For a company owning a worth business in any big stock market always have a tool to analyze its performance. The tool could be like an annual report which deliberately assesses a company’s fiscal health, financial status and market position within any specific period (Thomsett, 2007). Annual reports hold a great importance for organization, especially when the organization is owned by multiple owners or is a public limited firm (Thomsett, 2007). To develop the prospect of the company there is a need for a document like an annual report which gives year after year information about the company performance and growth tactics (Thomsett, 2007). There are different reasons of why enterprises give importance to annual reports. Some of the reasons include clean market analysis, comparative financial assessment and productivity analysis which is no other possible if there are no annual reports to compare. It has been that in markets where there is a major population of investors and share holders then enterprises come out regularly with the activity of reporting (Stittle, 2003). Enterprises know that by announcing their financial health (annual report) publically, they are able to connect to their shareholders, distributors and investors, which is very important for both growth and expansion of the business. Meanwhile, annual reports also assess market position as by expressing financial numbers the feedback of market (consumer, investor, shareholder and competitor) is testified and generated (Stittle, 2003). This study is going to access the importance of annual reports in terms of market analysis, productivity analysis and financial health assessment. The study will focus on Tesco, a giant retailer company of UK in order to better understand the importance of annual reporting (Flack, 2007). Tesco being a global retailer company holds a comprehensive reporting system. The company operates in more than 10 countries across the world, for which it has to keep a view on its global performance level. The annual reports of Tesco serve the same purpose as they provide information of what company has achieved in the previous times and what it aims for the future coming years (Tesco, 2012). Generally enterprises use annual reports to express three major types of information and that are market information, financial information and information related to productivity. Tesco’s annual reports also hit the same purpose as they project information of market competencies, company’s fiscal growth and revenues with respect to output levels (Thomsett, 2007). Tesco’s annual reports talk about the market situation in which the company operates. The reports indicate different market segments, those in which Tesco is successful and those where the company sets back. There is a summarized overview of different business constraints which Tesco highlights in its annual reports. Constraints include trading levels, profit and loss statements, revenues of a particular fiscal, growth, number of employees working, and number of stores operating in one particular fiscal. By giving the overview of all such constraints, Tesco is able to analyze its present market situation (Tesco, 2012). The report comes out at the end of each fiscal giving an overview of complete market statistics. This enables managers to assess present market in terms of future growth prospect. From Tesco’s annual reporting system it can be said that annual reports play a decisive role in market analysis. By having such event based information as in Tesco’s reports, the company is able to compare its past market with the relativistic present market (Tesco, 2012). Actually the reports are projections of periods allowing the planning to make true real assessment. This helps in creating market picture, which shows that how much there is stability and in which areas the company has to mainly focus for the coming periods of time. According to Tesco annual report (2012), the company showed a trading profit of £2,480 billion in UK and similarly in Asia the number reduced to £737. This highlighted more stability of Tesco in UK market than in Asian market and prepares the company to address its Asian continental business. Projecting this type of useful information is part of Tesco’ annual report documents, as this is for the help of planning administrators (Tesco, 2012).
