The Genesis Of Buying And Selling

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Over time small stores have metamorphosed into massive superstores. In the UK today, they play a major role in the economy, delivering goods and services, providing jobs, both within and globally.

A prominent sector is the retail industry with major players such as TESCO, ASDA, SAINSBURY'S, MORRISONS and their likes. The role of such retail giants cannot be over emphasized, however for the purpose of this study we would be analysing TESCO and their role in the economy.


As a third time Britain's leading retailer and one of the top three retail companies in the world, Tesco has branches in nearly every country worldwide, hence it being referred to as a popular brand. Tesco has 26% of UK market share and double the market share of its closest rival ASDA. (

Life keeps changing and the Tesco team have excelled at responding to changes, for this reason Tesco has grown from a market store set up by Jack Colen in 1919 to the biggest private sector employer in the UK.

The name Tesco made its first appearance above a shop in Edgware in 1929 in the UK. Since then the company has grown and developed responding to new opportunities and pioneering many innovations. The company has more than 470,000 employees worldwide providing diverse career opportunities for them. (


The core value of Tesco is to 'create value for customers to earn their lifetime loyalty'.

'Our success depends on people; the people who shop with and the people who work with us.'

No one tries harder for customer: (understand customers, be first to meet their needs, act responsibly for our communities)

Treat people as we like to be treated. (Work as a team, trust and respect for each other, listen, support and say thank you share knowledge and experience)

All the above mentioned in Tesco's 'Every little Helps' Strategy. (www.tescoplc/ourvalues).

Tesco's planning process runs each year and is reviewed quarterly so as to adjust staffing level and make recruitment when necessary. The organisation adopts Maslow's theory of motivation using the internally motivation esteem needs of their employees by recognising the importance of motivating their staff to progress their career within the company.

Tesco practices what it calls 'talent planning' this encourages people to work their way through and up the organisation's ladder this helps to achieve its business objectives and employees to achieve their personal and career objectives.


The goals and objectives of a company is what a company hopes to achieve within a given time period. It is the reason for the existence of the organisation; it is what drives the organisation, the employees and management in their day to day activities.

Tesco has outlined its goals and objectives in five main points.

1. To maximise sales

2. To grow and maintain the number one retail company in the United Kingdom

3. Tesco wants to outshine their competitors and remain the market leader

4. The main aim of Tesco is to maximise profit

5. To provide goods/services that is cheap and affordable to consumers or the public


According to Tesco their core purpose is to create value for customers to earn their lifetime loyalty. They further go on to state that their success depends on people, both those who shop with and work with them. As Britain's largest retailer and the number three in the world, Tesco endeavours to meet their lofty objectives by providing their customers with excellent value for their money with highly competitive prices and top notch customer service. Ultimately by pleasing, their customer and capturing their business for life, this will make them a highly profitable business and in turn also please their shareholders.

The aims and objectives of Tesco are based on product, price, place and public. Tesco place is a wide supermarket chain and is one of the biggest in the world. Inclusive in its general aims is also the need for survival and meeting stake holders needs.

Subtly underlying all of Tesco's beliefs, values, policies and practices is the aim to retain loyal customers. Tesco has captured this in their mission statement, which says to 'Retain Loyal People'. In order to achieve this goal Tesco gives out club cards to its customers and gives them points anytime they come shopping.


The structure of an organisation and its role in achieving the organisation's goals is very crucial. In many organisations this is a channel through which information is passed.

Mannud.L, (1999) emphasised that organisational design is a key feature for allowing an individual to achieve their personal needs as well as objective of the organisation.

Moorhead and Griffin (1995), stated that the organisational design coordinates the efforts of the people, work groups and departments

The members of the organisation interact to achieve the objective of the organisation as a whole. An organisation therefore exists for a purpose and it has specific objectives to be attained.

