Tesco: Management in Malaysia

Tesco is the third largest grocery retailer in the world after Wal-Mart and Carrefour. It is headquartered in Cheshunt, United Kingdom. Tesco was founded by Jack Cohen from a market stall in London’s East End in 1919. (Tesco PLC – About us – Our history) The name of Tesco came from the initials of T.E Stockwell, who as a partner in the firm of tea suppliers, and CO from Jack’s surname in the year 1924. Under the leading of Jack, its business has grown over the years and now operates in 14 countries around the world, employ over 500,000 people and serve tens of millions of customers every week.

Tesco operate in Malaysia by having alliance with local enterprise group, Sime Darby, who hold a 30% shares in the business. Since Tesco opened its first store in Malaysia in May 2002, Tesco has opened 46 stores across Peninsular Malaysia. Tesco has a strong track record of supporting local small and medium-sized enterprise (SMEs) and small traders. In 2007, Tesco Malaysia offers a special ClubCard which is the Green ClubCard Points for business customers to specially meet the needs of local operators. To help small retailers develop and compete, Tesco also support them by offering technical advice, training and support, as well as preferential access to the Tesco supply chain and reduced rates to Tesco malls. (Tesco PLC – About us – Our businesses)

Planning is the function of management that involves setting objectives and determining a course of action for achieving those objectives. It is also often called the primary management function because it establishes the basis for all the other things managers do. Managers should be able to plan and be aware of the environmental conditions that the organization facing and forecast future conditions.

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Strategic planning – This is the highest position in the company example board of directors. It involves SWOT analyses in determining how to position the organization to compete effectively in their environment. Tesco’s strategic planning is based on the organization’s mission, which is its fundamental reason for existence. Managers of Tesco require information from both internal and external sources. Survey and interview carried out by the managers are crucial in order to understand well about the company’s direction. Tesco’s strategy is to make their shopping trip as easy as possible for their customers. Besides that, the management of Tesco is constantly seeking for ways to reduce the price in attention to attract more customers. They utilize shopper insight to deliver ease of shop at anywhere around the world.

Tactical planning – It is the planning that is designed to develop relatively concrete and specific mean to implement the strategic plan. It is the middle level of managements. Tesco’s tactical planning includes qualitative and internal sources of information. Besides, routine information is also needed in the tactical planning. Managers in Tesco should have the ability to develop contingency plans to make sure category growth is within the expected parameters. Creation and execution of annual category plan to identify gaps and opportunities for retailer to exploit is also fundamental for Tesco’s management.

Operational planning – It support the operational managers by keeping track of elementary organization activities and transactions. Systems answer routine questions and track the flow of transactions through the organization such as: systems to record bank deposits or track the number of hours worked each day. Operational planning is the lowest level of management in an organization. Daily, frequent and regular information are needed in order to perform any task. Tesco’s operational managers usually use internal sources of information to carry out tasks. Besides, qualitative information is also essential in the operational planning. By going through the quantified analysis, managers in Tesco are able to create retailer specific promotional programs.

Workforce planning – It is the process of analyzing an organization’s future needs for people in terms of numbers, skills and locations. Workforce planning in Tesco allows the organization to plan how those needs can be met through recruitment and training. As a Workforce Planning Manager, he or she should be able to provide accurate call forecasts, shrinkage patterns and productivity reports to maximize Contact Centre activity. Monitor ongoing service level performance, escalating quickly to identify and manage emerging service issues are part of the managers’ responsibilities. Tesco is growing, therefore it needs to recruit on regular basis for both the food and non-food based of the business. Hence, workforce planning is vital for the company in order to expand its business.

Customer planning – Customer planning manager in Tesco will have to drive category growth make use of this household brand and retailer brand portfolios through a combination of research, merchandising, planning and working with category development and buying contacts within accounts. Creation of branded and own brand solutions is needed to support the category growth within the retailer. Besides, Tesco’s manager is playing an important role in manage and support retailer category reviews. They have to drive category benefit in order to achieve the objectives of the company.

