Tesco Plc

Business Economics and Finance in a Global Environment INTRODUCTION 3 MAIN BODY3 CONCLUSION 8 REFERENCES 10 INTRODUCTION Tesco Plc is a British multinational company who is engaged in the business of general groceries and merchandise retailer with headquarters in England, United Kingdom. MAIN BODY Different activities done by Tesco ltd in United Kingdom and India In United Kingdom, company has the portfolio of various shops such as Tesco Extra, Tesco Supermarket, Tesco Express etc. Tesco Supermarkets are having large number of groceries and have less

Business Economics and
Finance in a Global
Environment

Table of Contents
INTRODUCTION................................................................................................................................3
MAIN BODY.......................................................................................................................................3
CONCLUSION....................................................................................................................................8
REFERENCES...................................................................................................................................10

INTRODUCTION
Tesco Plc is a British multinational company who is engaged in the business of general
groceries and merchandise retailer with headquarters in England, United Kingdom. Tesco is public
limited company which was established in year 1919 by John Cohen. At present, company is having
6800 shops all over the world. The products offered by the company are supermarkets, superstore,
hypermarket and convenience shop. According to the year 2019 net income of the company is
£1320 million. Company is engaged in diversified areas such as banking, financial sector, clothing,
toys, furniture etc. Company is listed on the London Stock Exchange (LSE) and also is a member of
FTSE 100. The company operates in 11 countries with 450000 employees working in the company.
MAIN BODY
Different activities done by Tesco ltd in United Kingdom and India
In United Kingdom, company has the portfolio of various shops such as Tesco Extra, Tesco
Supermarket, Tesco Express etc. Tesco Extra shops are the hypermarkets present all over England
and located in the heart of the city i.e. centre of the city (Kotha and Sahu, 2016). Tesco
Supermarkets are having large number of groceries and have less non-food goods as compared to
the hypermarkets. Tesco express are the neighbour of convenience shops in which there is main
focus on food products such as chocolates, sweets, crisps etc. In express branch company charges
more amount of money as compared to the regular prices. Tesco Metro is in between Tesco
Supermarkets and Tesco Express shops in size. They are mainly situated in railway stations, inner
city and streets. One Stop includes the small shops by the company and the shops does not include
the name of the company. Tesco has also selling petrol by diversifying the company in various
biofuels to the customers.
In India, Tesco came first in the city of Bangalore with the creative and innovative strategies
in different sectors such as finance, IT sector, commercial etc. Company came in year 2008 with the
franchise agreement with Trent Ltd who is subsidiary of Tata group in India. Company came up
with new Star Bazaar shop which is engaged food and non-food products in retail sector. Company
is using traditional ways for distribution purpose i.e. it is mainly focussing on Indian retailers,
kirana stores etc. for the sale of company's product.
Market Structure of Grocery Industry in United Kingdom and India
United Kingdom in Groceries industry has the market structure of Oligopolistic market. The

supermarkets in United Kingdom have oligopoly market. Oligopoly is the market where the
competition is very less and the market is shared by very small number of producers or sellers in the
country (Oliver, 2019). Tesco covers the 25% of market share in the country and very few firms are
part of grocery industry. In United Kingdom Grocery industry has few companies and also prices
are set by the Grocery industry.
In India, there is perfect competition in Grocery industry. There are large number of firms
under grocery industry where the price are set by the market only. The buyers and sellers both the
parties have the knowledge and information about the products sold by the company. Under this
market structure all the companies sell the identical products and there are no entry and exit barriers
for entering into the sector.
Comparative analysis of major microeconomic indicators for UK and India and their impact on
economic policy of Tesco
microeconomic
indicators
UK India Impact in Tesco's
economic policy
GDP growth rate UK is the one of the
top most economy in
the world. The GDP of
UK is USD 2.62
millions which is USD
25 billion more than
India's GDP. Further,
the GDP of is growing
with higher growth rate
even after facing Brexit
(Malik and Meldrum,
2016) .
In the year 2019, India
was ranked one of the
largest economy of the
world. GDP growth
rate is approx 1.7 per
cent as per the report of
world bank 2019. In
addition, same as UK,
the GDP of the country
is also rapidly growing
(Tripathi, Seth and
Bhandari, 2015) .
With the help of
growing GDP rate, the
Tesco is improving its
economical condition
in businesses of both
the country. With the
help of higher rate of
GDP, the Tesco has
become able to
generate higher amount
of profit and revenue
from the running
businesses of UK.
On the other
hand, by performing
business activities in a
growing economy such
as India, the Tesco is
developing and
expanding its business
in country. In addition,
with the help of higher
level of growth in GDP,
Tesco is gaining a rapid
growth in economic
condition of businesses
based on India.