Tesco’s Annual Reports on Financial and Productivity Analysis On general companies launch annual reports in order to leak out their financial progress which is one reflection of financial health status. One of the aims of annual reports is to bring the investor close to enterprise’s prospect (Tesco, 2012). This aim adjusts useful financial information in annual reports which is essential for both the company administrators and for outsiders (investors, shareholders). By the help of such numeric information, the strategists are able to analyze a company’s financial health on a particular fiscal. Tesco being a multinational retailer stands with the same objective in its annual report system (Thomsett, 2007). The company utilizes its annual reports just to bring out useful financial information. Tesco’s reports include information like sales rate, profit rate, growth rate or revenues for a particular fiscal which are sufficient to indicate the financial status of the company within in the same period. This helps Tesco’s managers to understand the company’s financial health and status which is inevitably important to understand the financial performance of the company within a specific period (Tesco, 2012). According to Tesco annual report (2012), company recorded sales growth of 7.4% with profit growth of 1.3% respectively (Tesco, 2012). The similar report projected Tesco’s capital growth of 12.9% which was in comparison to 13.9% of the year 2011. This type of information is enough to reflect the financial performance of the company, which is also essential to access the future growth margins of the company (Tesco, 2012). It is to be obvious then when companies grow in terms of capital and expenditure they are showing good productive levels (Stittle, 2003). Annual reports play a decisive role in this respect as they project the key highlights of the company including new projects, day to day customer experience, employees stability and investors engagement, which are enough elements to understand the growth rate and productivity (Stittle, 2003). The same goes out to Tesco as it includes all the relativistic information which is necessary to evaluate growth levels. According to Tesco annual report (2011), the company projected its future investment plans more specifically in the UK retail market, which is showing significant growth and expansion in the recent times. The report highlighted Tesco’s investment plans in the clothing section which showed that the company had a good productive margin in the clothing sector (Tesco, 2011). From above analysis it can be said that Tesco believes in the annual report system, a system which is effective in presenting useful information. This information is further utilized by Tesco managers, in respect of market evaluation, financial assessment and productivity analysis (Tesco, 2011). The report system prepares Tesco for the future business prospects and hence is an important part of company’s assistance (Tesco, 2011). There are different reasons of why annual reports are important to enterprises. Some of the reasons are clean market analysis, comprehensive growth assessment and comparative financial evaluation, which are helpful to prepare future plans for the company (Stittle, 2003). Annual reports mostly include three types of information, market information, financial information and information related to growth and productivity. By general assessment of the reports strategists are able to understand overall performance of the company on a particular fiscal (Thomsett, 2007). Tesco an international retailing company also operates on annual reporting system. The company comes out deliberate with a year of year reporting where information is mostly based financials, market status and growth of the company. This type of information is important to both Tesco managers and investors as they have the idea on company’s real time progress by accessing the annual reported documents (Tesco, 2012). Hence it is to conclude that annual reports hold a major importance for an organization, especially when the organization is on the international grounds and requires a comprehensive tool of expression like annual reports (Tesco, 2011). Reference
Flack, E. (2007). The role of annual reports in a system of accountability. Sydney: Centre of Philanthropy.
Stittle, J. (2003). Annual Reports: How to Deliver Your Corporate Message to Stakeholders. Burlington: Gower Publishing, Ltd.
Tesco. (2011). Annual Report and Financial Statements. Cheshunt: Tesco.
Tesco. (2012). Annual Report and Financial Statements. Cheshunt:Tesco.
Thomsett, M. (2007). Annual Reports 101: What the Numbers and the Fine Print Can Reveal about the True Health of a Company. New York: AMACOM.

2. To what extent can improvements in productive flow and product quality lead to an increase in sales and profit?
The determination of value added involves various methods of calculation, which are compatible with the different definitions that attend to the concept. Although the concept remains the same, certain accounting approaches tend to exclude more items in the calculation than others, which often lead to different results. The challenge lies in the fact that there is no universal standards of determining value added (Hansen, Mowen, & Guan, 2009). Value added is usually obtained by adding the unit profit, unit labor cost, and the unit depreciation cost (Hansen, Mowen, & Guan, 2009). The unit profit is arrived at by calculating the difference between the production cost and the sale price. In order to determine the total value added is obtained by adding all the value added figures of all the units. Essentially, the difference between revenue and outside purchases is equivalent to total value added. In terms of analysis, the figure obtained of value added offers a range of interpretations. For instance, integrated companies usually regard value added as a higher portion of revenue whereas companies that are less integrated consider it as a lower portion of revenue.
Another method of approximating total value added is by combining total labor expense, operating profit, and depreciation expense in that order (Mowen, Hansen, & Heitger, 2012). According to standard procedure, the operating profit must come before depreciation expense. Labor expense includes such items as benefits, wages, and salaries. The figure of total labor expense is usually considered as a return to labor while the value of operating profit is generally considered as a return to capital. Capital comprises of items such as land, properties, and capital goods. Normally, it is considered important to follow the standard procedure when arriving at the different figures. Factors of production are usually considered in terms of value added when determining the figure of value added in macroeconomic calculations.
