Tesco's Supply Chain Sustainability: A Strategic Analysis

This assignment focuses on analyzing the role of supplier relationship management in reducing greenhouse gas emissions within Tesco's food supply chains. It evaluates Tesco's strategies for promoting climate-smart food choices, consumer preferences for private label products, and the impact of capital discipline on retail globalization using a case study approach. The analysis includes data from various sources such as academic journals, online articles, and company reports to provide a holistic understanding of Tesco's supply chain sustainability initiatives.

CONSULTANCY
REPORT

Table of Contents
INTRODUCTION...........................................................................................................................1
ISSUES............................................................................................................................................1
ANALYSIS:.....................................................................................................................................5
RECOMMENDATION AND CONCLUSION ..............................................................................9
REFERENCES..............................................................................................................................12

Illustration Index
Illustration 1: 2017 Analysts forecasts. ...........................................................................................2
Illustration 2: Staff on strike duty at Baggot Street outside the TESCO store................................3
Illustration 3: Finance report of TESCO..........................................................................................4
Illustration 4: TESCO Shares in market..........................................................................................5
Illustration 5: Risk Management......................................................................................................7

INTRODUCTION
After the industrial revolution, there are many significant economic and social changes
impacted on the companies in UK. Tesco PLC is an international British grocery and
merchandise retailer. It is the ninth- largest retail sector globally in terms of revenue. Company is
expanded over 12 countries and have many subsidiaries. The company is having revenue more
than £55,917 million in 2016, as per Forbes report. But as the market regularly changing the firm
is facing the issues regarding the annual revenue which affects the stakeholders’ relationship
when customer not preferring their brand. It is important for stakeholder to be responsible for
getting bottom line socially and economically. There was fall in their new sales strategy by 1.5%
at the end of the previous year. Due to competition, over share price and sales in big stores. It can
also due to poor business practise which consist of low wages, services, cafe culture, morale and
trading (Ramanathan, Bentley and Pang, 2014). Further, suppliers changed the prices of the
goods and services which was provided to the stores.
For this purpose, an audit based methodology was applied, to identify the key aspects of
the firm and business environment. Data is gathered from many sources in quantitative and
qualitative ways. For the former, industrial records, reports, newspaper and documented data was
used and later one included the interviews, concentration on group decision and telephonic
interviews. All the internal data collected was utilised to be applied on TESCO standards and
practises.
Main objectives of the consultancy were to:
1. Identify the areas where the services of the company get bottom line.
2. Suggesting the new ways by which TESCO can be more effective, efficient and
economical to the customer’s and employees.
3. Applying the strategies wherever applicable to business standards for uplifting the social
and economic condition.
Following report contains the details regarding the market problems and suggested
recommendation to improve the services.
ISSUES
Past Glories: Due to the market issues, the company is facing the decline in operating profit as
per it's years (Tidy, Wang and Hall, 2016).
1

In 2012, TESCO PLC was able to gain the profit more than £ 3 billion but now there is
decline in market share and scandal in the accounting system. Large fall has been seen in the
shares which also included the Lewis's Warning.
Their competitor Sainsbury was found to have the annual sales profit growth of more
than 3.7% in the past 10 years under Justin King (O'Mahoney and Markham, 2013). The
Company is gain little growth in the year 2017 of just 1.7%. Moreover, it was found that there
was high declination in their customer rate. Further consumer was dis-satisfied about the services
provided to them. TESCO has also faced the internal problems where staff had gone for the
strikes in 8 major stores.
There were many other issues which are faced by the company which are mentioned
below: Price: As per Gornall (2015), when German companies, Aldi and Lidl entered the UK
grocery industry with bottom price, TESCO got socially neglected. Due to this the firm
had to reduce prices of its product.
 Big stores: Due to increase in the online shopping the spacing outside the retail shops
were not utilized. There was loss to the company as they were not able to utilize their
space.
2
Illustration 1: 2017 Analysts forecasts.
Sources: Páll and Hanf, 2013

 Marketing: Company's image is being affected by the poor campaign and due to the
strike rates of the staff. Such factors have affected the brand image and cultural aspects
for the customer and staff.
 Brand: In order to develop company has followed many ways for becoming the biggest
retailers which affected the brand image of the company (Sherr and Thomson, 2013).
Also, as due to current strike of TESCO loyal staff firm has to face the problems.
3
Illustration 2: Staff on strike duty at Baggot Street outside the TESCO store
Sources: Wood, Wrigley and Coe, 2016