Leading

Leading in an organization is directing the work activities of others. Leadership in Tesco is about influencing, motivating and inspiring people. People at each levels in Tesco organization, from administrators and customer assistants to directors have their own responsibilities and timescales. Each people will face different types of decisions.This influences the most appropriate leadership styles for a specific work and for a given project. Tesco managers have responsibilities for ‘front of house’ (customer-facing) staff as well as ‘behind the scenes’ employees, such as office staff. Before making a decision, the manager will consider the task in hand, the people involved and those who will be affected (such as customers). Various internal and external factors may also affect the choice of leadership style used. Internal factors include the levels of skill that employees have. Large teams may have members with varying levels of skill. This may require the manager to adopt a more directive style, providing clear communication so that everyone knows what to do to achieve goals and tasks. On the other hand, team leaders may take a more consultative approach with other managers of equal standing in order to get their co-operation for a project. External factors may arise when dealing with customers.

Qualities of leaders in Tesco

According to Tesco Management a leader needs to exhibit certain qualities in order to effectively exercise their leadership functions. These are:

• Group Influence – a leader must generate willingness to achieve desired goal or objective.
• Command – a leader must decide upon a course of action as quickly as the situation demands and to carry through with a firmness and strength of purpose.
• Coolness – a leader must remain composed under testing or trying conditions.
• Judgment – to produce effective results, a leader must possess the ability to arrange available resources and information in a systematic and commonsense way.
• Responsibility – a leader must demonstrate sustained effort combined with a degree of dependability in order to complete a task or achieve an objective (Kermally 2005).

Management styles and leadership used in Tesco

Tesco’s tend to use autocratic leadership style. Autocratic leadership style is characterized by decision making fully by the manager. This is because the company needs to and the tasks need to be done quickly or else they would not be done. For example, a task that is set for a shelf filter to put the milk out but has not been told to put the milk out because the management is still deciding who is going to put what out, so the milk still will be in the storage and the customers cannot buy it. To run the Tesco sufficiently, the management uses autocratic leadership style.

Besides that, Tesco also uses management by objective. They use this because the management states to each employee in their decision analysis what their objectives are for a certain period. Also each manager is set objectives by their line manager for their team. For example, the sales team objective that has been set is to increase the amount of customers rising Tesco by 25%. This is how Tesco is structured and managed.

Organization

Organizational is a deliberate arrangement of people brought together to accomplish some specific purpose. Management is the process of getting things done, effectively and efficiently, with and through other people (Stephen P.R,DavidA. DeCenzo, Mary. C, p. 26 -27). Managers are responsible for arranging and structuring work to accomplish the organization’s goals.

Tesco divides its employees into departments in order to achieve a better performance, effective and efficiency. The functional departments inside the Tesco are as below.

Administration: It is to create an ordered way of working which enables the business to function smoothly. It provides the proper controls and methods of supporting the people within the organization. The admin managers would make an ideal administration system to have proper procedures for controlling and monitoring work. Hence, there would have to be a high level of supervision and well-motivated staff. Administration system is a very important department as well as they are the backbone of the organization, and without them the business would not be organized enough to reach their objectives.

Distribution: It helps Tesco to maintain the most competitive prices and improve customer service and always striving to make life better for customers, simpler for staff and cheaper for Tesco. The distribution managers are responsible to develop, promote and sell central distribution services to Tesco suppliers. They also work closely with Tesco Distribution Centers and suppliers in ensuring agreeable distribution service level and cost. This program offers a wealth of opportunity and provides customers with a chance to make big changes in how they operate.

Finance: The management is responsible for the transactions of Tesco. This team provides management information to measure and monitor the business, either in the form of corporate steering wheel, five-year plans, operating budgets, forecasts or weekly/monthly financial results. The finance managers should be able to set budgets and forecasting resources needed and drive action plan to achieve the budget. They have to ensure financial reports are created, updated and distributed to the management team on timely basis.

Human Resource: Nowadays, human resource developing is a key activity in today organization. (Beardwell, I., Holden, L. & Clayton, T 2004:266) The organization is 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). The Human Resource Managers are responsible to make a complete and feasible human resource management plan by using different strategies to manage those employees. They also ensure to across the business have world-class skills and tools to meet the needs of people and ultimately Tesco’s customers.