Calculating value added in national accounts usually involves capital and labor (Mowen, Hansen, & Heitger, 2012). Alternative definitions usually consider value added as the extra features, which extend over standard expectations of a given product or a service. Such items do not involve the cost of the product. According to some theoretical approaches, value added is considered as the difference in the prices incurred by a company over a product and the price paid by a customer for the same customer. As such, arriving at the figure of value added is through the determination of the difference in the prices. The figure is obtained by subtracting the company’s cost from the customer’s cost and then adding the figure of services to the results.
Theoretically, value added could be understood in terms of the different enhancements that a business puts on a particular product with the objective of increasing the value of the product (Mowen, Hansen, & Heitger, 2012). In this manner, value added is considered as a determination of the different qualities that are created on a given product or service. Value added can increase the price of a give product or its value. Generally, value added is considered as one of the ways in which a firm enhances the competitive advantage of its products or services. Other perspectives on value added describe it as an increase in the value of goods or services as they transit from one stage of production to another. This description derives from the assumption that goods and services will normally change in value as they pass through the different production stages. The figure of value added, according to this definition, is determined by calculating the difference between the value of inputs and the selling price of the product or service. On this note, inputs relate to purchased services and raw materials.
Alternatively, the figure is obtained by determining the difference between sales and the payments made to the suppliers. The three major components that describe value added include employees emoluments, returns on capital, and taxation. Returns on capitals are usually considered in terms of interests and dividends. In the conventional sense, value added is used for determining taxation. Value added tax is usually attached on items with regard to the level of difference between the selling price and the costs incurred in the production of a particular good or service. At this level, it becomes appropriate to consider some of the concepts that attend to the items considered for subtraction from the selling price. The cost of producing a particular service usually relates to the different kinds of items that combine to form the overheads of a given product or service.
Value added is also used in the determination of the size and growth of national economies (Mowen, Hansen, & Heitger, 2012). Combining the total of value added of different systems of production within an economy gives the figure of Gross Domestic Product (GDP). Besides determining the size of the national economies, value added is usually used to determine the size of any given company. Valuation of the strengths and weaknesses or strengths of a given company involves the determination of the value added. However, investors attach lesser interests to value added because it does not offer appropriate determinations of valuation measures. The value of profits and turnover are preferred to assess the size and performance of a company because they can be determined within the concept of vertical integration.
Usually, the process of preparing the value added statement involves the inclusion of sales and the amounts of money paid to suppliers (Hennig-Thurau, 2000). The statement also includes the distribution of value added. Generally, many countries embrace the concept of value added as one of the ways of determining the trends of performance of a company or business with regard to the nature of products or services. Companies use the figure of value added to determine the value of shares. On this note, value added is considered as an important feature in the disclosures to shareholders although it bears lesser relevance to other accounting indicators. On this score, it becomes important to consider the fact that the determination of value added must go alongside other accounting calculations for the purposes of determining the most appropriate position of a business in terms of size and performance.
The determination of value added must be informed by sufficient justifications based on the details of the processes that a service or a product undergoes before it is obtained by the customer (Hennig-Thurau, 2000). It is upon the customer to scrutinize the product and service in order to determine whether the figure of value added is commensurate to the real value of the product. Market forces and competitions are some of the factors that determine the trend of value added. The bargaining power of suppliers, the cost of raw materials and factors such as market preferences and the bargaining power of the customers contribute to the determination of value added. It is important to consider the fact that some of the issues that contribute to the value of value added as fluid and subject to accessional changes over time.
Business and product markets are usually subject to the processes of production, competition, and other internal and external forces. Global and local forces, regulatory mechanisms, and other macroeconomic forces tend to affect the constituent features of value added in ways that either increase or lower value added (Hennig-Thurau, 2000). Changes that occur within the production cycle and the supply chain are important in determining the trends of value added. The product markets weigh their stability with regard value added. The linkages and processes from the manufacturing point to the markets are largely regarded as a manifestation of the nature of value added. For instance, value added can be lower in cases where the manufacturer manages to negotiate a lower cost from the suppliers.
Value added influences the strength of a product on the markets (Trischler, 1996). Market strategies involving the manipulation of value added often involve the lowering of profit margins for competitive advantage. In some ways, the quality of a product contributes significantly towards enhancing the level of value added. Goods and services considered to be of a superior quality fetch a higher level of value added than those considered to be of a relatively lower quality. As such, it becomes important to consider the fact that market forces, trends, and nature of products are fundamental considerations used in the determination of value added. Some factors considered within the aspect of value added have to be considered in light of the dominant market forces relating to a particular product on the market.