GDP per capita at
constant prices
UK leads in the worlds
economy in terms of
GDP per capita income.
UK contains 20 times
of per capita income as
compare to that of
India.
As per the current
economic reports of
India, per capita
income has been
doubled in past 12
years. It has resulted in
reduction of poverty
within the country.
currently, per capita
income of India is
$1270 (Brooke and
et.al., 2015).
With the help of
increasing numbers of
per capita income, the
company has become
able to increase the
revenue generation
power of the company
by selling products and
services in both the
market.
Inflation rate (CPI) UK have a lower rate
of inflation. Recently,
inflation rate in the
country has been
observed to 2% in UK.
By reviewing the
inflation reports of UK,
it can be evaluated that
due to situation of
Brexit, the inflation
was increasing in UK
(Historic inflation India
- CPI inflation. 2019) .
Although, the
government has
controlled such
increase in inflation
with its effective
monetary and fiscal
policy. Currently the
inflation rate in UK has
been observed to
1.86% as compare to
last year's Inflation that
was 2.29% in last year.
As per the current
reports based on
inflation rate of India,
the inflation within the
country has observed
5.24% recently
(Historic inflation
Great Britain - CPI
inflation. 2019). It has
been raised from 4%
from last year. Further,
by reviewing the
reports, it can be
observed that the
inflation is increasing
rapidly in the country.
Inflation rate hace
direct impact over the
spending power of
population. In this
regard, the inflation
rate have a direct
impact over the
revenue generation and
profit earning capacity
of the country. As UK
contains lower amount
of inflation rate, the
Tesco generated higher
amount of revenue
from the businesses of
UK As compare to
Indian market. As,
India have higher level
of inflation in the
country that reduces the
spending capacity of
the population.
Unemployment rate
(ILO measure)
Being one of the largest
economy and having
high per capita income
and GDP growth rate,
the UK has a lower
value of unemployment
rate in the country. As
per the report provided
by world bank, the
employment rate in the
country is 4.2
(Unemployment rate
Percent. 2019).
The reports also shows
By analysing the
statistical figures of
unemployment rate, it
can be seen that
unemployment rate in
India is quite high.
Although, with the help
of effective governing
policy, it is reducing on
yearly basis but
reduction in
unemployment rate is
low in the country
(India Unemployment
The unemployment rate
effects the number of
customers available for
the company. Higher
percentage of
unemployment rate
shows availability of
less customers for the
company. On the other
hand, lower
unemployment rate
shows availability of
large number of
customers for the

that unemployment rate
in UK is reducing over
the year with higher
rate
Rate. 2019). It has been
dropped down to
2.55% in 2018 as
compare to the rate of
2017 of 2.56%.
company, as
unemployment affects
standard of living and
spending capacity of
population.
As UK contains
lower level of
unemployment rate,
Tesco has more
opportunity to sale its
product and improve its
profitability.
On the other
hand, the higher level
of unemployment rate
may reduce the
opportunities of
increasing the number
of customers of the
Tesco.
General government
balances (% of GDP)
The General
government balance is
improving in the
country. It was 44.5%
in 2017 which has been
grown to 45.6% in
2018.
Balance of Payments
(% of GDP)
Analysing fiscal and monetary policies of UK and India and their impact over firm's economic
activities
Monetary and Fiscal policy
The term monetary policy refers to policy of central bank of the country. This policy have
direct influence over the liquidity of the country This policy provides guidelines to several banks
regarding setting their interest rate over the loan provided to them. Further, central bank also
decided the maximum limit up to which the bank can provide loans to individuals, corporations,
companies, etc. for different purposes.
on the other hand, Fiscal policy refers to policy framed by government of the country in
order to charge taxes from various persons of the country including corporations, individuals and
companies of the country. The fiscal policy influences the economic condition of the overall

