Tesco Plc: Performance Measurement and Management Case Study Report

This case study report delves into the performance management strategies of Tesco Plc, a leading UK retailer. It examines organizational performance measurement techniques, stakeholder communication, and risk management approaches. The report explores various perspectives, including financial performance, customer and client satisfaction, and the people perspective, offering insights into Tesco's business strategies. It also addresses quality management, implementation issues, and provides recommendations for improvement. The analysis covers key aspects such as financial data, customer feedback, and employee relations, painting a comprehensive picture of Tesco's operations and challenges within the competitive retail industry. The study highlights the company's efforts to adapt to market changes, manage risks, and maintain customer loyalty through various tools and strategies.

CASE STUDY REPORT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
Organisational Performance Management and Performance Measurement....................................3
Communicating Performance to Stakeholders.................................................................................4
Risk Management by Tesco Plc.......................................................................................................4
Quality management and Improvement...........................................................................................5
Financial Performance.....................................................................................................................6
Customer and Client Perspectives...................................................................................................6
People perspective...........................................................................................................................7
Implementation Issues.....................................................................................................................8
Recommendations for Improvement................................................................................................8
REFERENCES..............................................................................................................................10

INTRODUCTION
Performance of the company playing the key role in the industry because on the basis of
this an entity able to create image within the market segment in which it operates. In context to
the performance, there are two aspects comes into consideration which are like as measure and
manage which both are highly necessary to use at the working environment. At the present case
study, there is Tesco Plc is selected which is one of the largest business organisation operates in
the industry of UK's retail sector. The current report shows about the management and
measurement of performance of the company with the help of different types of techniques and
tools of the performance measurement. Moreover, it focuses about the different perspective of
performance like as financial, customers, people as well as client towards the Tesco Plc. At the
end of study it describes regarding to the issues which comes into consideration while
implementing the plan of business.
Organisational Performance Management and Performance Measurement
Tesco Plc is a UK largest retailer company, which gives the employment opportunity
approximate 470000 people around 14 countries. Organization performance management and
measurement is the best way to analysis the company's actual performance. To manage the
performance of Tesco Plc, there are many strategies are framed for the growth of the
organisation (Van Dooren, Bouckaert and Halligan, 2015). In this way, Tesco management team
decided to make a performance management framework that would provide the outline objective
of the company. To manage the performance, Tesco Plc follow the corporate steering wheel
strategy so that they can communicate with there members easily. This strategy will focus to
maximize the profit, grow there sales, responsible for the fair and honest work. This strategy is
focus time and money people perspectives. To measuring there performance Tesco Plc consider
three approaches such as economy, efficiency and effectiveness approaches. In economy
approach, Tesco always try to maintain there cost, time and quantity or quality of there products.
Tesco also manage there human and financial resources so that it can not make negative impact
in there performance. By using efficiency approach, Tesco plc uses there tactical level and all the
activities which bare performed as per there results perspective. Tesco Plc also follow the
effectiveness approach, in this they can focus on there target groups or clients and they also
follow there strategic level performance (Delivering Success: How Tesco is Managing,
Measuring and Maximising its Performance, 2017).

To measuring there performance Tesco using various process such as they collecting the
data through interview, telephone, email or by filing the questionnaires etc. data are to be
collected by the Tesco plc. Tesco also used 360 degree feedback, balance scorecard as a tool so
that they can measure there performance. To measuring there performance they can analysis
there Swot, so that company can identify there strength, weakness, threat and opportunity. By
analysing the performance Tesco Plc examined that in comparison of 2015, there performance
rate will be increases with 28% in 2016. They also follow the E-business tools by using many
computer techniques, social media networks and RFID techniques so that they can measure there
performance. Tesco also analysis that by using social networking sites such as Facebook, twitter
and getting the customer's feedback, it also helps to measure there performance. In this by
adopting such techniques Tesco can measure there performance and managed effectively (De
Waal, 2013).
Communicating Performance to Stakeholders
Tesco is one of the most market leader in grocery sectors in which 60% of total sales and
profits are received by the UK business. It establishes there 3146 stores in all over world.
Stakeholder plays an important role in company's growth, in this way 24% of Tesco share are in
the hand of there shareholder. So that to make effective communication to there shareholder will
make great impact in there performance. To make an effective communication with there
shareholder Tesco follow the steering wheel as a tool which give right map and guidance to there
shareholder so that they can make forecast into the future. By using Tesco steering wheel it
focuses BSC areas such as financial, customer, operations and employee performance. By
sending the e-mails Tesco can communicate with there stakeholders. They give every
information such as financial statements such as balance sheet, profit and loss account which are
essential for the shareholder so that they can decide the amount of capital invested in Tesco
(Bodie, 2013). Tesco also communicate there performance through website and give details such
as there annual report as per the year, standards and level of performance to there shareholders.
Risk Management by Tesco Plc
Tesco Plc is the largest retailer which operate there work in large scale. In 2004 Tesco
established there 1878 stores which was increased by 2282 in 2009 in UK. Rest of Europe they
were launched 261 stores in 2004. Nowadays they established there 5878 stores all around the

