Importance of Business Information System for Tesco PLC

This report discusses the importance of business information system for Tesco PLC in achieving competitive advantage and growth in the market. It also explores the advantages of the new information system using the 6C framework analysis.

BUSINESS INFORMATION
SYSTEM
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TABLE OF CONTENTS
BUSINESS INFORMATION SYSTEM .............................................................................................1
INTRODUCTION ...............................................................................................................................3
1.......................................................................................................................................................3
2.......................................................................................................................................................4
3.......................................................................................................................................................5
4.......................................................................................................................................................6
CONCLUSION ...................................................................................................................................8
REFERENCES.....................................................................................................................................9
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INTRODUCTION
Business information system is defined as a grouping of information technology, people and
resources of a corporation in a systematic mode. It contributes in improving the productivity and
efficiency of business by establishing effective communication channels. Present report is based on
Tesco PLC which is a leading retail chain of UK and provides general merchandising and grocery
items to its consumers. The report describes about importance of business information system for
the cited firm for achieving competitive advantage and growth in market. In addition to this, 6C
framework analysis is going to be studied for identifying the advantages of new information system.
1.
Competitive strategies were given by Porter that assist a corporation for achieving the
competitive advantage in a productive manner (Ibrahim, 2015). These strategies include cost
leadership, innovation and product differentiation strategy. Tesco's business information system aid
in achieving these competitive strategies in the following ways-
Cost leadership strategy: - This technique has assisted Tesco to enhance its capabilities for
achieving economies of scale. In this method, large volume of goods is produced that is sold at
relatively lower cost to the consumers. Company uses ICT in an innovative way that aids in
operational and strategic control by single and double loop feedback channel. Navigation system
has been implanted in supply chain and logistic activity of corporation. It helps the enterprise for
achieving superior profit by selling goods at a low price. Automation in stores and manufacturing
plant has rendered an efficient method for reducing operational cost and due to this, per unit cost of
the product is also reduced (Moon and et.al., 2014). Tesco has implanted barcode scanners and
automated self-service checkouts that helped in reducing the requirement of personnel and
operational cost of the firm. Overall investment expenditure has been reduced and the enterprise
became capable for providing superior quality goods to consumers at lower price as compared to its
competitors. Tesco has captured large market share in retail industry by charging lower price for its
various products.
Product differentiation strategy: - Use of ICT in corporation has helped in achieving new
and innovative methods for manufacturing goods. Company has diversified in the areas of
consumer electronics and financial services. It also provides internet, telecom services and budget
software and all this became possible due to advanced technology adopted by the enterprise (Imrie
and Dolton, 2014). ICT has assisted Tesco in developing products in an attractive and innovative
way by improving features, durability and functionality of goods produced by the same. E-selling
option of enterprise has rendered a productive medium for marketing and selling commodities in a
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unique and effective manner. Product development team of firm works continuously for enhancing
quality of manufactured items and for inventing new products.
Innovation strategy: - Tesco has been able to move ahead with its competitors by the use of
ICT in its business. It has innovated new products at a fast speed as compared to its competitors.
Quality of products is continuously improved by research and development department of
corporation and thus, new range of products in merchandising and food category has been made
possible by the corporation (Cushman and Burke, 2014). Business operations of Tesco are
supported by wireless devices, self-checkout devices, bar code scanners and electronic self-
labelling. These techniques provide an effective methodology to find out innovative techniques for
manufacturing a product. Company uses thermal imaging technology for predicting and inspecting
customer’s arrival at checkouts in its retail stores. Separate voice and data networks of organization
has been combined into a single communication network that helped in saving investment cost of
operations (Weske, 2012). Apart from that, ICT system helped in improving the overall functional
and distribution system in organization.
2.
Information system is a useful tool that assists Tesco in processing the data of its inputs to
generate meaningful information that is required in executing company’s operations. An
information system is described as a software that renders a functional method for organizing and
analysing data of any firm (Rainer and et.al., 2013). Use of information system aids in developing
an effective communication channel in organization by providing new and advanced techniques.
Overall operations of enterprise including manufacturing, distribution and value chain management
are performed in a better way by adoption of innovative technologies. Necessary information
required by company's management for decision making process is delivered by the business
information system. Tesco can acquire software for a new business information system by using
following methods-
Purchasing the software: - Tesco can buy the software from a commercial vendor to
develop an efficient business information system in the firm. For installing software in organization,
a storage network and web application programme will be required and IT department should be
directed for making necessary arrangement for the same (Österle, 2013). The required program can
be purchased from an IT specialist corporation or from online and hardware suppliers. Before
taking purchasing decision, a proper and detailed analysis is required and IT department can support
the management for taking final decision. Company should investigate with trader about the details
of services that a software can provide. Data backup, total cost, tech support and services provided
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by the software should be inspected before final purchasing.
