TESCO's Challenges: A Business Project Report on Issues and Solutions

This business project report delves into the challenges faced by TESCO, a prominent UK-based supermarket chain, encompassing operational, financial, and HRM-related issues. The report identifies complexities in logistics and supply chain management, financial scandals, and difficulties in employee retention as key problems. Through stakeholder analysis, it highlights the impact of these issues on employees, customers, shareholders, and investors. The report proposes several recommendations, including improved planning, employee training, effective logistics, financial management, and quality improvements, aimed at enabling TESCO to navigate these challenges and ensure smoother business operations in the future. The analysis uses secondary data to evaluate the problems and suggests corrective actions for sustainable growth.

BUSINESS PROJECT REPORT

Table of Contents
Executive Summary:....................................................................................................................3
Introduction..................................................................................................................................4
Challenges/ problems the client is facing....................................................................................4
Purpose of the study:....................................................................................................................5
Stakeholder’s analysis:................................................................................................................6
Evaluation and analysis with secondary data..............................................................................8
Recommendations......................................................................................................................12
Conclusion.................................................................................................................................15
REFERENCES..............................................................................................................................17

Executive Summary:
Business enterprises are started with main aim of earning profit. Basically, it is an activity
to offer products and serviced to customers with an aim to make significant presence in market.
In present time, there are ample of business entities are working within market place. Therefore,
the competition is also increasing which might affect the future positioning of the organization in
profound manner. These entities play a crucial role in converting the raw material into finish
goods. Also, business organizations also generate employment opportunities to uplift the overall
living standard of society in significant manner. The present study is based on TESCO that is a
prestigious organization of retail industry. It is a well-known chain of supermarkets based on
UK. The company was started by Jock Cohen and now, it has presence across the globe. The
respective entity is known for offering variety of goods along with groceries to fulfill the demand
of global customers. The main purpose of the current project is to analyze different issues that
are being faced by the client company so that these issues can be resolves in an efficient manner
to get better results in future. Further, this also covers the impact of issues over stakeholders. In
addition, the main aim of report is to develop suitable recommendations so that the company can
deal with the issues profoundly. In context of issues, it is found that the respective organization is
facing numerous issues in terms of operating challenges, financial issues, HRM related issues
and more. In context of operating issues, the respective entity is facing complexities in terms of
effective logistics and supply chain management. It affects their ability to provide finish goods to
the customers in timely manner. Further, the company also faced ample of financial challenges
and accounting scandals that affected their reputation negatively. Apart from this, they are also
encountering HRM related issues where they found difficulty to retain customers within the
company for longer duration. Through stakeholder analysis, it is found that there are ample of
stakeholders within the entity such as employees, customers, shareholders, investors are more.
These all stakeholders are affected by the challenges that are being faced by the organization.
Here, stakeholders are getting affected in terms of changes in profit, daily operations of the
company as they also have interest in the business. It is suggested that the respective entity can
adopt significant corrective actions in terms of proper planning, training and development of
employees, effective logistic system, proper financial management, quality improvements and
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more. Here, implementing necessary recommendations will help the company in running the
business operations smoothly in future period of time.
Introduction
In current time, operating a business entity is important in order to earn potential amount
of profit. The main aim of business organizations is to contribute in success & growth of the
economy. These entities play a crucial role in converting the raw material into finish goods.
Also, business organizations also generate employment opportunities to uplift the overall living
standard of society in significant manner (Zhu, 2018). The size and scope of business can differ
based on investment, resources and purpose. It can be small, medium or large. However, the
primary motive of each & every business organization is to earn potential amount of profit.
Nowadays, the competition has been increased significantly. In such condition, it is quite
complex for the business companies to operate in such competitive environment. To ensure long-
term survival, they need to structure suitable strategies. With the help of such strategies, it is
possible to ensure success in the competitive environment (Polonsky and Waller, 2018). In
present time, business organizations are likely to face ample of challenges in terms of finance,
operations, HRM and more. Due to increasing size of the company, they also need to increase
number of resources. Sometimes, it might create obstacles in maintaining and managing daily
operations of business smoothly. The present report is based on TESCO that is a prestigious
organizations of UK. It is a forerunner company that was started by Jack Cohen to sale surplus
groceries. Now, it has become one of largest supermarket chain across the world. Along with
groceries, they also offer numerous general merchandise such as mobile phone, accessories,
clothes, food and more. In present time, the company is facing ample of issues and challenges.
The main aim of present study is to analyze the challenges that are being faced by the respective
company in order to draw appropriate recommendations to make improvements in future period
of time. This will include necessary evaluation of the problem using different models to
understand the problem effectively.
