An analytical understanding of the operational situation of Tesco - Coursework Example

? Management Contents Contents 2 Executive Summary 4 Introduction 4 Part 4 Business Transformation Process in Tesco 4 Part 2 7 Organisational Structure of Tesco 7 The Organogram 7 Analysis of the Organogram of Tesco 7 Advantages and Disadvantages of the Organisational Structure 8 Part 3 10 Challenges of the Marketing Department of Tesco 10 Challenge to Keep Low Pricing and High Revenues 10 Challenge to Reach Customers Uniformly 10 Challenge of Tesco to Know the Customers Better 11 Part 4 11 PESTE Analysis of Tesco 11 Political Factors in United Kingdom and Tesco 11 Economic Factors in United Kingdom and Tesco 11 Social Factors in United Kingdom and Tesco 12 Technological Factors and Tesco 12 Environmental Factors in United Kingdom and Tesco 12 Part 5 13 Scientific Management Theory and Tesco 13 Conclusion 14 References 15 Executive Summary The following paper is an analysis of Tesco, a large supermarket based in United Kingdom. The paper focuses along five main parameters like the process that endeavoured to transform its nature of business activities, the organisational framework of the company and its salient advantages and disadvantages, challenges faced by the marketing department of the concern, the study of Tesco’s operation in the light of political, social, economic, technological and environmental factors pertaining to United Kingdom and finally a research made on Tesco’s operation based upon Scientific Management Theory as propounded by Frederick Winslow Taylor. The five part analysis would present an analytical understanding of the operational situation of Tesco, United Kingdom. Introduction Tesco in United Kingdom has transformed its business operation in order to gain hold of a larger market share in the retail market of the region. Furthermore the company with the help of its organisational structure and scientific way of operations has earned the potential in gaining a strong foothold in United Kingdom. The following paper conducts a thorough analysis of the above parameters and presents the situational advantages of Tesco amidst its various competitors operating in the United Kingdom market. Part 1 Business Transformation Process in Tesco The process of business transformation in the supermarket giant, Tesco operating in United Kingdom gains momentum through a clear cut planning activity aimed at providing value addition to the existing set of supply chain activities. Effective planning helped in rendering dynamism to the existing supply chain network of the concern and thereby also helped the company to operate across international borders. Moreover the business process of the company operating in the home market also went a huge transformation through the introduction of loyalty schemes and also through operating via the online sphere. Both these activities helped in the enhancement of brand awareness of the company in the regional markets and also in augmenting the brand equity for the concern. Tesco operating via the online sphere gained hold of a larger market share and through the loyalty card schemes gained a niche group of loyal consumers in every region. Business transformation in Tesco was not only brought about by bringing effective modifications in the supply chain mechanism but also through the modification brought about in the existing formats. Further the company also revised its business and distribution process through the opening up of several local stores in the different regions they focused to conduct business upon. Working on another set of business strategy in reducing the price of products sold while operating through a number of business outlets, Tesco aimed at gaining a larger pie of the consumer markets both in the home country and in the international zones. In the supply chain activities the company management worked in bring about close monitoring activities through introduction of periodical audits. Further the supplier groups were also called by the company management to be rendered training on issues like enhancement and sustenance of product quality and in reducing supply and distribution costs. Focusing on the change of business process enabled in regards to the store formats it is found that Tesco that initially depended on the opening up of superstores in the different regions later changed their style to the creation of hypermarkets. The hypermarket or the supermarket model to which Tesco transformed itself helped in rendering to the customers a one stop destination to procure commodities of their interest. Similarly, elucidating on the change brought about by the concern in regards to the supply chain paradigm it is understood that where the supply chain activities resorted to direct movement of goods to the store later it was transformed into a centralised set of activities. This centralised set of supply chain activities involved creation of regional or centralised distribution centres from where such goods would be dispatched to the different stores spread along different regions. In the centralised distribution centres the supply chain activities earned a composite mode coupled with the design of a vertical organisation system in the supply chain network. This process transformed the entire supply chain system making it more specialised in nature to optimize the existing level of resources and infrastructure in order to sustain the quality of the products while delivering them on time. The emergence of the centralized distribution system largely revamped the initial localised or direct distribution system thus promoting the uniform availability of different assortment of products in each of the consumer stores. Moreover the centralized distribution system also helped the head office of the company to take both pricing and stoking up decisions pertaining to the different regions and thereby helped the company meet its objectives of consumer satisfaction (Sople, 2012, p. 240-241). Part 2 Organisational Structure of Tesco The Organogram Figure 1 (Tesco, n.d.) Analysis of the Organogram of Tesco The Organogram or organizational hierarchy chart of Tesco clearly reflects the existence of a Hybrid organisation structure. A Hybrid structure for an organisation is held to be a framework