Interest Rate Effects on the Tesco Company - Case Study Example

Executive Summary This memorandum looks at the current status of major economies of the world, probable trajectory of policy decisions, and the ensuing impacts on corporate business houses. The prime focus of this presentation is to enable the board to make informed decisions and adopt pragmatic, viable and promising business paths to navigate TESCO to greater success. Due consideration has been given to macroeconomic policies, inflation trends, exchange rates and political lobbying that might have deep impacts on corporate economies. Greater focus has been laid on the US, UK and Eurozone economies. However due consideration has been accorded to West Asian, Indian, African and other developing economies. Volatile Environs Engulfed by the economic crisis which has deepened the recession in many parts of the world, the UK economy is in a very uncertain state of flux now. In doldrums and undergoing severe pressures that overheat the economy, nobody really knows how much more money is required for the Great Britain to really overcome its debts which goes on to increase day by day. This has forced most of the officials and the economists to seriously rethink their strategies about reinstating and stabilizing the dwindling and swaying economy. (Davison-Forder) It has to be very much noted that most of the areas in the UK are really lagging behind and struggling to meet the reforms process in several sectors due to the acute lack of funds. The staggering rate at which the national debt of the UK is said to increase is projected from a 44% of GDP in the year 2007-08 to 77% of GDP in the year 2014-15. This is a very alarming picture indeed. (Davison-Forder) This makes it very mandatory for the government to take some very solid steps to fund such economies and zones which have taken a good beating due to the ongoing financial crisis. Thus when the government of UK takes some solid steps to bring about and boost investment in those areas then there will be a sure hope that the living standards and also the economic and social standard of these areas will be raised up. Thus the UK government needs to take some very concrete steps in this aspect so as to boost such waning economies with an aim to stabilize such an economy that will surely bear the brunt of the economic depression. (Davison-Forder) Indeed, nobody is aware of the real facts and the exact figures. To know the real state of the UK economy one needs to know the exact condition of the economy since we are all indeed tax payers and we as citizens of the UK are really entitled to see the Britons bank statements. Indeed the UK parliament has to make it public regarding the real state of the UK economy and also publicly announce and publish the papers of the economic state of the country with attached proof. This will indeed boost the confidence of the people whatsoever the UK economy is in and also will increase the confidence of the people of this country. Indeed if the balance sheet of any other company can very well be made public in the same way the real balance sheet of the UK economy has to be published which will very well instill a sense of confidence in the UK government. The TESCO Concern Under the present conditions it has become quite necessary for the company to really recoup its reserves and also redirect its efforts so as to successfully overcome the financial crisis that has dent a very big hole in many of the big names in the corporate world. Tesco, located out of Chestnut, UK has an international presence in grocery and general merchandising retail chains. It enjoys a very good international reputation over the years. Tesco’s headquarters is located in Chestnut in UK. Tesco, which was initially engaged in the business of specializing in the various types of foods, now has very much diversified itself into various other activities like clothes, electronics and consumer financial services. We have been doing very well in all our chosen fields. The company has very well increased the number of stores it operates around the world and this has led to phenomenal increase in annual turnover as well as profits. Our company is listed on the London Stock Exchange and Irish Stock Exchange. Even in the face of the severe economic crisis, we have performed well, and Tesco our company is now regarded as the second best retailer in the European market and projected to occupy the top spot in the near future (24houressay). The recent economic turmoil has not had any affect on the Tesco Company and it has very well made very important strides that has really taken it to the top spots of the British retail companies and has very well pushed back its rivals to the back. The most and highly interesting part is that the Tesco company has seen a very high surge in its profits and also the increase in its market capitalization at a time when most of the customers are also very well testing other brands and also at a time when the consumer spending has come down drastically. Thus, though Tesco is really put under severe test due to the recent economic crisis, the company will continue to remain stable and the profits and market capitalization will shoot up once the financial climate improves. This will be the time when it will surely see the boom in its industry and the profits will very well surge to take the company to the top spot. What’s Coming Up In the corresponding years there will be fiscal loosening to help our economies recover though very slowly. However, this single measure alone will not be very much sufficient to reinstate a breaking economy. Many more other parallel measures have to be made underway so as to stabilize the nation’s economy. It is with this idea that most of the parliamentarians are working towards so as to invest and pump in more money for Britain’s most important services like the NHS which is a sure indication of the very good stance taken by the UK government in its efforts to boost the morale of the UK public and also to give a very good boost for the nation’s economy. Indeed the newly instated