Challenges/ problems the client is facing
TESCO is a retail giant that is facing ample of issues in terms of reduction in sales,
revenue and more. The sudden economic events such as Brexit and more also create challenge
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for the company to operate business systematically. Further, they are also facing certain
challenges based on strategic management and daily operations which are mentioned as under:
 Operation management concerned challenges: TESCO has been explored in different
countries globally. However, they are facing challenge in terms of maintaining proper
logistic and supply chain management across the globe. This is because of rapid
challenges in grocery industry due to technological development. Due to ineffective
logistic management, the staff members of the company are unable to get proper
information which raise conflicts at workplace. It also enhanced complexities in business
environment.
 Finance related challenges: TESCO has been facing financial issues for longer period of
time. They have been encounter financial problems and accounting scandals in past
certain years that also affected their reputation in retain industry. Rather than fix the
issues, Tesco pushed up the overall numbers in order to cover up the situation and
maintain the position of one of the largest retail giants (Tesco Scandal-the perils of
aggressive accounting, 2014). Apart from this, they are facing issues of reducing revenue
due to quality of products, sudden economic events and other issues.
 HRM related challenges: Human resources are considered as an important part of the
company as they perform assigned duties effectively so that the company can grow in
future. Presently, TESCO is facing challenges related to HRM in terms of high employee
turnover, poor performance and more. Additionally, the company also faces change
management issues as the employees are not likely to show the positive approach towards
changes implemented within the organization.
Purpose of the study:
The main purpose of the study is to identify the business scenario of the chosen company.
The project is based on identification of different issues that are being faced by the client
organization. Here, the problems will be evaluated using different models. The project aims to
understand the issues thoroughly. Further, the study also aims to identify suitable ways to deal
with the issues profoundly. It will help in developing appropriate recommendations to take
necessary corrective actions to improve the overall situation in future period of time.
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Stakeholder’s analysis:
Stakeholders are considered as an important part of every company. They have power to
affect the business operations profoundly. Also, they have keen interest in the functions of a
business entity as they also get affected from the performance of the company. If company faces
any sort of challenges, it put direct impact on the stakeholders (Korada and Gitanjali, 2021). In
present scenario, the major stakeholders are managers, business owners, employees, customers,
suppliers and more. These all stakeholders are considered as a crucial part of the company.
Therefore, they will also get affect by the challenges being faced by the company. In this regard,
power-grid stakeholder matrix is given below:
Manage closely: Here, stakeholders are included with high power and high interest.
These are considered as the key players of the organization hence, it is imperative to maintain
close relations with them. For future success, it is required to engage these individuals fully and
make significant efforts to satisfy them (Horelli, 2018). In present context, shareholders and
investors fall under this category. They will profoundly affected by the challenges that are being
faced by the entity. Therefore, the entity needs to make them inform regarding the challenges
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and their possible impact. In addition, they need to inform by the company regularly using
different mediums of communication such as message, email and more.
Keep satisfied: These types of stakeholders have high power but they have least interest
in business. Hence, it is important to fulfill their expectations. They are not interested in getting
regular information regarding the company. However, there is requirement to provide adequate
amount of information to these people but not too much (Gerhardt, 2019). In present scenario,
government authorities fall under this category as they have high power to affect the business
functions of TESCO. Further, the challenges faced by the company are not likely to have any
direct impact on respective stakeholders.
Keep informed: In this, those stakeholders are included who have high interest in
business but do not have significant power to affect its function. To maintain healthy
relationship, there is requirement to inform such people regularly. It is also important to talk with
these individuals to ensure that no major issues arise in future period of time. These stakeholders
can prove helpful for the project in future period of time (Incera and et. al., 2021). In present
context, employees are fall under this category. They will directly affect with the challenges of
the company. They get pay from the company hence they will profoundly affect, if organization
faced any challenge.
Monitor: Here, those individuals are included who have less power and less interest in
business function. These are not considered as an important part of the organization. Therefore,
such stakeholders can be managed with minimum efforts. However, they need to inform with
adequate amount of information (Shu, Smyth and Haslam, 2021). In present context, customers
are fall under this category. TESCO is required to provide appropriate information to the buyers
using numerous communication mediums.
From the above-analysis, it is found that stakeholders occupy significant place in a
company. They are profoundly affected with any kind of challenge or issues that are being faced
by the company. In present context, TESCO is a large multinational company with numerous
stakeholders. It is imperative to keep the stakeholders informed in significant manner. Also, it is
analyzed that different stakeholders such as employees, customers, shareholders, investors are
affected with the challenges being faced by the entity. Therefore, the organization need to inform
them with adequate amount of information in order to protect their right for future betterment.
