Wednesday, February 12, 2020

Analyse a Firm in the UK or EU Country with Micro and Macro Economics Essay

Analyse a Firm in the UK or EU Country with Micro and Macro Economics and a Recommendations of its Possible Strategies - Essay Example Contrary to wholesale firms, retail companies are required to cater to the needs of a local segment of the population. Accordingly, Tesco has concentrated on strengthening its local operations in the various markets. The company has designated a separate management team for its operations in the different markets. The core retail service business has been adequately supported by financial and information technology services. The firm has utilized its technical expertise and human skill resources from across the word to gain a strong foothold in the respective local markets. This has helped it to emerge as a successful international retail company. (Tesco Plc, 2011). The sales and profit growth of Tesco Plc during 2008-2011 can be observed from the table below: Table: Tesco Plc’s Sales and Profit Growth 2008 2009 2010 2011 Sales Growth of Tesco Group (including VAT) 11.1% 15.1% 6.8% 8.1% Sales Growth of Tesco UK (including VAT) 6.7% 9.5% 4.2% 5.5% International sales Growth (in cluding VAT) 25.3% 30.6% 8.8% 13.7% Profit Before tax 5.7% 4.1% 8.9% 11.3% Underlying Profit Before Tax 11.8% 9.8%s 8.7% 12.3% (Tesco Plc, 2011) Demand, Supply and Price Elasticity of the Retail Business The retail industry faces a strong market demand across the world. Though, consumers can buy necessary commodities at wholesale markets at a much cheaper price, they get ready access to these goods at the nearby stores. Wholesale markets in a particular city are few and far between. On the other hand, retail stores have been established in almost every neighborhood. Citizens get the daily provisions of their necessary commodities from the retail shops. Buoyed by the steady demand, their retail companies have established their retail chains across their markets. They maintain a steady supply of the retail products to their stores, so that the retail shops are never in dearth of the essential products which are in such high demand among the citizens. All tyhese factors have played a s ignificant part in Tesco Plc’s business. The price elasticity of the retail products and the retail industry in general can be said to be moderate. The various retail products are moderately sensitive to the changes in their respective prices. When one retail company increases the price of its retail products, the consumers always have the option of buying the products from another retail chain store. However, the necessary commodities like the food items sold through the retail stores have low prices elasticities. Customers will continue to buy them, even if their prices are increased. Since the retail companies offer a diverse portfolio of products through their stores, different products are endowed with different price elasticities. Thus, Tesco Plc remains very careful in devising its pricing strategies. Other International Businesses The company has forayed into online retailing services and financial services after evaluating that there was a strong demand for these new services in the international market. Tesco’s international businesses are characterized by a competitive outlook and a continuous endeavor to expand their scale of operations. This strategy has ensured a sound growth in worldwide sales, market shares, revenues and return on capital employed (Tesco Plc, 2011). Adopting Technology to suit Growth Requirements Tesco Plc is focused on expanding its scale of operations in all the aspects related to its businesses. It has

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