ICT: ICT works to improve communications between business areas to improve stock availability and streamline processes. Every aspect of their operation such as stock, distribution, payroll, communication methods are controlled by ICT. ICT managers have to ensure that customers experiences the checkout process which mean the system and processes at the tills need to be simple and smart. They also have to get new ideas like ‘Self Scanning Checkout’ which the customers’ love. Therefore, ICT is truly a business partner which integral to all business operations.

Marketing: It consists of a number of areas including local and stores marketing, price and promotions and brand marketing. It works closely with the Customer Research and Analysis team to understand the customers and their trends. The marketing managers are responsible for seeing that basket size regularly increased, that the journey for customers is simple and effective, as well as planning for the future. All in all, marketing acts as the voice of customers which means they not only communicate with customers through eye-catching advertising campaigns, but influence the rest of Tesco to meet customer needs.

Customer Service: The aim is to try harder for Tesco customers than anyone else and to treat them as they would like to be treated. Thus, Tesco Customer Service Centres is set up as a place that serves up excellent customer service. Customer Service managers would be responsible to ensure the customer service options are managed effectively. They also manage a competent after sales service, extended warranty and credit service for customers. Now, they are making customers experience with them which is where ‘Every little Helps’ comes from, as it’s something they strive to every day.

Research and Development: It is focus on delivering major improvements to Tesco’s Store Ordering and Supply Chain systems to deliver better product availability, reduce stock holding and lower waste. This department covers four major areas of the business such as Sales Forecasting and Ordering, Depot Ordering, Optimization and Simplification and Business Insight. The project managers are able to lead multiple high-profile projects and deliver major improvements across the supply chain through redesigning systems and processes. In a nutshell, much of work relies on their ability to combine in depth analysis with practical recommendations and the perseverance to get ideas implemented.

Controlling

Control is the management function that involves monitoring activities to be secured that being accomplished as planned and correcting any significant deviation. Control is important in any management this is the only way that managers know whether organizational goals are being met. If managers did not control, they have no way of knowing whether their goals and plans were being achieved and what future actions to take.

Control is sales department – Tesco management experiences the improvement of sales over sometimes. Tesco management make sure their employees understand all the sales products, this is to take advantage of the opportunities presented by the organization and the management increasing sales can be trough special offers to customers, in addition to make customers to buy more and increase their products.

Control of quality of products – Tesco management make sure all the products are very good quality and the management make sure all the products are used from their community trade. In addition the management provided a good quality of products and met the needs of customers.

Control and monitor resources – Taking appropriate care from variation resources are very vital for Tesco management, it will help to save them in financial issues. Tesco management make sure all the equipment regular check and replace them as soon they are damaged and update latest software this to make sure their employees feel happy and make ease in their job. There is critical need to service the customers around clock. Tesco as a global retail business that span many time zones, the management gave flexible working option to some employees this can improve morale and help retain people within business and promote diversity as a key improving performance. Tesco management provided professional and skills training through programs technical skills development. Tesco has long-term established policy on promoting an equal opportunities and diversity across the global business.

The most important things leading to the success of Tesco

There are four most important things that leading to the success of Tesco. Firstly, Tesco is giving great value for their customers. They never ever compromise on their customer services. They are having a motive that customers are always first and right. Tesco train their employees in such a way that they give the best services to the customers. They also have good behavior with their customers. This is one of the important things that are leading to the success.

Secondly, Tesco’s giving importance to their employees. They are giving good facilities and best services to their employees. The management make the strategies in such a way that employee feel like their job is secure and enjoy their work. The employees also have given the discount cards. Tesco gives friendly environment in the working place to their staff. They give good rate and respect compare to the other big organizations.

Thirdly, the Tesco give main focus to control the cost and price of the products. To attract the customers and to be successful organization, they give the customers low prices of products and offer them high quality products. Although Tesco always negotiate their prices as compared to the general market, the main products of the Tesco are their own. So there are different cost centers in Tesco like labor cost, product cost, direct cost, indirect cost, maintenance cost and delivery cost.

Lastly, Tesco have new technologies to manage their business. Every year they are changing the strategies and operations. The whole business is computerized with new and advanced technologies. They handle their stock, cash, inventory and staff wages and account of the company. They also introduced their CCTV cam recording for the customers and staff safety, this is to prevent stealing.

