Organization Problem in Tesco: Issues and Possible Suggestions

This report discusses the organization problem faced by Tesco, one of the biggest retail grocery stores in Britain. It highlights the issues related to the credit system and price war, and suggests possible solutions to improve the credit system, jump into online business structure, and apply real-time customer behaviour application.

Running Head: ORGANIZATION PROBLEM
Organization problem
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ORGANIZATION PROBLEM 1
Introduction
Tesco is considered as the father of all retail grocery stores in entire Britain. In addition,
this organization is able to maintain its position among the top ten brands on the international
level. This organization is also known as one of the biggest industry which is offering
employment to a large population of the Britain youths (Tesco Company, 2019). This business
was pushed in the market by Jack Cohen in the form of stall present in the east of London. Both
wings of this organization manufacturing and retail helped this organization to generate revenue
of around £2 billion in 2005. This organization is able to gain the top position in the retail market
with the help of its 326000 employees and 2318 stores on the worldwide market. The main
objective of this organization is to service its customers within affordable price. Due to dynamic
change in the business environment, there are some issues which are being faced by this
organization which has directly impacted their sales and revenue.
Problem in Tesco organization
At present most of the business operations are carried on the credit system and this
system is followed on the global level. But as per the study it has been found that current credit
system is not effective because of which organization has to face heavy loss in the form of
financial capital. Current business environment is very dynamic and it is generating a huge
amount of pressure on the business operations especially when it comes to the retail sector
(Haddock-Millar & Chris Rigby, 2015). Due to the entrance of many organizations in the retail
sector, it has been found that Tesco organization is currently struggling from price war issue.
This price war has directly impacted the profit margin of this organization in the retail sector
because rise in competition has put this organization in pressure to compromise with their profit
margin in order to develop a strong customer base.
Tesco credit system is not good and because of this company has to face loss in terms of
financial capital due to external factors. In addition, company is currently facing price war due to
profit margin which is associated with retail sectors. Retail store of Tesco was not able to
perform satisfactorily in other countries which have impacted the business operation of the
company (The guardian, 2016). It has been found that due to ineffective credit system many
vendors of the organization were not able to get their money on timely base and in some cases, it
has been found that supplier has to wait for two to three years for their full payment settlement.
This issue has created a negative image of this organization in the business market and as a result
of this issue, Tesco organization were continuously losing their sales in various countries in
which there are operating.
Possible suggestion
One of the biggest issues which are being faced by Tesco organization is related to the
credit system. In this situation, one of the best options for Tesco is to improve its credit system
with the help of advanced technology. In this situation, the organization must introduce a real-

ORGANIZATION PROBLEM 2
time credit system in their organization in order to improve their credit process (Wu et al., 2019).
This real-time technology will help the organization to develop a credit flow system which will
settle the payment related to supplier within time duration of 6-7 months. Under this system
payment amount will be prioritized as per the timing so that there may not be any confusion
related to the payment of vendors. This strategy will help the organization to regain the trust of
the supplier and vendors by creating a better image that organization has adopted effective credit
system in order to resolve this major issue (Ekpo, Alobo & Enyia, 2018). Company must be
aware that image of the organization in the stakeholder's eyes has a direct impact on the sales of
their products because stakeholder plays a very significant role in the growth of the organization.
These stakeholders adopt various strategies in order to bring efficiency in their business
operations along with following ethical rules and regulations.
Due to heavy competition in the retail business, it has become very difficult for Tesco to
remain sustainable in the market for a long time. Growing competition has supported price war
in the market and in this situation, one of the best options for Tesco Company is to jump into
online business structure (Khan, Liang & Shahzad, 2015). At present e-commerce business is
considered as one of the fastest-growing business on the global level. Online business will help
the Tesco organization in gaining two types of benefits, one is cost-effectiveness and other is
better customer reach which will help the organization to build a strong customer relationship.
Having strong customer base ensures that the organization is going to grow on sales platform
which is directly connected with the revenue generation (Campo & Breugelmans, 2015). Cost-
benefit feature of online business helps the organization to invest less amount of money on
infrastructure and connected services. This saved amount will be invested in other activities of
the organization which can help them in attain a better position in the retail market.
Another important option for Tesco organization is applying a real-time customer
behaviour application which will help the organization to understand the buying behaviour of the
potential customer and related taste which is changing as per the lifestyle of the individual on the
global level. Due to advancement in technology, product consumption has not remained constant
and people are continuously looking for something new (Bahari & Elayidom, 2015). Because of
this Tesco organization had to face a lot of issues related to sales which have impacted their
revenue. This technology will help the Tesco administration to preplan all the related changes in
their products in advance so that they can take advantage of their competency from other
organization present in the retail business (McFarlane, Giannikas & Lu, 2016). In addition, this
will help them in generating a unique identifies related to customer preference which will help
the organization in building a healthy relationship with the customers (Kunz et al., 2017). In
addition, this technology will also help the organization to introduce an economy of scale in their
operations in order to lower down the prices of the product as compared to other retail stores.
This pricing strategy will help the company to attract more and more customer towards their new
end products.

ORGANIZATION PROBLEM 3
Conclusion
Growing competition in retail business has created such an environment in which it has
become very difficult for Tesco to remain sustainable. In addition to this, Tesco Company is
continuous facing issues related to their credit system which has created a negative image of the
company in the business market and as of result of this company was losing sales in many parts
of the world. Price war was also lowering down the profit margin of the Tesco in the business
market. In order to remain sustainable one of the best option for Tesco organization is to adopt
advance credit system in their business operation by which they will settle their due payment
within 6-7 months. In addition, organization must adopt a real-time customer base study which
will help them to understand the new preference of the potential customers so that they can
improve their products as per the new requirements.

ORGANIZATION PROBLEM 4
References
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Campo, K., & Breugelmans, E. (2015). Buying groceries in brick and click stores: category
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Ekpo, M., Alobo, E., & Enyia, J. (2018). Impediments to the Development of a Strong Consumer
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Haddock-Millar, J & Chris Rigby, C. (2015). Tesco plc’s declining financial performance and
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The guardian .(2016) Tesco delayed payments to suppliers to boost profits, watchdog finds
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