Tesco Business - Essay Example

TESCO BUSINESS VERSUS EDEN PROJECT Tesco, the biggest supermarket in the United Kingdom dominates the Britishretail market with both the market share and the global sales. Originally, it was a food company but expanded its scope of service to electronics, clothing, financial services, telecoms and internet services. Core UK business, retailing services, non-food business and international presence are the four key parts that Tesco’s strategy focuses on. Tesco’s stores increased from 98 in 2004 to 207 in 2005 and this success is attributed to an excellent operating strategy and management team. Tesco’s great number of manpower and its powerful marketing strategy are the underlying strengths that make it dominant in its specified area of business. (ivythesis.typepad.com, 2011) Eden project aim is to promote the understanding and responsible management of vital relationship between plants and resources. The site covers 50 hectares and could hold 35 football pitches. The biomes are not covered y glass but in EFTE, a transparent high tech foil, contain more than 100000 plants from 5000 species. ? 86 million has been spent to autumn 2002. Staff almost doubled by 2002 to 650. The site has attracted over two million visitors in less than two years a benefit of ? billion to the Cornish economy is predicted for the period 2001-2011.The project was a brain child of a former record producer Tim Smith who started to formulate the idea when driving around the abandoned china clay pit just outside St Austell has become home to the largest conservatories (‘Biomes ‘Peter Long, 2004 p 824). The iconic build began in Cornwall in 1998 and was officially opened in March 2001; they had planned for 750000 visitors in the first 12 months instead 1.9 Million people made their way to former china clay Pit in England most Westerly County. Eden Project has given a huge boost to Cornwall’s economy creating more than 400 Jobs. The Eden project was the largest conservatory ever built and superficially something of mega structure demonstrating a rich and complex human story. (International plant genetic resources institute, 2006) Tesco has set a new milestone in the UK’s business by soaring 20 percent profit in the last year which has taken them to a milestone of 2 billion. One out of every three pounds spent in a supermarket goes to Tesco. It is the Britain’s biggest private employer with a workforce of 260,000 employees. (Poulter S 2005) In order to achieve steering- wheel -targets, Tesco’s HR strategy revolves around work simplification, performance management, challenging unwritten rules and rolling out core skills to all head office employees. This clearly highlights how business measures at Tesco are closely linked to performance management. Although the frontline employees are considered to be Tesco’s reflection to its customers, all employees have vital roles to play in achieving the organizations goals. This is done through an innovative induction programme that caters for styles of learning, different cultures and varying work commitments which ensures that every employee clearly understands his or her individual role in contributing to Tesco’s core values and purposes. Tesco ensures that employees understand how their actions affects the big ‘picture’ of the overall business by providing continuous training that creates a graphical journey through Tesco’s history, its values, core purpose, business goals, financial aims, commitment to customers and the marketing strategy. In order to keep lead over its rivals in the fiercely-competitive UK supermarket sector, Tesco has adopted a human-resource-led business strategy. The strategic policy started in the company’s supermarkets with an aim of improving customers’ service by freeing up stores employees. Tesco concentrates on clear definition of employees’ roles, activities and responsibilities to ensure that employees are accountable, responsible, consulted and informed. 13 key management techniques are used by Tesco to improve the core skills of the workforce. These techniques include, coaching for high performance, situational leadership, plan-do-review, and problem solving and root cause analysis. People have for the first time been made a core element of the strategy. A senior director has been put in charge to organize quarterly board meeting to review HR issues.HR information is now tracked closely like financial results. Tesco, intends to continuously increase the skills of its workforce by integrating learning in its culture and remaining a step ahead of its rivals. (businessteacher.org.uk, 2011) At Eden all employees are expected to read at least one or two books a year which is outside their normal reading pattern. The y has to prepare a meal for their co-workers one a year. Applicants for senior appointment are interviewed by everyone who would work for them. Thus a prospective finance director would be interviewed by complete finance team. No one is criticized for making mistakes but failure to take responsibility or to do one’s best is criticized. Senior management use ‘gang trials’ where they give each other direct deed back on performance in a supportive atmosphere. Employees are empowered to contribute their ideas and have a right to redeem earned capital. Experimentation and exploration is encouraged through learning and empowerment to contribute ideas. (Elizabeth M.Mcmillan, 2008). Tesco needs to disseminate massive information in its daily operations to its customers and partners. It sends over 30 different product