The History Of Tesco Business Essay
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Published: Mon, 5 Dec 2016
TESCO is one of the biggest supermarket having lots of food line, it provides fresh local food with expediency and value in town and city centres. It having a wide range of food and non-food lines, such as stationary electronics, including seasonal items such as garden furniture. The major private sector employer in the UK is TESCO. It has 360,000 employees worldwide. Around 86% of all sales be from the UK. Containing Tesco stores variety from small local Tesco express sites to large Tesco extra’s and superstores the company also operates in 12 countries outside the UK. It is counting china, Japan and turkey. The company has of late open stores in the United States. This international expansion is a part of Tesco’s strategy to diversify and grow the business. In Thailand customers are used to shopping in ‘wet markets’ where the produce is not package which caters for local needs.
Tesco needs to ensure it has the right number of people in the right jobs at the right time. To do this, it has a structured process for recruitment and selection to attract applicants for both managerial and operational roles.Tesco aims to ensure all roles work together to drive its business objectives.
HRM Human Resource Management in TESCO Organization
Tesco’s well established and consistent business strategy has enabled it to strengthen the core UK business and expand into new markets successfully. Tesco’s business strategies are mainly focusing on huge domestic market of financial services, telecoms and non-food. One of the main objectives of Tesco’s business strategy is to create sustainable long term growth and according to the company this could be achieved by expanding into global market. The company initially focused on Asia and central Europe. Most recently it has made its entry into the US market. In 1997 Tesco first decided to diversify and according to the company itself this was the basis of its recent success. As a result of this strategy several new businesses have been created by Tesco for the last 12 years and most of these businesses are profitable and competitive (Tesco plc, n.d.).
Tesco has developed its strategies which are primarily focusing on five important factors, 1) its core UK business, 2) community, 3) non-food, 4) retailing services and 5) international market. The company has separate strategies on each of these aspects. Major objectives of Tesco’s business strategy include being a successful retailer internationally, growth of the core UK business, being strong in non-food market, development of various retailing services like telecoms, Tesco personal finance and Tesco.com and finally giving enough importance to community.
Tesco’s core UK business is a major part of its entire business as 70% of the group sales and profits of the company are coming from its core UK business. There are almost 2,200 Tesco stores employing around 285,000 people in UK only. There are four different types of Tesco stores in the country. These are 1) express, 2) metro, 3) superstore and 4) extra. In UK there are almost 960 express stores, 170 metro stores, 450 superstores and over 175 extra stores. Apart from these four there are ‘Homeplus’ where non food products, including clothing, are available. Tesco has learned an important lesson from current global recession as it has found out that although in tough time people want more value for their money but they do not want to make any compromise with product quality. Based on its past experiences Tesco has designed its future strategies. Tesco has a world leading customer loyalty program called ‘Clubcard’ which actually has helped the company to understand its customer in a better way (Tesco plc, n.d.).
According to Tesco, fulfilling corporate responsibility and creating values for community are crucial for achieving growth. Tesco believes that each and every strategy that they design has impact on the community. Tesco’s strategies regarding corporate responsibility or community include providing active support to local community, providing good jobs to the locals, taking care of the environment etc (Tesco plc, n.d.). Tesco take special care for environment and as a part of this they have launched an environmental store in Manchester on January 12, 2009. The company is aiming to create zero carbon stores in future (Tesco, 2009)
Main objective of Tesco’s non food strategy is to become as strong as it is in the food category. Tesco’s ‘Homeplus’ and ‘extra stores’ are the two stores where non food products are available. In 2006 ‘Tesco direct’, an online program where 125,000 products are available, was launched. The company has 25 distribution centres out of which 6 deal with clothing and non-food products (Tesco plc, n.d.).
