tesco business report

I need a report for Tesco

TESCO BUSINESS
REPORT

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Company overview 'TESCO'......................................................................................................1
Porter's Five Forces Model..........................................................................................................2
Evaluation of inbound logistics, operations and outbound logistics...........................................5
Analyse two support activities of Porter's Value Chain..............................................................6
Value adding activities of TESCO..............................................................................................7
Innovative ideas to enhance business process and competitive advantage.................................7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Organisations operate their business functions in a dynamic conditions which has
immediate impact over decisions and functions of company. These particular surroundings
known as business environment (business environment, 2020). There are two sub environments
namely internal and external. Intrinsic surroundings includes company's objectives, strategies,
policies, human and financial resources, corporate culture, organisation structure etc. External
factors involve political, economic, competitive, technological, global so on. All these forces
generates number of challenges and opportunities for organisations (Prajogo and Oke, 2016).
Information Technology is an essential aspect of management for running and operating
business function efficiently. An effective IT helps business to operate basic processing of
transactions. It enables business owners to collect and record relevant information regarding
employees, inventory etc. Also, it builds various management systems such as communication,
data, customer relationships, inventory.
This research report encloses thorough detailed information regarding TESCO. It exhibits
company overview in terms of its background data, products and services, current strategies.
Further, report describes Porter's Five Forces model in order to understand competitive
environment of given organisation. Also, discussed framework of Porter's value chain with
purpose of examine logistics and transformation of raw material into finished goods.
MAIN BODY
Company overview 'TESCO'.
TESCO plc is one of the largest British Multinational Corporation as well as third bigger
retailer of groceries and merchandise across Europe, Asia. Company has its headquarters situated
in Hertfordshire, UK. Company deals owns large number of supermarkets, hypermarkets,
superstores and convenience shops across seven countries including Europe and Asia. Tesco
serves and deals huge product portfolio which includes quality food, groceries, clothing
merchandise, home appliances, beverages, financial services and more. TESCO was established
by Jack Cohen in 1919 in form of market stalls. Today, company has strong brand position
worldwide as firm holds ninth position of largest in world in terms of gross revenues. Vision of
Tesco is to serves products that add value to customer's lives and make better together. Mission
of company is that to be winner for consumers by offering them best quality products for life.
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Customers desire for best products at best value that they can afford easily and TESCO job is to
deliver and satisfy these requirements in right manner. Core purpose of organization is 'Serving
shoppers something better on daily basis'. In UK , company serves its products almost 66
consumers at each second and it make sure that customers experience best on every single visit.
TESCO has expanded its business from many years, during 1950 company grew through
organically and acquisition as well as owned approx 800 shops at that time. Further, in 1987
tesco takeover the chain of 40 supermarkets in North of England. In 1995, company launched
loyalty card under name of club-card and later introduce internet shopping service which was the
first e-Commerce shop for customers. Also, company expanded its business across
internationally in same year. In 1997, Tesco announced the procurement of Association British
Food which was a retail arm at that time. Company diversified its product range in 1960 by
selling household and clothing goods under brand name of Delamare. In 2001, Tesco indulged in
internet grocery retaining and acquired 13 hypermarkets in Poland. Organisation purchased C
Two-Network in Japan during year of 2003. further, in 2004 tesco purchased Adminstore , 45
Cullens, Europa and Harts convenience shops across London. In 2007, Tesco opened chains of
small groceries shops under name of Fresh & Easy. In 2010, company opened its first film studio
in order to produce Tesco unique direct to DVD films. Currently, Tesco is ruling out entire retail
industry as company enjoys position market leader with holding 27% market share. In present
time, TESCO is planning for expanding it customer base and market share by entering in new
market called Bakeries. TESCO is going to adapt bakeries in large stores in order to fulfil
changing requirements of customers. Company is planning for adapting changing demands for
purpose of offering wide range of bakery products which must be available in each store.
TESCO faces number of challenges due to stiff competition as there are various established
organisation who offer same products at reasonable rates such competitors are ALDI, Sainsbury,
Lidl.
Porter's Five Forces Model.
