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Company BackgroundTESCO PLC is a multinational company forgrocery and general merchandise goods retailerfounded in 1919 by Jack Cohen and Tesco’sheadquarter is in London, United Kingdom.Compared to other retailer organizations, Tescocan be considered as the second-largest retailer(Largest retailer – Wal-Mart) in the world in terms of profits and it falls into the third place inrevenues. Tesco’s operations are being carried out in 14 different countries across Asia,UnitedKingdom and North America continents with the help ofover 530,000 employees. Tesco is the market leaderinUK (with a share of around 30%), Malaysia,Thailand and Republic of Ireland. Whilecarrying out their operations in those countriesTesco currently operating in number of sectorswhich includes retailing of books, furniture,petrol, clothing, electronics and software.Furthermoretheyprovidefinancial,telecommunication and internet services (TescoWebsite2013).2
Accounting and Financial Management3
Accounting and Financial ManagementIndustry Analysis for TESCOTesco’s market shares and their position when we compare other leading players in themarket can be shown as follows:Figure 1: Share of leading players in the UK retail marketSource: PESTEL AnalysisPESTEL framework will analyze environment in which Tesco carry out their operations bygiving attention to different forces which have the most impact on company’s performance inthe dynamic environment they operate.Political The UK government adopting a new tax measure which will affect the operations ofTesco. UK government increasing the VAT rate from 17.5% to 20% with the aim to increasegovernment revenue by £13 billion per year.In China accession to the WTO now trying to promote a free flow of foreign trades byeliminating all barriers in order to influence Western companies such as TescoUK government proposing a new fat tax system in order to control obesity which willaffect adversely on Tesco’s activities.4
Accounting and Financial ManagementEconomic Economic factors are really important for Tesco as thy impact of these are direct onthe buying behavior of customers.Reduction in interest rates of UK marker in difficult times in order to preventunemployment issues in the company and the industrySpending power of customers increased in the recent past as interest were reduced tomake them feel confident about the financial statusSince the recession in 2009 customers’ mindsets still face with uncertainty avoidingthem to spend in premium products which provide more opportunities for companieslike Tesco.UK spending on retail items (mainly food items) has increased over the past yearsSocial UK market demographics shows that there more elder people than younger people orchildren (Represent baby boom generation) which affect Tesco as they don’t tend tobuy much retail items.