Tesco Assessing The Impacts Of Ebusiness Information Technology Essay

This paper presents research findings expounding on the relative impacts of e-business technologies when integrated into an organization. The key objective of the study is to determine that how the adoption of innovative technological applications serves to be beneficial or detrimental to the business world and more specifically to the business sector. The recent trade practices require embracing newer technologies as they offer instant access and exposure to consumers and keep 24/7 connectivity to management resources. The positive aspect of e-commerce technology and social networking tools, is to provide users with the ability to communicate both synchronously and asynchronously i.e. via emails, video conferencing, chat and blog forum services. There has been a considerable amount of research conducted on several organizations for the adoption of innovative technologies and the general findings reveal that entrepreneurs often lack the skill, time or money to implement technology upgrades. Followed by these key study points highlighted in this paper, assessments are done to gain the insights on the impacts of deploying new web based technologies and social networking techniques. The research has been conducted in 3 phases to determine the consequences of e-business practice of Tesco, a leading supermarket of UK.

TABLE OF CONTENTS

CHAPTER I

INTRODUCTION………………………………………………………………………………… 4

TESCO: COMPANY PROFILE……………………………………………………….. 4

ONLINE MARKET SHARE………………………………………………… 5

PRODUCT RANGE …………………………………………………………….. 5

COMPETITORS…………………………………………………………………. 5

TESCO: AN OVERVIEW OF E-BUSINESS PRACTICE……………….. 5

RESEARCH OBJECTIVES…………………………………………………………… 6

RATIONALE OF INVESTIGATION……………………………………………… 7

LITERATURE REVIEW……………………………………………………………….. 8

ADOPTION OF E-BUSINESS TECHNOLOGIES………………. 8

LIMITATIONS TO ADOPTION…………………………………………. 9

CHAPTER II

METHODOLOGY……………………………………………………………………………… 10

RESEARCH QUESTIONS…………………………………………………………….. 11

SAMPLING TECHNIQUES & RESEARCH DESIGN………………….. 11

PHASE I…………………………………………………………………………….. 12

PHASE II……………………………………………………………………………. 12

PHASE III………………………………………………………………………….. 13

PROTOCOL FOR DATA COLLECTION…………………………………….. 14

ASSOCIATED RISKS TO DATA COLLECTION………………………… 14

VALIDITY AND RELIABILITY OF DATA…………………….. 14

MEASURES TO ENSURE DATA PROTECTION……………. 15

ETHICAL CONSIDERATIONS……………………………………………………. 15

DETRIMENTAL EFFECT OF STUDY…………………………….. 15

INFORMED CONSENT…………………………………………………….. 15

PRIVACY AND CONFIDENTIALITY……………………………… 16

CHAPTER III

RESEARCH FINDINGS……………………………………………………………………. 16

CRITICAL ANALYSIS OF RESULTS & FINDINGS………………….. 17

RECCOMMENDATIONS……………………………………………………………. 19

IMPROVE THE WEBSITE……………………………………………….. 19

REVIEW WEB TRAFFIC…………………………………………………. 19

EXAMINE THE COMPETITIVE STRATEGY…………………. 19

CORRECTIVE MEASURES BASED ON FEEDBACK…….. 20

CONCLUSION……………………………………………………………………………… 20

BIBLIOGRAPHY

CHAPTER I

INTRODUCTION

This paper is intended to highlight some the consequences of integrating e-business technologies within an organization and study the relative impacts with respect to the company’s growth pattern and fiscal benefits attained by the e-business practices. For the purpose of identifying the relative advantages or disadvantages associated to the utilization of e-business technologies, Tesco has been chosen as the subject which has a prominent presence as the leading supermarket across the globe and specifically in UK. The incorporation of e-business technologies are seen as a reality for many organizations and are considered as a vital element of a business plan. The immediate benefits to an organization are in terms of cost savings, efficiencies and enhanced profitability that can be clearly observed at every stage in the supply chain. Adopting e-business technology is no longer a competitive advantage, but a normal business process, without which an enterprise is unlikely to survive in the new economy (Dave, 2001). With the commencement of year 2000 a number of dot-com companies were established however, with a continuously evolving trends of the contemporary business practices a majority of companies are failing to and therefore, the investors have become extra cautious to invest money into electronic ventures. The study encompasses the relevant limitations and hurdles of adopting the e-business techniques and furthermore analyses the integral aspects and impacts of e-commerce practices within the selected organization.

