Impact of Globalisation Upon Financial Functions PDF
Added on 2020-11-12
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Research Project
Table of ContentsTITLE:.............................................................................................................................................1Introduction......................................................................................................................................1Literature Review.............................................................................................................................4Research Methodology....................................................................................................................8Data Analysis and Interpretation...................................................................................................12Recommendation...........................................................................................................................23Reflection.......................................................................................................................................24Conclusion ..................................................................................................................................25References .....................................................................................................................................26Appendix 1:....................................................................................................................................28Appendix 2 ....................................................................................................................................31
TITLE:“The impact of globalisation upon financial functions of Tesco Plc.” IntroductionOverview of the research Globalisation is a continuous process which include linking people, cities, countriestogether. It is concerned with expanding business by entering into the different economy andusing domestic resources as well as international resources. Globalisation can be seen verymuch in the financial market like money, insurance, commodity market etc. sports andentertainment sectors are also coming under the globalisation. This research is talking about theimpact of globalisation on financial functions of Tesco Plc and some of the impact whichcompany facing are managing risk globally. When company is serving internationally it has tomanage risk of different markets which broadens the firm's burden. Other than this, globalisationalso increases the financial responsibilities of the company and they has to arrange more fundsfor dealing in different countries with variety of customers. With the help of globalisationfinancial market is interconnected in many ways which is helping the financial functions like on-line transactions, movement of capital etc. to process very easily and fast. Globalisation hasbring twist in the financial functions by enhancing the dispersion of income and also contributingis financial growth (Stage and Manning, 2015). Background of the research This research is conducted with help of the company called Tesco Plc, it is a UK basedmultinational groceries store and is also deal in general merchandise. It has its headquarter inEngland and serving all over the world, Tesco is the third largest retailer in the world. Thiscompany has expanded globally and diversified their product areas like books, electronics,furniture, clothing, toys, petrol, financial services, telecom etc. This company will further help inconducting the research on “The impact of globalisation in financial functions of Tesco Plc”.There are different factors in the market which act as the reason of financial failures of thecompany. One of them are economic issues in any country like inflation rate of the economy aswell as the rate of currency (Tight, 2016). Other than this, customer's brand switching habits arealso the reason for financial failure of the organisation because when buyers shift from brand, it1
impact the company a lot by reducing its sales and by declining its profitability. Forexample,Tesco has faced financial failure after its expansion in Japan which leads company toface heavier loss. The main reason behind its failure is economical issues that prevailing incountry which affected the purchasing behaviour of customer and leads to increase in brandswitching (McNabb, 2015).AimThe main aim of research project is to analyse and examine the impact of globalisation onTesco Plc.ObjectivesTo analyse the impact on globalisation on financial activities and operation of Tesco. To analyse the benefits of globalisation to Tesco Plc. To evaluate the financial failure if it all Tesco Plc. Research questionsWhat are the impacts of globalisation upon financial functions of Tesco Plc.?What are the advantages and disadvantages of financial impact on Tesco Plc.?How does globalisation influence the financial activities of Tesco Plc.?RationaleoftheresearchReason for choosing this research topic is to analyse the impact globalisation in financialfunctions of Tesco Plc, It is a grocery and merchandise company. Main reason for choosing thisorganisation to work on the financial section of internationally working companies. It ismultinational company in terms of outlets as well as revenue. Company is providing employmentopportunities to many unemployed people in world and it is also contributing the in economyfinancially. Personal reason for conducting this research is to improve the skills like dataanalysis, data interpretation, literature review and many other skills of the investigator. Significanceofthe researchImportance of conducting this research is that it will help in determining the impact ofglobalisation on the financial functions of the organisation working at international level so thatcorrective actions can be take to improve these functions. It is also important for finding out thebenefits of globalisation on the business as well as on the economy to take its advantages . Otherthan this, research is also important to find out the influence of globalisation on financialactivities performed by the company (Krippendorff, 2018). 2
