Introduction to Business Studies: Motivational Theories and Tesco

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INTRODUCTION TO BUSINESS STUDIES
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Table of Contents
TASK 3............................................................................................................................................3
TASK 4............................................................................................................................................8
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TASK 3
Introduction
Tesco is a multinational British Company that operates in the retailing of the groceries and
general merchandise. Employee motivation is a highly significant concept for companies in order
to enhance productivity, job satisfaction and commitment of employees. The report summarizes
the most suitable motivational theories for Tesco in order to implement in Jack stores.
Motivational Theories in Tesco
For Jack stores, the most significant motivational theories can be Herzberg’s Two Factor or
Motivation-Hygiene Theory, Job characteristics model by Hackman and Oldham and Maslow’s
Theory of Motivation.
(Figure 1: Motivational Theories for Jack Stores)
(Source: By Author, 2019)
Herzberg Motivation-Hygiene Theory
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Motivational
Theories
Herzberg Two
Factor theory
Job
Characteristics
Theory
Maslow's
Hierarchy of
Needs Theory

This theory is the extension of the Maslow’s motivational theory by the psychologist named
Frederick Herzberg. It is considered one of the most effective and utilized motivational theory.
This theory highly emphasizes on depicting the de-motivating factors from those who possess
the characteristics of true motivators. According to Herzberg theory, motivating factors are those
factors that result in job satisfaction while hygiene factors are considered as the cause of job
dissatisfaction (Mehrad, 2015). The key motivating factors are comprised of work itself,
responsibility, achievement, advancement, and recognition. On the other hand, hygiene factors
can be defined as salary, working conditions, company policies, and administration,
interpersonal relationships and supervision. Motivating factors are linked with the factors
intrinsic in doing the job while hygiene factors are related to the conditions where the job is
performed. Considering this theory, Tesco would require taking away the dissatisfaction and
developing the conditions for satisfaction.
(Figure 2: Herzberg Motivating and Hygiene Factors)
(Source: By Author, 2019)
Advantages of Herzberg Theory
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Motivating
Factors
Recognition
Advancement
Responsibility
Work
Achievement
Hygiene Factors
Salary
Working
Conditions
Supervision
Administratio
n
Interpersonal
Relationships
Company
Policies

Herzberg motivational theory is beneficial for Tesco as it provides direction to the managers
regarding the enhancement of the employee motivation. It clearly provides differentiation
between the factors that depicts job satisfaction and dissatisfaction. It helps in differentiating the
different behavioral needs of the employees. These factors are also contributed to the governance
of employee behavior in the workplace.
Disadvantages of Herzberg Theory
One of the significant disadvantages of this theory lies in the fact that it does not consider
situational variables. This theory can be considered as a bias theory since it involves the reaction
of the employees at the time when they are asked about the satisfaction and dissatisfaction
sources at the workplace (Nosraty, et. al., 2015). Uncertain reliability can be realized in this
theory as the findings can be spoiled by the raters when they conduct an analysis of the same
response in a different manner. This theory lacks the consideration to the blue-collar workers and
emphasizes largely on the white-collar workers only. There is no utilization of comprehensive
measures of satisfaction as well as assumes the correlation linear between satisfaction,
productivity, and performance.
Job Characteristics Model
The model of job characteristics is developed by Hackman and Oldham on the basis of the fact
that the job can be considered as the most significant factor of motivation. This model
emphasizes that monotonous job highly leads to the fall in the motivational level of the
employees. Contrary to this, the challenging and creative job results in the improvement of the
employee motivation. This model clearly defines the core job characteristics that influence the
psychological states of the employee (Mukul, et. al., 2013). These characteristics are comprised
of task identity, feedback, task significance, skill variety, and autonomy while the crucial
psychological states are work meaningfulness, experienced responsibility as well as the
knowledge of the actual outcomes. As per this theory, the relationship between the job
characteristics and the psychological states also impact the work outcomes such as motivation,
satisfaction and absenteeism and others.