References
Hansen, D. R., Mowen, M. M., & Guan, L. (2009). Cost management: Accounting and control. Mason, Ohio: South-Western.
Hennig-Thurau, T. (2000). Relationship marketing: Gaining competitive advantage through customer satisfaction and customer retention : with 24 tables. Berlin: Springer.
Mowen, M. M., Hansen, D. R., & Heitger, D. L. (2012). Cornerstones of managerial accounting. Mason, OH: South-Western Cengage Learning.
Trischler, W. E. (1996). Understanding and applying value-added assessment: Eliminating business process waste. Milwaukee, Wisconsin: ASQC Quality Press.

5. During the 1980s and early 1990s recessions, British manufacturing management restored profitability, sacked employees, and transformed productivity. To what extent does the British experience differ when compared against the major competitors?
Recessions have profound effects on nation’s economies. The late 1980s and early 1990s recession had a great impact on the British manufacturing industry. Prior to the recession, the United Kingdom was the world’s top manufacturing nation. As the manufacturing industry suffered in Britain from the effects of the recession, competitors from other nations such as the United States, France, and Germany overtook it. The depression had been caused by the great value of the pound, towering rates of interest, a firm fiscal policy, the economic boom and bust, high charges of mortgage interests, and the use of the Exchange Rate System Since the recession in the 1980s, British manufacturing has not been able to regain its position as the world’s top manufacturing nation. Although the decline experienced by Britain has been inevitable, a number of measures have been taken to improve British manufacturing. Among these is the New Growth Economics, which focuses on growth policy, convergence and catching-up, social capability, human capital, and investment. The United Kingdom has also made efforts to sustain a high level of foreign direct investment, which is one of the foundations to the revival of British manufacturing. Keywords: Recession, British Manufacturing, Gross Domestic Product, Inflation, Manufacturing Sector, Competitors, Unemployment, Economy

A recession is a “downturn in the business cycle during which real GDP declines, business profits fall, the percentage of the work without jobs rises, and production capacity is underutilized” (Tucker, 2008, p.252). GDP means, “the value of a country`s overall output of goods and services during one fiscal year at market prices, excluding net income from abroad” (“gross domestic product (GDP),” n.d.). GDP can be measured on the basis of expenditure, income, or output, where measures depend on the amount of money used, amount of profit earned, and amount of goods and services sold respectively.
According to Keynesian analysis, if there is a decline in AD, this means that there will be a decline in the real GDP. What affects the real GDP is the AS curve slope. Low Aggregate Demand (AD) causes a slight reduction in real GDP when the economy is close to full capacity (“Causes of recessions,” n.d.). Source: (“Causes of recessions,” n.d.).
A recession consists of two quarters, whereby the decline in the GDP; during a recession the economy is functioning inside and further away from its production possibilities curve. During a recession the economy is affected in a downfall, demands begin to slowly go down; this is because the market is saturated and the demands for goods and services becomes weak (Montgomery, 2011).
Factors that lead to the recession in Britain during the 1980s and early 1990s include:
1. Great value of the pound: This reduced the demand for exports since they became more expensive. British manufacturing was the sector that was mostly affected.
2. High rates of interest: Inflation in the UK was above 15% in 1979 (“Causes of Recessions,” n.d.). High inflation was inherited by the conservative government, which made a commitment to reduce it. The government focused on tight fiscal and monetary policies, which reduced inflation, but caused a reduction in investment, spending, and output.
3. A firm fiscal policy: The government focused on reducing its borrowing level to reduce inflation, which was necessary for the economy. To achieve this, taxes were increased, consequently reducing consumer spending due to the fact that their disposable income was reduced by the tax increase.
4. Economic boom and bust: There was rapid economic growth during the 1980s. As a result of this inflation increased above 10% (“Causes of Recessions,” n.d.). The UK government embarked on reducing the inflation by increasing the rates of interests, which led to a reduction in spending.
5. Use of the Exchange Rate System: The UK government committed itself to maintaining the towering value of the pound, which required interest rates to be high and therefore led to a reduction in Aggregate Demand. There was consequently less demand for UK exports, which had become very expensive.