world. So that working in a large scale will also give the large number of risk, so that Tesco can
manage there risk by managing there growth. Tesco can manage there risk at different level such
as group level, sub group level. In group level, Tesco is managed there annual board meeting so
that they can review there strategic risk. They also fix the compliance and finance committee so
that they can set there treasury limits. In sub group level, Tesco manage there risk by using
functional work such as IT and they graded there stores with RAG graded so that they can define
there missing targets.
Tesco Plc focus in various culture because they were trade there products in worldwide
level. So that dealing with different culture make more risk to there performance. So that Tesco
always try giving care for there customers, staff. So that as per the record, Tesco increases there
staff retention rate by 80% (Hvidman and Andersen, 2014). To minimize the risk Tesco adopt
various techniques using Steering wheel techniques, in which they can understand the customers
and working as team. They also create trust and loyalty in team member so that they can work
hard. To managing the risk, Tesco pay there employees as per there performance. There main
criteria of sharing profit are: If employees complete there 1 year service than employer give
salary and % of salary up to maximum 3000 GBP. In this way Tesco can manage there risk to
improve there performance.
Quality management and Improvement
To manage the quality of the product and services are main issue which every company
can face. So that Tesco PLc also manage the quality and making improvement timely so that
they can improve there performance (Ates, Garengo, Cocca and Bititci, 2013.). To managing the
quality of products and services Tesco Plc give the priorities to there competitive element such
as low cost, quality, time of delivery, flexibility, speed and dependency. By using flexibility,
Tesco launches there branded product and acquire 70% of market shares. Tesco also build there
brand image by investing in new techniques so it can control the stock and provide better
customer handling. Tesco also negotiate with the supermarkets so that they can use low cost in
there promotional activity. Tesco is famous for there name as a brand so that they can maintain
the quality of there products. So that to maintain the quality Tesco follow the 100% customer
satisfaction approach without giving any defective products and they also manage at H&M to
maintain there quality of the products (Ghamkhari and Mohsenian-Rad, 2013).

Financial Performance
To measure the business performance there are financial perspective is also considered
which is one part of the balanced scorecard and helps to the Tesco Plc in order to take various
business decisions. For measuring the financial performance of an entity there are mainly
profitability things and aspects are to be utilised which are like as net income, revenue and sales
etc. At the end of an accounting period 2014 to 2016 revenue of the Tesco Plc reduces on
consistent basis which shows that management is not able to sale more number of the products
and services in the market. At the year ending 2014, sales of the Tesco Plc is worth of 63557
GBP which declines and reaches up to the 54433 GNP at the end of FY 2016. On the basis of
these negative data it has been clearly visualised and identified that the Tesco Plc not adopting
the effectual as well as effective kind of the marketing strategies to attracting the customers
(Tesco Plc, 2017). For this element it is highly necessary to manage and reduce cost along with
improving product and service quality which will result to increase users and sales also.
Apart from this, when talking about the another profit aspect such as net income it has
been analysed that after deducting all kinds of direct and indirect costs from revenue there are
how entity performs in the retail industry. The amount of net income at the end of 2014 is worth
of 974 GBP which reduce with high proportion in FY 2015 which is -5741 GBP. Apart from
this, after 2015 the net income increase and decline on next two years 2016 and 2017 which is
worth of 138 and -40 GBP. On the basis of both the data it can be analysed that in the current
situation and present era, financial performance of Tesco Plc in retail industry is poor where it
needs to adopt several effectual business strategies.
Customer and Client Perspectives
Customer need ans satisfaction are changing as per the changes in sales. Tesco provide
service in different cultures, so the reason to measure the customer and client perspective so that
company can find out the reasons for the dissatisfaction of customer. To understand the
dissatisfaction of customers can be understand by keeping large number of complaints. So that to
identify the customer perspective, Tesco using survey and focus on group so that they can satisfy
the customer wants and needs. To identify the customer's perspective Tesco follow behavioural
method which are concerned on the beliefs, attitude of the people. So that Tesco can target the
middle class and higher middle class customers or such family where 2 earning members are

