MANG 6449 Operations Management Report: Tesco Analysis

This report provides a comprehensive analysis of Tesco's operations management, focusing on strategic decisions, external factors, and key operational processes. It begins with an introduction to operations management and its significance, followed by an examination of external factors influencing Tesco, including a PESTEL analysis and Porter's Five Forces. The report then delves into key operational processes such as strategic operations management, decision-making, design of goods and services, and capacity management within Tesco. The analysis highlights how Tesco adapts to external pressures, manages its supply chain, and makes strategic choices. The report concludes with a discussion of the implications of these operations management strategies for Tesco's performance and future development, offering insights into its success and challenges.

Operations Management

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
CONCLUSION................................................................................................................................3
REFERENCES................................................................................................................................1

INTRODUCTION
Operations management of every organisation will deal with the set of entities the organisation is
doing away with regard to the goods and services. The business or an industry is moving ahead
with the policies that are necessary to be incorporated as a part of business operations such that
all the new resources that are in the organisation and that are stipulated for every sector of the
organisation will be used to improve the efficiency of the company. Taking care of all the
activities that are primarily carry forwarded in the organisation is nothing but operations
management. Operations management is more concerned with all the entities of the organisation
like that of organising producing manufacturing and also providing services to different
customers. Operations management is regarded to be one of the crucial part of an organisation
and it presents all the statistical data that is in charge of the organisation (Spring and et.al, 2017).
The controlling of all the processes as carry forwarded by the management and this is nothing
but taking charge over the entire entity of the activities of the actions that are being performed by
the management. It is a tedious task to accomplish and that is mostly associated with supervising
all the functionalities of the organisation. This entire report will deal with the operations
management and in context with the different formulations that are being adopted like that of
strategic operations management and the services operations Management related to
understanding as well as the process rice and layouts in operations. Every criteria with which the
components can be analysed are being portrayed in the report with proper discussion and the
description that is being provided. The organisation that is chosen in this regard is Tesco. The
Tesco company is one of the largest retailers in United Kingdom and is best known for its
groceries. It is regarded to be the topmost retailer of United Kingdom because of its operations
and the performance management. The activities that are being performed in the organisation are
portrayed in this report that will reflect upon the capability of operations that include various
information from sources.
EXTERNAL FACTOR WHICH INFLUENCE THE ORGANISATION
Tesco is one of the largest food retailer company there is in the world. The company provides
services even through online platforms and operates in market of UK which is largest for them.
Being a large firm, the operations of Tesco are affected by many external factors. These factors
can be analyses by Pestel analysis and porter’s five forces.

PESTEL analysis
Political: Tesco operates on a global level with the presence of stores all around the world. Thus,
the business operation of the company re affected by many political conditions of the country it
operates in. Tesco is a British retailer and the home market is UK (Weenk, 2019). The country
has a stable political environment hut the effects of Brexit has created lot of uncertainty for
Tesco. It operates only in the political environments where the business operations are mainly
conductive. Tesco is strong enough to handle and respond to the current and future political
factors and adjust the business and operation policies accordingly.
Economic: These factors influence the demand, costs, price and profit margin of Tesco. The
main economic factors which can affect the operations of Tesco are the high unemployment
levels. It decreases the demand of the products which will in turn affect the demand to produce
these products. Stopping the economic factors are not in control of any organisation. However,
the business strategy, performance and the marketing mix can be insightful for the benefit of
company. The business operations and profit are achieving the peaks in the international markets
of Tesco but the company is largely dependent on the market of UK. Any slow down in the
economy of UK will affect the UK food market and thus exposing Tesco to many market risks.
Social: The current market trends can predict that British customers are more into bulk shopping
under single roof. This is due to the social changes. To work with the trends, Tesco has increased
the amount of non food items in their product line which are available for sale. Whereas the
demographic changes have resulted in a fall in home meal preparation and UK retailers like
Tesco are aiming to add more value on their products and services. The company is focusing in
producing their own label share in the market for many operational improvements. This helps
Tesco to avoid having any extra expense in the business. Moreover, customer are becoming more
concern about their health and thus their attitude towards food is changing. Tesco is adapting
product mix to fulfil the demand of organic products. Along with this Tesco was the first
company to allow payment in cash as well as cheque at the checkout.
Technological: The advancements in technology are main external factor into the growth of
Tesco. Technology has influenced the development of many Tesco products. The new growing
technology benefits both the customers and company to make the operations run easy going. Use
of technology increases the points for customer satisfaction as it is readily available, provides
more personalised services and is more shopping convenient (David, 2019). Tesco uses the

