Tesco Business Extended Project: A Comprehensive Analysis

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BUSINESS ESSENTIAL EXTENDED PROJECT

Table of Contents
Introduction...................................................................................................................... 2
Background of the company............................................................................................3
Identification of different competitors in this sector..........................................................4
Positioning based on competitive advantage...................................................................4
Human resources......................................................................................................... 4
Finance and accounting................................................................................................6
Marketing...................................................................................................................... 7
Supply chain management........................................................................................... 8
Conclusion and recommendation.................................................................................9
References................................................................................................................. 10
1

Introduction
Businesses can be operated by making valiant efforts in several activities like
investment, man management, financial stability, proper marketing, sales activities and
so on (Min, 2015). In order to start a business, the owner needs to make proper market
analysis so that the various factors like competitors' force, suppliers force, customer
needs, society structure, economic status of the country, political condition and others
can be identified and analysed. It may allow them to understand the business
environment and make a decision of whether it is suitable for a condition for starting a
business or not. After successfully starting the business, the owner needs to make sure
that proper resource management, financial activities, a high level of marketing would
be conducted successfully. It is the right way to start and further extend a business
which may support to get a competitive advantage in the market.
2

Background of the company
The analysis for this report is based on the business activities of Tesco, UK. It is a retail
company in the United Kingdom which has become the third largest globally according
to the gross revenue amount. The company was established in the year 1919, 100
years ago. So, it can be said that this company is one of the oldest. It has been founded
by Jack Cohen. The headquarters of this organisation is located in Hertfordshire, UK. It
is operating the business in countries like the UK, Ireland, Thailand, Malaysia, Poland,
Hungary and many more and it has over 6800 departmental shops in those areas. In
2019, the company has gained a revenue amount of almost 64000 million GBP. The
company offers various products like groceries, food products, apparel, mobile
communication and services like banking, insurance and others. It has created a huge
management structure as over 450000 people are working in the organisation
(Tesco.com, 2019).
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Identification of different competitors in this sector
The retail industry is considered to be the fastest growing sector in the world. Retail is a
concept in which the business is conducted through selling and buying various products
and services (Kasemsap, 2018). Retail organisations mainly focus on the different types
of products and services to introduce in the market rather than specialising on one or
two products. Retail organisations do make lots of necessary changes in their
approaches to getting proper market values. Retail marketing is always undergoing
massive radical restructuring as few factors like increase of GDP, per capita income,
purchasing value and changes in customers’ preferences are making lots of impacts.
A fierce competition can be noticed in the industry of retailing. The company of Tesco
has also been facing that as competitors like Sainsbury’s, ASDA, Aldi, Morrisons are
operating their businesses successfully in the UK and making threats for them. In the
country, the consumers have spent almost 405 billion GBP in retail purchasing in 2017.
Positioning based on competitive advantage
The concerned organisation has been making serious approaches since its birth. They
started the business with a clear state of mind and making a perfect vision of serving
the people through proving products from various segments. That is what they are still
doing and they have never failed to continue so. But, these processes could not be
possible if they failed to manage in designing man management.
Human resources
Tesco has created a strong management structure for making smooth running of the
business. In order to monitor all the business activities, they have built a board of
directors in which qualified and skilled people have been recruited. The board
comprises of 10 efficient members who are tirelessly working for the betterment of the
company. The company has made a few key changes in the structure of the board as
well. In the financial year 2014/15, new people were recruited in the panel of board of
directors. John Allan has been appointed as chairman of this board. Dave Lewis and
Alan Steward have also been appointed as CEO and financial officer respectively. In
this year, four non-executive directors have taken their retirement and as a result of
that, the company has recruited another three. CEO has announced that the company
would reduce the costs in the head office activities by 30%. There are five executive
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committees which are comprised of 11 efficient people and these committees are led by
the CEO.
Figure 1: Governance structure of Tesco
Source: (Kusumaningtias et al., 2016)
In the departmental store level, the company has made a strong structure as well. This
is the main reason that they are successfully operating their business. It is always
important for companies like Tesco to have able people in the organisational structure.
Regional manager of the company is responsible for monitoring the store level activities.
Store managers are there under the regional manager, who looks after several
proceeding like supply management, maintaining the product quality, keeping the
products fresh, implementing technologies and other facilities in the stores and so on.
Others managers like food trading manager, non-food trading manager and personnel
manager are working under the store management to maintain the activities in different
segments.
Figure 2: Store level organisational structure of Tesco
Source: (Picot-Coupey et al., 2017)
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Management of Tesco has made effective approaches in the HR segments. By their
effective management in HR, the company has built a huge base of employees in its
workplace. The company has maintained a clear structure of the recruitment process in
which it updates the job requirements for the various positions in “Latest jobs” section of
its official website. The willing people can upload their CVs and covering letters. The
selection processes are done by the face to face and video conference interview and
online tests. The company also provides job details in other recruitment websites like
LinkedIn and others as well.
The company of Tesco has also been training its employees on a regular basis. They
have offered different types of programs to the employees in whom they can be able to
get the learning of their job roles and the company policies. The training can be off job
and on the job and these training procedures are followed for making the employees
efficient in handling the customers and the suppliers mainly (Cohen, 2017). Other vital
activities include marketing, store managing, making financial stability in the