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Evaluation and analysis with secondary data
Business entities are considered as the crucial part of the overall economy. The main aim of
business corporations is to earn potential amount of profit in longer run. Along with this, they
also contribute in growth of the overall economy by generating employment opportunities in
significant manner. Ample of people are likely to work in business organizations which further
help in improving their living standard. It acts as a source of income for numerous individuals
and also helped in increasing the overall GDP of country. Further, business entities are likely to
convert raw material into finish goods in significant manner to provide the end product to the
customers (White and et. al., 2017). In the present scenario, it is analyzed that TESCO is facing
significant issues in terms of operational, financial and HRM related problems. In context of
operational problems, the company is encountering issues in terms of logistic system and supply
chain management. Maintain proper operational management is highly important for an
organization to run the business in systematic manner. This help in producing quality products in
an efficient manner. Hence, the respective company needs to address operational issues in
significant manner.
Apart from the operational issues, TESCO is also facing financial problems that have
direct impact on their overall revenue & profit margin. They have been faced accounting
scandals and financial problems in previous years. They have been covered the accounting issues
in order to maintain the prestige of the company. In addition, the overall profit of the respective
company has minimized to 825 million Euro last year due to the COVID-19 pandemic. They
incur extra cost of nearly 892 million Euro including hiring of more number of staff in order to
provide online delivery to customers. During the pandemic, nearly 50000 temporary workers
were hired by the company that enhanced overall cost in significant manner (Tesco profits fall as
Covid costs offset sales surge, 2021). In addition to this, poor performance of banking operations
and drop in underlying sales at Tesco grocery wholesale business has also been encountered at
the time of pandemic. This is creating significant financial problems within the company in
significant manner. In terms of HR related issues, TESCO is facing issues of poor performance
of the employees. In addition to this, employees are also not likely to work in change
environment rather than they are resisting the changes. When the company appointed Clarke as
the head of international operations and IT, it introduced several changes within the internal
environment of the company. Therefore, the employees started to resist the changes as they were
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not likely to adjust in the new environment. Apart from this, they also face issues in terms of
motivation, retention of workforce that put a direct impact on the future success of the entity.
PESTLE analysis:
PESTLE is a useful model to analyze the external environment of a company. It helps in
assessing different factors that are present in the outside environment of an organization. Here,
the company cannot control such factors but these elements are likely to put major impact on the
overall performance of the business. It is a significant tool that also helps in structuring suitable
strategies for future growth of the company (Agyekum and et. al., 2021). In present context, the
respective model will provide a broad overview regarding the challenges that are being faced by
TESCO in current business environment. For this purpose, major elements of PESTLE analysis
are mentioned below:
Political Factors: Being a largest retailer, TESCO is likely to operate in different
countries across the nation. Therefore, they need to follow the necessary rules and regulations to
ensure the compliance & safety of products (Segura, Morales and Somolinos, 2018). As, the
organization is operating in various countries, it needs to keep a check on changing policies,
rules, regulations across different nations. With recent political event Brexit, the company is
facing several uncertainties in terms of running the business efficiently. Apart from this, the US
& China trade war is also creating complexities for tesco in managing business operations
smoothly.
Economical Factors: The respective company offers range of products hence they need
to keep an eye on changing economical environment of different countries. There are ample of
economic factors that affects sales, revenue, profit and distribution of the company (Lozano and
Taboada, 2021). In addition, they need to be aware with different taxation policies to get
benefits in future period of time. As the major business of tesco is based on UK hence they are
highly affected with any change in policies of the country.
Social Factors: By looking at the current environment, TESCO offers majority of the
necessary products at one place. However, the customer behavior and expectations are uncertain
that affects the business operations of the respective company profoundly. Being a global
retailer, they need to ensure to produce suitable products to meet with the requirement of people
of diversify culture. Also, the trend in changing culture and purchasing habits need to analyze by
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the respective organization to make necessary modifications in their own practice in future
period of time.
Technological factors: The environment is changing in current time. To stay competitive
in current environment, a business entity needs to adopt advance and updated technology
(Ulubeyli and Kazanci, 2018). In this regard, TESCO has been experimenting with its
technologies since beginning. To leverage the benefit of current online shopping trend, they also
offer online shopping and delivery facilities to customers. However, they need to improve the
technology in future to stay relevant and competitive in the business environment. Here,
changing technology creates issues in terms of resistance of employees within the business
entity.
Legal Factors: In this context, change in government policy put a direct impact on the
operations of the company. To operate business appropriately, TESCO needs to follow both local
as well as international laws as it will help in maintaining smooth operations. For instance food
retailing commission has been prepared ample of laws that need to be follow by different
members in retail segment. In the year of 2016, there were certain allegations imposed on the
respective company regarding the gender biasness. This also hampered their market image
profoundly.
