Principles of Operation Management

This document provides an overview of the principles of operation management and their impact on organizations. It covers the roles and responsibilities of operational managers, core operational activities, and the interrelation of various operational activities. It also discusses the impact of current trends in the business environment on operations and the external and internal factors affecting operations. Finally, it explores the implications of these factors on strategic long-term goals.

Principles of Operation
Management
1

Table of Contents
1. Introduction to organisation.....................................................................................................3
2. Roles and Responsibilities of operational managers...............................................................3
3. Core operational activities within the organization.................................................................4
4. Interrelation of various operational activities and how this adds values to organizations
operations.....................................................................................................................................5
5. How current trends in business environment impact on operations........................................6
6. External and internal factors....................................................................................................7
7. Impact and implication of factors on strategic long term goals...............................................9
8. How operations management support in long-term strategic goals.......................................10
Conclusion.....................................................................................................................................11
REFERENCES..............................................................................................................................13
2

1. Introduction to organisation
Tesco is the multinational groceries and general merchandise retailer company which is
been headquartered in Welwyn, UK. It is a British company which was founded by Jack Cohen
in 1919. It has around 6,800 shops in seven countries across Asia and Europe (Formentini and
Taticchi, 2016). The various products of Tesco are supermarkets, hypermarkets, superstores and
convenience stores. According to the gross revenue this company was measured to be the third
largest retailer in the world and according to the revenue ninth largest retailer in the world. This
company is also listed on the London Stock Exchange. Its market share in UK is 28.4% that
makes market leader in country. It is public limited organization with 450000 employees
working (Arora, 2016). the revenue generated in 2019 was £63,911 million. There are many
subsidiaries of company such as tesco bank, tesco stores, Booker group, etc. its market value on
2015 was £ 18.1 billion.
2. Roles and Responsibilities of operational managers
In Tesco operational managers play a very vital roles and responsibilities in organizations.
High level duties such as improving organizational processes, work to improve productivity,
efficiency and quality, and attracting talents are the functions of operation management.
Inspiring leadership is being provided by the operational managers in any organization. They
also make important decisions, planning and policies. Operational policies and procedures are
developed, implemented and reviewed by operational managers. Recruitment of new joining by
HR is assisted by them whenever necessary. .
Roles of operational managers
Operational managers are the upper level management of the company that makes sure that
company is performing at its best potential (Role of operations manager. 2019). The various
roles of operational managers are:
 A big picture perspective
 Oversight of financial information and budgets
 Supervise supply chain and inventory
 Workflow and staffing
 Operations managers in various industries
Responsibilities of operational managers
3

Their key responsibilities is to see budgeting reporting, planning and auditing and working
with senior stakeholders (Genovese and et.al., 2017). The responsibilities of operational
managers is to monitor each complaint with proper rules and regulations and to ensure each legal
and regulatory document should be filed. He is also responsible for identifying and addressing
problems and various opportunities for the company.
Building of partnerships and alliances with other organization is also the responsibility of
operational manager. Planning of short and long term goals while working with board of
directors for determining values and mission of the company. Operational managers are also
responsible for supporting workers of any organization to communicate with the team of
management.
3. Core operational activities within the organization
In tesco activities such as general administration, maintenance, generating revenues,
producing and selling of products are the daily activities. These activities of companies are
termed as operating activities (Schönsleben, 2018). The key operational activities of any
company include manufacturing of the product or service, selling, advertising and product
marketing activities. Deduction of operating expenses from the organizations operating revenues
gives the operating profit this shows operating income by organization financial statement. Any
organizations key operating activities is also the keeping the cash flow statements that keeps the
track of inflows and outflows of cash.
Manufacturing
Manufacture unit of company set out to perform some basic functions to transform
resources into finished goods. Their function is to fine tune the production process to focus on
quality and to hold down the cost of materials and labour. Manufacturing involve production
planning, production control and quality control.
Sales
In any organization this process of operational activities involves closing the transition after
marketing process begins. Highly trained staff is required in this process. This process involves
exchange of money with the product or service. But in case of online business this operational
activity can be automated.
Advertising
4

