BTEC Level 3 Unit 1 P5/M2
Influence of two economic environments on the activities of Tesco
P5: Describe the influence of two contrasting economic environments on
business activities within a selected organization.
M2: Compare the challenges of two selected business activities within a selected
organization in two different economic environments.
For this article I will be comparing the company Tesco in two different
economies, firstly in the UK and secondly with the Tesco’s branch in India.
Economic, importance of stability, levels of inflation and cost of labor:
Tesco’s is an internationally renowned business and it is important that they
have a stable economy to operate smoothly. Stability is necessary in the business
world in terms of the economic conditions. Stability exists when professionals
can make forecasts for the future, so they can predict the demands that
customers will have for the different products.
Importance of stability: Level of inflation is one way to measure stability. A
business wants to operate in an economy with low inflation because this makes
it easier for the business to be able to forecast and budget for future sales and
costs. The level of inflation in the UK is 0.3% down from 0.5%, which is a low
level of inflation, in India the level of inflation is 3.78% as of August 2015, which
has come down from the previous annual rate for June 2011 which was 9.6%
therefore the Indian economy has dropped in the rate of inflation for the past 4
years this means that the general level of prices for products has fallen which is
positive for Tesco’s. This affects Tesco because it means that the costs will be low
which is positive for Tesco’s and due to the last recession in the UK Tesco’s needs
that stability.
M2: It is clear that the level of inflation in the UK and India is low. However, India
previously had 9.6% inflation and is now 3.78% which is higher than the UKs
inflation of 0.3%, so there will have been a slight decrease in costs for them. This
means that India’s economy could cause more hurdles than the UK for Tesco’s.
However, they are only small decreases. So Tesco is in a good position in both
countries. Low running costs and cost of labor means they are able to offer
potentially lower prices or they could gain a greater profit.
The UK inflation rate
2006 - 2015
Influence of two economic environments on the activities of Tesco
P5: Describe the influence of two contrasting economic environments on
business activities within a selected organization.
M2: Compare the challenges of two selected business activities within a selected
organization in two different economic environments.
For this article I will be comparing the company Tesco in two different
economies, firstly in the UK and secondly with the Tesco’s branch in India.
Economic, importance of stability, levels of inflation and cost of labor:
Tesco’s is an internationally renowned business and it is important that they
have a stable economy to operate smoothly. Stability is necessary in the business
world in terms of the economic conditions. Stability exists when professionals
can make forecasts for the future, so they can predict the demands that
customers will have for the different products.
Importance of stability: Level of inflation is one way to measure stability. A
business wants to operate in an economy with low inflation because this makes
it easier for the business to be able to forecast and budget for future sales and
costs. The level of inflation in the UK is 0.3% down from 0.5%, which is a low
level of inflation, in India the level of inflation is 3.78% as of August 2015, which
has come down from the previous annual rate for June 2011 which was 9.6%
therefore the Indian economy has dropped in the rate of inflation for the past 4
years this means that the general level of prices for products has fallen which is
positive for Tesco’s. This affects Tesco because it means that the costs will be low
which is positive for Tesco’s and due to the last recession in the UK Tesco’s needs
that stability.
M2: It is clear that the level of inflation in the UK and India is low. However, India
previously had 9.6% inflation and is now 3.78% which is higher than the UKs
inflation of 0.3%, so there will have been a slight decrease in costs for them. This
means that India’s economy could cause more hurdles than the UK for Tesco’s.
However, they are only small decreases. So Tesco is in a good position in both
countries. Low running costs and cost of labor means they are able to offer
potentially lower prices or they could gain a greater profit.
The UK inflation rate
2006 - 2015
