Literature Review Retail Tesco

Topics: Financial crisis, Subprime mortgage crisis, Financial crisis of 2007–2010 Pages: 5 (1395 words) Published: January 27, 2011
University of Teesside|
The impact of the Financial Crisis 2008 on the Tesco plc|
Business Finance|
Fei LIU (K0146598)|

In 2008, the Financial Crisis had or has the huge impact on almost all industries. This report will identify that whether the Financial Crisis impact the Tesco plc or not, and explore what influences incurred. |

1 Background to the project
As the global investment bank Lehman Brothers bankrupt on 15th September, 2008, the economic crisis began to appear in the financial systems over world. Many financial institutions declared that they were in recession. The subprime mortgage crisis, which incurred in August 2007, resulted in this financial crisis. What is more, the first reason was the housing prices, which had a sharp drop in 2007 and led to the United American recession. Subsequently, in 2008, the economic crisis had influenced almost all companies, including retailers in the world. During the economic crisis, some analysts held the opinion that many retailers would survive only through heavy discount on their products and services. In order to avoid the credit crunch, retailers tried to cut the prices of the products to attract customers in 2008. There were many different discounts, which were up to 60%, for their almost goods, such as foods, furniture, electrical products, clothing, and so on. Mosaic chief executive Derek Lovelock said that in 2008, so many retailers reported significant revenue decreased.

The crisis had also huge impacts on customers’ attitude on consumption so that families, who were in middle-class customers, consumed in the discount stores, cheap hotels and supermarkets. These negative effects led to the drops of outputs and annual profits. Richard Dodd, of the British Retail Consortium (BRC), said: “The level of discounting is deeper, more widespread and longer than it has been in living memory. Previously it has been confined to short bursts, but we're now seeing a more prolonged period of sales and discounting.” Besides, Richard Perks, of the consumer analysts Mintel, said: "Shoppers don't feel as wealthy because of the falling property market and as a result have become more selective about what they buy." DATE The report will offer the brief impacts of the global financial crisis on retailers. The following section will identify the influences of the social factors related to retailers due to financial crisis in order to justify the more relevant information. After these, the Tesco plc will be analysed according to selected data to determine the Tesco was or not influenced by the global financial crisis. 2 The aim & objectives

The 2008 global financial crisis has impacted on numerous corporate economy performances. This crisis has or had more direct and more serious attack on sectors than the 1997 crisis. In this report, my aim is to investigate whether the economic crisis of 2008 had the disadvantageous impacts on Tesco plc in UK, and if the company had been influenced by it, whether the Tesco plc had overcame it. To obtain the aim, my objectives are

* to identify if the financial crisis had some impacts on the Tesco and to justify what impacts were; * to justify the Tesco’s performance before and during the financial crisis; * to determine managers’ strategies and methods to overcome the issues; * to determine what employees did to improve the performance of the Tesco plc; * And to identify the company perform after the financial crisis.

3 Literature review

Overviews of the Tesco plc
As the third-largest retailer in the world, the Tesco plc (LSE: TSCO), an international retailer, has 4,811 stores in 14 countries across Asia, Europe and North America till February 2010. The main products are groceries, consumer goods, financial services and telecoms. The revenue increased to £62.54 billion and the operating income was £3.41 billion in February 2010. Under this situation,...
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