Recent Developments in International Finance and Impact on Company Performance

INTERNATIONAL FINANCE

TABLE OF CONTENTS
TABLE OF CONTENTS................................................................................................................2
INTRODUTION..............................................................................................................................1
a. Two recent developments in international financial environment that have impacted the
company’s performance. It will also provide about how the developments are going to impact
company in future........................................................................................................................1
b. Discussing key elements of international financial and risk management strategy in the
context of ABC............................................................................................................................3
c. Analysis of financial performance of Tesco for the year ending 2019 and 2018....................4
CONCLUSION................................................................................................................................8
REFERENCES..............................................................................................................................10

INTRODUTION
The international Finance is also recognised as international macroeconomics which refers
to the study of monetary interactions between the different nations. It focuses over interest rates,
foreign direct investments. In the globalised environment all countries are depended over one
another for services and products from developing countries. The report will discuss about the
recent developments in the international finance. This has impacted performance and the
development in financial environment and which have impacted development and performance
of company. The study will also analyse different aspects of development in future. The study
will also discuss about international risk and financial management strategies. The report will be
covering major part in assessing the financial performance of company for year ending 2020.
The ratio analysis could be as the tool for assessing performance and to take sustainability
measures. Report is focused over Tesco Plc which is British Multinational grocery and general
merchandise retailer having headquarters in UK. Company is 3rd largest retailer in world by
gross revenues and 9th largest in world by revenues. Company is having stores in different areas
of the world.
a. Two recent developments in international financial environment that have impacted the
company’s performance. It will also provide about how the developments are going to
impact company in future
There are number of developments in the international market that are significantly
influencing the market and the businesses all over the world. The developments range from the
economic prosperity leading companies to grow in specific sectors while also crash of Wall
Street for many companies. This era is significantly dynamic and industries that have not been
able to manage their operations as per the changes and developments in international market
have suffered at large scale. There have been various political influences that affected
international trade and financial market and also Brexit has impacted the big companies resulting
in downfall of their revenues and income (Lane and Milesi-Ferretti, 2018). Developments in
financial market that have affected performance of Tesco plc are
1 Brexit
Everyone is aware about the Brexit which is exit of UK from the European Union. The
effects of action of UK government are seen in every industry operating in country. The
investors have postponed their proposals for investments in country. The economy of UK
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considered as most stable has seen fluctuations after the move of government. The investments
in country have decreased by 6%. It has increased the interest rate over loans making finances
more costly. To meet the working capital requirements company borrows short term loans every
year but increased will reduce the profits. Due to exit now the companies operating in UK have
to pay tariffs and other taxes for selling to and importing products from the members of EU. It
has further increased the cost of company (Gibbins, 2019). The major reason of lowering pound
is Brexit and slow growth of economy. Company has to suffer the foreign exchange losses due to
decreasing pound values. This has impacted the financial performance of the organisation
significantly. It could also be evaluated that organisations have seen decline in their revenues as
compared with last year after the steps of government.
2 US – China trade disruptions
The ongoing US – China trade war is disrupting the trade operations of most of the
countries. The countries being major trade partners influence the trade of most countries and also
impacts economic conditions of the country. It has influenced the international financial markets
to a considerable extent. Many major trade contracts are put to hold as the future negotiation can
change the marker conditions. US have increased the tariff rates over imports and exports that
has increased the prices of different materials. Also the suppliers and major customers have
reduced their supplies and orders due to high taxes. Also this is influencing the currency prices
of countries associated with these countries. UK is major trade partner of both US and China
which is influencing the economy of UK (Hall, 2017). Currency fluctuations and lowering
demands is affecting the business operations of Tesco.
Impacts in Future
The trade disruptions and Brexit may bring uncertainties for the businesses operating in UK.
If Brexit negotiations do not brings positive agreements there will be increase in prices of goods
supplied due to higher taxes and this may also lower the revenues of company in other nations.
The trade disruptions can increase the cost of finance and influence currency rates which will
require companies to suffer exchange differences. The strategies and operations of business are
required to be managed keeping in view the uncertainties that may be caused due to them. The
expansion projects of the company are put at hold because of fluctuations in international
financial market.
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