The structure and design of an organisation will no doubt determine if the goals of the organisation and that of the work force would be achieved. The organisational design provides a framework with which the individual and group can work effectively in order to meet collective goals.

The various types of organisational structure includes flat, hierarchical, functional, divisional, matrix among others.

Most organisations use either one of them or combine two different structures to run the organisation effectively.

In our research we discovered that Tesco combines two structures, which are flat and hierarchical to effectively run their organisation. The hierarchical is used for the company as a whole, which includes the Board of Director (BOD) while the flat decentralised structure is used within each of their stores. The store structure that TESCO uses is simple as it allows employees to see easily who is in charge of each department or who their department Manager is.


 Whatever form of structure is adopted, whether flat, hierarchy or matrix, it has impact on the organizational effectiveness. No structure is good or bad but it depends on the organization and the structure that meets the need of the organization in order to achieve its goal.

A clear organizational design and the establishment of a strong organizational structure can increase or maximize a company's effectiveness.

Because Tesco combines two structures they enjoy the benefits of the combination in that one's loopholes can be filled by the other.

Impacts of decentralized structure of TESCO;

In Tesco due to decentralized flat organizational structure a manager feels comfortable and is at ease to make decisions. Staffs of the TECSO organization have more responsibilities so it empowers them in decision making this motivates staff and increases productivity.

 It creates improved communication between staff and management. It also enables the staff to judge the situation within their working environment thereby expanding their knowledge and experience.

    There are less management levels so there are less costs as managers are usually paid more than normal workers. Top bottom chain of command is short but on the other hand Span of control is much wider than others which will improve the efficiency of organization.

On the other hand the flat decentralized structure can limit growth of business.

With this structure when changes occur or are effected it takes a long time for the whole organization to fully embrace it and adopt and this in effect limits the growth.

    Some times workers & staff have more than one manager this often obstruct the performance of an organization because managers want to apply different methods according to their own finding or ideas, so it becomes a barrier in the way of proper communication among the staff

Flat organization structure is usually common with small kind of business who have no effects on the performance of business. If the managers want to change the nature of business it would be easier for smaller business because smaller business can survive this situation but for the large organizations  like TESCO   they will have problems to face

Impacts of the hierarchical structure on Tesco

The hierarchical structure easily implements common policy for the organization as a whole and provides a consistent strategy across the organization. It prevents sub-units becoming too independent thereby making co-ordination and management control much easier.

This structure helps to improve economies of scale and reduce overhead cost. It encourages greater use of specialization and improves decision making because people normally compromise due to authority

This structure also assumes that the average person is lazy and has an inherent dislike for work. Therefore, most people must be coerced, controlled, directed and threatened with punishment, so that the organization can achieve its objective. It also assumes that an average person avoids responsibility, prefers to be directed, lack of ambition and value security. Taylor, (1947).

On the other hand, the hierarchical organizational structure can have adverse effect on the organization's effectiveness. 

The hierarchical structure restricts individual growth and self-fulfilment and this causes a feeling of failure, frustration and conflicts. That is why Argyris argued that organization should provide a more authentic relationship for its members.

Individuals may develop a dependence upon bureaucratic status, symbols and rules due to over-emphasis on rules and procedures. This stifles initiative and when a situation is not covered by a complete set of rules or procedures, there may be a lack of flexibility adaptation to  changing circumstances.

The hierarchical structure also leads to low motivation and morale. This is because there is insufficient delegation, lack of clarity in job definition and assessment of performance. Lack of relevant, timely information to the right people and inadequate procedures for revaluation of past decision can lead to late and inappropriate decision.


The relationship between an organization and its members is influenced by what motivates them to work and the rewards and fulfillment they derive from it. With the best strategy in place and an appropriate organizational architecture, an organization will be effective only if its members are motivated to perform at a high level.

The manager must understand the nature of human behavior, know how best to elicit the co-operation of staff, motivate staff so that they work willingly and effectively and direct their performance to achieving the goals and objectives of the organization (Mullins, L. 2005).

