Analysis of Business Functions and Strategies at Tesco

This report provides a detailed analysis of Tesco's business functions and organizational strategies. It begins with an introduction to Tesco as a multinational retailer and its global expansion. The report then explores Tesco's organizational strategies, including its multi-format approach and expansion into non-food retailing, as well as its ventures into financial services and telecommunications. A significant portion of the report is dedicated to examining the roles of various business functions within Tesco, such as administration, human resources, marketing (including the 4Ps), production, and accounting. Each function is described with examples of how they contribute to Tesco's success. Finally, the report applies SWOT and PESTLE analyses to identify Tesco's strengths, weaknesses, opportunities, and threats, as well as the external factors influencing its operations. The report concludes by summarizing the key findings and emphasizing the interconnectedness of the various business functions in achieving Tesco's goals.

Integration of Business Functions
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Table of Contents
INTRODUCTION ..........................................................................................................................3
Organisation strategies and changes within Tesco .........................................................................3
Role of business functions in Tesco ...............................................................................................4
SWOT Analysis .....................................................................................................................8
PESTLE Analysis ..................................................................................................................9
CONCLUSION ............................................................................................................................11
REFERENCES..............................................................................................................................12
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INTRODUCTION
This essay will determine a detailed understanding key elements of analysing internal
and external environment within which Tesco operates its various business functions. Tesco is a
multinational British general and grocery merchandiser retailer. The essay will also analyse
various impacts on the business operations within the Tesco. It also includes critical evaluation
of different business functions and their contribution in the success of Tesco. Furthermore, the
essay will also determine other elements and factors which influence business operations,
structure, culture, stakeholders and ethics. In addition, application of various theories on Tesco
such as SWOT analysis and PESTLE analysis will be demonstrated in the following essay.
Organisation strategies and changes within Tesco
Tesco is a global super-market chain based in United Kingdom; the company generates
more than £20 billion of revenue every year. Tesco was the first retailer that focused on the
nutritional value of own goods or products with the initiative of “Health Eating”. The company
obtained a huge success in the food retailing sector; this success helps the organisation to expand
their business all around the world. Tesco also developed and expanded its organisational
operations in various segments in order to target different markets and customers from every
sectors within a marketplace. The organisation successfully established around 2,500 stores all
around the world with 450,000 employees working for them. Tesco organisation rules the world
by its various business activities such as logistics, distribution, retailing, financial services and
telecommunication. The other main element of Tesco’ long term strategy for the development
and growth focus on being equally successful or strong in non-food and food retailing. Tesco
ensures delivering the products of high quality at effective and reasonable price and similarly,
services are offered to the customers (Sørensen, 2014).
Tesco earns around 80% of the profit from the business within UK, they have around
1,800 stores within the UK and 260,000 or more employees working within these stores. The
reason for this growth of their business is the achievement of multi-format approach, new space
and extension of the existing stores. The organisation have obtained a high rate of sales related to
non-food products, just twice the rate of food sales which is the major factor responsible for the
growth and expansion of their business. The last long-term strategy of Tesco for business
development and growth focuses on providing new retailing services with regards to the
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customer demand. In order to achieve this objective, the organisation developed three effective
tools –
 Tesco Personal Finance (TPF) – This was established in the year 1997, through a joint
venture with Royal Bank of Scotland, this joint project helped in combining Tesco’s
knowledge related to customers with the expertise of Royal Bank of Scotland providing
choices of products and services to the customers.
 Tesco.com –Tesco launched its online shopping portal in the year 1999 for providing
online shopping service to the customers with the help technological growth and
development.
 Tesco Telecom – Another scheme of Tesco was the Tesco mobile, this was launched in
the year 2003 with collaborating with the Telefonica subsidiary.
Role of business functions in Tesco
There are various functions in Tesco that helps to achieve their business goals and objectives and
sustain an impressive position within the market. These functions are designed and developed in
order to achieve competitive advantages in the market. The various business functions performed
by Tesco are as described below –
 Administration Function –Tesco performs effective administration functions in order to
make sure the smooth flow of various business activities or achievement of
organisational goals. Administration is a major support function needed by each and
every business or organisation, the various administrators within Tesco performs a
variety of tasks such as budget monitoring, conducting interview for new staff etc. The
routine functions of administrative department within Tesco consist preparing and filing
documents, opening mails, sending faxes and emails etc. This function helps in various
other tasks, such as conducting events, arranging travels etc. The examples of
administration functions are distributing, collecting and dispatching emails. Retrieving.