Tesco’s various retailing services include Tesco personal finance (TPF), Tesco.com and Tesco telecoms. In UK, TPF is the most successful supermarket bank. Initially TPF was a joint venture between Tesco and RBS, but in 2008 Tesco decided to buy the fifty percent share of RBS in TPF. All the financial products of TPF are available online. Developing Tesco.com was a strategy of keeping pace with the modern trend. Almost one million people are today using Tesco.com for online shopping. Tesco mobile is a joint venture between Tesco and O2. Currently it is country’s one of the leading telecom service providers (Tesco plc, n.d.).
Tesco’s success in international market is based on six major strategies. These are 1) being flexible, 2) acting as local, 3) maintaining focus, 4) using multi formats, 5) developing capabilities and 6) building brands (Tesco plc, n.d.).
According to Tesco itself its mission is creating value for the customers for earning their lifetime loyalty. Tesco believe that people who are shopping with the company and who are working with the company are the key for its success. If customers like Tesco’s offerings they will come back to it as a reward.
Tesco’s goal is to earn customer loyalty by providing best possible services to them. But apart from this Tesco has several business goals. Major goals of Tesco include being successful retailer in the global market, being a strong brand in the non-food market, strengthening its retailing services, growing its core UK business, giving proper importance to community and fulfil community responsibilities.
2- Identifying the organization’s overall HR strategy and goals:
This section will discuss overall Human Resource strategy and goals of Tesco. Tesco is the world’s third largest grocery retailer. It own approximately 470,000 employees around world. (Neville-Rolfe, Babbs and North, et al, 2009) Therefore, managers would make a complete and feasible HRM plan and use different strategies to manage these employees. The Human Resource strategy at Tesco’s revolves around training and development of employees, communication and consultation, and rewards and benefits linked to achieving steering-wheel targets. This way is used to measure the performance management (Anonymous 2003). Following, this paper will mention these main parts of strategies of Tesco.
The biggest part of HR strategy of Tesco is training and development. Every year, Tesco will employ a large number of staff. Some of them just graduated from universities or colleges. They have no idea how they will work and the culture of the company. Thus, they will accept a period of training. Tesco promise their employee ‘an opportunity to get on’. (Neville-Rolfe, Babbs and North, et al, 2009) It means each employee has same opportunity to acquire essential skill about their work; they also have opportunity to develop themselves to learn new knowledge. In the UK, skilled specialist employees such as fishmongers and bakers can get recognized qualifications during their careers at Tesco. In 2008, 97.4% of shop-floor and 99.9% of DC employees in the UK were trained to bronze level (competent), which should take four weeks to complete, and 94.2% of shop-floor employees to silver level (expert or experienced), which should take 12 weeks to complete. Tesco exceeded their plan to train 97% of retail and DC staff to bronze level, and 85% of their retail staff to silver level. If the employees know they can grow with the company, it will help Tesco to keep a large number of skilled workers. When Tesco spends money in training, the firm will own enough number of labour forces.
In addition, Tesco has an Options development program. In this program, staff could select and learn some skills that they need to grasp for the next work level. One in 30 of all employees at Tesco in the UK participate this program. (Neville-Rolfe, Babbs and North, et al, 2009) Through this program, employees could choice some suitable skills which they like to learn. It has more autonomy to maximize their staff’s enthusiasm. Therefore, Tesco plans to popularize this program in Central Europe and Asia in 2009.
Tesco also have a program which focus on employees who just graduate. This program tries to employ the high-potential graduate and to train them for into leadership positions in fast-tracks. Through this program, these high-potential graduates will be fully used as soon as possible. It will reduce the probability of these graduates leaving.
Second part is communication and consultation. Tesco want to know the views of employees on problems which affect or maybe affect them or company. Managers will use different types to communicate with them, such as staff question times, face-to-face interview, and Tesco’s internet. In addition, Tesco has annual staff survey and Viewpoint, which are anonymous and confidential. (Neville-Rolfe, Babbs and North, et al, 2009) Tesco uses these approaches to find the problems in working process as soon as possible. And check the plan whether results accord it. If not, the managers could change the plan to amend it.
