Principle of Management - Essay Example

?Principles of Management Table of Contents Introduction 3 Challenges and Opportunities of Tesco 4 Analysis of Four Management Functions for Overcoming Challenges and Exploiting Opportunities 6 Planning 6 Organising 8 Directing 11 Controlling 13 Tesco’s Adoption of Corporate Responsibility Measures 14 Conclusion 15 References 16 Bibliography 20 Introduction Every business corporation, irrespective of size and nature of business, has its own management ideas which help to run the trade smoothly and face the challenges as well as leverage the opportunities effectively. The management functions in an organisation can be divided into four tasks which are ‘planning’, ‘organising’, ‘directing’ and ‘controlling’. These managerial functions allow for making strategic, tactical and operational decisions effectively. Managerial functions can enhance the performance of an organisation and they serve towards providing recommendations to conduct business activities with greater proficiency. Managerial ethics assists managers to take more realistic opinions in relation to different issues and directs the behaviour of the employees to solve those issues (Daft & Lane, 2009). The paper provides an overview of challenges and opportunities faced by an organisation named Tesco. It is an international supermarket chain which provides grocery and other non-food items to the customers. It is a United Kingdom based company which has faced several challenges in the international market. Tesco also has numerous opportunities which can be accomplished by better managerial functions. The objective of the paper is to describe how the four key managerial functions can help to counter the challenges along with taking the advantages of opportunities that are faced by the company in the 21st Century. The major roles of stakeholders are also been considered in the paper. Furthermore, the paper also describes the corporate responsibility related challenges of Tesco and the company’s adopted measures to mitigate them. Challenges and Opportunities of Tesco In present days, the international marketplace has experienced significant progress and consolidation. Supermarkets in present times rule the sales of products in developed nations and are quickly growing in developing nations as well. At the same time, international consolidation and aggressive pricing approaches have concerted the market dominance within certain major players and reinforced their control on the suppliers. The international sourcing of raw materials has created new business prospects for supermarkets such as Tesco to carry out import activities from locations with cheap labour and cheap resources. In fact, Tesco presently captures a major share of supermarket in the UK. In last decade, the opportunity for supermarkets to purchase from manufacturers had increased intensely (Brown & Sander, 2007). Tariff declines, trade liberalisations, modernisations in communication technology, enhanced transport system and better capital flexibility have transformed the supply chain system for supermarkets. The international sourcing has generated new prospects for Tesco in the developing nations to sell the products. However, the global sourcing has also created numerous manufacturers, which in turn has intensified competition among organisations. The challenges faced by supermarkets nowadays include the aspects of increasing the return of the shareholders, maintaining low cost for product offerings, increasing flexibility by ‘just-in-time’ delivery and strengthening control related to product quality and providing utmost customer service standards (Brown & Sander, 2007). Supermarkets are the first and the foremost commercial organisations that perform in highly competitive environment with high concern on end result. The increased globalisation, changing life patterns and demographics have opened opportunities for supermarkets in developing nations. However, in order to stay competitive in the market, supermarkets require significant information on characteristics of the market in which they are operating. Besides, there is increasing necessity of ensuring safety and providing superior standards of products which can impact on the aspect of publicity and enhance market reputation (Brown & Sander, 2007). In the UK, Tesco has achieved quite a strong recognition as a supermarket retailer. Although Tesco faces significant competition from Sainsbury’s and Morrison, in the next decade the challenges of Tesco would be different and quite difficult in nature. The future success will be largely depending on the performance of Tesco in the international markets. Tesco is no longer an ordinary business corporation; rather it has become an association which has strong presence in daily lives of people. In future, one of the major challenges faced by Tesco will be to protect its brand image and enhance the business performance (Centaur Media Plc, 2007). Tesco has substantial opportunities in the supermarket segment due to its market leadership and knowledge in providing various services in numerous formats. In the long run, people are expected to be more comfortable towards internet and one-stop shopping methods and the supermarkets might become leisure and entertainment destinations for people who would be ready to visit there regularly. Thus, Tesco is required to become more flexible in terms of business activities. The future challenges include requirements of more tailored services and products, necessity of providing enhanced capability to satisfy the local customers’ requirements and need of ensuring more efficiency to perform as a universal trading company (Business Wire, 2008). Presently, the non-food business segment has become quite challenging for Tesco. It is expected that Tesco will launch several additional outlets in the next decades in order to take the advantages of prevalent business opportunities. Several indications depict that Tesco will face challenges due to price war from several competitors. In the markets of China and India, Tesco is already facing significant challenges due to price rivalry and increasing cost of raw materials. Besides, Tesco is also confronting challenges to maintain quality with quantity (Felsted, 2011). With respect to corporate responsibilities, Tesco has faced several challenges. The most significant