organisation have been performed by the staffs as well.
The organisation has a system of performance management which has been efficiently
performing for the development of the working environment (Forslund, 2015).
Employees are assigned for specific work with certain targets and they also provide the
flexibility in time to achieve those targets so that the employees do not feel exhausted in
doing the work. Good performances are rewarded by the management as the
employees have been getting increments, promotions and rewards as per their
activities. It certainly has created a good level of motivation and it has helped to
increase the performance level of the company.
Finance and accounting
The company has developed its financial positions in recent years after the joining of
new CEO in the company. As it is known as a leading retail organisation in the UK, the
company has created its value in the market. However, it has been found that there
were some issues in the financial performance as two of their former executive officers
have been accused of false accounting. It means that the company has got a fair
amount of income but it has not been shown in the financial data of the company. The
company was accused to inflate the rate of profit by 250 million GBP. This allegation
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had shaken the financial structure of the company and after the financial year of 2014,
the company has shown that it tried hard to turn around the things by taking serious
steps in redesigning financial structure. After the correction of the profit statement,
around 12% of share prices have fallen at the first instance.
Last year, the company has generated the amount of 56883 million GBP in group sales
which is excluding VAT and fuel tax. In 2017/18, it generated 57493 million GBP as total
revenue whereas it has been noticed of the high rising of revenue amount in 2018/19
financial year. The amount was 63911 million GBP. Around 2200 million GBP profit
amount was achieved by the company which was far better than 2017/18 financial year.
So, it can be said that after joining of Dave Lewis, the company has managed to pull
things back in their favour as the management has made a strong action against the
false activities in the company.
Marketing
Marketing has been the foremost concern for the management of the company and they
have taken some effective steps in its marketing (Ziliani and Ieva, 2015). They always
see marketing as an effective business plan.
Accessibility: Tesco has built accessibility in the market by opening lots of
departmental stores. They have always focused on reaching the vast area so that they
can make interaction with more people in the market. The company is operating through
6800 department shops in more than 10 countries. Apart from the offline presence, they
also have online accessibility as well. It has helped the people to get the products and
services without being present in the stores.
Diversification: The Company offers various products like groceries, clothing, food
products, home and kitchen goods, telecommunication and the various services like
banks and insurances. This diversification has allowed them to get in touch with more
people as the people has found the opportunity to get their desired products.
Brand positioning: Before the 90s, the company positioned itself as the retailer of high
volume low cost. But after that, they have changed their position as they start to offer
products of premium ranges besides low-cost products as well. They have made their
brand popular in the market. However, recently, the company has faced a few troubles
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in brand promotion as the consumers have found some difficulties to relate with the
brand.
Awareness: The important thing in marketing strategy is creating awareness in the
market (Asif et al., 2015). The concerned company has taken a few initiatives for brand
awareness. They have made several offline platforms like TV commercials, print ads
and others. Online platforms like own official website, social media have also been
utilised by them for increasing their brand awareness in the market.
Customers’ relation: It is always necessary for the companies to make good relation
with the customers (Hassan et al., 2015). Tesco has built a strong customer base by
maintaining a proper connection with the consumers. They are offering quality products
and services to the people and maintain a reasonable price structure as well. Tesco has
established their own loyalty card for the customers which are named as “Tesco
Clubcard”. Recently, the management has made the decision of designing Digital
Clubcard for the customers, which are expected to be easier to use.
Supply chain management
In the retail sector, management of supply chain is an essential requirement which the
companies need to manage (Christopher, 2016). It helps the companies in increasing
the product and service quality. Tesco has utilised the system of supply chain in
operating the business on a large scale. They have made an effective connection with
over 6000 suppliers as more than 90% of suppliers have agreed that the company
maintain the time in making the payments. The suppliers also provide quality materials
for the products and the company has also reduced the costs in managing supply chain
which helps them to maintain the product quality as well as reasonable price range.
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Conclusion and recommendation
Hence, it can be concluded that business can be successful in making positive
approaches in various segments. Managing human resources, marketing activities,
financial status and so on are the areas that the companies need to have the powerful
forces. The company of Tesco has built a solid management structure who is working
for building efficiency in the performances. They have also made proper marketing
strategies for getting the market reputation.
However, the company needs to maintain their supply chain more efficiently. The
financial structure should be designed more effectively by the financial officers as well
so that the previous issues cannot be repeated furthermore.
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References
Asif, M., Abbas, K., Kashif, M., Hussain, S. and Hussain, I., 2015. Impact of brand
awareness and loyalty on brand equity. Journal of Marketing & Consumer
Research, 12, pp.67-72.
Christopher, M., 2016. Logistics & supply chain management. Pearson UK.
Cohen, E., 2017. Employee training and development. In CSR for HR (pp. 153-162).
Routledge.
Forslund, H., 2015. Performance management process integration in retail supply
chains. International Journal of Retail & Distribution Management, 43(7), pp.652-670.
Hassan, R.S., Nawaz, A., Lashari, M.N. and Zafar, F., 2015. Effect of customer
relationship management on customer satisfaction. Procedia Economics and
Finance, 23, pp.563-567.
Kasemsap, K., 2018. The roles of corporate marketing strategies and brand
management in the global retail industry. In Digital Marketing and Consumer
Engagement: Concepts, Methodologies, Tools, and Applications (pp. 294-325). IGI
Global.
Kusumaningtias, R., Ludigdo, U., Irianto, G. and Mulawarman, A.D., 2016. Rethinking of
corporate governance. Procedia-Social and Behavioral Sciences, 219, pp.455-464.
Min, H., 2015. The essentials of supply chain management: New business concepts
and applications. FT Press.
Picot-Coupey, K., Viviani, J.L. and Amadieu, P., 2017. 20. Retail network organizational
design and financial performance. Handbook of Research on Franchising, p.415.
Tesco.com. 2019. Tesco - Supermarkets | Online Groceries, Clubcard & Recipes.
Available at: https://www.tesco.com/ [Accessed 14 Jun. 2019].
Ziliani, C. and Ieva, M., 2015. Retail shopper marketing: the future of promotional
flyers. International Journal of Retail & Distribution Management, 43(6), pp.488-502.
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