TESCO: COMPANY PROFILE

With its mass penetration of approximately 90% within the UK retail market alone and having an annual turnover of more than 1 billion, Tesco is generally recognised as the world’s largest online grocer. Tesco has been launched in various other countries and with its strong international presence it is diversifying into non-food categories as well. Tesco began to offer online services in 1995 which was based on consumer’s orders generated via local Tesco store using the internet (Mohorovice, 2000). To extend its e-business operation further, Tesco also launched its own Internet Service Provider (ISP) i.e. Tesco.net, for the purpose of creating an effective link between internet access facilities and the online delivery services; providing their consumers with a greater choice of ISP. The initial investment for the commencement of online service was relatively small as a network of existing stores, warehouses and distribution centres were already in place (Griffith, 2002). In order to effectively integrate the online service throughout the UK, an estimated amount of approximately £25 million was spent by the company (Griffith, 2002).

1.1.1 ONLINE MARKET SHARE

The overall online market share of the leading supermarkets has been illustrated in Table: 01;

Tesco

27.1%

Asda

10.1%

Sainsbury

6.9%

Waitrose/Ocado

4.2%.

1.1.2 PRODUCT RANGE

Food Ranges: Milk, eggs, butter and all grocery items

Non-food Ranges: Books, DVDs and Electronic products

Others: Dieting clubs, flights and holidays, music downloads, gas, electricity etc.

1.1.3 COMPETITORS

According to the Nielsen/Netrating audience panel for September 2007 for the top UK supermarkets shows the lead of Tesco, offline market share is in brackets from TNS which monitors the household grocery purchasing habits of 25,000 demographically representative households in the U.K as illustrated in Table: 02;

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Tesco

30.9%

Asda

16.9%

Sainsbury

16.4%

Waitrose

332,000

Morrisons

225,000

1.2 AN OVERVIEW OF E-BUSINESS PRACTICE

There is an increasing demand of e-business technologies as the consumers today prefer to utilize online services for shopping due to lack of time or extremely fast paced life and the launch of Tesco.com online service has served as the most simple and convenient way of shopping for consumers who are willing to pay a little extra for their groceries to deliver at doorstep and saves time. The orders once received are further processed online and the information is instantly passed on to the nearest stores. By developing the e-commerce and e-business practices, Tesco has extended its leading position in grocery home shopping since the foundation of tesco.com and has grown registered customers up to more than 750,000 with online orders up to 60k per week giving sales of over 5 million pounds (Palmer, 2005). To maintain the accuracy of the online orders, Tesco has maintained staff to gather the items in accordance with those specified in the online order list and then the groceries assembled at a delivery point to be distributed to households within a given area. A number of timeslots have been made available for delivery of online orders and consumers are directed to ensure the availability of someone to collect the requested stuff. The payment process is also convenient and most of the payments are collected online. To keep the consumers updated with the information on prices, all items are marked with their status of availability and sell-by date. A close substitute is added in case where a product is out of stock. The online sales in just the first half of the year 2007 were 748 million, a 35% year-on-year increase, and profit increased by 62% to 54.7 million (Palmer, 2005). Further to add value to its e-business technology, sophisticated software has been formulated to manage the collection and delivery of the goods to customers. It is also important to note that a number of marketing benefits are also associated with the incorporation of e-business practice within the business. Moreover, a database is maintained to extract valuable information about the products higher in demand and those which require specific types of marketing and promotion; can be identified. Feedback on satisfaction rates and responses of consumers to new offers or products can also be pulled out through this database. In addition to this, the database helps to horn the online strategy and deliver an added-value service to customers by effectively responding to their needs. Tesco has an active customer base of 850,000 and more than 250,000 orders are completed each week (Griffith, 2002).

1.3 RESEARCH OBJECTIVES

This research aims to enhance the understanding of acquiring e-business technologies and their utilisation and thereby assess the basis for improved business competitiveness. The theme is based on one of the largest retail store in UK i.e. Tesco, illustrating the impacts of e-commerce techniques implicated in regional, historical and economic contexts of the retail businesses (Yoruk and Radosevic, 2000). With continuously evolving global trends a need has been develop for the transition of business practices in order to achieve a knowledge-based economy by stimulating innovation and improved access to advanced research and development practices and e-business technologies. The proposed paper aims to study the relative impact of innovative internet technology encompassing the business practices of Tesco within UK. The investigation is based on how the innovative use of business networking and advanced e-commerce solutions encourage and support the Tesco to play a leading role in the advancement of a cutting edge trade society (Yoruk and Radosevic, 2000). At the same time the research expounds on addressing the related competitive challenges to this largest retail store of UK, in absorbing and developing new-fangled social networking culture. The study design is fabricated to expound on the impacts pertaining to Tesco benefiting from the e-xploitation of science and technology in order to develop closer links with new markets and consumers of the region. The theme of the overall exploration is to develop an understanding of how e-business technologies enable Tesco to broaden and deepen their consumer acquaintance and leverage business culture of excellence.

