Operations Management Report: Strategies, Models, and Risk at Tesco

This report provides a comprehensive analysis of Tesco's operations management, focusing on resource allocation strategies, the application of various management models, and risk mitigation techniques. It explores the strategies for resource management, including the Resource Based View and VRIO model, and details the implementation of Lean, Just-in-Time (JIT), and Total Quality Management (TQM) techniques to reduce costs. The report also examines the McKinsey 7-S model and its application in Tesco, along with a cost-benefit analysis. Furthermore, it delves into risk management, outlining standards, benchmarks, and a SWOT analysis to identify and mitigate risks, considering the relationship between various stakeholders and potential risks. Overall, the report offers valuable insights into Tesco's operational strategies and risk management practices.

PRINCIPLES OF
OPERATIONS
MANAGEMENT
1

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
LO 3.................................................................................................................................................3
Strategies for resource management...........................................................................................3
Resource Based View and VRIO model.....................................................................................4
Explanation of Lean, JIT ,TQM techniques and how those they help in reducing costs in
Tesco with examples...................................................................................................................5
Explanation of McKinsey's model, its application in Tesco and the way it will help the
company in achieving its goals and objectives...........................................................................6
Cost Benefit model......................................................................................................................6
LO 4.................................................................................................................................................7
Standards and Benchmarks for Managing Risk..........................................................................7
SWOT of Tesco and how can it help in mitigating risk and developing contingencies.............7
Relationship between various stakeholders and risk...................................................................8
CONCLUSION................................................................................................................................8
REFERENCES..............................................................................................................................10
2

INTRODUCTION
Operations management is the process of planning, organising, supervising and
scheduling various processes that are involved in the production and manufacturing of products
and services of a particular organisation (Bateman, Philp and Warrender, 2016). Tesco is a
British general merchandise and groceries retailer having operations world wide and
headquarters in England, United Kingdom. The report explains relevant and appropriate
resources for allocation for operations management, the various strategies of management of
resources. It also explains various models that can be opted by the respective organisation in
order to enhance its operational activities. Various standards and benchmarks are also explained
in order to manage as well as minimise risk. The report also describes the relationship between
the various stakeholders of the company and risk.
MAIN BODY
LO 3
Strategies for resource management
Resource management can be defined as the process of utilising the resources available
with the organisation effectively and efficiently whenever there is a need. Production raw
materials, human skills, inventory, financial resources, natural and IT resources can be cited as
examples. Resource management is an important aspect in operations management as it provides
an overview of the people who are involved in a particular project of the company and makes the
process of planning and formulating strategies transparent. It also helps in identifying problems
and addressing as well as controlling them on time (5 Reasons Why Is Resource Management
Important, 2020). Various strategies of resource management are explained below -
 Developing a strategic breakdown structure – It does not matter the kind of business
an organisation is into, it should take out time and create a strategic breakdown structure
wherein it align all its goals and measure them (Bromiley and Rau, 2016). Formulating a
strategic breakdown structure will help Tesco in measuring its results and adjust plans
accordingly and will also help the company by guiding its efforts.
 Planning for uncertainties – There can be cases where an opportunity can arise at the
last moment that might need assistance or can pose as a challenge. Such situations can
3

derail the complete work and efforts of the organisation all at once. Thus, the respective
company should keep certain resources as a backup for such situations.
Resource Based View and VRIO model
Resource Based View is a model that identifies resources as the primary components for
an organisation to gain high performance (de Mattos Nascimento and et. al., 2017). The model
states that if a resource within an organisation exhibits attributes of VRIO, it will enable it in
gaining a competitive advantage and sustaining in a competitive environment.
VRIO model
Resources Valuable Rare Inimitable Organised
Products Yes - - -
Financial Sources Yes Yes - -
Employees Yes Yes Yes -
Patents Yes Yes Yes Yes
Valuable – It refers to the resources that help an organisation to attain its goals and objectives.
The various valuable resources for Tesco are explained below - Products : These are valuable because they help in attracting customers and generate
profits. Financial Sources : These resources provide funds for carrying out various activities in
Tesco and that they are carried out smoothly. Employees : These are valuable because they help the company in attaining its goals and
targets.
 Patents : These are a valuable resource because they help in creating a goodwill for the
company in the market.
Rare – Rare resources are those resources that help a company in gaining competitive advantage
against competitors in the market (Srinivasan, 2017). There are certain resources that are not rare
for Tesco, like products because there are other players in the retail industry who offer similar
products as Tesco. Other rare resources are explained below - Financial Sources : Tesco has strong financial sources that have helped it attain the
position of a market leader in the UK market.
4