challenges are delivering healthy and quality products to the customers, maintaining the demands of Tesco’s products in the international markets, strengthening the online presence for encouraging better community involvement, finding most efficient means to assist in disaster situations, developing more leaders for ensuring sustained future success, providing better salaries and benefits to the employees, enhancing employee involvement in the organisation, encouraging responsible sourcing, reducing water and carbon footprint in the supply chain and finding solution for minimising carbon emission for better sustainability (Tesco, 2011). Analysis of Four Management Functions for Overcoming Challenges and Exploiting Opportunities In order to overcome the challenges and exploit the opportunities, organisations such as Tesco needs to develop plans, organise the resources, direct the employees and control the business actions. Planning The non-food items such as apparels, books and consumer electronic products have high demands and greater sales in the developing nations and therefore those markets can play a significant part in the future growth of business for Tesco. In order to leverage such opportunities comprehensively differential approaches are required to be incorporated by the management. With proper planning, Tesco can ensure that demands of customers are met at the right time in order to gain higher profit. Tesco requires efficient planning system, i.e. the company must grow to be more flexible in its business actions and conform to the product standards for ensuring more reliability in business. It can increase the capability to deliver products and services according to the customers’ demand which is a significant challenge as well as opportunity for Tesco. The key stakeholders of Tesco are its customers, personnel, shareholders, managerial executives, suppliers and government. It is the objective of any organisation to enhance the value of the stakeholders. The stakeholders play a major role in maintaining proper corporate governance in an organisation. The possible role of stakeholders relies on the characteristics of the organisation. In this context, planning can help Tesco to maintain best business related practices and make sure that the company considers the interests of a wide variety of citizenries along with communities within which it operates the business. Planning function will help to assure that Tesco performs for the benefit of the society at large (Fremond, 2000). Better corporate governance is significant for Tesco in ensuring future success of business as it can help to assure investors that they will obtain satisfactory profits on their investments. Without better corporate governance, Tesco can face challenges in its business operations as it will be enforced to depend completely on its own internally produced cash flow and accumulated monetary resources in order to support constant business operations. As a result, the overall performance of Tesco will be likely to suffer as the company might miss several lucrative business opportunities (Emmons & Schmid, 1999). The planning function can help Tesco to evaluate the present position as well as the future position. Planning involves setting objectives. It can make Tesco to be ready for facing the upcoming challenges and grasping the available opportunities. Planning is required for Tesco to develop proper functions for every department for the welfare of the stakeholders and the maintenance of good corporate governance. It is the objective of Tesco to increase the opportunities of business and to provide strong sustainable continuous progress. In future, Tesco wants to be a popular international retailer. It aims to position itself as a supermarket leader in ranges of food and non-food products internationally. Tesco also desires to become a high value brand and it seeks to create more value to the stakeholders (Tesco, 2012). Effective planning can help Tesco to select the cost-effective alternatives for making operative and well-organised management. It can also help to avoid the possibilities of repetition, intersection and cross-purpose work activities. Planning will assist in coordinating all the activities of Tesco towards the common objectives and help to support other functions of the management (Bagad, 2009). Organising Organising is the second managerial function which is useful for Tesco to progress according to the planned objectives. In order to become successful in the international market, Tesco needs to organise all the resources in an appropriate way. Organising denotes delivering every aspect deemed beneficial for better functioning of business such as organising employees, raw materials, tools and wealth of a company. Dealing with the challenges requires harmonising all the components of the business towards accomplishment of common objectives. Organising concentrates on assigning and positioning resources so that business is carried out successfully. Better organising process can encourage innovation and facilitate improvement in the organisation. Organising in Tesco is concerned with establishing, developing and maintaining good stakeholder relationship for carrying out business activities (Tripathi & Reddy, 2008). In order to enhance the flexibility of business and control the cost of business operations that are among the significant challenges for Tesco, the company can enhance the capability of employees and limit the number of workers. It can help to gain ‘high performance work system’ which significantly improves the functional and internal flexibility (Kalleberg, 2001). Employees are significant stakeholders of Tesco. The success of Tesco depends on the employees as they provide services to the customers. Thus, enticing right individuals, assisting them to develop and helping them to realise the potential are of great important for Tesco in order to deal with the challenges identified. However, if Tesco fails to retain the best employees, it will become difficult for the company to better serve the customers (Tesco, 2011). Tesco can organise the employees according to their suitable roles in the organisation. It is important to consider that every task which is essential for accomplishing the future objectives of business must be planned and appropriate employees who can complete those