Porter's five forces model was proposed by Michael Porter in order to understand
different five forces which influence competitive position of an organization. This particular
framework is used to analyse various elements which affects entire operation of industry in
which business operates (Eling and Schaper, 2017). This model analyse industry structure and
intensity of competition prevailing in such industry. If these forces are powerful in nature then it
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creates less chances of profitability for existing organisations. Main aim of using this model is to
understand and assess different strengths, weaknesses, threats and opportunities of particular
business entity and its current position in market. Porter's five forces model is based upon
assumption of encompassing industry attractiveness that how new changing trends influence
competition level and how companies manages to position themselves with view of attaining
higher success. Analysis of these forces enables the firms to anticipate different fluctuations in
competitions, requirements of customers. It helps them to modify themselves according to
industry structure develops and establish finest strategic solutions to resolve prevailing or
upcoming problems in industry (Gaganis,Pasiouras and Voulgari, 2019). This mechanism help
out business analyst to assess and evaluate feasibility of products and service whether they are
capable or not to satisfy customers requirements. TESCO is one of flourish organization in UK
as well as enjoys number of benefits in form of creating more revenue through sales but also it
has to face huge challenges and issues in respective of strategic planning and decisions. With
help of Porter's five forces model Tesco manager can easily determine upcoming threats so that
they can smoothly enhance them as well as opportunities to make them beneficial for
organization development. Through this model tecso can formulate its strategies and policies on
basis of prevailing conditions within industry. Tesco can effectively sustain its competitive
position via determining the affect of these forces over business operations.
1. Rivalry among competitors: this force is a major component of this model which
explains how much competitiveness and profitability is there in certain industry. In such
competitive industry, firms compete with each other in aggressive manner in order to
attain high profitable share in market which result in low revenue. There is intense
competition exists among rivals when there is a large pool of competitors who are selling
identical products and services at same prices (Falkner, 2017). In case of Tesco, impact
of this force is highly intense cause organization operates its business in such industry
where other established firms like ALDI, Morrisons, ASDA, Seinsbury offer same
products at relative costs. This increases probability of product switching where buyer
can smoothly switch from tesco over other supermarkets which result definitely influence
sales and profit margins of organisation.
2. Buyer's Power: this force refers to ability of customers to bring down certain prices of
products offered by company. This force justify the intensity of negotiating done by
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buyer in order to get high quality product at lower rates. This factor is measure on basis
of number of buyers available in market, how essential are each buyer is for
organization, cost bear by company when customer switch one product to other. In case
of Tesco, impact of this particular factor is high over competitive position of company as
customers of tesco enjoys intense power of bargaining due to accessibility of other
supermarkets and convenience shops in relative market. This makes easier for consumer
to use other products as if organization charges high prices for its products. Today's
buyers want best quality product related with less prices which is fulfilled by other
supermarkets also who are offering wide range of products at similar rates like tesco.
3. Threats of Substitution: this force point out alternatives of products and services that
are available in target market. This force is unfavourable for organization when
customers get different choices in form of other identical product associated with
lucrative prices (Schalteggerand Wagner, 2017). If intensity of this force is higher then it
raise the difficulty level for existing organizations in order to retain their loyal customers
and competitive position in industry. In context with tesco, impact of this force is high as
organization mainly deals in groceries products and other households essentials.
Alternates of such product are easily available in market provided by other giant firms.
Tesco's food substitutes are quickly produce and deliver by other retailers also they
attract more customers by offering non-food products also.
4. Threats of new entrants: this force describes how frequently new organisations come up
with new featured products in order to enter in specific industry. If there is a high
intensity of new entrants then it may create a problem for existing firms as it raise level
of competition within industry (Zhao and et. al., 2016). If an industry is highly profitable
and has few restrictions about entry then it will accelerates rivalry. Tesco faces low
impact of this force as approx 69.8% of grocery market is regulated and controlled by big
four markets. Moreover, in order to enter such industry organisation required to invest
high capital and generate strong channel of distribution and supply chain. Also to
compete with tesco and attract its loyal customer new entities needed to offer high quality
of product with competitive pricing.
5. Supplier's Power: this force describes an evaluation of how suppliers or dealers
increases their rates of inputs and charge premium prices for bulky orders given by
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companies. Supplier's power is high when there small pool of dealers, innovativeness of
materials etc. In case of Tesco, impact of such force is relatively low cause there is large
pool of British suppliers in UK due to which it is not easy for any dealer to charge high as
they do not want to loose relation with big firm like Tesco. This yield power to Tesco as
firm can negotiate over prices offer by suppliers (Kanakulya and Jinzhao, 2017).
From above study of model, it is clear that these forces have immense impact over
competitive position and profitability of TESCO. It is essential for tesco strategists to examine
these factors on regular basis in order to ascertain proper understanding of reasons that are
affecting organization productivity in retail industry. This will help company to be pioneer and
grab opportunities first so that it can convert these forces in their favour.
Evaluation of inbound logistics, operations and outbound logistics.