data feeds to approximately 15 online partner networks every day. This calls for a dynamic and flexible system to serve the changes in market conditions. The award winning Sonetto Channel Information management (CIM) that was implemented by IVIS group is the information system used by Tesco.com to manage, control and publish all information across multiple channels. Sonnetto specifically tailors the information for each channel in a multi-channel environment by taking a single feed. It uses business rules to adapt the content automatically for each channel in stores, call centres and marketing partners including price comparison sites and affiliates. As a result of its connectivity to pricing systems, it ensures accurate, dynamic and real time information is delivered to every channel. With Sonnetto CIM, the following processes can be controlled with minimum IT support by the category managers at Tesco among others; Importation of product and commercial data from internal systems, data providers and partners Set up of Data feed specifications and online partner relationships Selection of products to be included in the partner data feeds Selection of products to be excluded from feeds according to rules like stock availability Monitor and report feed content and feed delivery confirmation Build automated data feed extracts in the right file format for each partner. Tesco.com’s electrical; entertainment and jersey stores are now managed through Sonetto covering over 250,000 products. There is increased business agility as a result of use of the Sonnetto CIM at Tesco.com, enabling online marketing process to be driven directly by decision makers. (ivysgroup.com, 2009) The Eden Project is an ambitious effort to demonstrate the use of an agent based system. As an application of the info sleuth intelligent agent technology developed at MCC, it represents a significant step forward in the potential to organize access and analyse environmental information. (Reva Berman Brown, 2009 p 6) Over the years, Tesco has grown to become the number retailer in the UK by making changes in its marketing strategies. It is the UK’s fastest growing financial company and rates as the most successful internet supermarket in the world. Almost the entire relationship marketing strategy in Tesco is based on its ‘clubcard’ scheme which it has used effectively to attract and retain customers as well as in addressing different customer segments. Not only has this ‘clubcard’ enabled Tesco to overtake Sainsbury’s as the best retailer, but it has also strengthened its market share over the years. Tesco’s 'clubcard' is a membership scheme that provides customers with price-off vouchers allowing them to save money on shopping. For every dollar spent in Tesco or partner companies, a customer earns a point. Every 150 points are converted into ‘clubcard’ vouchers which enable the user to save. 'Club card' has been successful to Tesco, both as a loyalty scheme and as a relationship marketing strategy. This success has been brought about by the fact that Tesco has established partnership with major companies thus 'clubcard', earns points in all these companies. Tesco’s effective targeting of different customer segments through Tesco kids club, Tesco baby and toddler club, Tesco healthy living club, world of wine club etc has really boosted its marketing and customer loyalty. Membership to all these clubs can be registered online and it’s free. (businessteacher.org.uk, 2011) On the other hand, Eden project was marketed by shared visions of amazing plants and visually stunning architecture, the dome was best by stories of the gloom and doom which fed the media interest. The Eden project took advantage of its positioning Cornwall as a holiday destination and took advantage of public interest in ecology. It was appealing to plant lovers and provided a culture agenda beyond the garden festival that combined education and entertainment. Eventually these opportunities were wasted and project remained a temporary attraction to visitors within the UK, but a great attraction to media .The dome had initial advantage as it enjoyed proximity to central London through a new underground line position close to large local communities. (Reva Berman Brown, 2009 p 6) Eden Project built a strong brand and uses a modest amount of direct advertising expenditure. A key marketing tool is the website which is relatively cheap to set. Eden Project advertising strategy is not is not mass national TV or press advertising to create awareness. Limited advertising would be possible in the local media and strategically placing posters. The Joint promotion is useful when operating on a stretched budget. (Tonny Curtis, 2007. p 79) Tesco employs 240,000 people and operates 923 stores. It is a multinational company traditionally based in the UK. Initially, it was a food store but has now it has expanded its products and services to include financial services, internet services, a major non-food business etc. In the UK, Tesco has 702 stores and is the largest food retailer. It continues to increase market share through its policy of cheaper prices, variety, convenience to customers and better value. Tesco’s market share in the UK is 16.2 percent while operating 4 four store formats. At 2001, Tesco had the following stores outside UK; COUNTRY NO. OF STORES Hungary 44 Poland 42 Czech republic 12 Slovak republic 10 Central Europe 108 Taiwan 2 South Korea 13 Thailand 35 Tesco operates an international sourcing that works directly with the manufacturer. It has also