 Employees : The respective company has employees that are loyal to it and are highly
skilled, thus they are rare.
 Patents : Tesco has patents that are specific to its products and technology which makes
this resource rare.
Inimitable – These are those resources that cannot be copied by others (Thomé, Scavarda and
Scavarda, 2016). But there are certain resources that can be imitated like products and financial
sources. Financial sources can be imitated anytime either legally or illegally. Some inimitable
sources are - Employees : Employees are inimitable because skills that are possessed by the employees
of Tesco may not necessarily be present in the employees of competitor organisations.
 Patents : These are inimitable because a patent is of the nature that it cannot be imitated
by anyone in the market.
Organised – These are those resources that need to be organised after some duration of time.
Products, Financial Sources and Employees do not come in this category as they do not require
to be organised frequently. The sources that come under this category are -
 Patents : An organisation has to renew its patents frequently in order to ensure that the
competitors do not copy the same.
Explanation of Lean, JIT ,TQM techniques and how those they help in reducing costs in Tesco
with examples
Different techniques has been used by the organisation for managing their business
operations. Some of these techniques are discussed here.
 Just in time: It is a management technique which is designed to enhance efficiency,
reduce costs and eliminate waste by acquiring goods and services only when they needed.
Utilization of this strategy in Tesco will help them to eliminate waste in their organisation
in order to facilitate their operations and overall effectiveness of business (van Aken,
Chandrasekaran and Halman, 2016). It has a number of benefits in the business such as it
has little space for error and also help organisations to resolve problems with fulfilment
of orders.
For example, Tesco should provide a high quality of products and services that will
satisfy customer needs and wants. It will eventually leads to increase in operational efficiency
5

and thus, results in desire in delivery time and JIT can be applied to reduce wastes so that high
quality of products can be developed with reduced cost operations.
 Total quality management: It is an effective approach for management of overall
organisation (Grant and et.al., 2017). Major objective of this technique is to enhance the
quality of outputs as well as goods and services by means of continuous improvement of
internal operations. It can be utilized in respective organisation for ensuring quality of
product and service. For example, TQM can be applied in Tesco for reducing business
errors Cost of the operations will eventually decrease as percentage of defects decreases.
It helps the business in continuous improvement of operations.
Explanation of McKinsey's model, its application in Tesco and the way it will help the company
in achieving its goals and objectives
It is a framework for effectiveness of organisation that hypothesize that there are seven
different internal factors within an organisation which are need to be build up and aligned for
success of organisation (Holweg and et.al., 2018). Seven elements are structure, systems,
strategy, skills, style, staff and shared values which plays a vital role in achieving target gaols
and objectives. Tesco McKinsey's model determine connection between seven internal factors of
business in order to enhance overall efficiency. According to this model, a business basically
have soft and hard elements along with shared values which has a major impact on employee
performance and behaviour. Hard elements of Teso include its cost leadership strategy.
Organisational structure of Tesco is hierarchical which consist of many layers of management
which helps them to introduce free flow of knowledge that will eventually help them to achieve
gaols and objectives. In order to sustain their operations, Tesco depends on a wide range of
systems. Steering wheel performance management system is the best example for enhancing
performance of operations. New management process has been lead by CEO Dave Lewis has
announced some plans for simplifying systems of organisation in order to attain target goals and
objectives (Research Methodology. 2019). Model can be used in respective organisation for
reviewing effectiveness of business operations. It determines how to readjust an organisation for
supporting a new strategy (Slack, 2018).
Cost Benefit model
Cost benefit model can be defined as a process which enables the organisation to analyse
various systems, decisions etc. The model is developed by identifying the various benefits as
6

well the costs associated with taking an action and thus removing the costs from the benefits.
Once the process is completed, the model yields solid results that help the organisation to
formulate strategies and develop conclusions around he feasibility of a particular situation or
decision it takes (An Expert Guide to Cost Benefit Analysis, 2020). Tesco can rely on the cost
benefit model as it will provide a view of the situation that is being evaluated and is evidence-
based. Thus by providing an unbiased and direct view of the various consequences a decision can
have, the model proves out to be an important tool in formulating various strategies for the
business, examining the performance of a new hire and making decisions regarding purchase and
allocation of resources.
LO 4
Standards and Benchmarks for Managing Risk
ISO 31000 is a standard that was published internationally in the year 2009 and provides
various guidelines and principles for managing risk effectively. The standard outlines a general
approach to managing risk and can be applied to different types of risks like project, safety and
financial risks and used by any organisation. The standard provides principles and guidelines that
can help an organisation to undertake a review of its risk management process critically. The
standard is divided into 4 stages namely, identifying the risk, analysing, evaluating and treating
it. The standard does not provide a detailed instructions regarding how can risks be managed or
any advice relating to a specific domain of application.
SWOT of Tesco and how can it help in mitigating risk and developing contingencies
 Strengths – Tesco is a market leader in retail industry in the UK and has a high number
of sales and revenue when compared to other players in the UK market (Gibson and
Parkman, 2018). Also, the organisation is highly diversified and recognised across the
globe.
 Weaknesses – The company had to exit the American and Japanese markets due to failed
operations. Also, having low cost strategies can lead to a decline in its overall profit
margins.
 Opportunities – The company has an opportunity of expanding its business by making
itself present on various online platforms including social media. It can also expand its
discounted stores, Jack to increase its share in the market.
7

