FMA 1st Part Tesco

FMA 1st part Tesco
Introduction.
Tesco is a multinational retailer of groceries and other items for the home. The company was founded in
1919 in London, by Jack Cohen, who was the son of a Jewish migrant family, which moved to the United
Kingdom from Poland. However, Tesco as a brand was set up in 1924, and the name of the company was
originally made from two letters of Jack Cohen's surname – CO, and the initials of the supplier’s name –
TES. The first enduring supermarket was opened in September 1931. Tesco’s core values are all
centralized by customers, communities, and the planet, as well. According to Samuel Serto (2019), the
organizational mission is about the main purpose that should answer the question of why organisation
exists. Consequently, the organisation’s mission and core values should reflect the field of their existence,
products or services that the company offers, and also purposes tend to be about the vital ideas of the
main stakeholders. So Tesco’s mission based on the mentioned on the company’s website is ‘serving our
customers, communities, and planet a little better every day’ (Tesco, n.d. Core Purpose and Values).
Tesco is a worldwide famous retailer of merchandise. Generally, the company operates with the help of
different types of stores and is also represented online. Among the items, that Tesco offers to customers
are groceries, prepared food, non-alcoholic beverages, alcoholic drinks, and items for the home, such as
supplies for washing machines, mugs, candles, and other household goods. Each organisation, that wants
to exist needs to have main revenue streams, which are sources that permit the company to raise money
for existence. Thus, Tesco’s main revenue streams are sales of groceries and goods for households in the
company’s supermarkets or online deliveries.
Organisational Structure.
According to Whittington R., Regnér P., Angwin D., Johnson G., and Scholes K. (2020), organizational
structure should be defined as mentioned and distributed roles, responsibilities, and relationships in the
organisation. So, this should reflect the inner anatomy of the company. Tesco, as an organisation, has a
hierarchical structure, divided by function and area departments. The highest place in the hierarchy has a
board of directors, after them located chief executives from different departments, such as marketing,
human resources, sales, and finance department. The next in the chain are middle managers that are also
divided into different departments, were mentioned before, after junior managers, and in the end, all the
non-managers roles, which are also divided into different departments.
Summing up, Tesco’s organisation structure should be defined as tall or hierarchical due to the existence
of a few layers of management and several managers. Also, the structure is based on product-based, area,
and functional differentiation. Nevertheless, the company’s inner structure is decentralized, so lower
managers have decision power in the company. Such formation in the company allows employees to have
a sense of responsibility, due to the decentralization, therefore, motivation inside the organisation exists.
Tesco, as a company, created an environment where employees can have a career, indeed, get progression
opportunities inside. Nevertheless, due to the long chain of command in Tesco any reforms, that were
invented from the highest positions will affect the company and implement to the lowest chain of
employees slowly. Due to the area or geographical diversification, there could appear a few
disadvantages, such as the conflict between local and central management and duplication of resources
and functions. However, such an organisational structure also has strong advantages, and among them are
focus on local customers and understanding them and also positive competition inside the organisation.
Organisation Strategy and Business Model.

Each organisation needs to have a strategy. The strategy, as a term was defined in 1963 by A. D.
chandler, so it ‘is the determination of long-run goals and objectives of an enterprise and the adoption of
courses of action and the allocation of resources necessary for carrying out the goals’ (Alfred D.
Chandler, 1963, p.13). From the mentioned should be noticed that strategy is vital for each organisation to
grow and operate in the market, to be profitable and successful. Tesco’s Annual Report and Financial
Statement for 2022 also mentioned the company’s strategic priorities, which are the main goals of the
organisation. Among them are changing the value to be a favorite brand of the customers, expanding the
loyalty of the company’s customers, and providing consumers with new sources of revenue, increasing
the capital growth, and becoming a cost-efficient retailer. Organisational strategy could be analysed with
the help of the Ansoff matrix, which is a tool for strategic planning. According to the above-mentioned
Ansoff matrix, there are four types of strategies that exist: market penetration, market development,
diversification, and product development. Tesco exists in Europe mostly and uses a market penetration
strategy, that aimed to increase market share in the needed field and use existing products and customers.
Tesco is able to follow this strategy, because the company offers competitive prices in the market, and
uses a variety of marketing strategies and advertising campaigns, as well. One example of this if Tesco’s
club card, which was created to increase the loyalty of customers and attract consumers to return to the
organisation.
Business model was defined by Afuah (2004) and ‘is the method by which a firm builds and uses
resources to offer customers better value than competitors and make money doing so’ (Afuah A & 2004,
2001, p. 3-4). The business model should be created according to the strength of the company and used
them as a combination to make the best and the most valuable offer in the market for customers,
moreover it should compete with other companies in the field. The main idea of Tesco’s business model
is to reinvest and improve the firm for customers and employees. The business is organised around three
main ideas, such as customers, products, and channels for distribution. Based on the mentioned before
Tesco’s competitive advantages are diversification of goods with the help of which firm attracts people
with different incomes. The next advantage is a distribution system, low-cost of delivery, and as a helping
point for this company also invested a certain amount in digital programs to be the best in the field.
Conclusion.
Tesco’s mission is to serve customers, communities, and the planet a little better every day’ (Tesco, Core
Purpose and Values). The company’s business model of reinvesting and strategy helped the brand grow,
due to the concentration on the core values, such as customers, planet, and communities. Moreover, the
company’s organizational structure motivates employees to grow inside the company and also gave them
a certain amount of responsibility. Nevertheless, such a structure slows down the process of global
changes in the company. Despite all of the disadvantages and problems that could be caused inside the
firm, Tesco is a multinational retailer of groceries and household goods, that successfully operates in
Europe with the help of a market penetration strategy.
References list
19 Certo, Samuel, and S. Certo. Modern Management: Concepts and Skills, Global Edition, Pearson
Education, Limited, 2019. ProQuest Ebook Central,
http://ebookcentral.proquest.com/lib/ulster/detail.action?docID=5613127.
A.D. Chandler. (1963) Strategy and Structure: Chapters in the History of American Enterprise. MIT
Press.
Afuah, A., & Tucci, C. L. (2001). Internet business models and strategies: Text and cases. New York,
NY: McGraw-Hill/Irwin.
Tesco, n.d. Core Purpose and Values. Available at: https://www.tescoplc.com/about/how-we-do-

business/core-purpose-and-values/.
Whittington R., Regnér P., Angwin D., Johnson G., Scholes K. (2020). Exploring Strategy. 12th edn.
London: Pearson.

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FMA 1st part Tesco

Organisation Strategy and Business Model.

Tesco, n.d. Core Purpose and Values. Available at: https://www.tescoplc.com/about/how-we-do-

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