Environmental Factors: In present time, it is important to follow necessary
environmental practices to ensure success of a business entity in longer run (Marzi and et. al.,
2019). In this regard, the respective company has been undertaken ample of initiatives in order to
create sustainable society. Also, the organization follows appropriate practice of reuse, recycling
to reduce the amount of wastage. With increasing concern of people regarding the environment,
it has become important to follow environmental friendly practices for the company. Over the
last year, the entity has been changed its products in terms of reducing wastage and develop
sustainable practice.
Porters five force model
This is a framework that is used to analyze competitive environment of a company. It
helps in analyzing the number and power of competitors, suppliers and more. It is a business
model that helps in explaining the reason or sustainability of various organizations within the
industry. Additionally, it covers five different forces to analyze the progress of industry in
significant manner. In this regard, the porter has been identified five different forces that affected
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the growth of an industry in significant manner (Hafezi and et. al., 2020). In context of TESCO,
they are working in highly competitive industry. Here, retail industry has ample number of
players which is enhancing the overall level of competition in significant manner. In reference of
the selected company, different forces are mentioned below:
Competition in the industry: It is the highly important factor of the respective model
which reflects level of competition within the industry. The large number of competitors is
considered as a threat for the company. In condition of more number of rival firms, organization
cannot charge high amount from the customers. In contrast, they can easily charge high from the
customers in case of less number of rival firms (Hou, Wang and Luo, 2020). In context of
TESCO, they are working in a highly competitive industry. Here, retail industry is full of small
and large players such as ASDA, Morrisons, Sainsbury and more. These retailers are likely to
provide intense competition to the respective company. Tesco is working in such an environment
where already ample of well-known players are present hence, it is quite complex for the
company to make its own unique presence. Therefore, competitive rivalry is high for the
respective company that will create issues in future period of time.
Potential of new entrants into industry: Power of a company is also affected with the
entrance of new firms. Here, entry of new firms depends on the barriers within the industry. In
case of high barriers, it is complex for the new firms to enter in the market. However, it is quite
difficult to enter in the industry if entry barriers are more. In context of TESCO, threat of new
entrants is low due to high capital requirement. Also, Tesco is a large company with ample of
resources hence it will not affect by the entrance of any new firm in the market. The respective
company has already been established great influence among the buyers. Also, they maintain a
strong position in the retail industry by acquiring nearly 27% of the grocery market of UK.
However, they need to adopt significant strategies in order to maintain their competitive position
within retail industry.
Bargaining power of customers: Basically, this shows the power of customers to affect
the functioning of a business entity. Customers are the most important stakeholders of an
organization who can easily affect the operations significantly (Musonera and Cagle, 2019). In
case of TESCO, they have huge customer base. Ample number of customers visit to their store
regularly. Here, bargaining power of customers is high as they have options to switch over other
retail entities such as ASDA, Sainsbury and more which makes the bargaining power high.
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Nowadays, many competitors are present in the industries who are offering different products at
cheap price to the customers. This creates issues for the respective company in terms of charging
high price from the buyers. Besides this, they are facing numerous issues related to customer
switching as there are ample of other options available to customers from where they can
purchase the products.
Bargaining power of suppliers: Suppliers are also considered as an important part of the
organization. In retail industry, suppliers play an important role in providing necessary raw
material to the retailers to produce end product. In context of retail industry of UK, there are
large number of suppliers present (Svoboda and et. al., 2021). Here, TESCO is a large company
and has association with numerous suppliers. The company has a large supplier base which
provides them opportunity to negotiate with suppliers effectively. Also, the suppliers need to
work on the policies and rules of the company. In other words, bargaining power of suppliers is
high in context of the respective entity. Therefore, the bargaining power of suppliers is low in
case of the respective organization.
Threats of substitute: It is one of the important factors of porter’s five force model which
includes number of substitute goods or service that can be used as replacement of the company’s
product. Companies with fewer substitutes have power to charge high amount from the
customers (Koc and Bozdag, 2017). In this context, TESCO provided wide range of products to
the buyers. However, there are other retailers in the industry such as ASDA, Sainsbury and more.
These retailers are also likely to offer similar products to the buyers like TESCO. Therefore,
threat of substitute is high for the respective company which is creating complexities in order to
run business smoothly.
Recommendations
From the above analysis, it is found that the company is facing various challenges. To deal
with such challenges, it is important to take necessary corrective actions. In this regard, the
company is suggested to implement suitable recommendations which are mentioned below:
Porter’s Value chain
To deal with the operational issues of the company, it is suggested that the company
needs to implement porter’s value chain framework. This is a useful tool of strategic
management wherein organization activities are break down in strategic manner so that the firm
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