1.4 RATIONALE OF INVESTIGATION

With the passage of time e-connectivity and social networking practices are becoming obligatory for the success of businesses and followed by the observations it can be suggested that the adoption and implementation of the internet connectivity, e-commerce practices and social networking technologies by retail stores offer a great potential for creating new markets, new organisational forms, and new ways of working in the knowledge-driven economy. The motors of economic growth with their loose organisational structures and often fuzzily defined organisational roles and relationships perceived as fruitful milieus for innovative activities (De, 2000). All e-commerce networks have significance for innovative activities and the extent and the nature of overlap between social networks is especially important bearing heavily on the extent to which cooperation can be produced over large sectors of the economy. Business groups are based on social linkages whether it’s cultural similarity, informal link or an everyday contact. The need for adopting e-techniques and social networking arises in situations where economic advantage can be achieved for the group members of a business. To understand the ability of firms to respond to the fast-changing environments of the business world the approach of e-business technologies within business development process is important which can provide suitable insights into the structure and dynamics of local economies(Palmer, 2005). Although the bulk of the effort in innovation is to be done by the firms themselves, the difference between national and regional patterns of technological development highlights the importance of external economic and non-economic factors that encourage creative interactions between all parts of the society, leading the economy into virtuous circle of technological development (Rogers, Ghauri and George, 2005). Considering the significance of e-commerce and e-business activities within the business environment, this study has been conducted to expound on the subject matter and thereby present effective measures and recommendations to further enhance and overcome the limitations to adopt e-business practices.

1.5 LITERATURE REVIEW

A community can be more willing to adopt a certain technology when it can offer some beneficial package through which an existing human need can be fulfilled. The e-business technology is capable to offer enhancements to communication that improves networking and also sufficient enough to make needed knowledge resources more readily accessible; and this is what makes it striking for the retail sector (Goode and Stevens, 2000). It is also interesting to note that those that have been most successful in fulfilling specific market needs, or niches, also encounter competing technology vendors which can also be the case in any other situation.

1.5.1 ADOPTION OF E-BUSINESS TECHNOLOGIES

The e-business technologies offer additional benefits in the productivity of an organization and furthermore, a peripheral vision is offered to integrate within the business successful community building devices like Face book, twitter and MySpace and these possess a vital niche within the lives of their consumers and the communities that they tend to form. Astoundingly, the e-business networks which are the main selling product offered by these community building devices, is mostly formed outside of the e-environment before an electronic communication takes place (Rogers, Ghauri and George, 2005). Interestingly the e-business activities and these social networking platforms are not just for the purpose of fun instead they offer a means for advertising potential business practices. The social networking websites were formerly utilised by young however, the technologies that link individuals are no longer limited to the younger age groups and their significance has been realised hence, the models are now designed to serve as an interactive tool which can help diffusion into target markets (Fildes, 2002). In addition to these social websites an alternative niche is provided by a business focussed solution termed as Linkedin that offers the professionals and businessmen from diversified backgrounds with an ability to form business networks and maintain searchable contact information that can be further utilised for trade purposes (Goode and Stevens, 2000). These highly successful e-business technologies provide elementary communication and collaboration environments via text and sometimes via audio channels within specified limitations. Much better and enhanced communication and collaborative environments are provided by certain recent innovations as for example, Skype, which is not web based but offers a range of telecommunication devices and by utilising the IP connectivity it offers call and video conferencing options that can be very useful for swift business activities. All these e-business activities and social networking websites within their own capacities offer a platform for the organizations like Tesco to further enhance and develop their businesses with an unlimited access and exposure of consumers globally.