tasks effectively should be allocated for facing the challenges. Gaining success in international business platform requires better understanding of local culture and without better administration it is difficult to achieve requisite sales in the long run. Through organising the organisational resources effectively, Tesco can manage the finance effectively and can provide better pay benefits to the employees, turning them to be more loyal towards the organisation (Weihrich & Cannice, 2010). Suppliers play vital part in the business of Tesco. Nowadays, quality and safety of the products are basic concerns for every customer. Thus, in order to uphold their reputation in the business field and take further opportunities to expand the business in other areas, there is need for providing customers with better product selection. Assisting customers with quality products and healthy foods items can create new business opportunities in the markets where obesity and corporate social responsibility is of significant issue. In this context, organising the selection of suppliers can ensure healthy and safe products for customers. Better relationship with suppliers can enhance product quality and provide customers with their requirements, whilst upholding the strong standards throughout the business. In order to exploit the opportunities of internationalisation of business, Tesco needs to organise the relationship with suppliers and stakeholders and to decide the ways of sourcing raw materials. As different stakeholders have different requirements from business, Tesco must maintain better balance to those requirements because it is almost impossible to satisfy every necessity. Certain level of compromise is therefore required while organising the requirements of different stakeholders (The Chartered Quality Institute, 2012). In practice, Tesco organises the supply of products through its technical teams which are spread internationally with the intention of ensuring that every standard of business are fulfilled. The ethical trade manager is responsible for organising the supplies from certified sources for responsible business practices (Tesco, 2011). To organise the resources more effectively, Tesco can develop strong technology which can predict the demands of the customers effectively. Enhanced information system can help Tesco to rapidly update latest information and communicate with the employees. Therefore, it can easily help Tesco to recognise the resources that are required to fulfil the demands of the customers (State Services Commission, n.d.). The concept of organising is to make available appropriate resources when needed. Thus, organising resources not only helps to gain enhanced performance of employees, but also helps to reduce the amount of time and money spend on administrative purposes, allowing better exploitation of market opportunities. Directing The third significant function of management is directing. Directing signifies providing instruction, direction, communication and inspiration in an organisation. In order to achieve success in the market, there is need for progressing actively towards the fulfilling defined objectives. Directing comprises three sub functions which are communication, leadership and inspiration. Communication can help in sharing information and increase the understanding with stakeholders. Through appropriate leadership, managers in an organisation can direct and stimulate the performances of the subordinates and provide motivation for generating desire in the minds of the employees so that they can provide best efforts towards the organisation (Garrison & et. al., 2009). Through directing, Tesco will be capable of influencing and overseeing the performance of the employees for overcoming the challenges and for exploiting the opportunities. In the modern age constrained with fierce competition, better direction is one of the major factors for gaining profitability in business. The aspect of direction can be accomplished by strategic leadership. In order to overcome the weaknesses, Tesco needs to structure the business model in such a way so that it can increase communication as it is significant for maintaining a dynamic working environment. Better leadership can help Tesco to stay competitive in the international as well as local marketplace. Tesco can direct the employees by setting targets and objectives and balancing them with organisational goals. Direction is also important for developing future leaders for Tesco which is one of the most significant challenges faced by the company (Tesco, 2011). The major factor which can be administered by Tesco through the aspect of direction is enhancement of customer satisfaction. The customers are an extension of corporate image of Tesco and employees are the ones who can make them satisfied. Customers are the key stakeholders as they facilitate to establish the reputation of the organisation and to generate profits for survival of the business. Thus, it is crucial for Tesco to recognise the requirements of the customers and to provide them with high quality products. The performance of an organisation is directly related with loyalty of customers and creating value for them. The business of Tesco is developed around customers, employees and assets. A strong team can help to maintain good relationship with the customers and to reduce the challenges of the business in future. Better direction can help to increase the negotiation power of the employees with the customers which enables to provide best solution for any kind of issues faced by Tesco. When an organisation communicates with the stakeholders on numerous issues whether they are associated with better corporate governance or better corporate social responsibility, it can reduce the intensity of that issue (Ferrell, 2004). Increasingly, a good direction can help to incorporate stakeholder commitment depicting activities into organisations’ management system. In reality, appropriate direction can make the managerial tasks to be organised in a resourceful way. Direction can also enhance the flexibility of the business as employees can become more proficient to handle customer complaints and queries. Tesco can direct the employees in a better way by increasing cooperation by including employees more in the decision making process. Better direction also guarantees