Mitchell, (1982) states that motivation is "the degree to which an individual wants and chooses to engage in certain specified behaviours". The underlying concept of motivation is some driving force within individuals by which they attempt to achieve some goal in order to fulfil some need or expectation.

Motivation can come from extrinsic or intrinsic source.

Extrinsic motivation is related to tangible rewards and is related to job context, job environment and job itself.

Tangible or physical reward is a hygiene factor as proposed by Herzberg's two-factor theory because it meets employee's needs for physiological and safety proposed by Maslow and Alderfer's ERG theory of Existence need. Extrinsic motivation rewards in compensation and benefits, material or social rewards.

TESCO Employees are extrinsically motivated through:

Economic rewards such as pay, fringe benefits, pension rights, material goods, cafeteria to provide food and water to satisfy hunger and thirst, sleep, maternal behaviour, opportunity for promotion and pleasant working environment conditions.

Earlier writers such as Taylor, (1947) believed in economic needs motivation and drawn attention to the influence of money as a motivator. For Taylor, what the workers wanted from their employers more than anything else was high wages. Tesco salespersons are motivated by receiving commission on all items sold..

Tescos have a great staff share schemes free to reward hard work and committed employees who have at least a year's continuous service as at the end of the financial year and receive dividends on their shares. These are important source of motivation to employees as it enables them to become shareholders of the company. They no longer come to work to be 'told what to do', but are aspiring to be part of the whole, with a real role as stakeholders in the success of 'their' organization. Tesco offers a valued discount card 'Priviledgecard' so they can save 10% on most of their purchases, (


Tesco offers a top pension scheme, affordable healthcare benefits, Life Assurance on death in service, personal accident protection insurance policy, discount on travel insurance with Tesco Personal Finance to every worker. (

Social and leisure facilities

These are relational orientation to work and concerned with 'other people', such as friendships, status and dependency, group working and the desire for affiliation. According to Kets de Vries, (2001) there is the need for sensual and enjoyment needs, that is, exploration/assertion, which concerns the ability to play and work, a sense of fun and enjoyment.

These interact with economic incentives because people do not necessarily satisfy their needs just through the work situation. They satisfy them through other areas of their life as well. Therefore the manager would need to have a complete understanding of people's private and social life, not just their behaviour at work. Human beings are not only economic being but also a social being.

once work begins to take over one's life to the exclusion of all other interest, we run the very real risk of not only becoming a workaholic, but also of endangering personal relationships and friendships and/or suffering long term effects of ill health. In Tesco, employees are motivated when there is flexible working arrangement such as flexi-time, shift swapping, time off, and break from work. Work/life harmony is the drive to achieve a sense of fulfilment in balancing work and life responsibilities, i.e. have a life and keep your job, Stum, (2001). Tesco employees enjoy all the above benefit and have an exclusive staff benefit called National Gym Deal which gives special rates of membership for all Tesco staff including their family at hundreds of gyms and leisure centres across the country. Employees of Tesco have Leisure discount on UK attraction, such as Alton Towers and Warwick Castle, (

Training and development

According to Drucker, (1977) the one contribution a manager is uniquely expected to make is to give others vision and ability to perform. Training leads to self-improvement, improves knowledge and skill, change attitude, increase confidence, provide recognition, enhance responsibility, career advancement which will help employees to enjoy their work, feel they have all the skill they need to do their job to the best of their ability and perform well in the right area.

There is an increased need to place higher value on employees, and get the best performance from the employees. Tesco takes this responsibility seriously; this is demonstrated through their training and development policy. This has exceeded the government's recommendations for training of the individual and the move towards a learning society (

Tesco uses the process of delegation and empowerment, that is, entrusting authority and responsibilities to others and allowing employees greater freedom, autonomy and self-control over their work. This leads to improvement in the strength of workforce, give workers greater scope for action and opportunities to develop their aptitudes and abilities and this increase their commitment to the goals of the organization.

