Company Background TESCO PLC is a multinational company for grocery and general

Company background tesco plc is a multinational

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Company Background TESCO PLC is a multinational company for grocery and general merchandise goods retailer founded in 1919 by Jack Cohen and Tesco’s headquarter is in London, United Kingdom. Compared to other retailer organizations, Tesco can 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 in revenues. Tesco’s operations are being carried out in 14 different countries across Asia, United Kingdom and North America continents with the help of over 530,000 employees. Tesco is the market leader in UK (with a share of around 30%), Malaysia, Thailand and Republic of Ireland. While carrying out their operations in those countries Tesco currently operating in number of sectors which includes retailing of books, furniture, petrol, clothing, electronics and software. Furthermore they provide financial, telecommunication and internet services (Tesco Website 2013). 2
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Accounting and Financial Management 3
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Accounting and Financial Management Industry Analysis for TESCO Tesco’s market shares and their position when we compare other leading players in the market can be shown as follows: Figure 1: Share of leading players in the UK retail market Source: PESTEL Analysis PESTEL framework will analyze environment in which Tesco carry out their operations by giving attention to different forces which have the most impact on company’s performance in the dynamic environment they operate. Political The UK government adopting a new tax measure which will affect the operations of Tesco. UK government increasing the VAT rate from 17.5% to 20% with the aim to increase government revenue by £13 billion per year. In China accession to the WTO now trying to promote a free flow of foreign trades by eliminating all barriers in order to influence Western companies such as Tesco UK government proposing a new fat tax system in order to control obesity which will affect adversely on Tesco’s activities. 4
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Accounting and Financial Management Economic Economic factors are really important for Tesco as thy impact of these are direct on the buying behavior of customers. Reduction in interest rates of UK marker in difficult times in order to prevent unemployment issues in the company and the industry Spending power of customers increased in the recent past as interest were reduced to make them feel confident about the financial status Since the recession in 2009 customers’ mindsets still face with uncertainty avoiding them to spend in premium products which provide more opportunities for companies like Tesco. UK spending on retail items (mainly food items) has increased over the past years Social UK market demographics shows that there more elder people than younger people or children (Represent baby boom generation) which affect Tesco as they don’t tend to buy much retail items.
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