Similar Business's in Different Worlds

Topics: Supply and demand, Economics, Tesco Pages: 7 (2486 words) Published: June 24, 2013
Similar Business's in Different Worlds
Economic Environment in Wales
A good economy needs to have stability and growth, there needs to be a decrease in inflation and low interest rates to ensure there is access to the appropriate supplier of labour. The welsh government usually uses taxes and spending as a way to control the economy. As the banks work for the government they are able to alter the quantity of money that's available, in 2009 they provided them with more money to be able to lend more to business's due to the economic environment at that time. In the year 2008 the UK saw the start to a growing recession, in recent years of 2010, 2011 and even into 2012 Wales recession is still in a bad state, but being controlled a bit more. Towards the start of 2012, the government reduced interest rates by 0.50% to encourage customers to spend more., this helped as In 2011 the total spending on Debit/Credit cards was £38.2 billion, however in 2012 the total spend had been £42.2 billion.

The Inflation Rate in the UK:

Economic Environment in China

All power within the Chinese government is divided among three bodies: the Peoples Republic of China, State Council and the Peoples Liberation Army (PLA). Power is concentrated in the paramount leader, who controls all three bodies, he if effectively General Secretary of the Communist Party and of the Central Committee, President of the Peoples Republic of China, and Chairman of the Central Military Commission.

Just like Wales, China is also in a state of recession, due to customers buying less because they can't afford to, this has caused manufactures to cut back on their orders, producing fewer goods. This recession has causes a 'ripple' effect, for example a person spending less reduces the income of others.

As of October 2011, China's inflation rate has slowed tremendously, lowering to 4.2%. This inflation is controlled by taxes, and business's must therefore lower prices.

The UK is the sixth largest national economy in the world, measure by GDP, and the Peoples republic of China ranks at the world's Second largest economy. China's demand is therefore a lot higher.

Supply will be dependent on demand, In Wales demand is currently low and therefore business supply is quite low. In China, demand is high and therefore supply is high too. Supply will also depend on factors such as availability of the raw materials and labour, competition and government support. This is a major difference between Wales and China, In Wales there are few raw materials available without the use of importing and buying from other countries, whereas in China raw materials are available freely despite the recession, this is due to Chinas land mass and population. Supply is therefore unable to increase quickly within Wales as it can in China. Global Prices for the raw materials have increased tremendously due to the economic states such as the one in Wales. They often have to import all their raw materials creating a high demand for them. From the charts below you can see this effect and the difference in the number of imports between the countries.

Tesco's in Wales
Tesco was founded in 1919 by Jack Cohen from a market stall in London’s East End. Over the years the business has grown and they now operate in 12 countries around the world, employing over 530,000 people and serving tens of millions of customers every week. Their operation in the UK are the largest within the group, with over 3000 stores and over 310,000 colleagues. There are a numerous amount of Challenges and Opportunities for Tesco in the Welsh Economic Environment, the most obvious challenge being the recession, this will reflect on Tesco's in that they have to increase their prices. Due to the recession it has become easier for Tesco to obtain labour with the required skills (unemployment is high so easy to find). Thus if new shops are to be opened in Wales skilled labour should be easy to find. Another challenge...

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