In order to keep the awareness of new products or services among the customers in the
market advertising plays a very important role. For tesco advertising plays a consistent role to
increase the awareness among potential buyers. It also helps business to reach market objective
which involves regularly developing advertising campaign that involve planning, creating,
delivering and evaluation for an ad.
Marketing
Marketing of products and services generally means bringing people into your store. This
process involves grabbing attention of the customers and converting them (Hill, 2017).
Marketing is all about promotion of brand or product and reaching the targeted customers. In
business this operational activity involves the process of bringing the business message out to
public but this process doesn't actually sell the product but get the process started.
Distributing
The physical distribution function of an organisation is a complex process. Distribution
consist of activities that involve flow of goods from raw material supplies to final consumer of
the product. The goal of distribution operation is to ensure the achievement of established
customer service level at a minimal total cost. This operational activity incorporates the major
activity centre of purchasing warehousing transportation and order processing.
4. Interrelation of various operational activities and how this adds values to organizations
operations
For achieving the organizational effectiveness in Tesco mainly depends on the operating
managers to get engage in understanding the business objective, implementing their strategic
plans and supporting the plan organization wide. Desired outcomes are the results of regular
evaluation of the progress. Continuous benchmarking and monitoring eliminates insufficiencies
such as over-staffing, excess inventories or shortage of raw materials. The firm specially
allocates the responsibilities of monitoring efficiency and quality to some internal quality
controllers and auditors. The scope of operation varies with the type and size of the business. For
the production activities tesco essentially needs the resources such as labour equipments finance
and material components. For organisational effectiveness operational inputs must match
production targets so that speed dependability quality and flexibility of operation can be related.
Operations allow to evaluate the technical and production capacity of resources.
Relationship between production and sales
5

Sales and manufacturing are generally separate departments in company but each
department is very much dependent on each other (Hansson, 2019). Just for an example if the
sales department planning aggressively for the sales campaign on any seasonal merchandise but
before aggressively advertising the merchandise it much be sure enough that the production
department has the capabilities to fulfill the anticipated demands of the merchandise.
Relationship between sales and marketing
Many statistics are being calculated by the advertising agencies on the direct relationship
between sales and marketing but it varies greatly from agency to investigating more money on
advertising doesn't mean that the organization will have more sales. There should not be chances
that business invest a lot of money on marketing campaign. It is more important to target the
customers which are more likely to buy the product or services.
Relationship between manufacturing and distribution
A key element in the success of manufacturers distributor is for both parties to be on the
same page whether the relationship is strategic or tactile. A strategic relationship require closer
collaboration from both the manufacturers and distributor in form of marketing, branding and
production development.
5. How current trends in business environment impact on operations
In recent times, there are many current trends exits in business environment that impact of
operations. Technology plays a major role in it. With the use of technology issue in organization
and to solve those issues to improve operational efficiency and install the new technology
including software packages and hardware that impact the organization cost and it also improves
the production speed and quality of product.
Another trend is ethics related to change in environment policies which is affecting firms
operation. Here, new CSR policies are applied by companies in order to protect environment.
This is making changes in operations as advance technology is implemented and waste is
reduced. However, each country follows specific laws to protect environment. Thus, firms have
to work according to laws.
Implementation of new technology benefits a lot to organization and also have may risks.
Your employee not have proper knowledge to operate new system and technology, then
technology decrease the productivity and reduce the employee satisfaction. Your operational
6

database is online so you have to be chance the cyber attack, which can affect the operations
negatively or even business shutdown.
The global factor impacts the business around the world. They affect your supply chain
reliability, labor supply, wages, taxes, trade policy and government regulation are all affected by
global factors. Any change in the government policy it directly impacts the organization
operation like any change in tax policy and trade policy it directly affects the product cost and
transportation cost and also affect the organization profit. Tesco has started reducing waste that
mean they will change their environment policy as the government putting pressure on Tesco to
recycling which help in developing green ecosystem.
6. External and internal factors
Pestle analysis
Political factors
These are the factors created by government in changes in government foreign trade
policy, tax policy, trade restrictions, and many more factors impact the organization. As Tesco
operate worldwide, global political factors affect the performance of Tesco. An example of
political factor that is affecting tesco is Brexit. This is affecting the business operations as they
have to apply different standards and laws due to Brexit. Moreover, trade laws and policies are
changed due to which organization operations are impacted
Economic factors
This factor depend on changes in nation economy. The factors are Currency, GDP (Gross
Domestic Product), inflation rate etc. have directly effecting organization profit. The economic
factor that is impacting tesco is Brexit. This is because due to Brexit there will be downfall in
UK economy. Thus, tesco operations will be affected as they have to lower cost of production or
produce new products to generate revenue. In this way, revenue and profits of company
operating in UK as country economic condition will be impacted (Bromiley and Rau, 2016).
Social factor
This factor depends on the social changes, taste and preference and needs of people in
particular nation. the social factor that is impacting tesco operation is change in taste and
preference. It means customers are becoming more health conscious. Due to it, tesco have to
produce new products. So, it is highly impacting on their operations. The products produced are
7