fair treatment and better control of business performance. In order to convert the challenges prevailing in the international markets into opportunities, there is a need for linking the local knowledge with global skills. This is the reason for which the management team of Tesco includes a blend of local as well as overseas employees and they must be directed in a positive way. Through proper direction, Tesco ensures that best practices are followed in the organisation, which will enhance the interests of the customers in different nations as well as enhance their loyalty (Nwagbara, 2010). Controlling Controlling is the fourth activity of management. To strive in the increasingly competitive business context, the managers in an organisation need to ensure that every business activity takes place on the basis of the decided plan. Without sound controls, there will be less assurance that whether the challenges faced by the organisation have been comprehended effectively or not. Poor control can result in repeated mistakes without realisation (Ferrell, 2004). Tesco can control the business performance by establishing standards on the basis of organisational objectives and making evaluation of the actual performance with the desired performance. In order to exploit the external business opportunities, Tesco needs to develop certain criteria so that it can measure the performance i.e. how the company is going towards accomplishing the future objectives. Tesco needs to control the operational costs and keep it within limit in order to enhance the performance in comparison with other competitors. As the market of developing nations is highly cost sensitive therefore controlling cost is of high importance for Tesco. Besides, controlling the employees is the other significant aspect of business performance because in order to attain competitive advantage, there is need for retaining the employees. Through effective controlling process, Tesco will be able to recognise the potential problems of the business and then take necessary preventive measures. Controlling functions also will help in ensuring better corporate governance which is essential for stakeholder relationship. Comprehensive corporate governance requires better transparency, liability, fairness and obligation. It is the responsibility of the management to ensure that complete disclosure of financial as well as non-financial records has been maintained, impartial treatment has been provided to the investors, and responsibility towards society is achieved (Fremond, 2000). It is the responsibility of directors in Tesco to control the inner financial system so that it can provide financial assistance to the society rapidly and efficiently in disaster situations without affecting the internal funds. Better control also results in increasing decency; belief and truthfulness of the organisation towards the employees hence it can enhance employees’ involvement in the organisation (Tesco, n.d.). Tesco’s Adoption of Corporate Responsibility Measures In the competitive market environment of Tesco, corporate social responsibility (CSR) represents a factor of great strategic importance for the success in business. Almost every supermarket chain now days have a clear CSR initiative. Due to the increasing media attention of CSR related issues, supermarket chains such as Tesco among other organisations are taking increasing and observable activities for communicating their CSR advantages to different stakeholders. There is an increasing trend of supermarkets to invest considerable amounts on big campaigns related to CSR so that they can demonstrate the good performances towards the public. These CSR performances have significant impacts on the customers’ relationship with the organisation. It is a strategy to increase the brand reputation and market value of the organisation (Luo & Nhattacharya, 2006). Tesco has also adopted several measures in order to enhance the CSR performance. For ensuring better control on business, Tesco has established a framework which includes organisational structure, policies and measures, quality and truthfulness, investment assessment and monitoring of performance (Tesco, n.d.). Tesco has also adopted enhanced planning procedures in the business for increasing the customer service. It is one of the significant challenges for Tesco to provide personalised services to the customers. Through collaborative planning, Tesco has enhanced its supply chain capabilities for making better anticipation of the demands of the customers and providing customised services to them accordingly. Therefore, it can genuinely lead to better customer satisfaction (Oracle, 2007). Conclusion The four functions of the management are considered to be substantial for Tesco to overcome many challenges and to take the advantages of the opportunities. In order to be successful in the future endeavours of the business, Tesco can use the managerial functions to a great extent and can turn the business to be effective and efficient. Better management is helpful for Tesco to develop an environment which can provide enhanced flexibility in business. In order to stay competitive, systematising the business plays a vital part for organisations which can only be accomplished though effective managerial functions as observed in the discussion provided. The four managerial functions can be adopted by Tesco in several aspects of business which would provide great effectiveness in the international market. The managerial functions are beneficial for Tesco to gain competitive advantages and to exploit the business opportunities. Better management will definitely lead to gain cost efficiency and make the company feasible to compete with upcoming difficulties in the global as well as the local markets. References Brown, O. & Sander, C., 2007. Global Supply Chains and Smallholder Farmers. Supermarket Buying Power. [Online] Available at: http://www.iisd.org/tkn/pdf/tkn_supermarket.pdf [Accessed July 07, 2012]. Business Wire, 2008. Key Challenges and Issues Facing the Supermarket Services. Thomson Reuters. [Online] Available at: http://www.reuters.com/article/2008/02/22/idUS123594+22-Feb-2008+BW20080222 [Accessed July 07, 2012]. Bagad, V. S., 2009. Principles of Management. Technical Publications. Centaur Media Plc, 2007. 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