Inbound, outbound logistics and operations are an essential aspects of Porter's value chain
model. These three are come under primary activities category. These activities are concern with
incoming of raw materials, transformation process and delivering of finished products in market.
These activities are conducted in firm for purpose of adding value to product and establishing
competitive edge in target market (Burns and Dewhurst,, 2016).
 Inbound Logistics: this activity relate with incoming movement of raw materials, inputs,
machines, equipment and finished inventory from dealers within organisation. These
activities involve receiving, storing, and controlling of inventory with regard of raw
materials and finished products. In this step, company majorly focuses on quality of input
and optimization of resource in order to be cost effective (da Silva Guabiroba and et. al.,
2017). Inbound Logistics process of Tesco is difficult and complex to understand as it has
huge supply chain in which it supply 100+ products in different categories that are being
delivered to 7000+ stores across globe. Organization invest on regular basis to enhance
its capacity of logistics in order to exploit economies of scales at large extent. Company
can maintain better relationship with its suppliers to avoid unnecessary delay and fines
enforced by dealers.
 Operations: this activity is concern conversion of raw material or inputs into finished
goods or final output. It include the procedure of transforming base material into ultimate
products. This involve basic inputs, labour and energy to produce final output and
transporting the same in target market. TESCO operations are segmented in three
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categories: Retail, Manufacturing and Banking. Retail operations represents main
business of firm. Scope of these operations are broad in nature as company owns various
stores under name of Metro, Express, Extra and Superstores. Manufacturing Operations
represents tesco sells its own brand products under Everyday Value normal range
products in order to compete with giant discount companies like ALDI and Lidl at low
price. Banking operations of Tesco says company regulates its own bank under name of
TESCO bank. Operating with 3000+ employees and meeting requirements of million
customers.
 Outbound Logistics: these activities are related to distribution transportation of finished
products to end user (Harding, 2017). This section include collecting, storing of prepared
products in warehouse also movement of these from production area to ultimate
consumers. In case of Tesco, mains sources of creating value in outbound logistics are
flexibility and cost-effectiveness of delivery process. Tesco supermarkets offer services
of delivery to its customer purchased from offline stores or online (Tesco Direct).
Company maintain strong supply chain network with transporters and distributors in
order to distribute its products from warehouse to its stores on timely basis.
Analyse two support activities of Porter's Value Chain.
This model of value chain is explains various chain of events or activities which take
place in an organisation right from purchases of raw materials till its delivery of wide variety of
finished products in target market. Value chain is mixture of different sub systems that are useful
in manufacturing of products and services. Support activities include firm infrastructure, human
resources, Technology development, Procurement.
 Procurement: this activity relate with acquisition or purchasing of raw materials, input
for manufacturing of products within firm. This section involve procurement of
machineries, tools, equipments, resources that are required for transformation process
(Bell and Rochford, 2016). Tesco production team cautiously analyse procurement
activities in order to get highly quality materials so that finished product will be of better
quality. Company sustain cordial relationship with its suppliers and dealers so that it can
negotiate over prices and acquire finest material.
 Technology Development: this activities are concerned with research and development
also contains developing innovative techniques as well as automation process. Tesco
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make use of updated version of digital technology, equipments, machines, software that
in turn helps in reducing unnecessary costs at each level of production. Tesco make use
of online plate with purpose of marketing and selling out its products (Koc and Bozdag,
2017).
Value adding activities of TESCO.
Value adding activities are those which add some extra benefits to product or customer
which in result increases overall productivity and profitability level of an organization. These
refers to those activity which extend value of good at each stage of production cycle or
distribution. TESCO plc can increase its level of productivity efficiently and effectively by
adding great value in its production process, inventory management, marketing and distribution
system. Further, it enables management to reduce non profitable activities which slow down its
productivity (Amara, Halilem and Traoré,2016). There number of activities use by firm in order
to attract more customers. In such case, company launched service of loyalty card under name of
Tesco Clubcard in order to give rewards to its loyal customer in term of points that can be
redeem by buyers at any time. For enhancing company growth Tesco has opened new stores in
order to expend its sales. Company has launched small convenient stores in regional areas also so
that everyone can able to afford and reach out to those stores. Moreover, tesco make use lean
management programs for purpose of eliminating waste material it helps in maintaining hygiene
at supermarkets or stores.
Innovative ideas to enhance business process and competitive advantage.