6. High costs of mortgage interests: This was as a result of high interest rates, which caused most people to sell their property, reducing the prices of houses. Consumer wealth reduced as a result of the falling house prices.
There has been industrial change in the UK since the 1980s and early 1990s recession. This can be seen from the fact that employment in UK service industries has grown, but in the manufacturing industry, it has relatively declined. “Between 1971 and 1999 almost 4 million jobs were lost from UK manufacturing industries….Over the same period the proportion of total value of UK output produced by manufacturing industries fell from 41% to around 20%” (Moynihan & Titley, 1995, p.357). The loss of jobs was mainly as a result of the 1980s economic recession.
If a country’s manufacturing sector is weak, the economy will have to be constrained below full employment, since the domestic activity will draw in manufactured goods and cause a balance-of-payment crisis. Between 1976 and 1979, British manufacturing was expected to recover, but this did not work (Townsend, 1983). This is because a collapse of activities followed between 1979 and 1981 as a result of the recession. This recession affected the manufacturing output of British manufacturing, which affected the manufacturing areas and the employment (Townsend, 1983). Source: (“UK recession of 1981,” n.d).
This graph indicates how inflation had risen from 1979-1990, and the fall in GDP below average. In 1982, it begins to rise and goes through dynamic changes between 1984 and 1989. Between 1980 and 1982, the rate of inflation increased by 14.76% (“UK recession of 1981,” n.d). The UK manufacturing industry has been declining since the 1980s and early 1990s recession. During the nineteenth century, the leading manufacturing nation in the world was the United Kingdom, but this declined during the recession. As the British manufacturing lost its worldwide supremacy, other nations were improving their manufacturing capacities. It was at this period that Britain was overshadowed by the United States, France, and Germany in the manufacturing sector (Pike & Barnes, 1994). Since then, British manufacturing has remained behind these nations.
The 1980s recession exacerbated the decline that had begun in British manufacturing industries. The British motor vehicles and textiles, and iron and steel industries were the most severely affected. This is because these are the industries that faced the greatest competition worldwide. According to Pike and Barnes, “it is feared that the industrial base in the UK is now too small to meet the needs of the economy and any expansion will lead to an increase in imports and enlarge the already large trade deficit” (1994, p.10).
The performance of British manufacturing sector is relative to its competitors. The performance of a business can be measured by the growth of output, profitability, productivity, and structural change. The major problems facing Britain’s economy are the reduction of the manufacturing industry and unemployment. Britain has lost most of its market share to its competitors. While Britain competitors retained their employment, Britain lost 40% of its manufacturing workforce (Needle, 2004). The British motor manufacturing industry suffered during the 1980 recession, and lost its domestic market share to Japanese Motor manufacturing industry. This is because the market forces forced Japan to venture in Britain. Britain’s competitors such as Germany and France paid their employees more than Britain could (Anderton, 2000).
Average consumers were hugely affected by the late 1980s and early 1990s world recession. The UK textile industry faces great threat from its competitors in other nations. This was after it lost its top position as a textile and garment manufacturer. After the 1980s and early 1990s recession, Germany became the leading quality manufacturer of textiles and garments. However, later recessions have impacted the German textile and garment industry. According to Bohdanowicz & Clamp, “The French government has always heavily supported its fashion industry; more recently, the Spanish government made its fashion/textile industry a priority, pouring money into it to ensure its establishment across Europe” (1994, p.161).
There is dire need to improve the British manufacturing industry. Britain’s manufacturing capabilities can be restored, even though the decline by Britain has been inevitable. According to Pike and Barnes, “to achieve this means a higher level of domestic saving and higher corporate savings if the alternative of higher capital inflows at higher rates of interest is to be avoided” (1994, p.10). There have been recent developments of New Growth Economics in Britain, and these “may provide some direction as to what future policies may be appropriate to sustain long-term improvements in manufacturing competitiveness” (Lindberg, Voss, &. Blackmon, 1998, p.286). The New Growth Economics is focussed on growth policy, convergence and catching-up, social capability, human capital, and investment. One of the foundations to the recovery of British manufacturing is the sustained high level of foreign direct investment in the United Kingdom. This has led to increased investment in the manufacturing industry.

Reference
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