Analysis of the super retailer Tesco
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One of the biggest and top three international retailers is Tesco. At present, Tesco operates 2000 stores with 3, 26,000 people are working across the Asia & Europe. The Tesco expanded the business from the traditional mode to new approach of business and set as UK supermarket base of retails like non-super market business, personal finance and internet shopping. The Tesco is incorporating the business world wide and their product, culture and taste is different from other products.
Tesco operates 923 stores and employs 240,000 people, giving us access to a population of 260 million across our nine markets. Over the past five years, we have expanded from our traditional UK supermarket base into new countries, products and services, including a major non-food business, personal finance and internet shopping. The increasing scale and internationalization of our sales and purchasing operations makes a significant contribution to our efficiency and profitability, as we progress towards our long-term goal of becoming a truly international retailer. ( Globalsources.com,2010)
The vision of the company is to help the people lot. The company is selling variety of goods like food, phones, cloths and banking. The main philosophy and vision of Tesco is the 'Every little helps' of the company it will remain over a years and work with all together. The Tesco is not creating any marketing slogan or caption. But Tesco implicit, the company is meant for all.
The company's mission statements are "Pile 'em High, Sell 'em Cheap".
And "making good values and culture for the customers to earn and remind in their mind for their lifetime." very qualitative and try to motivate the employees and to sincere and be committed with the customers and also with the suppliers. (Tesco annual report, 2009)
Steering Wheel large:
The Tesco is measuring the performance of the business through this steering wheel. All over the Tesco Company this steering wheel is base for finding out the performance standards. This will view performance of the business from the top level to bottom level of organization. By this easily focus that the customer is getting all the things.
Values and Cultures:
"Their Core Purpose of business is to create value for Customers to earn their lifetime loyalty."
Every business expects that the customer is to be loyal. Same way, the company Tesco expects the customer to be very loyal in their lifetime. To retention this loyalty the Tesco is working so hard. The business Culture means is creating new and energizing one, with motivating the responsibility and follow the convention and good things in the organization which is different from other type of organization. It is that the every individual in the organizations is geared to stable the business through the market.
The main value of the business is to be honest, powerful, and be simple always. They give new innovation of product, best services and bring new thoughts to the market all should that switched off to other products. Values are helpful to feel the employees are all common, and be softy, lovely, and also genuine in nature.
Some of the values are,
Be always polite and smiling face with the customer,
The customer of Tesco able to understand the problem or strategic management
The employee's always brisk and service orientated mind.
Learn the daily and new things, love the work and do it interestingly.
GOALS AND OBJECTIVES
General objectives of the Tesco:
The main objective is to create the value and culture among the customer.
They want to be remaining as a market leader and give more than the other company.
The maximize the profit and give more affordable which the customers able to buy easily.
Specific Objectives of TESCO:
No one be hard to the customers,
Use to deliver the full strengths helps to no one to competitive.
Care the employees then only they care the customers with mine -hearted,
Treat the customers as one of the Tesco team.
The Tesco is main objective is achieve the companies long term plan, develop and identifies the collectives way of success.
The environment analysis or environment scanning helps to know about the performance in both the environment,
Macro Environment - External environment of the company - PESTEL and Porter's five models
Micro Environment - Internal environment of the company - SWOT analysis
Macro Environment - External environment of the company - PESTEL and
Porter's five model
The macro environment helps to analyze all factors that are affects and affects the performance of the company by using PESTEL framework.
P - Political
At present the Tesco is operating in six countries and additionally in Europe, the Tesco is highly regulated by the legislative and political condition in European nation and also by the other countries. Tesco is helping out the student by working part - time, giving opportunity flexibly, the Tesco employs large number of old people, disabled people, student sector, low income group etc., because to improve them and enjoying prevailing life style. (Ivory Research Ltd, 2009)
E - Economic Factors
The Economic factor controls are fully outside the market or company. Their effects fully on the marketing mix and affect the demand requirement. Now the UK is badly affected by the market because of some factors announced by the government so the decrease the volume of the sale and found to be risk in the market.
