rate in China was recorded at 1. 7% in October of 2012. Historically, from 1994 until 2012, China Inflation Rate averaged 4. 3% reaching an all-time high of 27. 7%in October of 1994 and a record low of -2. 2% in March of 1999.
Inflation rate refers to a general rise in prices measured against a standard level of purchasing power. The most well-known measures of Inflation are the CPI which measures consumer prices, and the GDP deflator, which measures inflation in the whole of the domestic economy. The Gross Domestic Product (GDP) in China expanded 2. 20% in the third quarter of 2012 over the previous quarter. Historically, from 2011 until 2012, China GDP Growth Rate averaged 2. 07% reaching an all-time high of 2. 50% in June of 2011 and a record low of 1.
50%in March of 2012. The Gross Domestic Product (GDP) growth rate provides an aggregated measure of changes in value of the goods and services produced by an eco nomy. China’s economy is the second largest in the world after that of the United States. During the past 30 years China’s economy has changed from a centrally planned system that was largely closed to international trade to a more market-oriented that has a rapidly growing private sector. A major component supporting China’s rapid economic growth has been exports growth.
The urban unemployment rate in China was last reported at 4. 1%in the third quarter of 2012. Historically, from 2002 until 2012, China Unemployment Rate averaged 4. 15% reaching an all-time high of 4. 30% in December of 2003 and a record low of 3. 9% in September of 2002. The unemployment rate can be defined as the number of people actively looking for a job as a percentage of the labour force. The benchmark interest rate in China was last reported at 6. 00%. Historically, from 1996 until 2012, China Interest Rate averaged 6.
45% reaching an all-time high of 10. 98% in May of 1996 and a record low of 5. 31% in August of 2010. In China, interest rates decisions are taken by The Peoples’ Bank of China Monetary Policy Committee. The PBC administers two different benchmark interest rates: one year lending and one year deposit rate. Tesco in UK: Tesco has over 3,000 stores in the UK; they have over 300,000 employees just in the UK which make them the biggest Private sector employer. Over 60% of group sales and profits come from the UK. The revenue made in Tesco UK in 2011/12 was ?
42,248m. I have explained above the situations in Tesco and China, those situations have had a major impact on Tesco, for example the inflation rate is high which means that customers will be more careful when they buy products they will check prices and buy what is necessary to buy. This means products will be in less demand, it says on BBC; supermarkets wasted 300,000 tonnes of food waste per year, Tesco were responsible for this as they have a 29. 9% market share. Second are asda at 19% this means Tesco are the leading contenders.
It is Tesco’s fault as they are being careless and buying stock which is not needed. The Tesco in UK has a plan for building a better Tesco on six elements: 1. Service and staff- more staff for existing stores, initially in fresh food departments. 2. Store and formats- faster store refresh programme, introducing warmer look and feel. 3. Price and value- better prices and promotions, more personalised offers. 4. Range and quality- better ranges, starting with re-launching Tesco brand. 5. Brand and marketing- better, clearer, more relevant communications with customers. 6.
Clicks and bricks- click and collect roll out, transforming range and online presence. Tesco in China: Tesco started trading in China in 2004 they have over 125 stores now and employ over 26,000 employees. They also serve a whopping 4. 4m customers each week. Tesco made about ? 1311 million in revenue. Tesco in china have also developed their own freehold shopping malls, under the life space brand, which are anchored by a Tesco hypermarket and provide a one-stop destination shopping experience for mainstream Chinese customers. China is a major sourcing location for the Tesco group.
The Tesco group international sourcing headquarters are based in Hong Kong and we also have a hub in shanghai. They currently buy around 2. 25bn worth of goods and services from China for the Tesco group every. Tesco in China still has not settled, a way Tesco can improve this is by understanding the consumer needs. By knowing what the customer wants that’s what Tesco will put in demand for the customers. As different countries have different demands they should do research into the different types of products each type of country demands.