Storing paper as well as electronics records.
 Human resource functions – The human resources of business refers to the employees
working for an organisation such as Tesco, effective and successful organisations focus
on developing effective workforce for improved performance and achievement of
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organisational goals or objectives. Human Resource Management (HRM) within Tesco
focus on recruiting skilled and talented employees, this assists the organisation to fill the
job positions with the most effective employees. HRM develops effective strategies for
conducting recruiting programs in order to recruit new and talented employees. In
addition, HRM not only conduct recruitment programs, but also develops effective
induction, training and development programs for the growth of the new as well as
existing employees within Tesco. The various functions performed by Tesco’s HRM are
– to advertise job vacancies, to notify employees regarding promotion opportunities, to
receive and record job applications, arrange interviews as well as notify results to the
candidates (Pulver, 2013).
 Marketing Functions – The marketing is to identify and meet the needs of the customers,
Tesco consider its marketing functions as the most important. Marketing function
involves various activities such as promotions, advertising, etc. which helps organisation
to attract the customers and increase the sales within the market. The role of marketing
function within Tesco can be understood by the marketing mix, It includes four P’s as
described below –
Product – It refers to the products or services offered by Tesco to the customers, it includes who
are the targeted customers, what they need or want to buy, their needs, the products the
organisations offering to them, the areas in which the sales are increasing and how to sustain that
growing sales.
Price - This include the strategies of setting the prices of the products offered to the customers
within the target market. The Price is the most important factor which affects the sales of a
product or service. Marketing team of Tesco analyse the market conditions, trends and
competition in order to identify and implement the most effective pricing strategy for their
products and services.
Promotion – This element or factor focus on the strategy used for promotion or market their
products in the market. The Promotion of products is very important in order to spread
awareness among the people and attract them to buy them. Marketing department in Tesco
effectively promote their products in order to attract more and more customers to increase the
sales of products as well as services within the marketplace.
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Place – The Marketing team within Tesco also performs an effective function in identifying the
methods of distribution of their product, the target market for selling the products, the best
methods of selling products and services in the market. The places which can help in the selling
the products in the best way possible. It includes the ways in which internet can assist in selling
the products, the requirement of wholesalers, retailers or foreign agents etc (Trevino and Nelson,
2016).
 Production functions – The production function is the activities or operations related to
the manufacturing or assembly of products within an organisation such as Tesco. Thus,
the staff members under the production department in Tesco make sure that the products
are manufactured on time as well as with high quality. The production department also
focus on purchasing the raw materials effectively with right amount, at low cost, and
with the best quality to get the best outcome or finished products. It also includes the
management of the warehouse where the raw materials are stored. The production
function includes the following activities –
1. Production planning – The activity involves various decisions such as which machines or
methods will be used, which products are to be produced, the time-scale to produce those
products and other elements of production in the manufacturing process. Production
planning includes the development of various strategies that will be involved in the
production process (Jussila,Kärkkäinen and Aramo-Immone,2014).
2. Production control – The production control includes analysing and identifying the
progress of overall manufacturing process, Identifying the problems and errors within
production process and resolving issues related to manufacturing activities of Tesco. This
function also includes the management of raw materials used in the production,
machinery breakdown or shortage of labour.
3. Effective utilisation of Machinery – This function refers to minimise the issues or
problems related to the machineries and equipment used under the production process
within the Tesco. It helps the production team to make sure all the machines and
equipment are working properly and efficiently without any overload or error.
4. Staff utilisation control – This function of the production team is related to control and
manage the staff effectively and efficiently for achieving the best outcomes or results.
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The staff utilisation control helps the production department to concentrate on their
efforts on main elements of production targets and areas.
5. Finishing quality check – The final quality check is to ensure that the produced good are
of right standard and high quality. This function is to examine each product or item by
hands physically in order to check the size and quality is meeting the standards. The
production process also includes the function of packaging and making the product ready
to dispatch.