S - Social / Cultural Factors:
Now people are very concentrate and expecting to buy all products in one shop. Because they are not like to spend time in shopping at various store.. "One stop" and "bulk shopping". Tesco is now concentrating also in non - food items and increased in their sales also. And customers now a days, more health conscious so that the Tesco adopting the style of product mix also. (Ivory Research Ltd, 2009)
T- Technological Factors
Technology is now a day's greater impact on the every business, the technology helps both the company and customer. So that customer shopping more convenient and launched a new technology as the ECR (Efficient Consumer Response). The technology implement by Tesco is,
Radio Frequency Identification etc.,
E - Environmental Factors:
The key issues of every business are now a day is social responsibility of the organization. Tesco's corporate responsibility is to regulate the specified corporate governances. The company is that ensuring that not giving the environmental affecting product. They are giving eco - friendly both food items and non - food items. This product does not affect the relationship between sale of both suppliers and company.
L - Legislative Factors
There are various government legislation and regulations that affect the company performance. The Food Retailing Commission (FRC) that controlling and enforcing the practices of suppliers and don't change current price without notice. There is various commissions and regulation to give better perform without any disputes.(Ivory Research Ltd, 2009)
Micro Environment or Internal Environment:
Threat of New Entrants:
The UK grocery market having the few competitors, they are Tesco, ASDA, Sainsbury's and Safeway. All these shops are competing with each other. Because all shops selling the things that cover everything in one shop. These all shops need huge investment and large chains of store. But now Tesco and ASDA are seen to be very huge competitor in UK grocery market. (TescoPLC.com, 2009)
Bargaining Power of Suppliers:
The major grocery shops are compete with one another, and dealing with large supermarkets all fear about that losing the customer because of price and competitor. If Tesco keeps the relationship with seller means helpful to survive the market without any negotiations.
Bargaining Power of Customers:
The Tesco had many things that loyalty card, game show, funs, puzzles, club card etc., to retain the customer because if not giving any facility to customer means customer will easily to switchover to other supermarket.
Bargaining Power of Suppliers:
The major grocery shop loses the customer because of not keep good relationship with the suppliers. Because the supplier relationship will give customer need product to the buyer.
Threat of Substitutes:
In the grocery departmental store like Tesco, Asda and Sainsbury main threat is, threat of substitutes, in grocery shop have substitute for all products. One way to reduce substitutes is acquire the small - operation shop.
Bargaining Power of Competitors:
The grocery business is important in size and controls the large players. The Tesco is the large retail shop and available all types of products under one roof. So the Tesco is highly competitive shop with other competitors. (TescoPLC.com, 2009)
The SWOT helps to know about the companies full detail and also able to find out the company Strength, Weakness, Opportunity and Threats prevailing in the environment.
S - STRENGTH:
Tesco has a leading market share in the country,
It has a unique brand value.
In the Tesco they providing the high customer service and satisfying the customer.
They were trying to retaining the customer loyalty.
The customer buy the product also through online.
The business is expanded continuously from the developed funds.
They were using the Steering Wheel to analysis the company's performance so that it helps to find out where the company is stand.
To gain the customer loyalty they are reducing the product price, it direct impact on the profit margins.
In specific area they are not operating the retail stores with specialist retailers so which gain only smaller portion of customer loyalty.
O - OPPORTUNITY:
The Tesco has a greater opportunity to wider the market and further expansion
of the market.
It is the third largest retailer in the international market it suggest to ensure the
buying power will enlarge in the future years.
By using or updating the current technology the increase the facilities and
selling through online so that try to increase the profit margin.
T - Threats:
There is chance of increasing the cost of raw materials and it will directly affect the profit margins of the company.
There is threat of competitor like Wall Mart / ASDA.
The UK price structure would flicker the price change.
There is some possible of threat in the international expansion
Thus SWOT analysis helps to find the prevailing micro environment in the organization
STRATEGIC DECISION MAKING
The Tesco is having more competitive advantage rather than the other famous departmental store situated in U.K. This review has provide some strategic decision making process from the analysis of whole theory about Tesco. The Tesco has a very good marketing strategy to capture wide market and satisfying customer expectation. It is also follow the porter's strategic models and strategic alliances to do the future analysis.
