Employment of Business Information Systems for a Competitive Advantage - Case Study Example

Tesco: Employment of Business Information Systems for a Competitive Advantage Table of Contents Introduction 2 Background 3 Functions of the Website 4 Collection of Information from the Website 5 Use of Information in Business Information Systems 6 Recommendations 7 Works Cited 8 Introduction Tesco is a Public Limited Company (PLC) operating in the tertiary sector of the global grocery and general merchandising retail industry. With over 530,000 employees and over 1800 stores, it is the largest retailer in the UK in terms of sales, with presence in 12 countries worldwide. Its customer base is enormous and well over 27 million individuals are registered as Tesco Clubcard holders. Due to intense competition in the grocery market, Tesco mainly competes on price wars in order to provide more value to its customers. Tesco faces competition from several grocery store giants including Asda, Sainsbury’s, and Morrisons, to name but a few. Apart from Tesco’s big competitors, a research has shown that smaller grocery stores are also emerging in the broader business scene to compete with Tesco and other giant grocery retailers based on increasing market share and promising annual growth rates (Silvera, n.pag.). Tesco’s success, to a large extent, can also be credited to its progressive innovations in business technology that has helped the company to deliver its promises. Tesco not only operates several neighborhood and superstores in towns but it also operates online shopping through its website. All orders made by the customers online are paid via credit cards or debit cards with an efficient delivery system which delivers within a day depending upon the time the order is placed. Tesco also offers superior customer service to its customers through its free phone or mobile help lines and by post. Each help department is classified in terms of grocery, clothing, wine, Clubcard, and so on with a separate dedicated free phone number. In the prevailing trend of price differentiation in the grocery retail industry, the lines between the giant superstores is blurred which is why customer service and value is at forefront for Tesco so as to enable the company to maintain its position in the competitive environment. Background As Tesco puts it in simple statement “we make what matters better, together”, it makes a case for its sincere objectives beyond mere profit maximization (Tesco, Core Purpose and Values n.pag.). Tesco’s core purpose revolves around providing the best for families and the society at large thereby solving bigger world problems through responsibility and integrity. The company has a defined set of values that employ its economies of scales to provide better quality goods for more value with a particular focus on the treatment of customers so as to build up trust and loyalty among its consumers. In an increasingly competitive external environment with dynamic change, Tesco hopes to maintain its strength by incorporating a strong organizational culture to foster a customer centered atmosphere and efficient team processes. As Tesco claims, its vision directs its decisions and actions as an organization. Its focus on customers is central to the workings of its business as it wants to be highly valued as a business through its loyal customers, the communities at large, and all its stakeholders. Like any other business Tesco wants to be welcome by its customers and wants to be a preference for its stakeholders to invest. The company also wants to be full of opportunities for all people that work with Tesco including its employees and customers. Due to fierce competition provided by other retailing giants, Tesco focuses on creativity and innovative ideas to drive the company forward with its novel ways. With its online shopping platform, on site stores, and dedicated customer service representatives, Tesco envisions an innovative approach to satisfying customer needs to yield more trust and loyalty among its consumers. The presence of its competitors such as Asda, Sainbury’s, and Morrisons has stimulated Tesco to cut down its prices leading to price wars. As it is, the lines between the various giant grocery retailers have blurred as they all have come to employ price differentiation as a strategy. In such a situation, innovations in business technology and the use of business information systems have proved to be seminal in maintaining customer loyalty and expand to international markets. Tesco has already penetrated into several global retail markets and aims to further expand to other countries bringing its state-of-the-art technology and expertise so as to earn a larger share of the customer’s wallets. Functions of the Website The Tesco website is large and serves various purposes ranging from providing product information to selling products online. Thousands of products are available to be viewed online with prices and other product specifications mentioned on the web pages. Moreover, the Tesco Clubcard allows the collection of club points that can be redeemed for discounts and other Tesco offers when shopping online. The products are diverse and include mobile phones, electronics, fresh food, groceries, and so on. Each broader category on the website is divided into several subcategories with numerous products classified within. Each product includes a description, price information, specifications if applicable, and captivating pictures of the product. Customers have a wide choice to choose from and the website is specifically designed to be user friendly and provide a unique shopping experience to its customers. Payment options are designed to be flexible for customers and include Visa and Mastercard credit cards and debit cards. The delivery system is quite efficient operating in several cities that deliver to a plethora of residential addresses. The delivery network of the company is extremely dense and interconnected