All Employees of Tesco are free to join unions. The unions could represent workers to discuss with company to protect the rights of employees. Moreover, Tesco has a helpline called ‘Protector Line’. It is a 24-hour confidential telephone line and email address for employees to report grievances and ethical concerns. (Neville-Rolfe, Babbs and North, et al, 2009) All reports will be logged and investigated by a special deportment. This is a channel for employees to report grievances.
The third part is rewards and benefits. Tesco offers basic wage as high as possible. However, it will base on the work which employees do. In addition, Tesco has a long-term reward plans across its markets. Its management terms could share bonus from the market growing. However, it also will link with their steering-wheel targets. The staff would gain some discounts in the stores.
In the future, Tesco will keep extend its strategies to increase its market share. The company’s goal will make HR strategy into a real complete part of its culture, and keep a long time.
The Human Resource role at any given organization with a well defined framework is very important. It is a very important requirement as a prerequisite of goal achievement in an organization. It has a vital role in decision making since it deals with the most important sector of an organization (Human Resource Management). Tesco’s success is highly attributed to the role of HR department and its components. This has assisted the organization to be in its effective position in the market.
Task 2: Management of Physical Resources
Task 3: Marketing
This study is conducted to obtain understanding about the global retailer of the grocery and general merchandise, Tesco Private Limited Company. This task consists of marketing analysis of the company. In order to obtain the specific information about the company different marketing frameworks were analyzed. The chief ones among them are SWOT analysis, PESTEL analysis, and Porter’s Five Forces Analysis. The market position of the company will be analyzed with the help of a number of strategic frameworks including analysis of Porter’s Generic Strategies, Bowman’s Clock and Ansoff Matrix. On the basis of the marketing and strategic framework analysis, conclusions will be made.
Background of Tesco PLC
Tesco Private Limited Company (PLC) is a retail company that specializes in the grocery and general items retailer-ship. Among the top retailers in the world, the company, as per its revenues, holds third position as a retailer in the world (Potter, 2011). According to Deloitte (2010) it is also among the largest companies by profit in the world and it currently holds second position in the list of companies that generates highest profits. The company has a wide network of operations in large numbers of countries across the world including Asia, North America and Europe. In UK which is the centre of its origin, it has over 25 % market share and is a market leader in the UK as well as in other markets like Malaysia, Thailand etc. (Tesco, 2011; Tesco Facts Sheet, 2011; Finch, 2010).
Jack Cohen laid the foundation of the company in early nineteen century and first store was established in 1929. The company stocks are traded in the London Stock Exchange under the symbol TSCO. It operates in the diverse business segments in retail industry including grocery, apparel, books etc., as well as services related to financing, DVD rentals and internet services (Tesco Entertainment, 2011). According to Fortune (2010), among the world’s largest companies list, Tesco is currently listed at #85 in the list of Global 500 companies.
Tesco is an international retailer operating in diverse markets. The main activities of the company are in retail markets of UK, USA, Poland, China etc. It also provides financial services like insurance and retail banking services which are provided to its valued customers through its subsidiaries. Its ecommerce business offers grocery and direct sales of related items by online services.
Market Objectives and Strategies
There are various strategic frameworks and market structuring tools which help to obtain information regarding the risks involved in doing business and the value trade-off. This analysis provides the basis on which strategic planning is developed. In case of Tesco it is employing two strategic plans as its primary market objectives. The first one is to focus on the development of market through effective partnerships with the other suppliers, companies and customers while the second one is related to the diversification of products and services by offering new and innovative products to the customers (Tesco PLC, 2011).
The market development strategy involves joint ventures and strategic alliances with the other companies operating in the similar industry to excel in the markets (Hitt et al, 2009).Tesco’s entry in the Chinese and Japanese markets has served as a key growth driver to the company’s revenues and its expansion strategies. The company’s interest in the Asian market is increasing due to growth in these markets and increasing trend of consumer shopping.