in which different units relating to a particular project all perform under a tied relationship. Thus an interrelation flows between the operations of the different teams like marketing, finance, sales, project, purchase and distribution, operations and the like to help in the successful completion of the project activity of the firm. Similarly the hybrid organisation structure is also held to exist for companies that tend to involve other such companies for the accomplishment of any project activity. This hybrid form of organisation structure is incorporated by several firms like Tesco and Unilever for the successful and effective accomplishment of project activities (Harrison and Lock, 2004, p.66). The analysis of the organisational structure of Tesco can be further analysed to be a hybrid between a centralised and decentralised organisation system. Thus headed by the board of directors and managing director reflecting a centralised decision making authority the authoritarian relationship further percolates along many decentralised units pertaining to different departments headed by different unit heads. This hybrid structure conceptualised by Tesco reflects the existence of two management models on a simultaneous plane to help achieve the firm’s objectives in the regional and international markets. Hybrid structure is also dealt where a business organisation works based on different departments or divisions the collective operation of which helps in meeting of organisational objectives (Smith, 2006, p.133; Fernie, 2005, p.42). Advantages and Disadvantages of the Organisational Structure Advantages The hybrid organisation structure incorporated by Tesco taking into account the interrelatedness of the different organisational units to help in effective accomplishment of a project undertaken thus reflects some seeming advantages. Tesco largely incorporates the use of internet in expansion and conduct of its business activities. Technological advancements helped the company working on the intranet and internet plane to help enhance its business effectiveness. However the use of internet and intranet gains effectiveness in that the activities of different units like marketing and sales are linked to such. Thus with the help of internet the company can help project its marketing and promotional activities pertaining to products and services and can also encourage the customers to conduct sales and purchase on an instant basis. This strategy thereby helps in expanding the activities of the company along international borders and thereby helps in enhancing both the sales and revenue paradigms. Further with the introduction of intranet, Tesco can largely integrate the functions of the different corporate units like distribution, warehouse and purchase to help in the steady accomplishment of business objectives. Disadvantages Tesco operating on the basis of the hybrid organizational structure however suffers from seeming disadvantages. The introduction of internet by the higher authority of the company in its different operations is required to earn flexibility such that the unit managers of the different units of the company are needed to be effectively trained to move along with the internet dimension. Failing to render adequate flexibility thereby causes a disruption between centralized and decentralized decision making authorities of the company thereby reducing the effectiveness of such Organogram (Murphy and Willmott, 2010, p.331). Part 3 Challenges of the Marketing Department of Tesco Challenge to Keep Low Pricing and High Revenues The marketing department of Tesco aimed at gaining the confidence of consumers through the introduction of a loyalty card scheme known as the Clubcard. The company worked to conduct large scale promotion in regards to encouraging consumers to enjoy the Clubcard experience thereby investing in large amounts. Large amount of mailers sent in the initial stages of the issue of Clubcard made the consumer groups to perform a record breaking redemption of their coupons in occasions like Christmas. However, herein the management of Tesco felt an increasing challenge of maintaining both its low price structure of the products offered and also simultaneously working to gain on profits. To counter the business challenge the marketing department of the company focused on analysing as to on which products the customers desired to get a price discount. This analysis helped in equipping the company to make effective decisions as to how much to invest on such Clubcard promotions and to segregate such promotional products from others. Thus it would help the company in both gaining on revenues and also in sustaining a long term relationship with the loyal customer base. Challenge to Reach Customers Uniformly Another significant marketing challenge that Tesco faces in the course of its retail business is of reaching the consumers spread along different regions in a uniform manner to provide the same assortment of products. It is found in this context that consumers residing in smaller regions fail to get the same access to large assortment of products which the other consumers living in developed regions can easily get their hands upon. The assortment of the products is decided to a large extent depending on the size of the store and the nature, economic and social status of customers entering such stores. Thus herein the Clubcard database can be used in a positive manner in understanding the needs and aspirations of consumers belonging to a particular region and thereby reaching them effectively. Challenge of Tesco to Know the Customers Better The database gained from the Clubcard would also help the management to know the customers in a better manner as to what percentage of the total number of customers flocking to the stores are actually loyal. Further the marketing department through more effective analysis of the Clubcard data can gain knowledge about the buying perceptions of the consumer and thereby provide the needed products according to the customer’s tastes and interests for specific regions (Humby, Hunt and Phillips, 2008, p.123-126). Part 4 PESTE Analysis of Tesco Political Factors in United Kingdom and Tesco The political parties in United Kingdom have shown large amount of protest against