so as to allow quick delivery to customers for greater customer satisfaction and loyalty. Although Tesco stores are open 24 hours a day, the delivery system is only available for a specified period of time. While most customers ordering their goods within the specified working times of the delivery system may receive their order within the same day, those ordering out of the delivery time may receive their products the following day. Despite this setback, customers receive their goods relatively quickly. For those ordering fresh food and groceries may require quicker and efficient delivery so as to deliver the goods in high quality, particularly foods that are perishable. Although Tesco’s website is large and serves many purposes, there are numerable channels through which customers can reach Tesco representatives. One of them is the dedicated customer service offered through free phone and mobile phone numbers for stipulated queries pertaining to Clubcard boosts, technical support, phone store queries, grocery queries, clothing queries, wine queries, and order queries. An independent customer service center is also available that receives any queries by post. Thus, apart from other online channels to be reached, Tesco also has traditional channels through which customers can reach Tesco representatives for help and other support. Since Tesco values its customers and its values are centered around the consumers therefore it pays particular attention to customer service so as to provide more value to its customers who do not have to consider other stores for their orders. This is very important due to the presence of other retailing giants who are there to provide similar goods and services with little differentiation in terms of quality but more differentiation on the basis of price. Tesco already has low prices and it even aims to further cut down prices by reducing its profit margin. Collection of Information from the Website Tesco has its own cookie policy which tracks the pages visited by any particular user within the Tesco website. The information collected includes page visits, product views, use of Clubcard points, and other demographic and personal information associated with the Clubcard. This information help the company to know more about the target customers who are potential buyers. In this way, Tesco gets to know about consumer needs and product preferences so as to enable the company to better their pricing strategies and offer tailored solutions to its customers based on their visits and page views. The cookies enable Tesco to track the pages visited so that ‘recommended products’ can be offered to the customer – based on the viewed products – which the customer might be interested in as well. All the collected information provided great insights to the company in assessing their success and helping them identify areas that need more work. Use of Information in Business Information Systems Information gathered through the website helps the company to design more customer focused strategies keeping in mind their varied needs. In particular, the cookies enable the Tesco website to display several recommended products which the customer might be interested in based on previously visited products. Customer preference is one variable which is important in Tesco’s decision making and strategy development as more products are offered to cater to customer tastes and needs. The Clubcard information including points, products points spent on, age, name, and other demographic information can be employed for better marketing and promotions. Marketing Information Systems characterized by effective employment of promotional mixes, sales, prices, distribution, and advertising (Marshall, ix) could use the information to develop and introduce more customer centered marketing strategies. The primary data can form a basis for the development of more marketing channels so that the right products reach the customers thereby fulfilling their needs. Location and addresses of Tesco’s customer base can provide relevant information to the company to better their delivery system and coverage so as to incorporate larger areas in their delivery network. The recorded time when the customer places an order can be used to evaluate the current order and delivery system which is currently available at only specific days and times. The employees at Tesco can also use the information and variables as key performance indicators to assess their own service, growth and success. The website alone collects large amounts of data and the Clubcard information provides additional data for marketing managers to organize into meaningful insights and hence assist in decision making. Apart from this the sales transaction information from the point of sale terminals also provide with useful data for the management to manage stocks, note customer buying behavior and efficiently utilize these information to track sales over a particular period of time. Recommendations In the face of intense competition, it is recommended that Tesco introduces a more connected delivery network that is open seven days a week and at far greater hours. Since customers form an critical component on the company’s mission and vision therefore, longer availability of the delivery system will attract more customers and will hopefully retain them as well. Tesco can use the demographic information of Clubcard holders to see how Tesco can penetrate other local neighborhoods so as to incorporate an even larger customer base. Works Cited Marshall, Kimball P. Marketing information systems. Danvers, Mass.: Boyd & Fraser, 1996. Print. Silvera, Ian. "Britains Big Four Supermarkets Sainsburys, Tesco, Asda, Morrisons Feel Pressure from Smaller Competitors." International Business Times, 2013. Web. 2 Mar 2014. . "Tesco PLC About us: Vision and Strategy." Tesco PLC, 2014. Web. 2 Mar 2014. . "Tesco PLC About us: Core Purpose and Values." Tesco PLC, 2014. Web. 2 Mar 2014. . Read More