Building software in organization itself: - Business information software can be developed
by IT department employees through using a system development life cycle. This software is
required in Tesco for increasing efficiency of business by doing automation of its operational
process. Decision making process of firm can be improved by the use of data and information
supplied by the program (Davenport, 2013). Developing software requires step by step preparation
including planning, analysing, designing, implementation and maintenance. People working on
designing the application should follow this system for developing a proficient information system
in the corporation.
Using open source software: - Tesco can use this method for sharing information systems of
other firms in a legal manner. Open source software is a computer application whose source code is
given to the user with a license and copyright. Sharing the program with other people and
organizations will save the cost of Tesco for installing a new information system. It is an affordable,
flexible and transparent method for installing information system software in the corporation.
Outsourcing: - In this method, Tesco can give work for acquiring information system
software on contract to the outside firm. It will provide a cost effective medium for developing an
effective information system (Gobble, 2013). Outside contractors should be given with proper
details about requirement of services in a software. The cited firm can focus on its core business
activities in a productive mode by outsourcing this activity.
3.
New information system adopted by Tesco has proved to be beneficial for improving the
overall organizational system. It assists in enhancing the productivity and revenue of organization
and gaining superior long term strategic positioning. 6C framework can be used for finding out the
efficiency of E-commerce in corporation (Christopher, 2016). Six elements of 6C framework have
been taken into consideration and ranked on the basis of their importance to Tesco. These elements
are as follows-
Customer services-1:- This element has been given with top priority as E-commerce
platform has provided an effective medium for the organization to serve its customers. Online
grocery retail has expanded the business of Tesco and a large market share has been captured by the
enterprise. Consumers can purchase the commodities of firm through various options available on
its online website. In 'pick from store' model that is adopted by company, goods for each buyer who
gives order online are hand-picked from the retail store (Fernie and Sparks, 2014). Wide range of
products are available at company's website and buyers are provided with superior quality services
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under that the same. A healthy and positive relationship has been developed with the purchasers of
firm.
Control-2:- Corporation uses information system that assists it in controlling the operational
activities in a productive mode. This element is given with second rank as effective control and
monitoring has been adopted and implemented by the firm. RFID technology is used that helps in
controlling distribution system under which proper control is made on receiving goods by suppliers
(Baghalian, Rezapour and Farahani, 2013). ERP system aids in getting front-line support from
informatics professionals situated in various countries. Supply chain and logistics activities are
controlled in an effective manner in enterprise by the use of advanced information system. CCTV
and digital cameras have developed a tough security system that assists in proper monitoring and
controlling.
Competitive advantage-3:- The objective of Tesco is to achieve competitive advantage by
using effective strategies and techniques. Company is performing better than its competitors as it
has emerged as a largest online grocery retailer of the world with 45.1% of online sales in the retail
market (Tesco, 2016). This element has been given with third rank as company was successful in
achieving its desired objective in a proficient manner.
Capability-4:- This element has been given with fourth rank as E-commerce system adopted
in the firm has rendered a productive medium for enhancing the capability of organization.
Percentage of online grocery sales of firm has increased in British grocery market. Goods of Tesco
are sold at its online website in a productive manner as a web management system has been adopted
to develop the content of its website (Imrie and Dolton, 2014). Tesco has developed a successful E-
commerce business through its website that has assisted in changing its business model of
supermarket chain.
Cost reduction-5:- Adoption of E-commerce system has aided in delivering and receiving
goods at lower prices. All manufactured items and raw materials are stored in low-cost warehouses
that provide an efficient method for reducing transporting, packing and picking cost. Overall
operational cost has been reduced due to adoption of this method (Wood, Wrigley and Coe, 2016).
Use of RFID system and barcode scanners has reduced the need for human resource and thus staff
expenditure has been reduced.
Communication-6:- This element has been given with sixth rank as communication of the
corporation has also improved. Separate voice and data networks have been replaced by a single
network that has been outsourced to cable and wireless networks. Overall working system of all the
departments including human resource, payroll, finance and logistics have improved and this has
lead towards achieving objectives of the enterprise (Cushman and Burke, 2014). Use of RFID
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technology is helping in developing a standard distribution system with the support of suppliers and
retailers.
4.
Tesco uses Information and Communication technology for operating its business operations
in a productive mode. It has achieved a leading market position by capturing 45% market shares in
the retail industry.