by using organic ingredients. Therefore, overall operations are changed. it is impacting on
company production, business operations, etc.
Technological factors
This factor is part of the latest technological develop for the organizations. Here, it refers
to technological development. The technological factor impacting tesco is shift in shopping trend
of customers. they are focusing on online shopping. Hence, tesco will have to develop App. So,
it will impact on its entire operations. They will have to install computer systems and change IT
infrastructure. Thus, it will affect on their business operations.
Environmental factors
Environmental factors include change in environment law, policies, CSR, etc. As tesco
operate at global level they have to follow laws of each country. So, any change in laws and CSR
will affect on tesco operations. For example- change in CSR policies of EU will impact on tesco
operations. They will have to emphasis on maintaining sustainability by reducing use of plastic.
They will have to make changes in operations to protect environment and contribute in CSR.
Legal factors
It includes factors such as employment laws, health and safety law, etc. tesco have to
adhere and follow laws and regulation of each nation. Therefore, any change in such laws impact
on tesco operations. For example- minimum wage act 1998 in UK force companies to provide
minimum wage to staff. Similarly, health and safety act 1974 have to be adhere by organization
(Reid and Sanders, 2015).
Swot analysis of tesco
Strengths
 Tesco is the biggest retailer store in UK. It generates higher revenue compare to other
supermarket chain in UK.
 Tesco covers 27.7 % of market share in UK.
 The firm has more than 6800 stores in 14 countries. It has good market share in Asian
market as well.
 Organization has advance online payment method, applications, and M-commerce
facility.
 Company's supply chain network is strong, reliable and efficient.
Weaknesses
8

 Tesco export operations failed in American and Japanese market and company close the
stores after 9 year in Japan and after 5 year in US.
 Firm profit affected by high liability on debts and credit cards.
 Low cost strategy reduces the profit margins.
Opportunities
 Tesco start new Jacks' store which has view significant growth. It has good opportunity to
grow this business and successfully complete low-cost rival with Aldi and Lidl.
 Developing partnerships with reputed companies it can offer excellent opportunity for
Tesco.
Threats
 Government regulations also putting pressure because new regulation require change in
their operation structure for additional expanses (Arora, 2016).
 It faced social media backlash when Tesco launched its Christmas ad in 2017.
7. Impact and implication of factors on strategic long term goals
There is a great impact of both internal and external factors on tesco long term goals. It can
be evaluated that Tesco use lot of resource for trained and development of its employee in result
employee highly and also motivated to achieve more. Customer relationship is important part of
long-term business, Tesco always dedicated to create and maintaining relationship with customer
and it has high level of customer satisfaction (Cosimato and Troisi, 2015).
For long term stability in market you must have good and strong network of supply chain of raw
material and Tesco have this. Your network is strong so you easily make good growth in market
and challenge your competitor for long-term.
Firm days inventory (it is efficiency ratio of days the company holds product before
selling) is high compare to the other brands and this can impact the growth of company in long
term. For long-term profit firm need to update technology on time otherwise you to able to stand
in market and Tesco update technology and it also introduces RFID Technology to supermarket
and many other type of trending technology and change the technology according to the current
trend give the good result to your firm. Tesco provide many types of other online platforms like
M-Commerce, online payment method, order tracking etc. With this they are able to establish
relational to customer.
9

External factors exists outside business that impact the organization like government
policy, law, social trend, technological changes and environmental policies any type of changes
in those factor can affect the Tesco's operation and profit directly. For controlling on the waste
government change in policy, and they create the pressure on firm and Tesco try to control the
waste of product and for controlling on waste firm need to installation of new technology and it
effects the organization cost (Ivanov, Tsipoulanidis and Schönberger, 2017). Now days public
faced more health issues that's the reason customer's aware about their health, and they focused
on healthy and organic food. Brexit can be taken as example where there will be a great impact
on tesco long term goals. It will result in forcing organization to trade in different way. Also,
impact of Brexit will remain for long time on business. They will not be able to operate freely in
other European countries.
Tesco need to change in policy according to the latest trend and develop the new product
according to the customer's requirement and for developing new product Tesco required
installation of new technology and it impacts the company operations and operating cost.
Similarly, some of these laws may include the National Minimum Wage Act 1998, the
health and safety at work Act 1974, the employment equality regulation 2003.
According to the National Minimum Wage Act firm pay minimum wage to unskilled
employee and it affects the organization operation and effect the cost and also demotivate skilled
employee.
8. How operations management support in long-term strategic goals
There are different operational management approaches followed by tesco. It enables
them to perform in effective way and attain goals. The approaches are six sigma, lean
production, BPR, etc. These all focus on improving quality of products and services. Here,
changes are made in operational process or method. Through it, deviations are identified and
improved. In this way long term goals are accomplished. However, strategies are developed on
basis of goals set. So, by following of approaches tesco is able to maintain quality of products.
They have solved various issues like customer services, rise in cost, etc.
Six sigma – it is an operational approach that focuses on improving the process or procedure and
enhancing efficiency. it uses a set of tools that is used in improving process. here, defects and
errors are determined and then eliminated by improving process. this enables in maintaining
product quality and attaining goals. Moreover, methods applied in it can be statistical, empirical,
10