UK government has to start a new and refreshing program to revive the stumbling economy and thereby give it more stability. This is essential for the whole nation to shred the ill effects of depression, and become a very prosperous economy like it was a few years back. Indeed it is a very sorry state of affairs as far as the UK economy is concerned and this very much is the state of affairs as far as the ground situation is concerned. There may be drastic changes in the UK, owing to the reforms, which will really fuel the economy to its many turbulent phases. What will happen if the current state of economic affairs continues and the economy really tumbles and the whole economy comes to a standstill? Nobody can really imagine and the real state is that there may be many ground breaking realties that has really pushed the economy to such a shocking state of affairs and brought it down. There will be lot of false politicians who get really involved and give lot of false promises and result the transition of the economy to bring it to its original best state. But what this bunch of people does is harming the economy and doing worse things to the nation which will certainly spoil the chances of an imminent recovery process. Thus, it is for this very reason that the majority of the politicians play a double game—getting people and the parliament to back their bunch of reforms, and at the same time making things worse for the existing government which quite lacks transparency. This leads to total fallout of the UK government’s policies and thus the imminent fallout of the UK government once again. (Davison-Forder) Interest Rate changes and the UK company and the Effects on the Tesco Company As the global interest rates are keeping on changing and the financial crisis has led to a spurt in the interest rates the UK economy is surely going to be affected due to this hike in the interest rates. Consequently the Tesco company being a UK company will always feel the hike in the interest rates within the company and surely has got a very tough time ahead for itself for at least a couple of years from now on. This has made it much mandatory for the company to pull up its socks to rein down the costs of production and also increase the profit margin and also achieve higher sales. An addition to this fact is the rate of the UK inflation data’s which is also the primary data that will also have a sure affect on the Tesco company. Thus these steps of concreteness will very well ensure that a whole lot of better things are being achieved and thus results and will do a world of good for the citizens of the UK economy by now have become very much embroiled into the many politics of human affairs and also the balancing act of reinstating of the broken and the crumbling economy. This could be very well be used in the state for the reforms to be taken directly underway so as to bring back the economy to its feet and thus reassure the people of the advantages that can be really accrued as a result of this kind of economic revival and this will surely do a world of good for the whole of the country which would in other words be crumbled beyond recognition and would have certainly brought the economy to a grinding halt. Thus the UK economy is still in its nascent phase of economic revival and will take a certain amount of time to be really in its full capacity of the economic revival to really happen and thus really forces the economic thinkers to build up hopes for a better and safer future which is what is the actual need of the hour and most people really want the government to take some concrete steps regarding this so as to revive the economy back to its past glory and thereby achieving the prosperity for the people of the country and thus the robust economy has to be totally planned by the government authorities and the concrete steps have to be taken to much achieve the same before time goes out and all the people and the politicians including the parliamentarians have to awake to this fact and the revive the economy back into its initial and the glorious form. The affect of the Exchange Rate on the Macroeconomic policy and its affect on the Tesco Company Another very important factor that has to be considered and has got a profound affect on the performance of any company worldwide is the affect of the worldwide exchange rate that can very well affect the macroeconomic policy of any nation and that which can very truly determine the fate of any company’s operation in the future. This calls for the policy changes within the Tesco company that is very much required since the Company policies have to be very well remodified to suit the global change in the exchange rate and that which can truly be regarded to challenge the macoeconomic policy changes that are quite affected and brought about by the UK nation. This has to be specially kept in mind by all of those concerned in the government field and they have to thoroughly work for achieving this dream and make that into a sheer reality and thus convert and bring back a sinking economy back into its original and the glorious form. Hence this will very well go in to the back of the people of the country as well as the politicians and results in the tightening of the UK economy. (T pettinger2010) Thus the major and the sole aim of any politician now should be to work towards the achievement of the macroeconomic stability and really work towards the achievement of this very much needed stability. There are lots of people who will be really amazed if such kind of massive and large scale macroeconomic stability can very well be achieved and this very well does the medicinal affect to the dwindling economy of the UK. Thus factor really lies behind the more important cues of the macroeconomic revival and all the people and the politicians have to really work towards the achievement of this very goal and result in the very fast paced economic revival of the country as a whole and the economy can be really brought back into this state of affairs with some additional inputs from the politicians and also the people