Tesco has followed the low cost strategy for capture wide market at U.K. This has leads to attract more customer and they are feel that the product has more quality with the low cost. So this one has leads to operating cost and competitive cost. Thus this low cost strategy must balance these two operating cost and competitive cost. Thus Tesco will able to follow the low cost strategy.
In porter's model strategic decision is cost and differentiation strategy. The Tesco is providing various offers and promotional mix into the product. This has improved its sales and profit of the Tesco. Thus the strategic decision making process has followed in the Tesco and it has successfully created it. (Robson, 1997)
The Tesco has planned to implement the low cost strategy and product different strategy. So that it has attracted many customers and it able to create good brand name to the company. The company is also develop the retail store is several areas by following these low cost strategy and differentiation strategy. Thus the tactic plan has used by the Tesco for improving the sales and profits.
The Tesco has plan to expansion its retail stores in international level. Thus it has entered into international market from improving retail stores and from doing joint ventures. The company is also put partnership with existing retail stores and it has improving its retail stores by internet selling, joint ventures and also it improving portfolio business like financial services, dot com business, telecommunication etc.
TYPE OF DECISION MAKING LEVELS IN ORGANIZATIONAL STRUCTURE AND INFORMATION REQUIRE FOR INFORMATION SYSTEMS
Type of Decision Making Levels in TESCO
Decision Making Level in Tesco
DECISIONS MADE AT THE VARIOUS DECISION MAKING LEVELS IN TESCO ORGANIZATIONAL STRUCTURE AND THE INFORMATION REQUIRED
Identify, develop and the implementation of business strategy for TESCO, select executive team members,Direct functions and performance through the executive team.
Business strategy, information about executive team members
To give direction and leadership toward the achievement of the TESCO's mission, strategy, and its goals and objectives
Strategic goals and objectives, growth, profitability, loss, budgets, company trends
Decision about Buying patterns, choosing suppliers and Purchasing policy and planning, Managing retail staff.
Current market, supplier's detail, purchasing policies.
Decision about the hardware &software that need for the TESCO, problem solving, works in partnership with clients, to improve the structure and efficiency and of an organization's IT systems, meeting with clients to determine requirements, working with clients to define the scope of a project.
Updated knowledge about IT, knowledge current market, and problem solving methods.
Assess the long term financial trends. Budgets, taxation and financial related decision making to ensure the TESCO meet its financial and legal responsibilities.
Financial reports, Government regulatory agencies information, financial trends.
Actual expenditure against budget, Risk Management, Payment Accuracy standards.
Expenses, payee details
Decisions about the marketing promotions, sales adverts, open up new stores.
Knowledge about Competitors, current market situation, current economy.
To provide policy and procedural advice on all matters of employing units and with staff members, to provide HR support, to manager monthly regional plan.
Policies and procedures, HR department information, staff information.
Assist in the recruitment of the most qualified managers to meet the district's needs, Coordinate sales promotion activities and pricing of merchandise, Oversee preparation of merchandise placement and displays.
Store performance report, staff records ,promotions.
Profits of the branch, stocks, security, administration, the selection, requirement of staff members and staff development, customer related management.
Stock level, sales report, wastage level, security status, staff Rota.
To manage the store in Management's absence, e.g. weekly stock and consumption account, to supervise.
Stock level, sales report, wastage report, knowledge about customer and staff.
Describe merchandise and explain use, operation and care to customers, Operate cash register, count money and making deposits, Arrange and display merchandise to promote sales.
Cash handling, day to day operations, money, banking, Product knowledge.
INFORMATION SYSTEMS FOR EACH DECISION MAKING LEVEL IN TESCO
The followings are the various decision makers' levels in the First Tesco,
Top Level / Strategic Level:
The strategic level decision making is important level in the organization. It impact is affects in all levels of organizations. And this strategic level decision making had very great impact in the information systems in long range. The tactical and strategic data and information almost in same.