wireless devices, intelligent scale, electronic labelling system for shelf and a self checkout
machine. Such technology has improved the efficiency of operations involving distribution and
stocking the products.
Environmental: It is important for the company to show responsibility towards society and
operate in a way which can benefit overall population. Major threats to the food retailers such as
environmental related issues. Tesco’s business operations work with the ethical parameters and
do not exceed the minimum obligations to stakeholders and the rules and regulation of
government. Government has intended to launch new business strategy for following more
sustainable consumption and production to have less wastage and reduce the use of consumption
of resources. This will lead in less damage of the environment.
Legal: Government legislature and policies have a direct influence on the business operations of
Tesco. Some practices results in banning of many current and ongoing practices including
demanding payments from suppliers and changing the already set prices. The growing
competiveness in the market has result in threats of intense price wars and strong requirements
for the products. Tesco is not allowed to pay below the minimum wage set by government and
cannot sell liquor to the underage customers. Adding to this, Tesco can be sued for misleading
their customers.
Porter’s five forces
Threat of new entrant: The grocery market of UK is divided in many brands including Tesco and
some small chains of supermarket. The grocery market in the country has been converted in
being a super market dominated business. Large chains like Tesco have more power due to their
high operating efficiency. They provide wide range of products present under one roof and major
marketing mix expenditure. This force impacts the small businesses and shops. Thus, it makes
many obstacles for the new companies to enter the grocery store market (Adelakun, 2020). It is
difficult for the new entrants to raise sufficient capital required for large fixed capital and build
up supply chains. Tesco has invested so much in the technology for the self checkouts and stock
control systems which impacts both the already exiting companies as well as the new entries in
the market. Tesco has achieved a differentiation from the other brands which can be seen in their
process of operational tactics in their product development and promotional activities.

Bargaining power of suppliers: Power of suppliers can be influenced by a lot of grocery chains
and the main apprehension of losing their business to other supermarkets. Tesco can negotiate
better promotional prices from the suppliers. Small chain supermarkets cannot match Tesco’s
level. The suppliers based in UK go through the threat by the growing power of large companies
like Tesco to switch to the source of their products from abroad to cheaper deals. Relations of
Tesco with the sellers can influence the deal and affect the strategic freedom of company and
profit margins. The high competition in the market has reduced the profit margins of the
supermarket chains as well as the suppliers.
Bargaining power of customers: When the products offered by the company are standardised
there is less switching costs and more power to yield buyers. The strategy applied by Tesco of
offering their customers a loyalty cards has become a success as it helped in customer retention
while increasing the profit in the business of Tesco. The company focus on fulfilling the need of
customers, customising services, making sure about the low prices and making better choices has
helped the company retain their customer base. The demand of customers has increased which
has forced supermarket companies like Tesco to sell non food items.
Threats of substitutes: The threat of substitution results in reducing demands for a product as
customers can switch to alternative options. In the grocery industry, threat of substitution is more
likely to happen between products or the substitute of need. New trends have major influence in
creating threat of substitute for products and needs. Tesco is trying to attain the already existing
small level operations and openings.
Bargaining power of competition: The growth of grocery industry is increasing and marking
their dominance especially the larger companies such as Tesco (Jelassi, and Martínez-López,
2020). They have a large size of the store and increased retailer concentration which form the
basic characteristics of this sector. Operating the business in a place where the market is flat,
then the growth is difficult. The large chains of Tesco are attaining large amount of information
related to the customers to maintain the communication balance. The competition in the market
has encouraged the UK retailers to innovate and improve in order to build their market share.
KEY OPERATIONAL PROCESSES
Strategic Operations Management
Operations management deals with all the integral part of the organisation and is more related to
the entities that are in regard to be performed by the organisation. The strategic operations