in general. Thus the economic state of affairs have to be really taken into account and as per this the politicians of the UK have to really plan as to what they will be doing in the future days so that the more the days they spent in planning the whole thing the more they will be damaging the economy and the more late the economy will take to get revived. For this very reason the economy has to be first taken into account and then only the later steps of the other factors have to be really accounted for or else the economy will go into a state of deep economic depression and the government will find it being dumped by the people of the country and they themselves losing hope on the democratic form of government that they elected and brought to power. (T pettinger2010) For this very reason the politicians all across UK have to join hands in such a time of international adversity and work towards an amicable solution for resolving the doubts of the people and bringing back the economy back to its old splendor. This will very well go a long way to do a world of good to the economically downtrodden people and the citizens of the country of UK who are really finding it difficult to make the ends meet and make a total recovery of their day today life so that the whole economy really limps back to the normality and the people of the country of UK can lead a normal life as they used to do before the financial and the economical crisis that has engulfed the world. This will really do a world of good for the economy now needs such a kind of revival since it has to be very well the biggest impact of the century that has hit the world economies and brought most of them to an absolute stand still. This will be a very good factor since most of the economy starts in the process and has tried to make the revival a sure reality that would have been otherwise a distant reality since it would mean a death bell to the world’s most powerful economies. Much has to be done if things have to be really brought under the control and this must be very well included in the memorandum for the main board of the company. The financial situation of the UK is really very grave since most of the funds have dried out and the Government is in a real stalemate to solve this type of situation and very well requires all the members of the parliament to sit together and jointly discuss the current situation of the country and jointly discuss all the issues relating to the financial situation of the country. (T pettinger2010) The economy of the UK is in real doldrums and this can be very much solved by means of such discussions that can really solve the very worse kind of situation that is currently prevailing in the country. In hopes of the revival of the whole UK economy what needs to be done is to very well mobilize all the economic thinkers to thoroughly thinks of the solutions that can very well prevent a breaking down of the economies that will very well solve situations that can very well accrue to the non performance of an elected form of government and cause disturbances in the economic and all other forms that can really block the entry of a very good solution to the current country’s economic deficit which can only solved by the government’s good decisions and policy making at the highest levels of the parliament. (Janina Davison-Forder(April 8th, 2010)This has to very much precede the government’s steps wherein they can really mobilize the forces to meet this kind of economic threat to the country and has very much needed economic stability for performing all the activities that is very much required for the country and its citizens. Thus whatever be the reason of the economic condition of the country the parliamentarians have to really find a way out for the speedy economic revival of the country. To fuel this citizens have to really join hands and very well work towards the achievement of the revival of the economy. Hence the economy has to be brought back to its feet with renewed efforts from the country leadership and has very well go a long way into getting the company out of the terrible and the most horrible debt situation that the country has not seen for centuries. It is for this reason that most of the economic thinkers are joining hands to get the country out of the debt and thus the fuel the economy once again to its feet and bring about the economic revival of the whole nation through a set of concrete economic steps that would very well be the key to the raising the hopes of millions of people all around the UK and also later to make the country to bring back its lost glory and bring back the days of economic prosperity for everyone to relish the fruits of their economic efforts. (Janina Davison-Forder,April 8th, 2010) This would be the best that the government can do to alter the hopes of the people around the country and thereby cause a very good and fastest economic revival for the entire country which is very well drowned in a sea of debts and also uncertainty that has been very much ruling the minds of the citizens and the rulers of the country of UK. (Jill Treanor, Patrick Wintour26, Jan 2010) This is very well indicated in the role of the government officials who are very much concerned about the growing concerns of the economic uncertainty that is hanging around in the country and this would very much be with likes of the country. Thus most of the people all over the country are very well pinning the hopes on the country’s ruling party with a hope that the country will fall back into the lines of normality and also will very well do on the economic front and thus roll back to the economic stability of the country. Thus the fuelling of the policies has resulted in most of the government doing a rollover and a scrutinisation of its policies so that everything falls back to the line of normality and the government also in the future will be able to function properly without any type of hindrance being offered form any type of sources. (Jill Treanor ,  Patrick Wintour, 26,Jan 2010) Hence something should be done truly by the new government if it has to taste some kind of success in its efforts to mobilize the revival of the economy and also become a favorite to the people of UK. Thus everything possible has to be done in accordance with the view of solving the financial crisis of the country and this is very much to do with the public view of the government that has to take in and bring about concrete measures so as to bring the economy back to its previous best and thereby bring back the fallen economy.