This results in Division of labor which will lead to specialization, hence, Job design, which can be done through job rotation, job enlargement, and job enrichment.

Intrinsic motivation is related to psychological rewards. Motivation is not just about money, it is about creating an environment in which people will enjoy working.

Psychological reward is a motivator as proposed by Herzberg's two-factor theory because it meets employee's needs for love, esteem, self- actualization proposed by Maslow and Alderfer's ERG theory of Relatedness and Growth need. Restriction the Psychological growth of the individual can cause feeling of failure, frustration and conflict.

Giving praise/ receiving appreciation

Managers in Tesco believe that Giving praise develops a positive self-concept in employees and leads to better performance. Praise is a motivator because it meets employee's needs for esteem, self- actualization. Praise is most powerful, less expensive, and simplest, yet most underused motivational technique.

Employees should be given positive recognition and credit when it is due and let them know you appreciate them.

Tesco workers have performance review to recognize the difference an employee make and give them praise for a job well done,

A sense of challenge

Employees at Tesco are giving responsibilities that are challenging, and it leads to intrinsic motivation than jobs that do not make use of a person's own skill and ability. Motivation includes opportunity to use one's ability. There are not many motivating forces more potent than giving your staff an opportunity to exercise and express their idealism. This leads to growth, creativity and advancement.

Kreitner et al (1999) suggest that although motivation is a necessary contributor for job performance it is not the only one. Along with ability, motivation is also a combination of level of skill; knowledge about how to complete the task; feelings and emotions; and facilitating and inhibiting conditions not under the individual's control. Ability and motivation are driving force, so the manager must encourage staff to direct their effort towards the successful attainment of the goals and objectives of the organization.

Factors affecting employee productivity

Employee productivity can be affected positively and negatively .there is a considerable policy or interest in the productivity of the UK economy, both the overall level and the level of individual sectors including both public and private. Analysis of labour in Tesco has been taken part of this more general interest. Typically productivity is measures in terms of labour productivity, that is to say the output generated for every unit of labour input.

Tesco believes that happy employees are productive employees. An employee with a positive attitude usually enjoys the work they do and feel empowered and recognised to their contribution. An employee that does not really enjoy their work but is simply there for pay check usually does not produce at a higher level, develops a bad attitude and generally drags their team down. Tesco strongly believes that an employee productivity is determined by good environmental harmonious climate by their relationship with their immediate supervisor or line manager. When supervisor or line manager fails to keep promises or never gives credit when due, makes negative comments or blames others for their mistakes the productivity level of their employees are significantly impacted.


"A poor supervisor is the no1 factor that causes low productivity"

Says Barry.L.Brown (president of the consulting group)

He further states a good supervisor will motivate, inspire, encourage, reward good performance and retain their employees.

This retailer also states that health concerns naturally are a big drain on an employee's ability to be productive and companies do know it. They went in depth that at a strategic HRM conference and exposition last June., survey showed that 85% of their employees said they were interested in services to increase employee productivity, minimise absence and enhance the health of their employees. Our research states that 30%aged 19-64 are not working due to a disability or chronic disease or are not working for other health reasons. This result in loss of productivity, low absenteeism but also the employee is at work but performing a less than full capacity because of health reasons. They say further all the feel good psychological methods of improving employee productivity are great but they are useless without the right tools. And the right tools mean the right technique. For an employee to be efficient and productive in today's job environment means equipping them with the right gear. We would say companies that do not upgrade/ignore the necessity for technical tools run the risk of diminished employee productivity

INTEL-the world's largest semi-conductor maker found that wireless notebook; pc users increased their productivity 100 hours per year.