management is a strategic approach that is made by enhancing or plan which is required for the
goods and qualities or the services that are to be provided or rendered to their customers. The
different areas of strategic operations management in the organisation and that can be portrayed
in Tesco are as follows:
Decision areas for strategic operations management: there are certain entities are the
requisites that are to be enhanced in the organisation and that can only be based on management
efficiency of dealing with the compliance (Gölzer and Fritzsche, 2017). Decision making is one
of the formulation that is very important interacting with the choices of the organisation and that
with regards to our retailing sector is a hectic phenomena. The decision-making that is performed
in the organisation is a strategic approach towards how the goods and services can be divided in
the organisation. When it comes to Tesco the decision-making process is maintained in such a
manner that the organisation is divided into small sector and IT sector is incorporated with a
manager. The decisions that are to be taken and are being performed by the managers of every
sector of this organisation. It is one of the strategic approach where the manager will take charge
over the sector that is being allotted and every customer or the sales that are in regard to that
particular sector will be dealt by them.
Design of goods and services: the goods and the services that are being rendered by the
organisation will have to be particularly designed because it is not until when the services and
the goods that are required by the customers are designed and equipped in the organisation that
they can increase the amount of sales. For this the management will have to perform the tasks in
a strategic all manner where they can interact with their customers and get to know there needs
such that they can be fulfilled. All the statistical data that is being collected upon knowing their
interest as well as the number of customers that are visiting on a daily basis or a monthly basis
will be segregated. This segregation is necessary in order to provide the essential goods and to
avoid wastage. This is one of the strategic approach that can account for profitable aspects in the
organisation.

Location strategy: location is an important factor in determining the pace of customers. It is not
until when the organisation is at a good location where there is a huge amount of customer base
that is visiting the organisation on a regular criteria that they organisation can move ahead in
more operational policies. For this the organisation will have to make sure that upon expanding
the company on to any other country it must ensure that the area or the location where it is
operating will have to be stipulated with a good amount of community or population such that
these records can be maintain in determining the choices of customers. The statistical data in this
regard will include those of the number of people that are residing in that particular place.
Supply chain management: supply chain plays a major-criteria in the retailing services because
the products are to be supplied by the head organisation where the organisation is entire. This is a
business operation and it will have to be continued in a strategic manner where the organisation
will have to account for the number of suppliers and the reliable ones based on the data that they
have collected (Gölzer and Fritzsche, 2017). In this particular aspect and complete information

for the statistical data is necessary in regard to the supply change where it can go on with good
quality product along with probable service.
Quality management: quality management is defined to be that entity with regard to the
organisation where this quality will reflect upon the services or the goods that are available with
regard to the organisation. quality is the major criteria where people will tend to focus upon.
Without overall quality is there will not be any customer base. The increase in revenue will
entirely depend upon the of the organisation will tackle with the quality management. For this
the organisation will first have to have a systematic approach where it will have to ensure the
number of products that are there in the organisation. Upon a complete analysis of the required
product and the stuff that is available it is next the quality that is to be ensured. For their the
statistical data of all the products will have to be carry forwarded along with the different
products that will portray quality.
Layout design and strategy: the first and foremost essential importance is given to the strategic
operations management where it will deal with the layout design and strategy. For this the
Professional Management services will have to ensure different strategies where the focus will
entirely be on the skills and expertise of operations management. This layout design will include
the amount of workflows and the facilities are to be provided in the organisation. For this survey
will have to be conducted upon the organisation and the prominent factors of the organisation
where the development will have to be carry forwarded is injured (Matthias and et.al, 2017).
Understanding Services Operations – concepts and definitions
Every business environment consists of different set of activities that are being dealt by them. A
statistical as well as effective policies are being carry forwarded upon delivering the choices of
the organisation. Operations are said to be carry forward in a better and faster manner unless and
until the service design is properly enhanced. Services are nothing but the different set of
activities that are being performed by the organisation as a part of operational management.
These activities are said to be supported by a different set of customers when they are more
towards the policies as well as the service concept is totally understood. The value of Service
Management is entirely dependent upon the emphasis that is granted by the customer upon
receiving definite set of services. The service management is set to be high with regard to
retailing services because it is entirely dependent upon deliverance of its goods and service
policies. There are different elements that are included in facilitating the choices service