Advantages of the Job Characteristics Model
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The major advantage of this theory is that it helps the managers in recognizing the impact of job
characteristics on the job outcomes. This would assist Jack stores in depicting the key
components of the job and design it as per the components in order to ensure that the job
characteristics would impact positively on the psychological states and ultimately the job
outcomes. It helps in the encouragement to job rotation, assignment of the task to a team,
motivates the idea of providing opportunities to share ideas and opinions along with developing
the connection between the employees and end users.
Disadvantages of Job Characteristics Model
The theory of job characteristics is not necessarily beneficial in providing solutions to issues
related to employee motivation as well as productivity. Chances are there when the employees
may lack resistance to the idea of job redesigning (Batchelor, et. al., 2014). Due to this, the
performance of the employees may affect negatively due to the additional responsibility. The
efforts for implementing the job characteristics theory may get wasted due to the presence of
certain factors such as job insecurity and unequal compensation.
Maslow’s Theory of Motivation
Maslow’s Hierarchy of Needs Theory is the oldest and most utilized motivational theory being
designed by Abraham Maslow. This theory categorizes the entire human needs in five basic
groups named Self-actualization, Self-esteem, Belongingness and Love, Safety and Security; and
Physiological needs. This theory emphasizes the fact that a level of need does not motivate the
human when it is satisfied. In other words, the needs are not used for the motivation once the
satisfaction of those needs. Maslow has classified the needs in the form of hierarchy.
Advantages of Maslow’s Theory of Motivation
This theory clearly provides direction to the management regarding the ways of motivating the
employees. The major advantage of this theory is that it considers the inter-personal as well as
the intra-personal variations of human behavior (Jerome, 2013). This theory is most suitable for
the dynamic environment since it considers motivation as a changing force.
Disadvantages of Maslow’s Theory of Motivation
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It is realized that this theory does not provide the direct cause and effect relationship between
human behaviors and needs as well. It is said that needs and their satisfaction are considered as
the psychological feelings which are not known even by the person himself many times. Due to
this reason, the managers of Jack stores would not be able to be aware of the needs of the
employees.
Conclusion
It is evident that the employee motivation may largely influence the success of Jack stores by
Tesco. Herzberg two factor theory of motivation would be the most suitable motivational theory
as it will ensure the smooth functioning of Jack stores by keeping the employees motivated. This
theory would make sure that the factors of job satisfaction and dissatisfaction be identified in
Jack stores.
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References
 Batchelor, J. H., Abston, K. A., Lawlor, K. B., and Burch, G. F., 2014. The Job
Characteristics Model: An Extension to Entrepreneurial Motivation. Small Business
Institute® Journal. 10(1). pp 1-10.
 Jerome, D. N., 2013. Application of the Maslow’s hierarchy of need theory; impacts and
implications on organizational culture, human resource and employee’s performance.
International Journal of Business and Management Invention. 2(3). pp 39-45.
 Mehrad, A., 2015. ROLE OF HERZBERG MOTIVATION-HYGIENE THEORY ON
EXPLANATION OF JOB SATISFACTION AMONG STAFF AT ORGANIZATION.
International Journal of Information Research and Review. 2(12). pp 1491-1492.
 Mukul, A. Z. A., Rayhan, S. J., Hoque, F., and Islam, F., 2013. Job characteristics model
of Hackman and Oldham in garment sector in Bangladesh: a case study at Savar area in
Dhaka district. International Journal of Economics, Finance and Management Sciences.
1(4). pp 188-195.
 Nosraty, S., Khosravipour, B., Monavvarifard, F., Hamidi, F., and Salehi, L., 2015.
Analyzing the Role of Motivation Factors in Herzbergís Theory on Teacherís Job
Satisfaction (Case Study: Elementary Schools in Talesh City). International Journal of
Advanced Biological and Biomedical Research. 3(1). pp 87-92.
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TASK 4
Introduction
Sources of finance are of utmost significance for the organizations for the purpose of business
expansion, smooth functioning of business operations and others. Zylla Limited owns numerous
ferries for offering services related to the river crossing of people, goods, and vehicles as well.