Company has to face the problems in marketing due to due to market in China. Their
financially income has reduced by £ (51)m and their costs has increased. Moreover, brand,
reputation and trust are affected if the customers are not satisfied. Transformation of external
economic environment affects the productivity of the company and may even impact on the
business and shareholders. Along with this market competition and liquidity are also affects the
company. This are considered as the main priorities among the company. Technological
development and data security must also be taken care as they contain personal data of the firm.
There were big challenges faced by the company from the stock values. There was
downfall seen in the stock values of the company (Chen and et.al., 2015). Company has to face
the fall of more than 17% in their share price. Moreover, they are had cut down the jobs of more
than 1200 person. There are many workers which are removed from their jobs and their working
time was solved.
All such factors have largely affected the firm's market share, social and economical
condition of the TESCO. For such conditions company has to take the major decision so that
they are able to uplift their position (Nikolaevich, 2015).
4
Illustration 3: Finance report of TESCO
Sources: Grody, Hughes and Reininger, 2015

ANALYSIS:
According to Venkatkistareddy and Kumar (2016), in their book “Mastering Strategic
Management” customer’s will always pay for the service and product which they are willing to
buy. For this purpose, consumers must be aware about the business and its process. Their
satisfaction is considered as main aspects for the organization. In order to gain market growth
and earn profit companies needs to get depended on the clients’ perception. Understanding their
behaviour and can help in better ways to make the marketing strategies. For this things market
analysis needs to be done. Following issues were taken care while taking a survey:
1. In current ever-changing world preferences of the customers are also changing. So, their
reviews must be considered and implemented.
2. All the factors which might affect the customer preferences.
3. Measure the service level which are consumers experience.
4. All the parameters can be implemented if market and business strategies are made.
Jones, Comfort and Hillier (2016) stated that customer’s experience helps and supports
the company growth. Their attitudes, belief, behaviour, sincerity, motive and perceptions are the
major concerns. Further details regarding the organisational structure, data flow, style and
5
Illustration 4: TESCO Shares in market
Sources: Tjärnemo and Södahl, 2015

culture also affect position of company. For the analysis two methods were used in order to
collect the information.
Primary and secondary research methods are used in order to find the customer feedback
to the company. According to Barrientos (2013), initial methods includes the three ways which
are survey, experiments and observation while secondary includes various mediums such as
journals, newspapers, internet, literature reviews and business magazines. Through the report
from news headlines it was found that many TESCO staff were removed and they were going on
strikes due to this thing. Moreover, it was found that many customers are not preferring the
products as the prices offered by the Adle and Lidl is low. After the analysis, it was found that
maximum preferences were given to the grocery, cosmetics and accessories. The least products
were sold in the electronics section. Customers were found that they are satisfied with the billing
procedure. They will be implementing the new technology which will benefit the customers and
suppliers. The new methods of transaction will be more fair and standardised.
According to the Mishra, Mahesh and Kolluru (2016), TESCO is planning to develop
overseas. They are trying to solve the issues which have majorly affected their overseas market.
In a news interviews Lewis said that they were making the more investment they want to
upgrade their services which already exists. These methods can help to uplift the footfall of the
company.
Market condition is the major areas where the analysis is to done. As stated by () TESCO
they finished their disposal programme (Julier, 2013). Moreover, they are planning to develop by
resolving the international issues. Further, they are getting focus on the environmental factors
which have affected their growth and profitability. However, there are certain areas which are
unanswered such as the overseas operations and TESCO plans for the developments.
6

Employees were mainly found disappointed due to the company new rules and regulation
regarding their wages. The company has adopted the risk management framework which helped
them to resolve their major issues.
7
Illustration 5: Risk Management
Sources: Gornall, 2014

