The Main Operations Processes in Tesco and Walmart - Essay Example

? Tesco Company versus Wal-Mart Tesco supermarket has hugely revolutionalised the way people used to shop in early 1970s. The company by then was busy building national store networks all over Unit kingdom to ensure customers accesses its products easily (Weele,2010). Since it embarked in its network expansion; the company has continued to expand to this day, while also diversifying into different other products apart from the ones it started with. On the other hand, Wal-mart started as a small store in Arkansas back in 1962. It began its operations back in 1962, and has been aggressively expanding in U.S. The company was able to introduce its full line grocery in 1988 (Varley, 2005). The company has through many struggles emerged as the largest grocery retailer in U.S. Currently, it is reported that the company sales are even higher than the combined total sales of its three competitors in U.S. i.e. Kroger, Safweway, and Supervalu. Volume Wal-mart produces tones of various products yearly. The company has diversified sources and centres where its carries its production. Yearly, it is estimated that the company spends $335 billion buying and transporting its merchandise globally (Pride, Hughes & Kapoor, 2011). This ability to produce in large volumes has allowed this company to lower its cost of production thus enabling it to sell at a lower price than its competitors’. Tesco too is widely known for its bulk production system. The company engages itself in what appear to be a multinational grocery and general merchandise retail (Keupp, 2007). This clearly shows the large number of goods the company produces. The company produces large volume of goods which has led it to open thousands of stores in over 14 countries all over the world. Variety In order to increase their competitive advantages, both Wal-mart and Tesco have hugely diversified their products. For instance, Wal-mart offers variety of services including retail goods, pharmacy, financial services, wireless, and also photo lab services. The company offers retail goods in various categories, for example, customers can purchase electronic products like digital cameras, laptops and computers in Wal-Mart stores (Mullins & Walker, 2013). In addition to home furnishing, the company also offers baby products, sporting goods, and grocery items. Wal-mart, offers to its customers financial services like credit card, debit cards, bill payment and also money transfer. Customers can also purchase money orders, gift cards and also cash cheques at various Wal-mart stores. This strategy adopted by Wal-Mart to offer a variety of goods to customers has enabled it to attract a large pool of customers not only in its home market in U.S. but also in the overseas markets. On the other hand, Tesco Company unlike its rival Wal-Mart has slightly taken a different line of specialization. The company started as a simple grocer, but with time it has been engaging in clothing sector, finance, insurance services, software business, internet shopping business, sale of DVDs, and mobile phone sales (Mullins & Walker, 2013). Its specialization in all these products has given it a higher competitive strength in UK compared to other rivals who usually specializes mainly on grocery. Variation in Demand variation Variation in demand has numerous implications that can be seen in the company’s characteristics. Wal-mart has constantly maintained low levels of demand variation. It has successfully maintained a variation of as low as 5% in its demand for a very long period (Varley, 2005). This has been possible for the company due to its effective strategy of focusing on how to lower prices of its products. This has given it a relief to maintain a very stable demand either during peak seasons or off peak periods. On the other hand, Tesco mainly records a medium level of demand variation with a range of between 10 to 20 % variation in its demand. This is brought about by the changing capacity, anticipation of what the customers might demand, flexibility and a high unit cost strategies adopted by the company (Keupp, 2007). Though the company sells its product at a lower price, the prices are not lower enough to compete with its main rival Wal-Mart. This greatly affects its demand especially during off peak seasons. Visibility dimension Wal-mart allows its customers a high chance to trace their orders. At different stages, the company has availed different channels that can be effectively used by its customers to track the orders they have placed with this company. For example, customers are availed with a valid email logging details which they can use to directly contact senior sales personnel and enquire about the orders they have placed (Weele, 2010). This has created large customer satisfaction, a sense governed by their perception of the company will and wish to engage them more in production, and sale of their product. Tesco, on the other hand, maintains a low visibility dimension with its customers. In this company, there is a time lag between production and consumption, thus they opt to engage in standardization of their product rather than increasing their visibility dimension (Weele, 2010). This is due to the fact that Tesco usually ensure a high staff utilization and centralization; strategies which does not necessarily call for exposure of operational internal workings to its customers. Implications of various performance objectives as outlined by Slack Operation management has great effect on the five broad categories of stakeholders in each company. Stakeholders; in