 Accounting function – Accounting is another important function performed by the
finance department within the Tesco, The accounting functions refers to systematically
record, analyse, interpret and present the financial data and information. The accounting
department focus on collecting, managing, recording and analysing the essential
financial information related to the business which is useful to develop and implement
organisational strategies for improving the performance and results of the business.
Other functions of accounting department in Tesco are as follows –
1. To maintain a business you require information, records, reports, and
investigation, precise data about resources, obligations, liabilities, benefits and
that is the reason.
2. Accounting is Importance for any business exercises.
3. Accounting helps administration association by giving data like level of benefit
over capital, capital venture position, administration productivity in controlling
and so forth. It helps in organising different exercises of various offices of the
business. The primary elements of the modem administration are arranging and
controlling. Controlling is basic for finish of exercises as indicated by design.
Book keeping can help administration much in controlling (Prajogo, 2016).
4. Preparation of different spending plans is fundamental to maintain the business
effectively. The chronicled data which is required in arrangement of spending
plan is provided by accounting department.
All the above roles and function within Tesco are very essential and needs to be performed
effectively in order to sustain their leading market position as well as profitability. The various
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functions in the organisation are the key elements which are responsible for the growth and
development of Tesco. Each and every function within Tesco Company are interlinked or
connected as well as work with coordination for getting the most successful results and achieve
the organisational goals or objectives.
Application of theories for identifying the organisational strategies of Tesco.
SWOT Analysis
In order to identify and understand the various elements such as strengths, weaknesses,
opportunities and threats related to Tesco, we can apply the SWOT analysis theory. These
elements are as described below –
Illustration 1: SWOT analysis
Source : (Business Current Events: Tesco Lotus Going Greener)
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 Strengths –Tesco is a very powerful and strong retail brand in the global market, it
comes the most valued top 100 brands in the world. The company is well known for
offering a wide range of products, values for money and convenience to the customers
worldwide. Tesco has around 7000 stores all over the world, they use effective and
innovative organisational methods in order to grow and develop their business. This
expansion of the business is a major strength of Tesco. Another most effective strength
of Tesco is the global activities or operations such as joint ventures, online shopping etc.
Due to the large size and facilities, they can purchase raw materials in bulk which
permits Tesco to offer products to the customers at cheap prices as compared to the
competitors. This helps them to achieve competitive advantage and lead the industry
(Healy and Palepu, 2012).
 Weaknesses –Tesco has developed a large organisation with very different products in
various sectors. Such as food, books, clothing, furniture, insurance, petrol, and financial
services. The model which is being used by the organisation has the great weakness.
Profit and revenue have the negative impacted by the bed debt of the credit card which
the venture have. Other than that, there is high level of insurance claim over the venture
and this is the reason profit of the venture is being decreasing year by year. On the other
hand, the biggest weakness which the firm have is that they do not have proper
knowledge and experience in some sector in which they are dealing such as smart
phones and Tablets. Thus, the firm need to invest lot in the technology and information
technology sector (Storey, 2016).
 Opportunities: There are many opportunities which Tesco have, such as expansion in the
new market for example entertainment through the digital channels, more number of
investment in the Blinkbox etc. On the other hand, wherein Tesco have been invested in
the smart phone and tables, can give them huge profit from the different market such as
Malaysia, South Korea, Thailand, and China.
 Threats: As the venture have several opportunities, they can have different types of
threats which can become the hurdles in the development of their business. The venture
is at the top most position with the highest target customers. But they have to face huge
competition with the different industries such as Sainsbury's, Asda, Morrison's and
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increasingly, Lidl and Aldi. These competitors can become the biggest threat for the
venture on the base of price, product, after sales services, distribution strategies,
promotions tactics etc. Asda whose Walt-mart branding have been increasing day by
day. It can happen that they can grasp the market share of Tesco. Thus, it can be said
that Asda which is the biggest competitor of Tesco can become the threat for the venture
(Zen, Duan and Li, 2015).