Company has prioritized their issues according to the preference. Following were the
major principles risk which were identified by the company. Customer’s Proposition: Firm believes that if they are unable to make the changes
according to customer preference they will be largely affected. This will also affect their
market shares and will support their competitors (Fuglerud, Halbach and Tjøstheim,
2015). TESCO considered it as their main priorities. They found that they were unable to
deliver better services which affected the loyalty of their customers. Such factors have
largely affected the financial conditions of company and due to which their profitability
decreased from previous years. Modifications of economic model: The firm is largely affected by the external factors as
stated by the Mylan and et.al., (2015). They were unable to make sustainable
developments to meet the business objectives. Due to this their operational cost got
raised. The firms as taken it as the primary priorities as such factors are required to make
sufficient cash to run the firm. Liquidity: Such factors as affected the employees of the organisation. As there is less
funding and no profit increment, they have to get loans or financially support from other
sources. This affects the performance and operation of the organisation. Such factors are
considered to be secondary aspects (Wood, 2014). Competition and markets: Due to entry of new German companies in the market and
their low marketing strategies have highly affected firm performance. This has resulted
loss in shares and new methods of profitability to the company. As it has majorly affected
the company so it is highly prioritized by the entity. Technology, data security and privacy: The structure was properly maintained by the
company and no new things are adopted. They have effectively managed their resources
and data. They are keeping the software updated so that their information can be
protected.
 People: This segment are highly focused as customers and employees are largely needed
to be focused. But as per the details given by Jones and et.al. (2013), major staff has been
removed from their services. This has largely affected the company policies and
marketing structure. Moreover, their brand image and customer’s belief were largely
affected. Employees are highly dis-satisfied by the steps taken by Lewis for the firm
8

betterment. There was high defection rate found due to entry of new companies and their
low pricing strategies.
The major analysis was done through the news headlines, reports, customers and
employees feedback, and journals (Strategic Report, 2016). Moreover, Tesco strategic report has
highly briefed the problems faced by them. The analysis will help to provide the better solution
and recommendation which can help the company to improve their current issues. Moreover,
customer review was taken through interviews, questionnaire and telephonic conversation.
RECOMMENDATION AND CONCLUSION
Following are recommendation based on the issues and analysis of the Tesco plc.
Company needs to develop the strategic approach in order to maintain and retain their
image. Moreover, they need to understand their stakeholder as they play the key role in
development and further future planning. In order to achieve specific market expectancy, they
need to know the customers preference and their choices. Further their decision making should
involve the needs and choices of consumers. Though they have increased their employee hours
but for customer’s satisfaction but this has affected the staff members of the company.
In order to expand globally they in needed to include the new design, strategies, prices,
and supplier relationship. In order to improve their sales and profitability in other countries they
must adopt the strategic initiatives. Moreover, planning and forecasting can help them to review
their performance in other countries (Tjärnemo and Södahl, 2015). For this purpose, company
needs to focus on their funding plans. Specific majors must be taken in order to reduce the
expanses and effective cost control methods must be adopted. Furthermore, support from the
Tesco banks can help to maintain their losses. The company must focus and review on their
annual reports and financially statements.
As stated by Davis and Butler (2017), company has not followed the code of business and
CSR policies. Though they refreshed their policies but then also as they have removed thousands
of employees, firms image and reputation is largely affected. Moreover, protest and strikes which
are currently getting headlines will affect the firm’s policies. They need to adopt the new pricing
strategies which can help them to compete the new competitors in the market.
As the major sales is grocery, the firms should maintain their pricing strategies and new
methods as well as sales techniques can be used to sell the electronics items. Due to ever-
changing market and environment future long-term planning must be adopted with consideration
9

of all the aspects which are mentioned in the report. All the internal and the external factors must
be considered to make the strategies and development programs.
Certain aspects taken so that customer relationship can be improved are:
1. Regularly review the feedback and collect the necessary details regarding them so that
the company can make improvement according to it. Customer relationship management
can help to improve the conditions of the firm (Barrientos, 2013).
2. Target based Resources Allocation: As said by Gornall (2014), company should focus on
their potential customer’s as they are main source of profit. This helps to improve the
target business organisation as focus on the target based allocation.
3. Response to the customer’s problems and complaints can help to make their belief on the
company.
4. Analysing customer purchasing pattern: this is required by the firm to understand the
preference of the customer’s. Through this shopping pattern of the company can be
understood. Moreover, it will help to increase productivity and sales of the organisation.
Steps taken to improve the marketing of the company:
1. Conduct market analysis to understand stakeholder perception.
2. Accelerate changes must be made on strategies as per the internal and external factors.
3. Goal setting, improving relationship with customers and employees is must.
4. Develop marketing strategies and use other theories as well as principles which can help
to develop (Julier, 2013).
5. Focus on the customer and competitors.
6. Adopt the pricing strategies and promotional activities which can help to develop the
company.
7. Deliver the services and goods in consistent and persistent ways.
From the following consultancy project, it can be reviewed that there are many issues
faced by the Tesco Plc. For this primary and secondary research option are chosen to identify the
issues. The company needs to be overcome those issues in order to make development and
increase its productivity. Project further contains details about Tesco Plc, its analysis and at last
recommendation are provided which can help them to improve their market share and customer
satisfaction.
10

