Tesco Economy

Tesco is a UK based international grocery and merchandising retail chain. It is the largest retailer of United Kingdom according to a survey carried out by TNS world panel. It provides a variety of goods and services to their customers. I will perform economical and technological analysis on our chosen organisation TESCO plc. The economics factors are the buying power of buyers and suppliers in the economy. The buying powers of buyers and suppliers affect a numbers of factors such interest rate, inflation, tax and exchange rate.

In order to carried out an economical analysis of TESCO plc, influences of the stock market and tax increase need to investigate, amongst many other monetary matters such as money supply, disposable income, employment rate and deflation. Economical Issues: The economic environment faced by organisation is shaped and influenced by the political environment as well as by the economic bodies and economical issues that are constituents of external environment. Local Economic: Banks are a key local economic environmental player for any organisation.

Local authorities, council and local people social status are all local economic factors affecting TESCO plc. Tesco is helping in government New Deal. Tesco sets target of 1500 New deal jobs. On 8th, December 2008. Tesco is opening new stores in the area where Unemployment is in high rate such as Milford Haven, Ramsgate, Liver pool and Belfast. Tesco has also won LEP (local employment partnership) award 2008. Tesco has some negative image as well in local public in Newcastle. In Newcastle Tesco has its world largest store according to area.

Tesco is forcing local council to buying up huge lands for new stores. This is illegal and not acceptable behaviour from a giant organisation like Tesco. The Guardian May, 2007. National economy: The main influence on TESCO plc at a national level come from the action of the country’s national bank in this case bank of England and central stock market which in London stock market. Supermarkets Shares supermarkets2006-20072007-2008 Tesco29. 00%30. 60% Asda16. 70%16. 60% Sainsbury’s16. 20%16. 30% Morrison11. 30%11. 10%

Somerfield5. 70%5. 40% Waitrose3. 60%3. 70% Iceland1. 90%1. 80% Source: TNS (www. bbc. co. uk) According to Taylor Nelson Sofres (TNS) World panel market shares data. Tesco, the UK’s biggest retailer by sales, saw its market share rise from 29:00% to 30. 60% in the last 12 weeks from October 2008. One of the reasons why Tesco is strongly competing with its competitor is that between 2000 and 2006 Tesco prices fell by 17% in real terms. Due to the size and ability of Tesco to buy in bulk they enjoy economies scale.

Ultimately, this means that they have the competence to lower prices when they want in order to keep their prices attractive and compete with its main competitors such as Sainsbury’s and Asda. TESCO plc fundamentals: FUNDAMENTALS? (VALUE) Market Share in issue (m)7861. 59 Market Cap25550. 16 PE ratio14. 85 Operating Margin (%)4. 49 Profit Margin4. 49 Turnover Per Share6. 00 Source: www. telegraph. co. uk “Tesco sales growth has been driven by flowing drivers: More space from new stores, extensions and new formats. Development of own label ranges including premium food lines.

Development of non-food ranges, particularly clothing. And expansions of other departments such electrical house wares and home entertainment. Of less importance in the context of food retailer growth, but still important are: Development of services e. g. Optical goods, dry cleaners, financial services and telecoms among many others online development. Much of the online demand comes from existing customers, but in addition to being a service to existing customers, the internet shopping service probably picks up business in its own right.

Online is, in part, a service to existing customers, but it is also a way of giving customers access to a far wider range of goods than would be available even in the largest stores. Non-food only stores. Tesco followed Asda in developing these, but they are still small in the group context. It will be interesting to see whether they survive the recession. But Tesco has realised that the growth potential in the UK is declining and alone among the major players has expanded abroad, with conspicuous success”. Supermarket usage for year 2007-2008 Chart:

Number of visitors to supermarkets as a percentage of total visitors. Source: MINTEL The above chart shows the usage of supermarket over year 2007-2008. According to a survey carried out by MINTEL. As we can see from above chart Tesco is the first choice for more of the customers over year 2007-2008. The temporary 2. 5 % cut in (value Added Tax) VAT comes into effect officially. Tesco implementing VAT cut three days early. Tesco has decided to implement the cut in an effort to help families save on Christmas shopping bills.

They will apply VAT reduction on to all applicable non-food products, including electrical goods, home entertainment and clothing. Global economy: The global economic environment is shaped by how countries decided to behave economically to each other. The global economic bodies highly likely to affect an organisation like TESCO plc are European Union, World money market and world trade organisations. Tesco’s strategy for world domination is well under way, according to international operations director Philip Clarke. Without doubt the international arena is where the company has the most potential to grow.