TESCO plc is a flourished and well established brand which known for its large number
of supermarkets across world. Company deals in wide range of products including food items,
stylish clothing, home-ware products and other non food items. Company holds strong market
share position in UK. In order to sustain its current position and competitive edge Tesco is
required to formulate exclusive to act as first mover in retail industry. From analysis of
competitive environment through Porter's Five Forces model, it is understandable that TESCO is
facing fierce and stiff competition within industry (Prajogo, Oke and Olhager,2016). In order to
maintain its competitive edge among rivals tesco required to organize an effective research and
development programs on daily basis so that firm can modify or design its products according to
requirements of buyers. Tesco can conduct aggressive promotional activities to increase more
awareness regarding its brand products. To enhance retail business process and competitive
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position company can make use of digitalization. In today's era, each individual make use of
mobile technology so to expand its business Tesco can introduce its personal mobile application
in order to gain customer by providing offers like personalized gifts and discounts. With this
feature customer can easily get connected with Tesco. Through technology buyers can easily
track down their order without going anywhere. Moreover, company can launch personal
shopping assistants and chat bot functions through Artificial intelligence through this technology
organization provides on-demand shopper services. With advance technology Tesco can build an
effective warning system though which firm can easily assess expired food products on time so
that it can be replaced by fresh items (Bedeley and et. al., 2018). This enhance process of
inventory management as well as eliminate labour time of determining these products manually.
Tesco must advertise its brand products on social media platforms with purpose of covering wide
customer base.
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CONCLUSION
As a conclusion, business environment is an essential aspect for organisation as it
contains various intrinsic and extrinsic factors which influence decisions and functions of a
company. An organisation may have some strong areas but there are always some areas where it
become weak. To assess these areas analyst required to examine these surroundings so that firm
can formulate its strategy accordingly. Organisation needed to determine its weaknesses and
strengths so that these can be converted in benefits for its long term growth. Analysis of
environment helps organization to eliminate risk of getting fail in designing or developing new
product. There are various model which helps is examine micro and macro environment through
porter's five force and value chain model in order to gather perfect information related to
industry and competitors moves. These models helps organisation to measure their current
position in market and how to maintain its competitive advantage.
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REFERENCES
Books and Journals
Amara, N., Halilem, N. and Traoré, N., 2016. Adding value to companies' value chain: Role of
business schools scholars. Journal of Business Research. 69(5). pp.1661-1668.
Bedeley, R.T. and et. al., 2018. Business analytics and organizational value chains: a relational
mapping. Journal of computer information systems. 58(2). pp.151-161.
Bell, G.G. and Rochford, L., 2016. Rediscovering SWOT’s integrative nature: A new
understanding of an old framework. The International Journal of Management
Education. 14(3). pp.310-326.
Burns, P. and Dewhurst, J. eds., 2016. Small business and entrepreneurship. Macmillan
International Higher Education.
da Silva Guabiroba, R.C. and et. al., 2017. Value chain analysis of waste cooking oil for
biodiesel production: Study case of one oil collection company in Rio de Janeiro-
Brazil. Journal of Cleaner Production. 142. pp.3928-3937.
Eling, M. and Schaper, P., 2017. Under pressure: how the business environment affects
productivity and efficiency of European life insurance companies. European Journal of
Operational Research. 258(3). pp.1082-1094.
Falkner, R., 2017. Business power and conflict in international environmental politics. Springer.
Gaganis, C., Pasiouras, F. and Voulgari, F., 2019. Culture, business environment and SMEs'
profitability: Evidence from European Countries. Economic Modelling. 78. pp.275-292.
Harding, S., 2017. MBA management models. Routledge.
Kanakulya, E.K. and Jinzhao, W.A.N.G., 2017. The Status of Africa’s Construction Industry and
its Porter’s Five Forces Analysis. International Business and Management. 14(2).
pp.50-53.
Koc, T. and Bozdag, E., 2017. Measuring the degree of novelty of innovation based on Porter's
value chain approach. European Journal of Operational Research, 257(2), pp.559-567.
Prajogo, D., Oke, A. and Olhager, J., 2016. Supply chain processes. International Journal of
Operations & Production Management.
Prajogo, D.I. and Oke, A., 2016. Human capital, service innovation advantage, and business
performance. International Journal of Operations & Production Management.
Schaltegger, S. and Wagner, M., 2017. Managing the business case for sustainability: The
integration of social, environmental and economic performance. Routledge.
Zhao, Z.Y. and et. al., 2016. Competitiveness assessment of the biomass power generation
industry in China: A five forces model study. Renewable energy. 89. pp.144-153.
Online
business environment. 2020. [Online]Available
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