Natan Trolka P1
CHANGES IN THE ECONOMIC
ENVIRONMENT ON TESCO P1
In this report I will describe and then explain how the GDP, inflation, interest rates and employment rates are
affected by the growth and recession stage of the business cycle. I will also explain how the balance of
payments is and how Tesco’s contributes to trade surpluses/deficits. I will also be stating what the conflicting
objectives are of Tesco’s and how they affect them as a business whilst describing, the ripple effects and
providing an example of the industries it affects. This report will also contain a description of structural
adjustments and explain the business sector Tesco’s fits in. What the welfare considerations are and how
Tesco’s contributes to the welfare state.
The second company that I have researched is Tesco. Tesco’s mission statement is; ‘to create value for
customers to earn their lifetime loyalty’
Tesco was founded by Jack Cohen in 1919. It is now a large,
global organisation that has 7,817 stores including franchises,
in 12 countries such Asia, UK and Ireland, Germany, Hungary
and Thailand. They currently employ 500,000 people round the
world. Over million customers a week shop at Tesco markets
around the world. Tesco provides services such as Tesco
Banking, Tesco Extra, petrol stations. They sell many products
ranging from household goods to garden centres. Including clothes, electronics, food etc. Tesco are in
SECONDARY and TERTIARY sector due to the fact that they provide service by selling the goods to the customer
but also they are secondary as they make their own brands including clothes and food products. So that puts
them both in secondary and tertiary sectors.
The purpose of Tesco is to supply a wide range of goods which it sells, both in store and online. It also offers
financial services such as its own credit card, personal loans and various types of insurance, in addition to
providing a home delivery service to its online shoppers. Tesco’s simple mission, to be the champion for
customers, helping them to enjoy a better quality of life and an easier way of living.
Tesco doesn’t plan on expanding into other countries as the failed when they tried to expand into America. The
whole investment ruined, so far they are planning about opening more stores around UK and Europe in the
upcoming years as there is bigger demand for their products, people are familiar with them and that’s why
there is greater demand.
Tesco annual turnover for year 2014 was £63.55bn, however their records show that this year they might fall
down as they plan to have a turnover of £60.09bn in 2015. They are successful as when the recession hit UK,
Tesco managed to stay on top whilst other competitors dropped down in their market value, however on the
other hand in 2015 Tesco weren’t as successful as in previous years due to their loss in profits. Previous years
were more successful for them, but overall they maintain to keep their position on top.
Their online expansion attracted more customer into buying as it’s easier for them and more convenient. Tesco
also made home deliveries which were a great success for them and by this it increased their profit. It
increased their number of customers, since it is more convenient for them. You can order you groceries online
and Tesco will deliver it to them.
GDP (GROSS DOMESTIC PRODUCT)
GDP is the value of everything the country makes in the economy. The indicator is used to measure how much
is being made in the UK is known and Gross Domestic Product. Changes in the GDP indicate which stage of the
business cycle the UK economy is in. GDP is the measure of the business activity in the country as a whole for a
1|Pa ge
, Natan Trolka P1
particular quarter. GDP would be affected by the growth of a business cycle as if businesses within the country
are doing well the country will be making more growth and money to invest within the UK spending budget
without having to borrow from banks as people will have enough money to be paying their taxes, VAT etc. If the
UK GDP is high in the UK within 2013, Tesco super market will gain more profit, as businesses will be doing
good and people will have more money to spend on within the super market store.
THE BUSINESS CYCLE
Growth
Growth/recession result from an increase or a decrease in GDP (Gross Domestic Product).
Gross Domestic Product means the value of goods and services produced within the nation’s borders
i.e. UK borders
Growth in the economy means that there is an increase in GDP from one year to the next
Slump
A slump is a term denoting a period of poor performance or inactivity in an economy, market or industry. In
economic terms, a slump specifically refers to a recession, signalling a slowdown of business activity. It is a
sudden drop in the economic level, it usually often happens before recession.
Recession
Recession in the economy means that there is a decrease in GDP from one year to the next. A recession is a
significant decline in activity across the economy, lasting longer than a few months. It is visible in industrial
production, employment, real income and wholesale-retail trade. The technical indicator of a recession is two
consecutive quarters of negative economic growth as measured by a country's gross domestic product GDP.
Recovery
An economic recovery is a period of increasing business activity signalling the end of a recession. Much like a
recession, an economic recovery is not always easy to recognize until at least several months after it has begun.
Economists use a variety of indicators, including GDP, inflation, financial markets and unemployment to analyse
the state of the economy and determine whether a recovery is in progress.