1.5.2 LIMITATIONS TO ADOPTION

Research from the European Commission (2002) constitutes that when it comes to introduce technological advancements especially e-business technologies to the retail industry, they face certain problems as statistics suggests that the smaller retailers are less likely to familiarise themselves with e-commerce techniques. This does not necessarily means that by the enlargement of size or by integrating specific regulations or policies will solve these problems. Reliable, stable and open business environment is what retail industry will benefit from and therefore policies encouraging this along with liberalisation of ecommerce practices and the interoperability of internet solutions, and easier access to finance through horizontal policy initiatives are likely to succeed in tandem with retail-specific initiatives (Goode and Stevens, 2000). The competitive or environmental pressure that compels a retailer to adopt e-business technologies tends to result in sustained and improved profitability of an organisation. In accordance with another study by (Robertson, Lockett, Brown & Crouchley, 2007) it can be observed that among the retailers their poor perception towards computer based technologies limits adoption as small retailers or organizations have limited finance or support to engage with state of the art web based technologies that would enhance communication. When larger companies adopt the e-business technologies it is interesting to note that positive network external effects can be achieved which can also be thought of as word of mouth effects (Frambach & Schillewaert, 2002). The significance of words spread within general public is highly recognised within the business world and organizations do realise that the adoption of techniques which can broaden the horizon of their trade can be extremely beneficial. The e-commerce technologies offer the same by providing the business owners with all ingredients to attain better chances of success. As for example the network externality effects were particularly important in the success of fixed line and mobile phone adoption as an additional subscriber leads to an increase in the utility of all existing and future subscribers thereby augmenting the eventual success of the technology (Fildes, 2002).

The existing relationships between the retailers and the consumer markets also tend to hinder in adoption of the innovative technologies. There is a specific load or pressure within everyday business practice and the knowledge that is required to carry out routine activities through technological means is absent in most of the business environment unwilling to become a part of modern trade practices. The inability to deal with the recent technological environment tends to compromise the credibility with business partners and leaves sensitivity amongst the workforce that the business environment is less dynamic. On the other hand, in some instances there are numerous of consumers without internet capabilities or those who do not feel secure to utilise advance e-business techniques; also see their credibility compromised in terms of other retailers. Furthermore, industry, market scope, competitive pressure and external technological support are considered to be factors that influence retailer’s willingness to adopt e-business technologies. The adoption of advanced technologies is greatly influenced and also dependent upon the industry in which the retailer operates (Levenburg et al. 2006, Raymond 2001). Processing of information is carried out by the service industry and therefore, much of their functions rely on the information systems. Retail industries are increasingly reliant upon the point-of-sale systems for the transfer of goods. Manufacturing industry rely more on technological systems. It has been observed by a study that the ecommerce practices vary not only across sectors i.e. across Standard Industrial Classification codes but also within constituent sub-sectors (Fallon and Moran, 2000).

CHAPTER II

METHODOLOGY

The research methodology incorporates the use of both primary and secondary data including exhaustive literature review, interviews and observations based on studying the obtainable research data. The study expounds on observing a radical intent to utilise the development of innovative networking technologies as part of retail processes however, certain limitations make it difficult for the owner managers. The contemporary business practices and market trends has established that by implicitly adopting social networking techniques wider level of transformations within an organization can be obtained (Fink, 2007). To obtain a better picture the study needs to obtain a theoretical understanding of how economic costs and lack of technical knowledge become two of the most important factors that hinder in growth of social networking technologies in small organisations. The research methodology involves observation of theoretical data, data collected through interviews and analysis of market activities, validated research procedures and investigative strategies upon the area under discussion. The method used in this research is to evaluate various technological, organisational, and environmental aspects that facilitate or inhibit adoption or diffusion of social networking technologies and thereby identifying the relative impacts on an organization.

2.1 RESEARCH QUESTIONS

The core element of this dissertation is to determine the upshots of implementing e-business technologies within Tesco and studying in detail how it affected the organization with a particular emphasis on the business practices. The objective is to assess the overall business activities and growth pattern of Tesco to find out the impact of the innovative networking technology and also elicit the views of significant participants of the organization. The five main objectives of this study are;

To establish how e-business technologies are acquired, absorbed and utilised within Tesco to gain competitive advantage;

To study the relative impacts of e-business technologies when applied to a retail organization particularly within Tesco;

To investigate enablers and constraints that influence e-business practices within a wider context embracing all the regional, social and economic factors;

To adopt a methodology, influenced by data collected from the active respondents and theoretical groundings for investigating Tesco’s e-business practices;

To utilise a research design incorporating users of e-business technology such as the owners, managers and administrators of Tesco, to gather valuable views and comments about the relevant consequences.

2.2 SAMPLING TECHNIQUES & RESEARCH DESIGN

The recruitment and designing of sample required the random selection of the study population that is acquired from the 500 employees working on various levels within Tesco, located in Central London. The additional information about the organization was supplemented by the retail store’s online website. The sample was designed to develop and benchmark the present scale of adoption of e-business technologies among the allocated sample of Tesco located in the Central region of London. The design of sample was tailored at diverse echelons. A brief semi-structured questionnaire was distributed and the interviews were tape recorded and transcribed verbatim for the assessment of relative impacts of e-business technologies. A back up staff for taking notes in writing and recording was made available to the interviewers, where applicable. The interviews were conducted on the basis of discretion; hence the sample store, market participants and the respondents are kept unidentified. Initially 500 active employees were engaged in the study functioning at various levels within the organization that include owners, managers, IT administrators, support staff and also some regular consumers. The sample is further categorised in accordance with their level of maturity i.e. depending on their status of commencement, stability and innovation. At the outset, the interviews were conducted in each firm and the respondents were selected from senior management team. The interviews were based on open-ended questions with in-depth interrogation in which the flexibility was maintained on the focus, follow-ups and probes clarifications to pursue the emerging themes (Alvesson and Sköldberg, 2000). The duration of interviews lasted between one and one-and-a-half hour’s session. The research has been conducted in three phases; each phase is discussed in detail as under:

2.2.1 PHASE I

For understanding the existing research exhaustive literature and systematic reviews were carried out. Review was based on investigating how social networking has been adopted and integrated in small firm and thereby identifying their relative impacts. The exhaustive literature study also examined the association between the use of social networking technology and small firm growth. These reviews helped to identify major themes within previous research and the details contained within the papers highlighted concerns with social issues, absorptive capacity and policy support that enable the transfer and development of social networking technologies within business practices. Gaps include sector bias, lack of research on the situated nature of technologies, factors that mediate the adoption of new systems of organising, and how relational competence and social skills influence firm growth (Alvesson and Sköldberg, 2000). An in-depth study was carried out of relevant literature present in books, newspapers, articles and renowned academic journals.

2.2.2 PHASE II

The research survey was administered during the period in between February 2010 and March 2010 and the investigation was focussed on studying the relative consequences of integrating e-business technologies within UK’s leading retail, Tesco. A smaller canvassing team of 5 interviewers were trained to administer the telephonic survey and approximately 500 employees of Tesco were contacted via telephone. The inclusion criteria as set in accordance with the research methodology allowed the survey information to be collected from the owners, managers, IT managers or from employees and people of similar stature by the canvassers. Certain regular consumers were also considered as respondents and accepted as per the inclusion criteria. A response rate of approximately 18% was received through the outbound calls that helped to achieve about 90 completed forms. It is important to note that problems of sample selection and response bias can lead to results that are difficult to extrapolate to larger populations. In this case two types of bias were encountered. Firstly, regional bias arose due to the over collection of surveys from the upper management and too few from the lower management. Secondly, the survey contained too few surveys administered to the consumer base of the organization. Both imbalances were corrected using a weighting process called rim weighting (Alvesson and Sköldberg, 2000). All results generated for this document are weighted implying that the results reflect the general picture to be found in the organization.

2.2.3 PHASE III

The third phase of the research methodology is designed to understand the need for incorporating e-business technologies within the potential retail market and assessing how entrepreneurs would utilise the technology to gain competitive advantage, and finally investigating the limits of the e-business technology when put into practice. In order to gain deeper insight into the need for e-business technology within the retail store, qualitative interviews were conducted on 500 employees of Tesco selected from different departments within the organization. The interviews were conducted on the upper management and directorship level or with IT decision makers of the companies (Fink, 2007). The research encompasses the incorporation of e-commerce and e-business techniques for selling products from a broad range of departments of Tesco including food products, healthcare products, sports, groceries, electronic products and home accessories. To acquire a rich background of company information there were about 10 stores enlisted for interview via cold calls to the database collated during the enterprise survey and further 5 stores were enlisted through general contacts. Respondents were asked to illustrate the nature of the retail business practice in order to gain insight into the role of e-business technology in the company. Details were collected regarding the trade practice of the enterprise to identify the level of operation i.e. local or international, furthermore, investigations were made about the current level of networking technologies in use and the mode of communication between employees, suppliers and customers were also studied.

2.3 PROTOCOL FOR DATA COLLECTION

The target study population is comprised of actively participating members and employees including owners, directors, managers, administrators and IT staff of Tesco. An aggregated set of data collected through authenticated annual reports of the organization to determine the growth patterns after the adoption of e-business technologies. Renowned economic journals, newspaper articles and books are used for compilation of authentic data. An open ended brief survey questionnaire was distributed to the respondents in order to collect valuable comments and meetings to discuss and accumulate annotations of relevant stakeholders.

ASSOCIATED RISKS TO DATA COLLECTION

There are certain practical difficulties that hinder in the collection of data that eventually result in delaying the research procedure. Due to the indulgence of human objects there are chances of missed appointments, absences due to illness that might account for the down gradation of the research process. Effective time management by pre-evaluated questionnaires cut short and transcribed interview sessions and appropriate theoretical observations are required to anticipate research obstacles in timely manner (ESRC, 2010).

2.4.1 VALIDITY AN

 

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