( James Thompson .2008). )Hope the new government really takes all these into consideration and work towards the realization of these ideals and also make the economy to be stabilized so as to bring a certain transition that will indeed go a long way to the making the economy back on to its feet. If not for the parliamentarians there is no other suitable force that can very well do any type of good to the economic revival of a really battered and tattered country. This is the very reason that the government has taken the full quantity of measures and sees to itself that there is primarily no reason wherein the government has to do much about the revival of the country’s politics. Thus the people have to really pick up the full onus of pressurizing the government in taking up some concrete steps of reforms so that there will not be much ambiguity as to their type of working towards achieving an amicable and very good solution for the embroiling situation that has very well ensued currently due to the ensuing current economic condition. Much has to be done in this account and a very good and concrete step have to be taken so as to ensure that the steps taken are very well in the right direction and has nothing to do with adversely affecting the economic situation. This really will very well do well for the entire economy since there is much to be done if the current economic situation has to be really overcome and some sanity in terms of the financial situation of the country on the whole has to improve.( James Thompson .2008). As a part of the main board of the company this has to be very much taken into account since this will very much affect the general proceedings of the company and also will result more in causing undue harm to an already broken economy. This factor has to be given much importance to and also should be on the main agenda of the board of directors and hence help the company to perform more skillfully taking into consideration the growing needs that has to be very well highlighted in almost all the meetings of the general body of the board of directors. This will very well enhance the quality of the company performance and also give the much needed assurance so as to enliven the very much needed things that are needed by the company so as to get out of the financial burden that has put a breaks on the company development and also the multitude of opportunities for the different employees altogether. This action will very well take into account the much needed reforms that will always do a world of good for the persons who have very much created the needed the much needed medicine that will surely act as an antidote for fighting the financial and economic downturn that is faced by the country right now. This has to be very well taken into account and has to be well scrutinized by the officials of the company which otherwise will land all of the company into financial troubles. This on the other hand can very well be solved by the company which has to take into the more relevant aspects that has to be totally taken care of. This will indeed be a boon to the company and also its functioning and which will otherwise affect the entire operations of the company and also fuel the kinds of economic revival that can be well imagined of. References Janina Davison-Forder (April 8th, 2010). What state is the U.K economy in?. Available.http://www.economicvoice.com/what-state-is-the-uk-economy-in/5008551,24 November 2010 Jill Treanor. Patrick Wintour (26, Jan 2010). Available http://www.guardian.co.uk/business/2010/jan/26/uk-economy-debt-bob-gross Edmund,convey.(29,june,2009) What state is the u.k. economy in?. Available, http://www.telegraph.co.uk/finance/economics/5689553/What-state-is-the-UK-Economy-in.html.24 November 2010 Peter Rance Combe(22,july ,2010) Bank shows concern at state of UKs economy. Available.http://business.scotsman.com/business/Bank-shows-concern-at-state.6433040.jp  Scott Hamilton and Francine Lacqua,(April,28.2010)U.K economy remains in “fragile state”Available.http://www.businessweek.com/news/2010-04-28/u-k-economy-remains-in-fragile-state-besley-says-update2-.html U.K economy. Available http://www.economicshelp.org/blog/economics/uk-economy-2009/ Edwin, lane Economy news Retrieved from, http://news.bbc.co.uk/2/hi/business/8570775.stm Fragile State of U.K. Economy Curbs Pound’s Strength http://www.topforexnews.com/2010/04/28/fragile-state-of-u-k-economy-curbs-pounds-strength/ Nadeem valayattu(june 2009).UK Economy Set for Debt Fuelled Economic Recovery Into 2010 General Election, Available. http://www.marketoracle.co.uk/Article11088.html The current state of the u.k economy. Available. http://www.courseworkbank.co.uk/coursework/current_state_the_uk_economy_2571/ Richard Fletcher(mar 2010) Four simple tables will reveal the state of the UK economy, Retrieved from,http://www.telegraph.co.uk/finance/financetopics/budget/7505951/Budget-2010-Four-simple-tables-will-reveal-the-state-of-the-UK-economy.html What state is the u.k economy in currently. Available. http://wiki.answers.com/Q/What_state_is_the_UKs_economy_in_currently T pettinger(2010) impact of u.s dollar.Available.http://econ.economicshelp.org/ Economy, investment and finance report, Available. http://www.economywatch.com/ How does Tescos domination of the British supermarket industry alter its policies on new product selection?. Available. http://www.24houressay.co.uk/essays/bus/tesco.html James Thompson (2008). Recession slows the Tesco juggernaut Available. http://www.independent.co.uk/news/business/analysis-and-features/recession-slows-the-tesco-juggernaut-1048858.html Read More