 Threats – Brexit has been posing threats due to trade deals and matters of cost. There is
also competition posed from various supermarket giants that have emerged in the last few
years.
Thus, a SWOT analysis can help Tesco in identifying its strengths and weaknesses
besides identifying the risks that may pose to be as challenges for it helping it in mitigating the
same.
Risk mapping can be defined as the process of listing down all the possible risks that can
impact the operations within an organisation wherein each risk is place on a 2D space which
includes its probability of occurrence and impact. A risk map will help the respective company
improve its risk managing and governing process by prioritising efforts for managing the risk.
Relationship between various stakeholders and risk
The relationship between different stakeholders and risk is explained below -
 Investors and risk – The relationship between investors and risk can be explained
through risk-return relationship which states that higher the return of an investment,
higher is the risk and vice versa (Heizer, 2016). Also, there is no guarantee that an
investor will get a high return by accepting a higher risk.
 Customers and risk – The relationship of customers with risk is high as they demand
trendy products that are in sync with the market. But there can be cases wherein the
organisation has already produced products but since they are not in sync with the
market, they are considered waste due to which the risk is high.
 Suppliers and risk – Organisations have different suppliers who provide them with their
raw materials (Kamalahmadi and Parast, 2016). But there are low chances that raw
material does not match with the product requirements because organisation's do not
want to go in a loss. Thus, the risk associated with suppliers is less.
CONCLUSION
From the above report, it can be concluded that operations management is an important
component within an organisation for it to be able to conduct its overall operations in an
effective manner. This also helps it in enhancing its overall productivity as well as performance
and expand itself in various untapped markets. In order to achieve this, it can make use of
8

various strategies for resource management and implement techniques and models like total
quality management, just-in-time and McKinsey's model.
9

REFERENCES
Books & Journals
Bateman, N., Philp, L. and Warrender, H., 2016. Visual management and shop floor teams–
development, implementation and use. International Journal of Production Research.
54(24). pp.7345-7358.
Bromiley, P. and Rau, D., 2016. Operations management and the resource based view: Another
view. Journal of Operations Management. 41. pp.95-106.
de Mattos Nascimento, D. L. and et. al., 2017. Synergy between principles of lean thinking and
BIM functionalities in interdisciplinarity of management in industrial plants. Journal of
lean systems. 2(4). pp.80-105.
Gibson, P. and Parkman, R., 2018. Cruise operations management: hospitality perspectives.
Routledge.
Grant, D. B., and et.al., 2017. Sustainable logistics and supply chain management: principles
and practices for sustainable operations and management. Kogan Page Publishers.
Heizer, J., 2016. Operations management, 11/e. Pearson Education India.
Holweg, M.,and et.al., 2018. Process theory: The principles of operations management. Oxford
University Press.
Kamalahmadi, M. and Parast, M. M., 2016. A review of the literature on the principles of
enterprise and supply chain resilience: Major findings and directions for future research.
International Journal of Production Economics. 171. pp.116-133.
Slack, N., 2018. Essentials of operations management. Pearson UK.
Srinivasan, G., 2017. Operations Research: principles and applications. PHI Learning Pvt. Ltd..
Thomé, A. M. T., Scavarda, L. F. and Scavarda, A. J., 2016. Conducting systematic literature
review in operations management. Production Planning & Control. 27(5). pp.408-420.
van Aken, J., Chandrasekaran, A. and Halman, J., 2016. Conducting and publishing design
science research: Inaugural essay of the design science department of the Journal of
Operations Management. Journal of Operations Management. 47. pp.1-8.
Online
5 Reasons Why Is Resource Management Important. 2020. [Online]. Available through:
<https://www.ganttic.com/blog/why-is-resource-management-important>.
An Expert Guide to Cost Benefit Analysis. 2020. [Online]. Available though:
<https://www.smartsheet.com/expert-guide-cost-benefit-analysis>.
Research Methodology. 2019. [Online]. Available through:
<https://research-methodology.net/tesco-mckinsey-7s-model/>.
10