Tesco does agree that downsizing expensive labour while outsourcing a cheaper version. But for their employees remaining in Tesco, their moral and motivation can take a big hit. Tesco's also raised a question that will the downsizing save their cost or be contradicted by a loss in productivity from demotivated employees? The psychological impact on employees can directly impact productivity. In addition forcing many to focus on their second career other than the one in hand. So Tesco as a global chain always believe in retention and sustainability of their employees. (

One crucial point to note is that salary itself is NOT a motivator but a hygiene factor. Also, people are often more concerned with equity of salary than the amount itself.

To return to this year's National Business Awards, the company just chosen as Employer of the Year was Tesco. In their citation the judges said that "Tesco was voted Employer of the Year because its solutions were seen to be more holistic." These "solutions" involved recognising the importance to company performance of a committed and motivated staff. To ensure that they have this and also retain it, Tesco have invested £12m this year alone in training schemes all of which are pure Herzberg motivators. For example:

new and more open lines of communication between managers and staff;

a scheme whereby directors and senior managers spend a week on the shop floor listening to ideas and suggestions from customers and staff;

a "talent spotting" scheme to fast-track shop-floor workers up the promotional ladder; and

A better understanding of individual employee circumstances.

The result of all these initiatives is that Tesco is continuing to show record sales growth and profits - proof if it were needed that keeping staff motivated is good for business.

Proof that Herzberg's motivation theory is still valid came in a survey published in The Times earlier this year. 1000 staff from companies employing more than 500 workers were interviewed. Many were found to be bored, lacking commitment and looking for a new job.

Why? Because of level of salary? No - in fact pay came 5th in the list of reasons people gave for leaving their job.

The main reasons were classic Herzberg motivators - people left for better promotion chances, more challenging work, a more exciting place to work and more varied work. (Serving the business community by Fiona Hutchison's talk-motivation at work)



The role of the internal factors affecting an organisation such as TESCO cannot be over emphasised. The organisational structure of TESCO reflects the image being portrayed in their mission statement. This is characterised by the flat structure eliminating bureaucracy in communication within the organisation, thus giving employee more responsibility in decision-making.

The recruitment process is such that it reflects the local environment of their stores, by employing locals; it also has a highly diversified background of employees based on ethnicity, sex, age and race.

Tesco Gender Objective scheme is aimed at increasing the number of female staffs progressing to management levels, since 60% of its customers are females, the female staffs would be able to understand their customer needs better.

According to CEO of TESCO, Sir Terry Leahy, he said that "TESCO doesn't want one leader; we want thousands of leaders who take initiative to execute the strategy".( al,2008) .Over the years employee empowerment has been the mantra of TESCO, as a result staffs are more involved in decision making.

Staff training and development is of high importance. In 2007, TESCO filled 3,500 management positions, 27 directors, 200 store managers and 800 departmental heads by promoting within the organisation.

The working conditions and environment within TESCO is geared towards strict adherence to health and safety rules and regulations. The well being of staff and relationship with management is one with 'human face' where the concept of treat others as you would like to be treated is put to practise. By looking after their own people, their people would look after customers. This system has been a way of boosting morale throughout the employee population.

TESCO introduced a 'steering wheel 'system to communicate its new strategy to its employees; it's aim is to drive performance and help employee navigates into the future. It focuses on financial, customer, operations, and employee performance. This steering wheel is to give a feed back on performance to employees. It has helped the company stay focused on strategy and improved employee productivity and efficiency thereby contributing to the rapid growth experienced by the company over the past two decades.(Kaplan .R.S et al 2009).

However, it has not been smooth sailing all the way; there have been cases of poor employee treatment in some TESCO stores. Also another issue is the proportion of immigrant minority workers who have risen through the ranks within the company. According to an Independent report [TESCOPOLY], TESCO has fared badly in its treatment of immigrant workers.

The Pension scheme of its workers has been faulted as not being a true reflection of an organisation which professed having interest of its workers in mind. This was highlighted by the Transport and General Workers Union, national secretary for transport, Ron Webb, he said 'Unbelievable though it may be TESCO is actually looking to make job cuts on the day it claims to be customers friend. We do not accept this cuts are either necessary or ethical….."(www.tescopoly).