country's economy and also have impact over inflation rate within the country.
Monetary and Fiscal policy of India:
Reserve bank of India frames monitory policy for the country for the purpose of maintaining
sufficient flow of cash and maintain appropriate amount of liquidity within the economy of country
(Monetary Policy of India, 2018). The RBI uses several instruments such as REPO rate, CRR rate,
SLR, etc. With the help of these instruments they provide instructions to the banks and other
financial institutions in order to maintain liquidity sufficient liquidity within the economy. currently
the RBI develops their monetary policy by taking into account growth and stability of different
sectors of the economy (Bhatia and Jain, 2018). In this regard, RBI has developed the policy to
liberalise the monetary policy in context to providing financial resources to the businesses of
country. In this regard, companies performing their business activities in India can gain a benefit of
economic growth.
While performing business activities in India, Tesco gains benefit of maintaining financial
stability with the country with the help of effective monitory policies of the RBI. In addition, due to
liberalised policies in the country, Tesco becomes able to take loans and credits from banks and
other financial institutes available in the country (Ramanadham, 2019) . It helps the company in
maintaining liquidity within the company through which it can efficiently perform its business
activities without facing problem of insufficiency of financial resources. In addition, with the help
of maintaining sufficient financial resources within the firm and making availability of resources for
expansion purpose, due to liberalised policy of RBI, company becomes able to expand its business
efficiently and improve its economical condition as well.
Monetary and Fiscal policy of UK
Talking about monetary policy of UK, The Bank of England performs activity of developing
monetary policies in the country. The major goal of the bank while framing the fiscal policies within
the country is maintain lower rate of inflation within the country. In this order, the bank has
developed a policy to provide loans and other credit facilities to various businesses of country at
lower interest rate. In addition, the policy has also increased the maximum amount of credit to be
provide to different companies. Policy developed by bank of England yhave influence over the rate
of properties within the country, assets of the company, power of spending of individuals,
companies, corporates, etc.

With the help of this policy, the Tesco has become able to run its business in market of UK.
Further, with the help of healthy monetary policy of the country, the company has become able to
increase its spending power and improve its economical condition as well.
Analysis of foreign trade policy instruments for UK and India and their impact on economic
policy of Tesco
Foreign trade policy instruments
Foreign trade policy refers to policies framed by the Government of country in order to
monitor and control the trading activities performed by foreign companies in the country. Export
policies, Import policies, Foreign direct investment, etc. are some major instruments of foreign
trade policies. With the help of these policies, a government can analyse and monitor the trading
activities performed by foreign companies (Palley, 2015).
With the help of EXIM policy i.e. export import policy, the government can control and
monitor the level of products and services to be exported or imported in the country. In addition, by
amending policies relating to foreign direct investment, the government monitors and control the
amount to be bring into the country and maintain sufficient amount of foreign direct investment
within the country.
For the purpose of increasing volume of foreign trade within the country government of both
UK and India has liberalised the EXIM policy of the country (Williams, 2016). These liberalised
policy helps in attracting more foreign companies towards both countries. Further, by developing
more attractive amendments into the EXIM policy, foreign companies are being motivated to
expand their business within the country.
In this regard, it can be seen that with the help of liberalised policy of UK and India, the
Tesco is expanding its business in both the countries. Through, various attractive policies developed
by the government in the country for its foreign companies, Tesco is gaining various monitory and
non monitory advantages from the effective policy of government in context to foreign trade
policies in the country (Bhattarai and Trzeciakiewicz, 2017). Therefore, Tesco is expanding its
business in the country over the year and improving its business and improve its revenue generation
capacity as well.
Furthermore, by analysing the above evaluation of foreign trade policies of India and UK, it
can be seen that due to effective policies developed by government using several instruments of
foreign trade policies, the Tesco is improving profitability in the country. Therefore, it can be said