REFERENCES
Books and Journals
Barrientos, S., 2013. Corporate purchasing practices in global production networks: A socially
contested terrain. Geoforum. 44(1). pp. 44-51.
Chen, J. and et.al., 2015. Research report on corporate social responsibility of China. Springer.
Fuglerud, K. S., Halbach, T. and Tjøstheim, I., 2015. Cst-benefit analysis of universal design.
Literature review and suggestions for future work. Oslo: Norsk Regnesentral.
Gornall, J., 2014. Under the influence: Scotland's battle over alcohol pricing. BMJ: British
Medical Journal. 348.
Gornall, J., 2015. Sugar: spinning a web of influence. BMJ: British Medical Journal. 350.
Jones, P. and et.al., 2013. Sustainability: UK retailers and social media. World Review of
Entrepreneurship, Management and Sustainable Development. 9(4). pp.460-474.
Jones, P., Comfort, D. and Hillier, D., 2016. Materiality in corporate sustainability reporting
within UK retailing. Journal of Public Affairs. 16(1). pp.81-90.
Julier, G., 2013. The culture of design. Sage.
Mishra, R. K., Mahesh, P. and Kolluru, S., 2016. Contribution of Organized Retailing to
Agricultural Distribution System: Prospects and Challenges. Springer India.
Mylan, J. and et.al., 2015. Eco-innovation and retailers in milk, beef and bread chains: enriching
environmental supply chain management with insights from innovation studies. Journal
of Cleaner Production. 107. pp. 20-30.
Nikolaevich, B.O., 2015. Development Features of Retail Chains in Russia: a Comparative Study
of Europe. International Journal of Econometrics and Financial Management. 3(1). pp.
1-6.
Páll, Z. and Hanf, J. H., 2013. A multi-perspective analysis of food retail internationalization-
insights from foreign retailers on the development of the Hungarian and Eastern
European markets. Management & Marketing. 8(4). p. 593.
Ramanathan, U., Bentley, Y. and Pang, G., 2014. The role of collaboration in the UK green
supply chains: an exploratory study of the perspectives of suppliers, logistics and
retailers. Journal of Cleaner Production. 70. pp. 231-241.
11

Tidy, M., Wang, X. and Hall, M., 2016. The role of Supplier Relationship Management in
reducing Greenhouse Gas emissions from food supply chains: supplier engagement in the
UK supermarket sector. Journal of Cleaner Production. 112. pp. 3294-3305.
Tjärnemo, H. and Södahl, L., 2015. Swedish food retailers promoting climate smarter food
choices—Trapped between visions and reality? Journal of Retailing and Consumer
Services. 24. pp. 130-139.
Venkatkistareddy, G. and Kumar, R. S., 2016. A Study on Consumer Preferences for Private
Label Brand Products in Bangalore City of India. Journal of Marketing Vistas. 6(2). p.
24.
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.
17(1). pp. 31-57.
Online
Wood, Z., 2014. Five problems for Tesco's new boss to deal with. [Online]. Available through:
<https://www.theguardian.com/business/2014/jul/21/five-probems-tesco-dave-lewis>.
[Accessed on 30th June, 2017].
Strategic Report, 2016. [Online]. Available through:
<https://www.tescoplc.com/media/264195/strategic-report-2016.pdf>. [Accessed on 30th
June, 2017].
Davis, R. and Butler, S., 2017. Tesco continues savings drive as it cuts 1,200 head-office jobs.
[Online]. Available through: <https://www.theguardian.com/business/2017/jun/28/tesco-
to-cut-1200-head-office-jobs>. [Accessed on 30th June, 2017].
12