Major challenges facing by Tesco over the next five years

Tesco’s major challenge is to overturn failure to become a player in the US market. Tesco’s target is to break record in the US market by 2013. To achieve the goal, Tesco have to look for developing markets such as Asian country where there is a large proportion of the population is underserved by quality supermarkets.

Apart from that, lack of consumers’ confidence towards the products is also one of the major challenges. To survive the plunge, Tesco should start diversifying operations and to invest more on Tesco bank, insurance and mobile communication portfolio.

Moreover, Tesco is also facing another challenge in technological advancement. Software have to be kept updated all the time in order to make ease to their employees. Tesco should design an application or website to create convenience for the customers to look for sales and to check for points accumulate.

In order to make their brand product as a strong brand is also part of the major challenges. The product made by Tesco must be in good quality and innovative. However, to maintain and improve the freshness of the product is also accounted in the challenges.

Critical review

Tesco sells daily necessary things such as food, nonfood, electronic, house equipment and others items. Tesco sells more than 23,000 items. Tesco have been critiqued good and bad review from customers, employees and managers. The practices that Tesco using for maintain their sells are PESTLE analysis.

Political Factors

Tesco operates around the globe. Tesco performance is highly influenced by political and conditions of these countries (ivory research ltd, 2005). Tesco provided mix of job opportunities from flexible, such as lower-paid and locally based jobs and highly-skilled, higher-paid (Balchin, 1994). For example, without the flexible system, their financial will be affected due to the difficulties in finding employees with highly-skilled but lower-paid. The flexible system can insure people factors work with them without compromised with their objectives. This will make the employees can improve their skilled and loyalty with their companies.

Recommendations: provide more motivation and training

Economic factors

Economic is one of the concern to Tesco, they are likely influence demand, costs, prices, and profits (Ivory research ltd, 2005). With highly unemployment, which the decreases the effective demand required to produce such a good products. For example, if someone is to demand with his work this will affected his job performance. Due to working in large scale and few employees. This mean the management need to hire a unemployment, this can make the jobs more easy and the demand can be negotiate.

Recommendation: offering a jobs and benefits to the employees, find a good suppliers with good production and loyalty, give opportunities to their employees to improve their performance.

Social factors

This has a significant influence in business managed the organization is made up of people. The fact that it determines the people environment of business. For example; without social with people Tesco will not know what the customers needed and wanted. Social communication need to build up among them and customers.

Recommendation; need to change the communication skills to all employees, make them be professional in their tasks.

Technology factors

Nowadays, technology is helping us with everything. Tesco make sure all the electronics and software are up to date with technology update. This will provide good environment for both customers and Tesco employees. This will give better benefits service, and more personalized and shop with more convenient. For example; nowadays smartphone have taken our lifestyle, so everyone needs to be in hurry and fast. Now various type of application has been invented and software also has been updated. With the smartphone we can easily access to buy our items or groceries at the tip of fingers. Tesco has made application for that ‘Clicks & Bricks’

Recommendation; always make sure the equipment is on the maintained, always update the software, update with the customers.

Conclusion

It is not a coincidence for Tesco to last and even become one of the top grocery retailer until today, but it is needed to thank to the management system in Tesco. Although there is a geographically diversify due to decentralized basis, the management systems in different countries are still more or less the same. Tesco has a pretty complete organization by having different department to smoothen operation of daily routine, every single employee knows about their specific duty and could perform it well. While a comprehensive planning by the manager is essential to acquire the maximum output from the employees, manager also playing a vital role in leading the employees to approach the objective in a more effective and efficient way. The controlling of employee by managers also make sure that thing won’t go wrong and even it does, rectify can be done spontaneously to prevent unwanted loss.

Upon doing this assignment, we learned that management principle is not only related to business and commercial activities only, but, it’s also applicable in our daily life. For example, the autocratic leadership style that is being practicing by Tesco, although it seem that that is a lot of restriction under the autocratic system, yet, the applying of this system can ease us in doing our task that is being assigned. We can reduce the time on figuring new way and method to solve it but just simply follow the conventional procedure. This can help us to save time and at the same time ensure the quality of our work.