EX: what will happen to the business in 10 years time?
Chief Executive is working at the top level of TESCO and needs to make decisions based on sales, profitability, depth, market growth, long-term goals and objectives. The Information System which would be suitable for Chief Executive would be an Executive Support System.
Chairman is working at the top level of FQR and needs to make decisions based on sales, profitability, depth, market growth, long-term goals and objectives. The Information System which would be suitable for Chairman would be an Executive Support System. The following will describe the Executive Support System.
These are the two level of management in strategic level using Executive support system (ESS) to make strategic decision making in Tesco.
EXECUTIVE SUPPORT SYSTEM:
It is used at the top level of the organizational decision making level. It is very expensive to make because of the complex mathematical formulas and equations they deal with. Executive Support System will provide timely, concise information about the company (TESCO) to the company top managers. The main aim of Executive Support System is to monitor key performance indicators. Keep track and tells about the market share, profitability, market growth, depths, capacity utilization etc.
Based on these, the company managers can make future adjustments and changes. They can set targets and can also set goals and objectives of the company in the long term. (Laudon, 2010)
Middle Level / Tactical Level:
The tactical decision making helps to implement the strategic decision making. This level helps to allocate the resources effectively and efficiently. These level information systems are analysizing, summarized, and aggregate the information from the organizations. This level generates the report of summary, exception report etc., the characteristics are,
Decision Support System:
Mainly used by the top managers and professional staff in the organization. Decision Support System deals with low volume of data, the processing is interactive and the output is data/analysis. (Laudon, 2010)
Ex: The IT Director of Tesco has to deal with Technologies, networks, servers, Software's, consultancy services and have to make decision on information available. IT Director Duty is to decide which technology should be implemented to operate the company operations.
Management Information System:
It is used at by managers. Management Information System deals with large amount of data. The data contains past and current volumes of data. The output is in the form of reports. MIS is suitable for Managers of Tesco because they have to deal with annual and monthly reports which consist of branch performance, staff information in the district, delivery timings and schedules. MIS would be helpful to Area Managers in keep track of performances of branches by looking their progress in the form of reports. (Laudon, 2010)
Operational level decision making is a day - to -day running of business. It makes the information from day to day routine operations. It describes the information and keeps record of acquisition and disbursement of resources. It collect, validates, and record transactional data from all levels of management. It has some characteristics are,
Emphasis on the pest
Sales assistance of Tesco deals with the day to day activities involve in the company to keep the company running. Sales assistance of Tesco deal with customer service, queries, product knowledge, price check, reduction and other day to day activities of Tesco. To deal with these kinds of things sales assistances use Transaction Processing System (TPS) to make decision to carry out day to day activities.
Transaction Processing System:
TPS is mainly used at the low level people of the organization. Sales assistance deals with customer quires, selling products, and day to day activities of the organization.
Ethical issues of the IS/ IT usage:
The effectiveness of business and implantation and using of IT/IS is doing the business ethically. In many organization using the information system in adverse way. So the government and people getting loss in different ways.
If using the IT/IS in ethical way means, the usage is more,
The employee is benefited, because earn more ,
The Company benefit and profit margin will increase,
Fraud will minimize,
Reduce the tax evasion
Get more employment for the educated people
The review has analyzed each and every activity of Tesco and its management system. The Tesco is implemented many Information system and computer process work, even though it is not able to reach the ultimate objective of the company. It has internet sources of activities to do the sales and create advertisement process. But the Tesco must increase information system by implementing SAP, ERP module to deliver the good communication and interaction between each and every employees of the Tesco group. In the company each process has to centralize and implement information system into each department and stores to centralized and integrate each activity.
The Tesco has very good delivery system by the way of improving information technology into each and every stores and it also create good marketing concept among their customers. Thus this review has explained about the implementation of information technology and the process of each and every department into the retail stores. It also shows the Tesco organization structure to deliver the good processing methods and procedures of each department and it also clearly stated the level of organization in Tesco.
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