specifications are necessary in order to move ahead with the choices of deliverance. The service
elements are classified into different kinds and few of which are as follows:
Supporting facilities: the supporting facilities are nothing but the internal facilities that are
related to the equipment that is being dealt by the organisation. This equipment needed be the
one that is physically existing but that can also be the branch network as well as different
supportive Technologies (Schwarz and et.al, 2019). The technology that are used by Tesco are
mostly used in the digital marketing policies where the entire grocery list as well as the items are
being depicted. This is necessary because a support is essential for every Organisation in order to
move ahead and effecting their essential qualities.
Facilitating goods: direct of facilitating goods which are also known to be the physical items
that are present in the organisation. This can also be the food for the form of receipt for cheque
books and also different cards that are in regard to the facilitating goods policies. These are
necessary in order to ensure that customers make their transactions using definite set of entities
like that of ATM cards where the lack of cash can therefore be minimised.
Facilitating information: information will have to be depicted by the organisation every now
and then. This with regard to the groceries is a major aspect where definite set of products are to
be highlighted and the services will have to be scheduled. When the services are scheduled at the
right time and in a right place then customers can avoid the negotiations with regard to time
bound.
Explicit services: explicit services are not internal length at these are something that will fall
under the categories of transportation as well as entertainment. When customers are entering into
the organisation the one thing that they usually look after is an atmosphere that would be
soothing. This will also ensure that the customers will be occupied with certain ambience and
cold avoid the boring ideology.
Service operations management is entirely a crucial component and that with regard to retailing
services is set to be that entity which will have to be carry forwarded (Brown and et.al, 2018).
An Organisation is composed of Definite set of objectives as well as AIMS that are to be
achieved in the right possible time. The service organisation will have to react accordingly to the
needs and wants of systematic approaches of customers. this will help them to restore the service
as quickly as possible.

Scheduling & Capacity Management
In an organisation capacity planning is an essential component where scheduling is the process
that is to be derived. Operations management is full of sequences that fall in regard to fulfilling
the standards of customers as well as moving ahead with the potential to maintain the definite set
of products that are available in the organisation. There are different resources that are available
in the organisation like that of the equipment which is necessary to portrayed the standards of all
the products are the essential prices in the organisation. This will fall in regard to the technology
which is also known to be the digital marketing (Ramanathan and et.al, 2017). There is a
sequence of operations that is performed in maintaining the capacity planning and approaches
like that of traditional planning systems is also Incorporated. Capacity planning is necessary
because the material that are required in the organisation are not always available. That might
sometimes be a delay in production and that is why the customers will get impacted. This
concept is essential to move ahead with the real capacity of resources which is a considerable
factor in maintaining the growth of the organisation. Capacity scheduling can only be done when
the resources are available and are in stock in the organisation. It is not until when the materials
are properly available that the organisation can move ahead in implementing the operational
management choices. Sometimes material can be accumulated and in this case they might be
offered that are available which is also known to be the one of arranging materials without any
wastage. This with regard to retailing sector is one of the essential component where the
management usually strives hard in bringing the best out of the ability to portray resources as
well as the services that are being stipulated. Traditional planning will help to bring about all the
components are the ingredients that are necessary to win over the calculations and to move ahead
with the surplus goods that are available. Operations management in case of the scheduling and
capacity management is a wonderful approach where the system that are incorporated in the
organisation can be used to fulfill the essentials of the organisation. Sometimes they might be
heavy stock all at once and customers may not be in a demand. and at times they will be cases
where they need heavy stock but couldn't help it out. In such a case the surplus amount of
products that are in store for the organisation can be useful and that maintenance will entirely
deal with capacity management.