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Literature ReviewLiterature review is the type of paper which researcher uses of analysing the previousstudy on particular topic.The impact on globalisation on financial activities and operation of Tesco.According to Eswar S. Prasad, Kenneth Rogoff, Shang-Jin Wei, and M. Ayan Kose,(2003), financial globalisation is the combined concept of increasing linkage through crossborder financial flow. Globalisation has increased the risk management properties in the marketbecause Tesco is working internationally in different countries it has to have some riskmanagement tool to reduce it and sustain in the market. It is affecting financial activities ofTesco by producing new financial products globally (Capello and Perucca, 2015). According tothe Authors internalisation has increased the supervision for international financial infrastructurein return to it, number of specialised cross border clearing has been taken place. According to the Bianchi and Civelli, (2015), International reporting standard are made tosupport the company to its financial performance strong , as per the authors investments andcapital allocation has been increased, help the company is mobilizing and pool the savings.Authors want to say that globalisation is bringing higher level of financial developments otherthan this it is best method to improve the financial supervision all around the world which inreturn improve the corporate governance. Capitals can easily flow in the world, domestic savingsof the Tesco can be invested in the international market with the expectation that it can get thebetter return. It provide improved techniques of savings to the company. Some of the financialactivities of the Tesco are purchase of raw material and making budgets of every activities theywill going to perform. Globalisation gives a positive impact to the company in purchasing rawmaterials because organisation can get cheap material from the market as well as they can getlocal labour for the production purpose. For example if a company plan to globaliseinternationally its financial activities will get impacted as it have to arrange financial resourcesfrom their personal savings or from the financial institutions. These savings after that invested inthe globalised plan to run the activities and to achieve the goals of the organisation as well as toincrease its profitability and productivity. The benefits of globalisation to Tesco Plc.According toWilliam C. Dudley, (2017), Globalisation has different meaning to everyperson. William is focusing on the globalisation in the context of its role in international4
economic integration and economic development. As per the author, it is promoting living ofstandard of people internationally by providing them job opportunities which is helping theindividual to earn their basic living. Tesco Plc is working globally and enhancing standard ofliving in people. Other than this globalisation is providing support to industries that are facingchallenges like less competitiveness in the market. As per the point of view Cahnmann-Taylor and Siegesmund, (2017), With the help ofglobalisation Tesco Plc has become third largest retailer in the world, it has created its own levelof competitiveness for their competitors. Tesco is also getting benefits like employees of thecompany are able to learn new skills and techniques to perform a task in different countries. It isadding to their knowledge to play the jobs well. William wants to say that globalisation isaffecting the long run productivity of the company (Bianchi and Civelli, 2015). There are somebenefits of open trade like it provide company a larger platform to work, specialisedopportunities, better technology which provide a faster transmission. As per Tejvan Pettinger, (2017), Globalisation is a process of cooperation andinterconnection of different national economies. According to Tejvan, globalisation is providinggreater movement of labour, growth of multi-national companies. , greater free trade, goodcommunication and better transportation. Globalisation is providing Tesco Plc a specialised wayof production in different parts of the world, which in return reducing the cost of the products.Company's investment is also increasing as well as the country's long & short term investmenthas become very easy. For example when any company plan to expand their business by optingglobalisation, they open their new units in other countries. This help the organisation to attractthe customers and increase their consumer base. As result to this, company will get more profit.The financial failure if it all Tesco Plc. According to Zoltan ban, (2015), globalisation is the is a process of entering into the newmarket to expand the business. As per the Author, there are so many reasons because of whichTesco Plc faces financial failures. Economic issues are the major reason because of whichcompany's financial activities get fail. Situations like inflation causes a lot of trouble for theorganisations working internationally because change in one can affect the entire performance ofthe company. For example if UK's inflation rate is increasing it will decline the purchasingpower of the customers and as a result organisation's sale will get decline. This situation willlower the revenue of the organisation because of which they will not be able to mange their5
expenses and as a result, prices of products get increased. As per the author, another reasons forfinancial failure are customer's brand switching habits, this affect the sales of the company. Forexample when a customer switch from one company to other it reduces the profits and sale of theparticular brand (Hartas, 2015). According to the Capello and Perucca, (2015), Customers switch because they have theproper information about the products available ion the market and prices each brand is offering.Competition is another reason for the financial failure in any business firm. Wen competition isvery high it make difficult for the company to survive in the market. Organisations start spendingmore on their promotions and advertisements which add to the company's expenses more andmore and as a result it may face problem of burden of debt or bankruptcy which lower downsthe image of the company. When a company fail to survive in the market it is very difficult forthem to plan their finance again because no banks and institutions get ready to provide financialsupport to the failed company.6
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