PESTLE Analysis
Another theory or approach which can help to analyse and understand various factors or
elements affecting the organisational strategies of Tesco is PESTLE Analysis which is as
mentioned below –
Illustration 2: PESTLE analysis
Source: (PESTLE Analysis of TESCO)
 Political factors - Tesco operates its function at a global level, therefore the political
factors at the global level have a great impact on the strategies and performance of the
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organisation. The political elements include tax rates, legislation acts and other
regulations of the county Tesco is operating in.
 Economic factors – These are major factors or elements which affect the business and
performance of the Tesco. The change in policies, taxation and other economic factors
can have a great impact on the business operations within Tesco. Therefore, the
organisations should be aware of these changes in overcome the problems or weaknesses
they can develop.
 Technological factor: Technology is very much critical factor for the supply chain
management of the Tesco. Organisation like Tesco which is in the retail industry, need
to be very strong in the supply chain which helps them to gain competitive advantage
and enhance their cost efficiency. As it is the most effective way to gain competitive
advantage, all the competitors have started implementing the same strategy. The
management of Tesco needs to be attentive for disruptive technologies, which occur
frequently in retailing. Thus, the venture needs to be very much attentive in adopting the
advanced technology so that they can lead in the market (Hair, 2015).
 Environmental: In the press, substantial emphasis is made on global warming and the
consequences associated with it. Such as it have been founded that there is increase in
the temperature of the country which leads to melting in the Artic Ice. As well as it have
been founded that by the end of 2040 there will be an ice-free summer. Other than that,
there are several other facts as this is one of them. These factors motivate the country
and different organisations to focus on the environmental sustainability. Thus, Tesco is
going to adopt the different strategies and activities in order to protect the environment
and different disasters in the coming years. Such as the venture have reduced their
consumption of energy and greenhouse gases. On the other hand, it has been founded
that when the venture is going to open new stores, at that time they are considering the
different environmental factors that they cannot harm the environment (Morschett,
Schramm and Zentes, 2015).
 Legal: It has been known that every country has their different laws and legislation
which need to be followed and implemented by the different organisations. Tesco is
marketing the wide range of products and services to their consumers such as
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agricultural products. Thus, they need to follow the different agricultural policies. On
the other hand, the venture is also dealing with different financial services such as credit
cards, savings, loans and mortgages. They need to follow the financial services act 2012.
There are three bodies that have been regulating the act that are Financial Policy
Committee, the Prudential Regulatory Authority and the Financial Conduct Authority.
Whenever the venture is going to market their new financial services, they need to take
permission from these three bodies. Thus, it can be said that legal aspects have great
impact over regulating the business.
CONCLUSION
The above study identified and described a brief introduction of Tesco, which is a multinational
retailer brand. This essay described strategies and changes in them within Tesco for the last few
years. The various changes included launching new products, online website etc. which helped
the organisation to grow and develop their business globally. Moreover, the essay also focused
on the various functions and roles performed by different departments within Tesco organisation
such as Marketing, Production, Administration and Human resource functions. Furthermore,
essay included the application of various theories such as SWOT and PESTLE which helped in
analysing the various factors and elements which are affecting the organisational strategies and
performance of Tesco.
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REFERENCES
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Morschett, D., Schramm-Klein, H. and Zentes, J., 2015. Strategic international
management (pp. 978-3658078836). Springer.
Hair, J.F., 2015. Essentials of business research methods. ME Sharpe.
Healy, P.M. and Palepu, K.G., 2012. Business analysis valuation: Using financial statements.
Cengage Learning.
Prajogo, D.I., 2016. The strategic fit between innovation strategies and business environment in
delivering business performance.International Journal of Production Economics.171.
pp.241-249.
Pulver, S., 2013. Business and the Environment.
Sørensen, H.E., 2014. Business development. In Palgrave Encyclopedia of Strategic
Management. Macmillan Publishers Ltd.
Storey, D.J., 2016.Understanding the small business sector. Routledge.
Trevino, L.K. and Nelson, K.A., 2016. Managing business ethics: Straight talk about how to do
it right. John Wiley & Sons.
Jussila, J.J., Kärkkäinen, H. and Aramo-Immonen, H., 2014. Social media utilization in
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pp.297-310.
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