This document examines the structure and functions of Tesco. It covers the aims of Tesco and how it relates to its stakeholders. A supermarket exists in a competitive environment, where it acts as a value-added intermediary between geographically dispersed supplier companies and the scattered individual customers who eventually buy their products (Steeneken and Ackley, 2012).
“There are many things that strike a newcomer to Tesco. This is a business with an unusual range and depth of core competencies; it has outstanding operational effectiveness; it understands deeply what it means to orientate a business around the customer; it is passionate, and successful, about developing talent from within; and it manages a complex operating environment with great team work”. – Sir Richard Broadbent (Chairman’s Statement – Tesco’s Annual Report and Financial Statement 2012).
The company’s success today is dependent on the people who invest in Tesco, those who shop and those who work at Tesco. With a goal of becoming a world renowned retailer, Tesco strives to understand and meet the needs of all its players.
Tesco is a British retailer that deals in grocery and general merchandise.
Tesco’s vision is to be most valued by:
The communities in which it operates
In 1997, Tesco set out a strategy to grow the core business and diversify with new products and services in existing and new markets. This strategy has enabled Tesco to deliver strong, sustained growth over the past 15 years. Tesco followed customers into large expanding markets in the UK – such as financial services, general merchandise and telecoms – and new markets abroad, initially in Europe and Asia and more recently in the United States. Currently it operates in fourteen (14) countries across Europe, Asia and North America (tescoplc.com).
Over the years the company has devised a seven part strategy to help in maintaining sustainable growth. These are:
To grow the UK core
To be an outstanding international retailer in both online shopping and in stores
To be as strong in everything else they sell as they are in food
To grow retail services in all its stores
To be responsible for the communities it serves in
To be a highly valued brand
To build a team that can create more value
Tesco’s sparkling growth has come at the expense of rivals, who are battling to keep customers. The other UK supermarkets simply cannot compete on both price and range of different store formats (Corporate Watch, 2004). In the supermarket industry, ‘non-food’ products carry much bigger profit margins than traditional food products, especially when they can be bought in bulk and sold at low-rent out-of-town premises (Corporate Watch, 2004). Tesco realized this in time and took advantage.
INNOVATION AT TESCO
Since its inception the company has used various means to deliver retail services to its customers and has grown into a chain of supermarkets. In 1999, Tesco introduced its online retail service in the UK which turned out to be very successful.
In 2005 Tesco introduced the Guideline Daily Amount labels making it the first retailer to put nutritional information on the front of its packs.
Tesco has announced following new customer research, its support for a hybrid labeling system that combines its existing Guideline Daily Amounts (GDA) with the “traffic light” colour coding system (www.tescoplc.com). The traffic light colour coding system uses a colour coded classification to ensure that a product label provide information in a format that is most useful to consumers. Philip Clarke, Tesco’s Chief Executive said: “We are committed to doing what is right for our customers and therefore have decided to bring together the distinct benefits of GDAs and traffic lights. We know customers are looking for a consistent approach, and intend to work with government, health bodies, other retailers and manufacturers to deliver this as soon as possible.”
Tesco is currently running pilot projects to wireless-enable three shelf-edge activities: stock maintenance; price management; and customer product information (Riley, 2012). Tesco has acquired Mobcast, the award-winning digital book platform provider, to offer its customers even more choice in how they buy and enjoy books (www.tescoplc.com).
Extranet system employed by the company, enables Tesco to use the Internet to create proprietary and customized information flows between the company and its business partners. The system connects business partners online behind virtual firewalls, bringing more flexibility, scalability, extensibility and integration across the distribution channels (www.ivoryresearch.com).
A stakeholder is a person or in this case a group of people who have an interest or are concern about something (Concise Oxford Dictionary). Tesco’s stakeholders are its customers, staff, investors, suppliers and non-governmental organizations (www.tesco-careers.com).
IT expenditure at Tesco has to satisfy four key questions to show how it supports the retailer’s core purpose of creating value for customers in order to earn their lifetime loyalty. These questions are:
Will it make the customer shopping experience better?
Will it increase the capability of staff by making things simpler?
Does it result in a more agile infrastructure?
Does it use common back office systems and process?
As part of its marketing strategy, Tesco makes a conscious effort to listen to its customers. Tesco offers its customers quality at affordable prices, always putting the customer first. “Our core values ‘no-one tries harder for customers’ and ‘treat people how we like to be treated’ characterize our approach to Corporate Responsibility. We believe we can achieve most when we work together on practical things that make a difference. ‘Every little helps’ can become a great deal when everyone pulls in the same direction.” Sir Terry Leahy, former CEO of Tesco (www.tescoplc.com).
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Tesco believes that continually engaging customers in communication helps the company to know its shortcomings and how to rectify them. Periodic forums are organized in-store to get feedback from customers. The company has a large number of suppliers and a strong partnership with its suppliers; this ensures a reliable supply chain which in turn ensures that customers get what they want when they need it.
The staff is an integral part of Tesco’s success, therefore the company makes efforts to make give all employee equal chances to get on. Employee development is a priority at Tesco hence the investment in a state of the art Training Academy in Asia. Employees are encouraged to take advantage of trainings and groomed to deliver their best. Employee performance is always assessed irrespective of the role they play in the organization; this is to ensure that the company’s focus is maintained.
Tesco promises to actively support local communities, buy and sell products responsibly, care for the environment, provide customers with healthy choices and also create good jobs and careers (Corporate responsibilities-www.tescoplc.com). There are community champions who strive to understand the communities in which Tesco serves and come up with ways in why Tesco can make a difference in these communities. The company has partnerships with a number of NGOs and supports groups like Mary’s Meals; an International Charity that provides food for school children, the British Red Cross, and The Consumer Goods Forum; which is a global Committee that identifies projects that can improve the sustainability profile of the retail industry.
Periodically, Tesco meets with its investors to update them on the performance of the company; there is also a link on the Company’s website that provides investors with updates. Tesco continues to communicate with investors year round by sending investors publications to brief them of the company’s finance and operational standing. All investors want good returns on their investments and Tesco is committed to giving investors profitability.
Tesco has an Investor Relations teams that engages with shareholders on a regular. The Corporate and Legal Affairs Director, leads the Company’s contact with socially responsible investors and has regular meetings, on both a one-to-one and group basis, to discuss the work the Group is doing on corporate responsibility and governance-related issues (www.tescoplc.com).
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