Also over the last couple of years there has been incessant reports of TESCO forcing farmers to push down their prices almost below production cost and they have been made to bear the brunt of massive price cut which TESCO has embarked upon in order to have lower prices than their major competitors.

For years running TESCO has been able to consistently post impressive profits and also experienced immense growth, further giving shareholders returns on their investments.



In the UK, the current financial meltdown has led to a high level of unemployment. TESCO with its large physical presence and continuously expanding stores has been able to provide thousands of employment through the Local Employment Partnership program {LEP} and Jobcentre plus.

As TESCO continues to grow and making further inroads into different countries within the EU and Asia, it's performance would be affected by the political and legislative conditions in these countries.


TESCO has been able to weather the storm of the current global economic meltdown by posting a sales growth of 2.7% to £20billion whiles overall profit before tax moved up 1.5% to £1.42billion in the first half of 2009. (TimesOnline 2009)

TESCO has taken advantage of the situation in the financial sector to further push into the banking and insurance sector. They have recorded tremendous growth in its customer based from 300,000 in the past 12 months to more than 6,000,000 across all product lines. Also TESCO is now the seventh largest credit card issuer in the UK. (Capell. K. 2009).

However, on the international market TESCO has experienced losses in some of its European stores, trading profit in Europe fell 5% to £191million, worst hit by economic problems in Hungary and Ireland. (Lindsay.R, 2009).With bulk of the company's market in the UK, TESCO would be badly affected if there is a slowdown in the UK retail market.


Changes in demography such as increase in female workers, aging population and a decline in home meal preparation suggest that UK retailers are also focusing on added-value products and services.

As the awareness of organic product grows customers are now buying more organic foods, TESCO has the largest share of organic product sales, selling over 1200 organic product lines.


TESCO has to a large extent benefited from its investment in I.T systems. The I.T systems have played a vital role in strong profits delivered by TESCO. The TESCO website, is the largest online supermarket in the world.

As a result of the advanced-in-store queuing system, it has improved shopping for 26million of its customers by reducing check out times. According to TESCO, its ongoing efficiency program known as Step Change and involving I.T improvements as well as general process efficiency was expected to deliver £450 million savings in 2008. (King.L, 2008)

The ability of TESCO to manage large realms of information in its operation through use of hi-tech software has given it considerable advantage over its competitors.

TESCO's use of technology in its stores:

Using weather to predict sales to reduce food wastage and be more environmentally friendly.

Through the Electronic Data Interchange (EDI) system, TESCO has improved the management of information about its grocery and non food suppliers.

Radio Frequency Identification(RFID)


The current expansion plan of TESCO could suffer a major setback if the proposal of the Competition Commission is ratified by the Department for Communities and Local government. The proposed 'competition test' would ban supermarkets with a strong local presence from adding more floor space in an area, which it says would improve choice for shoppers by making it easier for rival grocers to open.(Leroux.M,2009)


In 2008, Compassion in World Farming (CIWF) awarded TESCO, the Rotten Egg Award for failing to make any commitment to end sale of eggs from caged hens.

As it continues its expansion program, TESCO claims its structures are now more environmentally friendly and greener. Also it has stepped up the reduction of carbon emission of its refrigeration plants.

TESCO is also working on using alternate bio fuels for its delivery trucks making its fleet greener. As a mark of environmental responsibility, TESCO introduced its own unique farm management scheme called Nature's Choice Scheme introduced in 1992. It sets environmental standards and specifies shape, size, taste, variety and shelf life requirements.

The sponsorship and involvement by TESCO in events like Race for Life, in 2008, raised £60million for cancer research, is part of corporate social responsibility effort.


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( 30th Oct 2009).

(www.tescoplc/ourvalues ).

(,Sept.2009. July 2009 Oct 09


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