established a number of internet businesses for grocery. (www.globalsources.com) Eden Project is open every day all the year round except the 24 and 25th December. Visitor number can range from 300 a day to 14500 on the busiest day in summer. Visitor flow is predictable and driven by traditional holiday periods approximately 70% visitors visit during Easter holidays and the October school half term. For instance a week in august the forecast would be 6000 visitors per day between per day between Monday and Thursday. It is difficult o predict daily visitors due to the unpredictability of British weather. Apart from the natural plant domains, there are a wide range of activities all year round which include music events, art and summer programmes for families. Eden project provides several cafes and restaurants; they focus on fresh, local and tasty food. All cafes and restaurants are Eden managed and they have no franchised outlets. Where possible food is freshly prepared for instance all sandwiches are freshly prepared each day. Menus cater for omnivore, vegetarian, vegan and gluten free consumers. In Jo’s cafe customers can learn about the food they eat and its impact on their health and environment. Organic and fair trade products are sourced and more than 80 percent of catering produce is sourced from the local suppliers. When sourcing food products, there are four priorities which include; Quality, price, seasonability and cornishness. In Eden they ensure that products are environmentally sound, socially acceptable and economically viable. In deed Eden spends around ? 10million each year on with approximately 2000 suppliers. If there are more visitors most of catering and front –of- house employees will be helped by employees who do not normally work in operations. The behind the scene employees will receive an email requesting them for assistance at a short notice. Predictably busy days are classified as tricky days. (David Bowie, and Francis Buttle, 2011.) Tesco’s financial statement is prepared according to the accounting standards and companies act 1985. The group’s financial statement consists of those of parent company and the subsidiaries. Its accounts are prepared earlier than required to enable them publish their statements on time. All undertakings are made up to 22nd February 1997.Stocks are made up goods for resale and development property valued at lower of net realisable value and cost. Money markets investments are stated at cost and interest and such other income from them included in the profit and loss account. Amounts of interest paid are included in the fixed assets net of taxation. Depreciation is provided for on equal monthly instalment on the expected period of use. Leasing of assets is dealt with as tangible assets while outright purchase of assets is dealt with as liabilities. Expected cost of retirement benefits for employees is charged to the P$L accounts over the period of employees in the pensions scheme. Financial year end exchange rates are used for conversion of assets in foreign currencies to sterling pound. Interest and expenditure from swap transactions is treated as if it were interest payable or receivable over the term of the swap. (www.tesco.com) Eden Financial model is unique in its own way; it includes insights that could be of importance for the establishment of future funding of science centres. To date the project has cost ?135 million to build and with the support of both public and private finance. The biggest contributor has been Millennium Commission which offered ?59nmillion with ? came from European fund allocated to Cornwall and ?21 million from south west RDA. The other funds are commercial loans, charitable donation and Eden own resources. Early business models had been based on securing funds to securing public funds to support capital cost with commercial income generating enough funds to support the ongoing running cost. Eden has no guaranteed revenue to date, its only source of revenue is the amount generated from visitors. Current annual income is ?18million the visitors are not the only source of income but also the beneficiaries of the public education activity which is the core of the mission. The visitor’s income generates a surplus of ?2.5-3 Million. The surplus covers the cost of debt and long-term maintenance. The surplus is however not sufficient to cover these demands. (Isobel Doole, 2006) Reference list Businessteacher.org.uk (2011).A report on HR practices at Tesco. Retrieved 6 May 2011 http://www.businessteacher.org.uk/free-business-essays/tesco-hrm-essay Businessteacher.org.uk (2011) Tesco Marketing essay. Retrieved 6 May 2011 http://www.businessteacher.org.uk/free-business-essays/tesco-marketingstrategy- essay David Bowie& Francis Buttle (2011) Hospitability marketing: Principles and practice, Elsevier, Edition 2. globalsources.com (2011). Tesco. Retrieved 6 May 2011 http://www.globalsources.com/pec/profiles/tesco.htm Ivythesis.typepad.com (2009). Strategy HRM at Tesco. Retrieved 6 May 2011 http://ivythesis.typepad.com/term-paper-topics/2009/04/strategy-hrm-tesco.html Peter Long (2004). The hidden places of England, illustrated Travel Publishing Ltd. p 82 Poulter S. (2005). 2 billion Tesco. Daily mail London April 12th 2005 Reva Berman Brown (2009). Flagship Marketing .Taylor& Francis, 9Vol 39. P 106 tesco.com (2011). Tesco PLC accounting policies. Retrieved 6 May 2011 http://www.tesco.com/investorinformation/report/accounts/page11.htm Tonny Curtis (2007).Marketing practice, Butterworth –Heinemann, p 79 Read More