(A) Supply chain management of the cited firm consists of its employees, activities,
suppliers and different components under operational processes. All activities that are involved in
managing logistics operations come under the supply chain network (Mollah, 2014). Coordination
and collaboration with business partners including suppliers, retailers, intermediaries and service
providers develop supply chain network of Tesco. It has adopted RFID system for receiving,
counting and transporting the products in distribution network (Hearnshaw and Wilson, 2013).
Supply chain system of the cited firm is as follows-
All parties involved in supply chain management system are interconnected with each other
and work in a cooperative manner for accomplishing the objectives of organization. Tesco offers
variety of products in the range of food items, merchandising goods, electronics products and
services including telecom, internet and financial services (Stank and et.al., 2015). For maintaining
an effective supply chain management system in the organization, it is essential that all parties
should be connected for effective communication. Major parties involved in the supply chain
management of Tesco are suppliers, consumers, retailers and employees at distribution centre as
well as in assembly plant. Flow of information and products takes place by the efforts of members
in supply chain of organization (Beynon-Davies, 2013). New information and communication
technology developed by the firm has assisted in developing an effective link between all suppliers.
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The upstream supply chain of company consists of Tier2 and Tier suppliers and downstream
supply chain consists of distribution centres, retailers and customers. Various ICT tools are used in
company for point of scale scanning, automated warehouse control, electronic data interchange,
centralized ordering and distribution. All techniques aid in developing links between all elements
involved in the supply chain structure (Yeh, Lee and Pai, 2012). Thermal imaging technology has
been used in stores for identifying consumer arrivals at checkout points. RFID technology has been
used in the distribution process that helps in drawing goods from suppliers at distribution centre. A
single communication network has been developed by replacing separate voice and data network.
Internal and external communication channel has been improved and it enabled the corporation to
execute its operational activities in an efficient manner (Li, Hsieh and Rai, 2013). Company has
introduced loyalty card for consumers for doing interaction with company and it has also helped in
collecting useful data that guides the firm to identify purchasing patterns and managing store
operations.
(b) ICT has assisted in maintaining physical, financial and information flow in Tesco in a
productive manner. It has developed a single data and voice network throughout the organization by
replacing separate data channels. Also, it has provided an effective medium for improving
information flow by encouraging co-operation and mutual collaboration among people linked in
supply chain activities of the firm. Information transparency can be achieved by disclosing required
information to business partners and it assists in reducing information distortion, problem
identification and increasing mutual understanding between all supply chain partners (Davenport,
2013). Information resources can be shared among all business partners in a productive mode.
Proper information flow has improved the decision making process of corporation by providing
necessary data and details needed for determining future processes.
Tesco has developed an effective ERP system in the firm which serves in executing multiple
business functions by the use of integrated data system. Product flow of material including
management of procurement, manufacturing and inventory has been successfully completed by the
use of effective information flow (Zikmund and et.al., 2013). RFID technology used in Tesco
helped in reading product tags of the items within short span of time. Unique identification and
traceability of the product became easier by the adoption of this tool and it also assisted in
improving inventory flow by tracking, checking and shipping the products in an appropriate mode.
Financial flow of the firm can be managed in a better way by keeping record of budget, purchases,
cash inflow and outflow as well as financial transaction and record of audits (Rolstadas and
Andersen, 2012). Use of E- accounting helped in keeping records of the financial information
through a simplified and time saving method. Less staff is required for doing financial management
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in the organization and keeping transparency in the overall processes. Use of business information
system helped in doing proper financial planning and facilitated in the allotment of resources.
Product flow in corporation has been enhanced by the use of Barcode scanners and ERP system as
management of these resources has become efficient through using these tools. Barcode scanners
identify accurate details about a product with very less errors. It facilitates in faster information
transfer and providing valuable services to the consumers. ICT tools have provided a proficient
method to Tesco for staying ahead with its competitors by making effectual use of advanced
technology.
CONCLUSION
From the above report, it can be articulated that business information system has proved to
be efficient for improving information, material and financial flow of Tesco. Various tools of ICT
like ERP, Bar code scanners and RFID are beneficial for improving supply chain and logistics
activities of company. Apart from that, report also shows that firm can acquire information software
through various resources to enhance its productivity and improving the overall operational process
in a systematic mode.
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REFERENCES
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Gobble, M. M., 2013. Outsourcing Innovation. Research-Technology Management. 56(4). pp.64-67.
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Stank, T. and et.al., 2015. Reimagining the 10 megatrends that will revolutionize supply chain
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Springer Berlin Heidelberg.
Wood, S., Wrigley, N. and Coe, N. M., 2016. Capital discipline and financial market relations in
retail globalization: insights from the case of Tesco plc. Journal of Economic Geography,
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Online
Tesco. 2016. [Online]. Available through: <http://www.tesco.com/groceries/>. [Accessed on 5st
September 2016].
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