RECOMMENDATIONS
Tesco has made its way in being the top in the grocery industry and has set up a large chain of
supermarket in different areas, even the international markets. This British multinational retail
brand is the largest retailer in the UK. But the company still has to cross many obstacles and
change their operational strategies in response to the industry structure. In addition to this, Tesco
must gain sustainable competitive advantage. Using the strategy of cost leadership can help
Tesco the lowest costs in the entire industry while offering their products and services to a more
wide range of market at lower prices (Aiello and et.al., 2020). The reduction of operation costs is
the foundation for this approach. It will help them price their product competitively and generate
high profit margins. Thus, Tesco will gain more competitive advantage. Tesco should also
differentiate their products in order to attain uniqueness and increase the value for customer.
Tesco must try paying the money owned by suppliers should be paid in line with proper payment
terms. It should provide more transparency and clarity to the deals with suppliers. Tesco must
focus more on developing internal efficiencies which will help them survive in the external
pressures. They can also combine their product into some specific markets to expand their
product line.
CONCLUSION
The entire report concludes upon explaining the essence of operations management as one of the
core component in every company. Strategic operations management is essential and that is what
being portrayed in this report along with an understanding that is given to services and
operations. The external forces that will influence all the organisational policies is being
portrayed in the report along with the context that is taken in the form of the organisation which
is chosen. A complete description regarding the topics that are selected in orientation with
operations management is being depicted in the report. The different flow charts or appropriate
management tools are being portrayed with an essence of bringing every data and information
into existence. The conclusions based on evidence is are being provided along with
recommendations which are specifically derived to be incorporated in the organisation. These
recommendations will serve to be the benefits for the organisation and also portray
implementations and implications.

REFERENCES
Books and journals
Weenk, E., 2019. Mastering the Supply Chain: Principles, Practice and Real-life Applications.
Kogan Page Publishers.
David, J., 2019. PESTEL analysis of the UK. Retrieved October, 30, p.2019.
Adelakun, A., 2020. Should Porters Five Forces have value in Businesses today. Computing for
Business (BSC) Aston University Birmingham.
Jelassi, T. and Martínez-López, F.J., 2020. External Analysis: The Impact of the Internet on the
Macro-environment and on the Industry Structure of e-Business Companies. In Strategies
for e-Business (pp. 49-95). Springer, Cham.
Aiello and et.al., 2020. Tesco grocery 1.0, a large-scale dataset of grocery purchases in London.
Scientific data, 7(1), pp.1-11.
Spring and et.al, 2017. Creating the competitive edge: A new relationship between operations
management and industrial policy. Journal of Operations Management. 49. pp.6-19.
Gölzer and Fritzsche, 2017. Data-driven operations management: organisational implications of
the digital transformation in industrial practice. Production Planning & Control. 28(16).
pp.1332-1343.
Matthias and et.al, 2017. Making sense of big data–can it transform operations management?.
International Journal of Operations & Production Management.
Schwarz and et.al, 2019. Sport facility operations management: A global perspective. Routledge.
Heaslip, 2018. Editorial for special issue on: humanitarian operations management.
Brown and et.al, 2018. Strategic operations management. Routledge.
Ramanathan and et.al, 2017. Impact of customer loyalty and service operations on customer
behaviour and firm performance: empirical evidence from UK retail sector. Production
Planning & Control. 28(6-8). pp.478-488.
Online
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