Micro Environment analysis and Marketing Strategy:
Position of offering the best value for the most competitive prices contributed to be Tesco number one retail in the UK. Smart Supply Chain Management and Development strategy, constantly research, seeking in order to meet customers’ needs, introducing new innovation, product quality and price, offering huge product range, store facilities and services, working closely with suppliers, developing and motivating its staff, participating in the formulation of national food industry and environment protection – makes possible to keep strong competitive position within market even through time. Terry Leahy, CEO of Tesco plc states “there are many opportunities for business like Tesco as long as you stay close to customer and adapt to the changing circumstance” (ICSC Research Review, 2008).
The group provides online services through its subsidiary Tesco.com, broadband internet connection (Tesco Broadband) and telecommunications services (Tesco Mobile and Home Phone). “Tesco.com is the largest online grocery shopping service in the world; it is the fourth biggest online retailer in the UK, behind Amazon, Dell and Argos. Tesco.com serves 850,000 regular customers in the UK and gets more than 250,000 orders every week” (Datamonitor, 2010). Significant advantages of buying online, such as comparatively low price, large product range and the ability to shop around the clock – enable retailers to draw shoppers’ interest (Gladding, 2005). “Tesco, the United Kingdom’s biggest grocer, has attracted considerable attention because of its ambitious overseas strategy and its successful on-line home delivery service” (Child, 2002). “Since establishing an MVNO with 02 in 2003, Tesco has built up 1.5m mobile subscribers and 250,000 of these visits the mobile portal every month” (New Media Age, 2008). Hence, Tesco makes possible to carry into effect purchasing by using mobile phones and brings new life in m-commerce shopping (New Media Age, 2008).
According to company’s recent press release information Tesco.com sales up 20.5%, profit up 21.4%, including Tesco Direct (Tesco, 2010). Datamonitor (2010) in its “Tesco, PLC SWOT Analysis” states that “With a strong foothold in online services, Tesco is well placed to benefit from growing online spending. A strong online presence enables the group to serve new customer segments, avoid investments in physical infrastructure and earn better margins”.
The company has an impressive brand image, which is associated with high quality goods and services, huge range of assortments and at the time the best prices. Credible brand name enables the company to launch more new products and new market lines; to go through new markets much easier and quickly, and become successful in this field as well, as it was its entry into the Personal Finance market (Datamonitor, 2010). Through the diversification process, Tesco has increased the range of its operation by entering to new markets of distribution and service supply, such as petrol distribution, banking and insurance, real estate and communications. Such changes and strategy improvements have further reinforced company’s market power above its main competitors.
Since the mid-90s, Tesco has been investing in overseas markets, by looking for new opportunities to expand and opening new ways of generating long term growth of shareholders value. Today the Group operates in 12 markets outside the UK, in Europe, Asia and North America. The half of the retail shops are represented beyond the UK (Tesco.com). As a part of international expansion, now Tesco is planning to open wholesale grocery store in India by investing up to $114 million over two years. “It complements our entries into China and the United States, giving us access to another important economy in the world” commented this decision the company’s chief executed (World Trade, 2008). At the same time, Tesco announced that it has set up a South China headquarters office in Guangzhou in order to maintain its’ presence in this country, where the company already has 47 stores and has been running the business over three years long (World Trade, 2008).
As a part of supporting its global expansion programme, the company plans to centralise all its overseas business after signing a 100million pounds network and voice contract. Through this network upgrade, Nick Folkes, Tesco’s IT director, commented, that the company will be able to standardise key finance, human resources, data warehouse and sales applications across the whole worldwide operations. The Cable & Wireless network will connect 1,800 Tesco sites in the UK, stores in more than 14 countries and 440,000 employees worldwide, hence, significantly contribute expenditure reduction from reducing call costs to savings on staff travel expenses. He remarked “Our aim is to have a common technology platform in tandem with common business processes so that we remain competitive as we continue our expansion abroad” (Kamath, J. 2008).
Smart human resource management is also important key of Tesco’s business performance. The company has selected Red Prairie’s workforce management solution to manage its global store staff, which will enable Tesco to improve customer service by aligning customer traffic with employee schedule. “Ultimately, it will improve our business by increasing store productivity, and supporting revenue growth” said Dave Briggs, programme manager for Tesco (Apparel Magazine, 2008).