that with the help of these policies, economic condition of businesses of the Tesco is improving over
the year.
CONCLUSION
The above study based on various macro economic factors of UK and India and their impact
over the business trading in the country, it can be analysed that Tesco has grabbed a large number of
market share in both the countries. Further, due to favourable macroeconomic factors of the country,
Tesco has become able to improve its economic condition of the company. In addition, by analysing
the fiscal monitory policy of UK and India and their impact over the business of Tesco, it can be
analysed that these policies have positive impact over the company's business, these factors are also
helping the company in improving its economic condition of businesses running in UK and India.

REFERENCES
Books and journals
Oliver, M.J., 2019. Whatever Happened to Monetarism?: Economic Policy Making and Social
Learning in the United Kingdom Since 1979. Routledge.
Ramanadham, V.V., 2019. Privatisation in the UK. Routledge.
Palley, T.I., 2015. Money, fiscal policy, and interest rates: A critique of Modern Monetary
Theory. Review of Political Economy, 27(1).pp.1-23.
Williams, J.C., 2016. Monetary policy in a low R-star world. FRBSF Economic Letter, 23, pp.1-23.
Bhattarai, K. and Trzeciakiewicz, D., 2017. Macroeconomic impacts of fiscal policy shocks in the
UK: A DSGE analysis. Economic Modelling, 61. pp.321-338.
Malik, S. and Meldrum, A., 2016. Evaluating the robustness of UK term structure decompositions
using linear regression methods. Journal of Banking & Finance, 67. pp.85-102.
Brooke, M., and et.al., 2015. Measuring the macroeconomic costs and benefits of higher UK bank
capital requirements. Bank of England Financial Stability Paper, 35.
Kotha, K.K. and Sahu, B., 2016. Macroeconomic factors and the Indian stock market: Exploring
long and short run relationships. International Journal of Economics and Financial
Issues, 6(3). pp.1081-1091.
Tripathi, V., Seth, R. and Bhandari, V., 2015. Foreign direct investment and macroeconomic factors:
evidence from the Indian economy. Asia-Pacific Journal of Management Research and
Innovation, 11(1). pp.46-56.
Bhatia, B.S. and Jain, A., 2018. Relationship of macroeconomic variables and growth of insurance
in India: a diagnostic study. IJAME.
Online
Monetary Policy of India. 2018. [ONLINE] Available through
<https://www.toppr.com/guides/business-economics-cs/money-and-banking/monetary-policy-
of-india/>
Historic inflation India - CPI inflation. 2019. [ONLINE] Available through
<https://www.inflation.eu/inflation-rates/india/historic-inflation/cpi-inflation-india.aspx>
Historic inflation Great Britain - CPI inflation. 2019. [ONLINE] Available through :
<https://www.inflation.eu/inflation-rates/great-britain/historic-inflation/cpi-inflation-great-
britain.aspx>
India Unemployment Rate. 2019. [ONLINE] Available through :
<https://www.ceicdata.com/en/indicator/india/unemployment-rate>
Unemployment rate Percent. 2019. [ONLINE] Available through :
<https://www.imf.org/external/datamapper/LUR@WEO/OEMDC/ADVEC/WEOWORLD>
Related Indicators for India Consolidated Fiscal Balance: % of GDP2019. [ONLINE] Available
through : <https://www.ceicdata.com/en/indicator/india/consolidated-fiscal-balance--of-nominal-
gdp>