This report discusses the sources of finance available to the company for purchasing a new ferry
and payment for working capital requirements of this expansion. It further evaluates the different
techniques of investment appraisal for determining the most suitable technique for the company.
Sources of Finance
Short-term Financing
 Asset-based Loan: This source of finance is referred to the business loan being secured
by the corporate assets such as inventory, real estate, equipment, and accounts receivable
and so on. This loan is basically taken for the purpose of fulfilling the needs of cash
flows. The terms and conditions of this source are determined on the basis of the asset
secured as collateral. This loan does not grant for the full value of assets being secured as
collateral. The interest rates on this loan are lower as it involves the seizure of pledged
asset in case of non-fulfillment of the loan.
 Accounts Receivable Financing: This financial source involves the invoice discounting
facilities that are offered by banking and non-banking institutions (Baresa, et. al., 2017).
The bank takes all the commercial bills and makes the payment to the company with a
discount. The bank directly collects the payment from the customers when the due date
comes.
 Bank Overdraft: This facility is offered by the banks that enable the customers to draw
the money amount more than the balance exists currently in their bank account. However,
this facility comes with a maximum limit beyond which the companies cannot enjoy the
overdraft facility. The main aim of this source is to satisfy the short-term needs in which
the interest rates are charged on daily basis on the actual amount being withdrawn by the
customer (Baresa, et. al., 2017).
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Long-term financing
 Equity Financing: Equity financing mainly involves common stocks as well as the
preferred stocks. This is basically the methodology of obtaining finance through the
selling of ownership interest for the business objectives. The scope of equity financing
ranges from the initial public offerings to obtaining finance from the friends and family.
It should be noted that this source is different from the debt financing that implies the
borrowed finance of a company.
 Venture Funding: Venture funding is mainly used for obtaining finance by venture
funding firms that invest in the new companies or companies having the potential to grow
in the long-run. The investors, however, invest in companies in lieu of the equity stake. It
should not be ignored that this financial source involves a high degree of risks for the
venture capitalists (Čalopa, et. al., 2014).
 Retained earnings: Retained earnings are the internal source of finance in actual terms.
Under this method, a certain percentage of the total profits are kept in the reserves such
as reserve funds, replacement fund, reserve for repairs and general reserve, and others for
the purpose of diversification of operations or business expansion. This source is
considered useful due to the absence of taking any type of loan, losses on discounted
bills, and interest payment.
Evaluation of Techniques for Investment Appraisal
Particulars Discount factor Amount
(in£)
Payback
Period
Cost of ferry 1 150,000 150000
Cash inflows for five
years:
Year 1 0.971 55,230 53628.3 -94,770
Year 2 0.943 70,045 66052.4 -24,725
Year 3 0.915 88,375 80863.1 63,650
Year 4 0.888 79,870 70924.6 143,520
Year 5 0.863 57,555 49670 201,075
Sale of 0.863 45,000 38835 246,075
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decommissioned ferry
in year 5
Total 396075 359973
Payback Period Method: This method is expressed in years which imply the time taken by the
investment project to make the cash inflows equal to the cash outflows. This method is easily
understandable and applicable and does not consider the future assumptions of the interest rates.
It is the most appropriate method for the situation where the uncertainty of future exists. This
method involves the ranking system for the projects as per the repayability which proves
beneficial for the firms experiencing the constraints of liquidity (Azeez, 2015).
Payback Period: Initial investment/periodic cash flow
2+ (-24725/88375)
2.275 years
Net Present Value Method: This method determines the variation between the present value of
cash inflows and cash outflows of an investment project. This method is considered as the
strongest investment appraisal technique. This method is highly beneficial for the attainment of
the financial objectives and helps in the identification of the time value of money. It assists in
determining the entire benefits that can be derived from the different proposals over the lifetime.
Net present value = Present value of cash outflow - the present value of cash inflow
209973.415
Conclusion and Recommendation
The NPV is positive in the given scenario which clearly indicates the positive condition for the
acceptance of an investment project. Using a payback period, it is evident that the company
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would be able to pay the investment amount in 2.275 years. This is recommended that the project
implies the acceptance condition for Zylla Limited.
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