etc. if product quality is maintained by eliminating defects it enabled tesco to achieve its long
term goals.
Lean production – this is also similar to six sigma but it aims to cut cost in production by
eliminating waste. Here, process is not changed but business and operation process is made more
efficient and effective. It works on basis of principles in which main aim is to reduce cost
without affecting productivity. In this quality is maintained to generate value. with help of this
operational approach, tesco can accomplish its long term goals.
Business process reengineering- it is a framework to redesign entire process in order to
improve product output, quality, etc. BPR also enable in reducing cost. here, processes are
redesigned to improve effectiveness. Either automation is done or alternative process is used.
Usually, technology is used in this approach. This enables in achieving goals in effective way.
therefore, tesco can also accomplish long term goals with BPR approach.
Strategic planning in Tesco is a process of dealing its strategies decisions and allocating
resources to achieve their strategy. Rather than isolated units strategic planning deals on whole
business. Operational management supports long term strategic goals as to ponder strategic
objectives and missions. Manager’s emphasis on product/market strategies. From research and
development to raw materials sourcing and distributing relation each and everything is laid out
by functional chiefs. The planners have all turned out into strategists. For the long term well-
being of the organization the attention of managers has been shifted from planning process
technicalities to substantive issues. Different companies have several phases of strategic planning
depending on the different rates of progress. This progress can be divides into four sequential
phases each marked by advanced over the precedence in various terms such as formation of
issues and alternatives, preparatory staff work quality participation of top managers to guide the
strategic decision process and implementation effectiveness.
In tesco strategic goals are attained by using various processes and system. They use ERP
which is useful in planning of resources as per requirement. Furthermore, systems such as MIS,
DSS, etc. are used by managers to take effective decision (Fahimnia, Sarkis and Davarzani,
2015). This supports in finding out errors in operational process and improving it. Besides this,
several tools are also used like KPI, benchmarking, etc. which enables company to measure
efficiency of operations and make changes in it to increase productivity and to achieve goals.
Apart from it, different processes are applied within organization to maintain performance of
11

operational process. This allows in maintaining pace of attaining targets in specified time and
utilizing resources in effective way.
Conclusion
From the above it has been concluded that in Tesco Operational managers play a very vital
role in an organization. Their role includes high level duties such as improving organizational
processes, work to improve productivity, efficiency and quality, and attracting talents are the
functions of operational management. Also, the core operational activities of Tesco are
manufacturing, sales, marketing, advertising and distribution. Moreover, different core
operational activities are interrelated in order to increase the effectiveness of the process and for
operating managers to attain long term business goals. In addition long term strategic goals are
supported by operations' management as they deal with strategic planning on a whole business
rather on a single isolated unit.
12

REFERENCES
Books and journals
Arora, P., 2016. Application of lean principles/lean management can improve. Indian journal of
medical microbiology, 34(2).
Bromiley, P. and Rau, D., 2016. Operations management and the resource based view: Another
view. Journal of Operations Management, 41, pp.95-106.
Cosimato, S. and Troisi, O., 2015. Green supply chain management: Practices and tools for
logistics competitiveness and sustainability. The DHL case study. The TQM
Journal, 27(2), pp.256-276.
Fahimnia, B., Sarkis, J. and Davarzani, H., 2015. Green supply chain management: A review and
bibliometric analysis. International Journal of Production Economics, 162, pp.101-114.
Formentini, M. and Taticchi, P., 2016. Corporate sustainability approaches and governance
mechanisms in sustainable supply chain management. Journal of Cleaner
Production, 112, pp.1920-1933.
Genovese, A. and et.al., 2017. Sustainable supply chain management and the transition towards a
circular economy: Evidence and some applications. Omega, 66, pp.344-357.
Hansson, S.O., 2019. Improvement principles. Journal of Safety Research, 69, pp.33-41.
Hill, T., 2017. Manufacturing strategy: the strategic management of the manufacturing function.
Macmillan International Higher Education.
Ivanov, D., Tsipoulanidis, A. and Schönberger, J., 2017. Global supply chain and operations
management. A Decision-Oriented Introduction to the Creation of Value.
Reid, R.D. and Sanders, N.R., 2015. Operations Management, Binder Ready Version: An
Integrated Approach. John Wiley & Sons.
Schönsleben, P., 2018. Integral logistics management: operations and supply chain management
within and across companies. CRC Press.
Online
Role of operations manager. 2019 [online] Available through : <
https://smallbusiness.chron.com/role-operations-manager-14234.html>
13