the sale and purchase of genetically modified crops by both the local and regional markets and also by the grocery and other retail firms operating in the region. On account of such several grocery retail firms like Tesco in United Kingdom have stopped selling such genetically modified crops in their retail outlets (Harris, 2012, p.30). Economic Factors in United Kingdom and Tesco In regards to the economic condition the market for grocery products in United Kingdom reflects a positive note with a rise of around 3.1 percent from the period ranging from 2009 to 2010. During 2010 the market for groceries reached a value of 150.8 billion pounds and is also reported to attract the maximum of household spending in the region. During 2010 around 12.8 percent of the total expenditure on household products was relegated to grocery alone thus raising the demand for the units selling such (Brehm and Nicholson, 2010, p.2). Social Factors in United Kingdom and Tesco Tesco works a lot in improving the stature of the social communities through development and infrastructural activities. The company carries out investment in social development projects. However again the company suffers from serious fallout in which it fails to trade on fair commodities. Tesco fails to meet the parameters of ethical and fair trade largely with only a niche segment of such products falling in the fair and ethical sector. Technological Factors and Tesco The company endeavours to incorporate innovation in its different operational activities such that to conserve a lot on energy sources. Conserving on energy sources helps the company in reducing its operational cost and thereby induces profit. Moreover the use of effective technology also helps in sourcing the right quality and quantity of goods to the consumer thereby enhancing consumer loyalty. Environmental Factors in United Kingdom and Tesco Tesco operating in United Kingdom is found to render enhanced focus on the environmental parameter. Thus the company works to render a carbon footprint for the operational activities of its different outlets and supply chain zones to help in reducing carbon emissions. Further the company also works in enhancing the use of recyclable packaging. Use of recyclable packets for the stores can be seen as another way forward to being environmental conscious. Promotion of greener stores in different regions that works on environmental and energy conservation also speaks of the environmental consciousness of the company (Friends of Earth, 2005, p.2). Part 5 Scientific Management Theory and Tesco The Scientific Management Theory as propounded by Frederick Winslow Taylor works basically on four principles. Taylor stated that an organisation to work on a scientific basis needed to forego the rule of the thumb and thereby should operate based on rationalistic ideas. He further stated that the organisation should work in rationalistically selecting, training and developing the individuals to help accomplish the goal of the concern. Individual development should be guided by organisational support. Scientific management requires the organisational managers to divide the entire organisational task into different workloads. Such workloads should be tasked upon groups of workers based on effective categorisation. Standardisation of the tasks should be made based on time and quality and thereby adequate planning should be made by the managers to allocate needed resources to help the tasks performed meet the set standards (Smith, 2006, and p.35-36; Iafc, 2010, p.63-64). In regards to the use of scientific management theory and rationale in Tesco it is found that the company management works in close conformity with the supplier groups, the staffs of the supply chain system and also with the internal people to help deliver the right quality of product to the consumers. In that the management body is concerned with the division of tasks among the appropriate bodies and also in rendering effective monitoring based on set standards. The supplier groups are required to procure quality materials and effective technology to help in the production of hygienically safe products. Quality of such produces is tested based on set standards by external audit teams and technologists. Similarly the internal people of the organisation are also trained and developed through the use of manuals to help them gain detailed understanding of the process to keep the products safe. Similarly the staffs working in the supply chain groups are also tasked by the concern to know the process of handling and sustaining frozen food products. On the whole the different operations of the different team right from supply chain groups, to suppliers and the internal staff is managed and controlled effectively by the management body of the company. Thus this shows that how the entire organisational task of delivering the right quality and hygienically safe product to the customer is divided amongst separate groups and effectively monitored for achieving success (Sheridan, et al., 2004, p.36-38). Conclusion Tesco, the supermarket operating in United Kingdom is found to have undergone a total business transformation in which the management tends to add value to the different set of business processes for the concern. Thus business transformation not only meant to adding value to the supply chain management activities of the company through the decentralisation of authority but also in the designing of new formats for the company. Again the business organisation of the company is closely dealt with in the paper to gauge the level of advantages and disadvantages gained by the company in respect to such. One of the crucial management functions of the company pertaining to marketing is also analysed to signify the different challenges from the external environment and activities thereof in countering the challenges. The paper also presents the analysis of the external environment of Tesco based on political, economic, social, technological and environmental factors. Finally the paper concludes through the understanding of the incorporation of scientific management principles in Tesco. References Brehm, D., and Nicholson, J. , 2010. United Kingdom Retail Foods 2010. [Pdf]. 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