there and selecting such family where all the decision are taken by the head of the family (De
Waal, 2013). Tesco also analysis the quantitative data as per the respondent.
In past 12 months Tesco market share was dropped from 31.4% to 30.6%. So that Tesco
Plc try to make the efforts of customer satisfaction which includes various variables such as
price, convenience etc. To measure the customer satisfaction, Tesco developed many tools or
models such as SERVQUAL, SERVPERF, the service profit chain model, Satisfaction- Service
Quality Model etc. so that company can measure the customers and client's satisfaction.
Nowadays Tesco developed Club card which is known as loyalty scheme, so that the company
can earn the customer's loyalty. Tesco also use marketing strategy and it is beneficial for gaining
the customer loyalty and satisfaction.
People perspective
Perspective refers to attitude and perception of people towards products and services
produced by organization. It is one of the smart way to analyse customer demand and their
opinions on quality services provided by Tesco. However, it is gathered through different
methods as by conducting survey, face to face interview and door to door marketing. On the
basis of these collected information, various ideas are generated for improving efficiencies and
grocery products. Therefore, adequate strategies are prepared to improve effectiveness of firm sat
high level. For gaining people perspective, it is needed for manager of the company to identify
people perception and their different choices in various terms as social, cultural and so on
(Performance management in Tesco, 2016). Thereby, perspective is an approach to identify
comments and views of other people on a particular thing. Including this, it is beneficial for
optimum allocation of resources and fund as well enhancing quality services at high level.
Besides this, it is termed as key tool to meet all expectations of people by fulfilling requirements
at large scale. It influences productivity and profitability of organization that is interrelated with
making decisions for further years for proper business operations efficiently. Along with this, it
is needed to analyse all people views critically so that actual market position of organization and
its products' value can be gained by this method. Including this, people perspective is helpful for
competitive advantages and sustainability of entity in market for long term periodicity. However,
on behalf of their opinions, innovations are created and implemented to enhance quality services
and improving its efficiencies regarding business and competitive strategies. Thus, marketing

manager of Tesco analyses people attitude and perception towards product services of groceries
and food items (Bodie, 2013). Through this process also tries to establish good relationship with
all customers including agents, retailers and other business entities therefore effective demand
for product can be gained. Moreover, it is useful for maintaining their loyalty and positive
attitude towards goods and services for long time period to sustain and maintain its good
reputations. Thus, people perspective is key tool for business operations and gaining proper
satisfaction for long time periodicity at high level.
Implementation Issues
When the Tesco Plc going to implement any kind of the business strategy and plan then
there are several types of the issues as well as problems comes into consideration and by doing
commitment with them able to implement at the workplace in proper manner. Main issues and
obstacles which can be arise while implementing and executing in Tesco Plc are like as cost
increases, communication theories and methods, level of understanding in employees, relations
among all the available employees and employers etc (Mone and London, 2014). Apart from
this, in case the objectives and activities of the plan are unclear among the employees or
individuals and manager or leader then also create a big issues at the time of implementing the
plan in the Tesco Plc.
Recommendations for Improvement
On the basis of the above analysis done in context to the performance of Tesco Plc it has
been identified that it not able it not having the better communication with stakeholders, less
effective risk management strategies as well as unable to manage and improve quality level of
the products and services. Moreover, in context to all perspectives of balanced scorecards the
Tesco Plc performing poor and to improve that in needs to enhance the quality which is main
concern for the consumers. Along with the quality users concern towards the cost and pricing
aspect of the product and services also and for that Tesco Plc needs to adopt and implement the
cost control methods and techniques. In order to this, to manage and improve business
performance it should use the quality management techniques such as jus-in-time, six sigma,
bottleneck etc. which helps to enhance quality level in the retail industry. Moreover, better the
level of services, timely delivery of the products in effectual manner etc. are also one of the best
techniques to improve business performance in the retail industry of UK. In respective segment

of UK there are level of competition is higher and for that Tesco Plc should use competitive
strategies such as cost leadership, differentiation, focused etc. by which able to beat the rival
firms and raise customers. Ultimately, business performance of the Tesco Plc in retail sector
improve and raise in the fruitful and effectual ways.

REFERENCES
Books and Journals
Ates, A., Garengo, P., Cocca, P. and Bititci, U., 2013. The development of SME managerial
practice for effective performance management. Journal of Small Business and Enterprise
Development, 20(1), pp.28-54.
Bodie, Z., 2013. Investments. McGraw-Hill.
De Waal, A., 2013. Strategic Performance Management: A managerial and behavioral
approach. Palgrave Macmillan.
Ghamkhari, M. and Mohsenian-Rad, H., 2013. Energy and performance management of green
data centers: A profit maximization approach. IEEE Transactions on Smart Grid. 4(2).
pp.1017-1025.
Hvidman, U. and Andersen, S. C., 2014. Impact of performance management in public and
private organizations. Journal of Public Administration Research and Theory. 24(1).
pp.35-58.
Mone, E. M. and London, M., 2014. Employee engagement through effective performance
management: A practical guide for managers. Routledge.
Van Dooren, W., Bouckaert, G. and Halligan, J., 2015. Performance management in the public
sector. Routledge.
Online
Delivering Success: How Tesco is Managing, Measuring and Maximising its Performance, 2017.
[Online]. Available through: <https://www.ap-institute.com/perfomance-management-
case-studies/delivering-success-tesco> [Accessed on 24th May 2017].
Performance management in Tesco, 2016. [Online]. Available through:
<http://essayandreportwriting.com/academics/report-writing-samples/performance-
management-in-tesco/> [Accessed on 24th May 2017].
Tesco Plc, 2017. [Online]. Available through: <http://financials.morningstar.com/income-
statement/is.html?t=TSCDY> [Accessed on 24th May 2017].