simple terms refer to any person with an interest in any company’s operation (Cavusgil, Knight & Riesenberger, 2012). So the five performance objectives of quality, speed, dependability, flexibility and cost have great implications on the operation strategies adopted by each of the company. Cost The cost structure of Wal-Mart hugely varies with that of Tesco. Wal-mart main operational strategy is to use low inventory levels and prices to generate faster sales based on low prices and value (Ryans, 2008). This practice of keeping their inventory low allows them to maintain low prices for their customers. This increases their demand which in return result to increased sales for the company. On the other hand, Tesco, though it does not directly apply the low inventory level technique, it perfectly manages the other four performance objectives to ensure it save on operational cost (Cavusgil, Knight & Riesenberger, 2012). With its major emphasis on product quality and customer feeling, the company has to ensure that it set standard which would allow it to lower the cost of producing the products so that it can be able to set competitive prices in the market. Quality Quality is the key aspect that drives many customers to various stores to purchase a product. As a result, both companies should ensure that irrespective of the operation strategies they use, they do not compromise with the quality of their goods. With Wal-mart operation approach of ensuring low cost of production, they should be very keen to ensure that, though they want to reduce the cost so that they can sell to consumers at low cost, the quality of their products is high. This will call for more investment and spending on their production process time (Walker & Rushton, 2007). On the other hand, Tesco production processes mainly dwells on quality increment with a sole aim of attracting more consumers. However, they should be very keen on the cost they bear to produce those high quality goods to ensure that customers will afford to purchase them. Speed Each company willing to thrive in any market should maintain an effective external and internal speed. This is the only way to make customer to have a positive view of the company thus encouraging them to return more likely with more business (Cavusgil, Knight & Riesenberger, 2012). Wal-mart has adopted operation strategies that place it at a better position in terms of external speed. This is because the company has set out various outlets in many countries thus allowing customers to access their commodities quickly. However, in their strategies, they need to establish production centres in various countries so that they can achieve internal speed. This will help them reduce the cost of their inventories even further thus attracting more customers. Tesco, on its operation strategies, does not address the problem of external speed. The company has so far opened its outlets in only 14 countries. This is not enough for such a large multinational company as Tesco (Manheim, 2011). The company has to revisit its operation strategies to ensure it open more stores in more countries so as to ensure its customers accesses goods wherever they are without much hassles. Flexibility Flexibility is a very crucial factor a company should consider to fit its products and services to its customers. Wal-mart has developed a wide variety of products and services to its customers to choose from. However in its operation strategies, it must ensure it adjust its delivery procedure so that it can cope with unexpected changes (McLoughlin & Aaker, 2010). Tesco should in its operation strategies ensure it incorporate changes necessary to achieve delivery flexibility. Dependability Every company should ensure that their operation strategies allow their customers to receive goods or services on time. With its strategy of producing goods overseas then transporting them to its local market in U.S., Wal-mart should ensure that there are well laid down transport channels to ensure customers back in US receive commodities on time (Walker & Rushton, 2007). On the other hand, with its strategy of producing goods in UK and then transporting them to overseas markets, Tesco should lay down necessary facilities to ensure their stores abroad are fully stocked to meet an upsurge in demand to avoid frustrating its customers. References Cavusgil, S. T., Knight, G. A., & Riesenberger, J. R. 2012. International business: The new realities. Upper Saddle River, N.J: Prentice Hall/Pearson. Keupp, M. M. 2007. How operations design affects business efficiency. Mu?nchen: GRIN Verlag GmbH. Manheim, J. B. 2011. Strategy in information and influence campaigns: How policy advocates, social movements, insurgent groups, corporations, governments, and others get what they want. New York: Routledge. McLoughlin, D., & Aaker, D. A. 2010. Strategic market management: Global perspectives. Hoboken, N.J: Wiley. Pride, W. M., Hughes, R. J., & Kapoor, J. R. 2011. Foundations of business. Australia: South-Western Cengage Learning. Ryans, A. B. 2008. Beating low cost competition: How premium brands can respond to cut-price rivals. Chichester, England: John Wiley & Sons. Varley, R. 2005. Retail Product Management: Buying and Merchandising. Taylor & Francis. Walker, S., & Rushton, A. 2007. International Logistics Supply Chain Outsourcing: From Local to Global. Kogan Page. Weele, A. J. 2010. Purchasing & supply chain management: Analysis, strategy, planning and practice. Andover: Cengage Learning. Mullins, J. W., & Walker, O. C. 2013. Marketing management: A strategic decision-making approach. New York: McGraw-Hill. Read More