Boom
2|Pa ge
CHANGES IN THE ECONOMIC
ENVIRONMENT ON TESCO P1
In this report I will describe and then explain how the GDP, inflation, interest rates and employment rates are
affected by the growth and recession stage of the business cycle. I will also explain how the balance of
payments is and how Tesco’s contributes to trade surpluses/deficits. I will also be stating what the conflicting
objectives are of Tesco’s and how they affect them as a business whilst describing, the ripple effects and
providing an example of the industries it affects. This report will also contain a description of structural
adjustments and explain the business sector Tesco’s fits in. What the welfare considerations are and how
Tesco’s contributes to the welfare state.
The second company that I have researched is Tesco. Tesco’s mission statement is; ‘to create value for
customers to earn their lifetime loyalty’
Tesco was founded by Jack Cohen in 1919. It is now a large,
global organisation that has 7,817 stores including franchises,
in 12 countries such Asia, UK and Ireland, Germany, Hungary
and Thailand. They currently employ 500,000 people round the
world. Over million customers a week shop at Tesco markets
around the world. Tesco provides services such as Tesco
Banking, Tesco Extra, petrol stations. They sell many products
ranging from household goods to garden centres. Including clothes, electronics, food etc. Tesco are in
SECONDARY and TERTIARY sector due to the fact that they provide service by selling the goods to the customer
but also they are secondary as they make their own brands including clothes and food products. So that puts
them both in secondary and tertiary sectors.
The purpose of Tesco is to supply a wide range of goods which it sells, both in store and online. It also offers
financial services such as its own credit card, personal loans and various types of insurance, in addition to
providing a home delivery service to its online shoppers. Tesco’s simple mission, to be the champion for
customers, helping them to enjoy a better quality of life and an easier way of living.
Tesco doesn’t plan on expanding into other countries as the failed when they tried to expand into America. The
whole investment ruined, so far they are planning about opening more stores around UK and Europe in the
upcoming years as there is bigger demand for their products, people are familiar with them and that’s why
there is greater demand.
Tesco annual turnover for year 2014 was £63.55bn, however their records show that this year they might fall
down as they plan to have a turnover of £60.09bn in 2015. They are successful as when the recession hit UK,
Tesco managed to stay on top whilst other competitors dropped down in their market value, however on the
other hand in 2015 Tesco weren’t as successful as in previous years due to their loss in profits. Previous years
were more successful for them, but overall they maintain to keep their position on top.
Their online expansion attracted more customer into buying as it’s easier for them and more convenient. Tesco
also made home deliveries which were a great success for them and by this it increased their profit. It
increased their number of customers, since it is more convenient for them. You can order you groceries online
and Tesco will deliver it to them.
GDP (GROSS DOMESTIC PRODUCT)
GDP is the value of everything the country makes in the economy. The indicator is used to measure how much
is being made in the UK is known and Gross Domestic Product. Changes in the GDP indicate which stage of the
business cycle the UK economy is in. GDP is the measure of the business activity in the country as a whole for a
1|Pa ge
, Natan Trolka P1
particular quarter. GDP would be affected by the growth of a business cycle as if businesses within the country
are doing well the country will be making more growth and money to invest within the UK spending budget
without having to borrow from banks as people will have enough money to be paying their taxes, VAT etc. If the
UK GDP is high in the UK within 2013, Tesco super market will gain more profit, as businesses will be doing
good and people will have more money to spend on within the super market store.
THE BUSINESS CYCLE
Growth
Growth/recession result from an increase or a decrease in GDP (Gross Domestic Product).
Gross Domestic Product means the value of goods and services produced within the nation’s borders
i.e. UK borders
Growth in the economy means that there is an increase in GDP from one year to the next
Slump
A slump is a term denoting a period of poor performance or inactivity in an economy, market or industry. In
economic terms, a slump specifically refers to a recession, signalling a slowdown of business activity. It is a
sudden drop in the economic level, it usually often happens before recession.
Recession
Recession in the economy means that there is a decrease in GDP from one year to the next. A recession is a
significant decline in activity across the economy, lasting longer than a few months. It is visible in industrial
production, employment, real income and wholesale-retail trade. The technical indicator of a recession is two
consecutive quarters of negative economic growth as measured by a country's gross domestic product GDP.
Recovery
An economic recovery is a period of increasing business activity signalling the end of a recession. Much like a
recession, an economic recovery is not always easy to recognize until at least several months after it has begun.
Economists use a variety of indicators, including GDP, inflation, financial markets and unemployment to analyse
the state of the economy and determine whether a recovery is in progress.
Boom
2|Pa ge
