Comparative Analysis of Tesco PLC and Primarks Capacity Management - Essay Example

? Comparative Analysis of Tesco PLC and Primark’s Capa Management Comparative Analysisof Tesco PLC and Primark’s Capacity Management Introduction Capacity management refers to the management and planning of demand and customer base of companies at one end and manage supply chain effectively on the other end. Moreover, this concept also refers to the management of activities of the company in order to cater demand and facilitation of customers. This report evaluates the capacity management and planning of the two renowned retail companies operating in the UK, Tesco PLC and Primark which have a long history of serving millions of customers every year. Although the retail services offered by both companies have a marked difference, but it is possible to conduct an analysis which undertakes a review of their strategies regarding their ability and planning to meet demands of their existing and potential customers. Before moving ahead with the analysis, following is a brief review of the two retail companies’ operations. Tesco PLC Tesco PLC is a well established and a leading retail business operator in the United Kingdom with approximately 250,000 employees and above 1700 retail outlets. Tesco PLC started as a food retailing company in the UK and then extended its retail operations to include retail products such as electronic items, clothing goods, home and office equipments and furniture, and financial services. Tesco PLC, today, has the largest customer base in the UK retail segment (Tesco PLC, 2012). Primark Primark operates as a subsidiary of one of the largest food processing company and retailing company ABF PLC (Associated British Foods PLC, 2012). The company has an Irish origin and it deals with the retailing of clothing products in and outside the UK. Primark is different from Tesco in a way that it has a limited range of retail products to offer (Associated British Foods PLC, 2012). Comparative Analysis of Tesco PLC and Primark’s Capacity Management In the UK, demand for retail products has slowly picked up pace after the overall improvement in economic indicators of the UK which were affected by the recent financial crisis. Keeping in view this improvement in demand, retail service providing companies are faced with a challenge of managing, expanding and planning their capacity to meet increased demand for retail products. In this pursuit of retail capacity management, two main options have been considered by the retailers across the UK. The first option is the expansion of retail floor space by opening up new retail outlets and the second option has been to go online and make use of the omnipresent advantage. Tesco PLC and Primark, both of which are retailing companies, have catered this increase in demand and the challenge of capacity management by focusing on these options. However, it is pertinent to note here that both companies have different challenges to face; Tesco PLC has a large and mature customer segment which needs to be catered, managed and facilitated through conventional and unconventional means. On the other hand, with a comparatively small customer segment, Primark’s aim to build capacity is aimed at increasing customer base, rather than managing or facilitating it. Having taken into consideration the increase in retail customers’ demand, Tesco has considered a paradigm shift in its capacity planning and management. As per the interim report published by the company in company for the year 2012 – 13, the management is focusing more on online retailing rather than increasing physical retail outlets. The possible outcome of this strategy to increase capacity can be the catering of increased demand of the customers and to have a wider reach by nullifying the impact of constraints associated with physical outlets (Tesco PLC, 2012). Having considered the fact that the customers of the company increased significantly, Tesco PLC required a solution for increasing its capacity to manage growing customer base. In this regard, Tesco introduced an order processing system which was aimed at increasing the capacity of the company to process large number of orders from customers at the same time (Tesco PLC, 2012). On the other hand, Primark has been focusing on expanding its retail floor space in contrast to strengthening its online retail system. According to the Chief Executive of the Associated British Foods PLC, which is the parent company of Primark, Primark has been looking forward towards further expanding its retail selling space in the UK. One of the recent developments in this regard has been the inauguration of Primark’s flagship store in Edinburgh (Associated British Foods PLC, 2012). Moreover, the management of the company is also holds a pessimist view on increasing retail floor space in future on the basis of the fact that the sales density of Primark has risen considerably (Associated British Foods PLC, 2012). Although Primark appears to be less concerned about its online retailing and managing the demands of its customers more effectively through virtual means, this may at the same time be attributed to the fact that Tesco PLC has reached at a stage where it is necessary for the company to go online. On the other hand, Primark’s low penetration in the UK market comparative to Tesco PLC may be regarded as one of the prime reason as to why it is focusing on increasing its physical presence and managing the demand through increasing its physical capacity (Associated British Foods PLC, 2012). Conclusion Keeping in view the comparative analysis of Tesco PLC and Primark in this report with regard to their capacity management and initiatives taken in this respect by both of them, it is evident that there is a marked difference between the strategies of both companies. Tesco PLC, having a strong physical presence and large retail floor space in the UK, has been focusing on going online to target a greater customer base. In fact, the management at Tesco PLC is considering reducing its retail space, which will ultimately benefit the company in reducing its operating costs. On the other hand, Primark has persisted with its strategy of increasing retail floor space in the UK and has also planned to carry it forward in the future too. List of Reference Associated British Foods PLC, 2012. Introduction. [Online] Available at: HYPERLINK "http://www.abf.co.uk/investorrelations/annual_report_2012/operating_review/introduction" http://www.abf.co.uk/investorrelations/annual_report_2012/operating_review/introduction [Accessed 5 May 2013]. Tesco PLC, 2012. Interim Results 2012/13. London: Tesco PLC. Read More