Tesco has been proved a very good innovator as bachelor’s placement’s in Tesco yet further proved its innovation temperament which has seen in Tesco as they have the ability to mold according to the trend whatever are the market need as it become the first who protect the convenience outlets in UK, it’s one of the biggest innovation of all is the Clubcard Loyalty Program, Another great innovation done by Tesco was in supply chain management in which it partitioned the loaders according to the delivery like 1 chamber of frozen foods, another ambient products in only one truck, another innovation is the collection of data from customers on every purchase to use this information to offer the draw on product range, Voucher mailing to the customers according to the purchasing behavior of the consumer so that it can return to Tesco. Continuous analysis on the data gathered from the market it innovates its products like once Tesco got to know that nappies does not have market share so they researched on it and introduced the club offering baby advice on pregnancy and motherhood. With this around one fourth mother and baby market was captured by the company (Strategic Direction, 2008).
Company has that much strength that it wanted to collaborate with the US grocery market where other European companies fear to stand. US market is known as typical market as it produces very luxury products at one end and cheaper products on the other end, but Tesco is the only one who can stand with this giant market as it is UK’s biggest market which ability to attract customers of all social groups. Normally, people in US live near a big supermarket but Tesco bet that it will provide small stores with all needful products which are preferred by the people of US. Tesco look forward to launch Tesco Fresh and Easy Stores in US. These stores will be much spacious to provide all the necessary products under one roof, not like US outlets which does not provide alcohol, pizza’s, snacks etc. Healthy eating is also one of the major fields where Tesco thought to capitalize its money. One of the biggest hurdles is to persuade the US people to behave likewise of the Tesco trend in UK where transportation facility and easy convenience helps people to buy more products especially in the case of perishable goods. Tesco has one more worry in front of it as its credit rating in respect of measuring quality of goods and services has been slumped where rivals were resurgent in this process (Strategic Direction, 2008). So Tesco is proved to be a good innovator which makes it in building strong reputation and brand name in the UK market providing all the necessary products under one roof. Tesco strategies makes it possible to compete it in the market like its brand strategy, price strategy and its thorough analysis of the market like Product life cycle analysis etc. making Tesco a competitive brand. According to the Product Life Cycle when a new product is launched or old product is launched in new market generally there is no competition expected at this stage and a high expenditure is needed in market research, launch cost and market test so the product may incur financial losses in early stage. The same situation was there when Fresh & Easy chain of Tesco incur a loss of $106.8 million. It is clear that there were very low sales of these products so the weakness of the sales raises questions about the expandability of this format, what Tesco is into these days. So Tesco should limit the expandability at such a large scale in new market.
Task 4: Information Systems
This report analyses the information systems of TESCO
The report includes an analysis of the company major types of information systems, including a more detailed assessment of its Transaction Processing system, Decision Support System Enterprise system a and supply chain management. The company Decision Support System (DSS) is based on the effective collection of information through its Transaction Processing Systems.
Management Information System (MIS)
We are living in a time of great change and working in an information age. Managers in the big company now have to deal with masses of data, convert that data into information, analysis the information and making decisions leading to the achievement of business objectives. For an organization, information is as important resource as money, machinery and manpower. It is essential for the survival of the enterprise.
Before computers are widespread used in the world, many organizations found difficulties in gathering, storing, organizing and distributing large amount of data and information. Development in Management Information System made possible for managers to select the information they required, in the form best suited for their needs and in time they want. This information must be current and in many cases is needed by many people at the same time. So it has to be accurate, concise, timely, complete, well presented and storable. Most companies in nowadays depend on IT. But personal computers (PCs) themselves will not improve organisational productivity: this only comes out about if they are used efficiently and effectively.
This information system is the mechanism to ensure that information is available to the managers in the form they want it and when they need it. It is designed to support their work through providing relevant information for their decision-making. Computer system can clearly help organization in the processing of data into accurate, well-presented, up-to-date, and cost-effective information. However, weather that information is also concise, relevant, timely, and complete will largely depends on the capabilities of the people involved in its processing and selection.
TESCO is a British based company working in general merchandising and retail business. Its profit exceeds three billion pound a year and it is the third largest retailer in the world.
TESCO is working in more than 12 countries of the world. TESCO is the leading Superstore Company in UK with more than 2000 stores in the UK. It specializes in many items including food, drinks, clothing, electronics, financial services, home appliances, health care, insurance, dental care, music and telecommunication services etc.
Nature of Information system:
Largest global grocery retailers TESCO, has successfully put into use Oracle and SAP Business Objects Polestar applications, because it is the retailer preferred enterprise system. For implementations of these enterprise system TESCO work out on feasibility, how they can make out best of these applications.
TESCO, Oracle Retail Warehouse Management System, Oracle Marketing platform, Oracle accounting Hub, Oracle HR, Oracle BI, and SAP Business Objects Polestar has provided TESCO with a solution that is now a basis for common processes and operations locally and internationally.
Functional uses of MIS
Sales and marketing:
Company previously were using Linux system for digital marketing purpose, since switching to Oracle Marketing platform TESCO business is closer to their customer than ever because of the digital marketing services which is in its providing supports intelligently targeting about the consumer buying habits.
Oracle generates personalized incentive and discount scheme to encourage customer loyalty. For these customers all they need to do is, register to receive Oracle promotion with the swipe of a credit or debit card which is located nation wide. Every time the customer of an Oracle subscriber makes a purchase the transaction data electronically transmitted to oracle’s database. This is how company are identifying and learning about their shopping patter and with the help of these discount and incentive scheme they can understand their customer future purchases.
Oracle accounting Hub helping TESCO to do day to day firm activates such as;
All sales and purchases Ledgers
Oracle financial Accounting Hub provides an internal control structure to ensure successful audit and compliance reviews.
TESCO accounting structure is not also bound of Oracle accounting Hub, company can quickly accommodated with effective changing according to the organisation requirement which mean Oracle providing flexible accounting and finance system to the organisation.
Human resources Management (HCM) and finance:
TESCO encourages and provides opportunities to its employees to participate in higher educational programmes to get professional skills.
TESCO has introduced two courses for its employees, these are training programmes and the once the workers complete these trainings they qualify for higher posts.
These two programmes are
These training programmes enhance the retail and customer service skills of the workers. In order to achieve that Oracle HR software are providing workforce information to the Managers. Through the software a manager can know starting and finishing time of a particular job. Human resources system (HRM) also helping in TESCO to manager regarding recruitment and retention objectives.
Manufacturing and Production:
Business circumstances demand immediate attention. Oracle BI Applications provide TESCO proactive, event-based, and scheduled alerts that are delivered directly to users via email, handheld,
and other portable devices or to a personalized dashboard. Powerful, timely, and actionable information help prevent issues from becoming problems.
When overtime levels at a production facility are in danger of exceeding budgeted levels, Oracle BI Analytics sends an alert to the plant manager and company controller. Armed with this information, they can quickly correct the deviation, preserve profit margins and examine alternatives to paying overtime such as hiring contractors or more full-time workers.
System from a constituency perspective:
Transactional processing system:
A Transaction Processing System also referred to as TPS is an information system used to collect, retrieve, store, and modify transactions within an organization. For a computer to be considered a transaction processing system it must pass the ACID test
Each transaction process is standardized to increase competence, TESCO require a custom made TPS which works with TESCO business strategy and processes. This is why there are 2 types of transactions.
Batch processing stores data for processing at pre-defined times. Batch processing is useful to an organization because it needs to process large amounts of data using limited resources.
Real Time Processing
Real time processing systems are in place to react to an event within a prearranged time. These types of operating systems are found within organization i.e. banks.
TESCO rely on their TPS bec
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