Tesco

1. Executive summary The purpose of this report is to analyze the Tesco, which is a global grocery and general merchandise retailer situated in Cheshunt, UK. The organization is that largest organization of its kind in the UK and has a market share of 30%. The company was founded by Jack Cohen, when Cohen used to sell Surplus groceries from a stall in the Well Street market. The name first appeared in the 1924 with the name of tea merged with the initial two letters of Jack Cohens last name. The key findings of this report are the SWOT (Strengths, Weaknesses, Opportunities and Strengths) of the company, the portfolio of the company as well as the Company description. Also included in the analysis are the branding and positioning; market segmentation, Ansoff Matrix, Pest for NPD and will be concluded with the ultimate financial state of the company with recommendations as to what shall the company do in the future to maintain its status as the leading grocery and general merchandise retailer in the UK and what sort of problems will it face in the future and what shall be the precautions it needs to take before these problems affects the operations of Tesco.

2.

Company background

SWOT (Strengths, Weaknesses, Opportunities and Threats) Analysis: The SWOT Analysis of Tesco are as follows: -

Strengths

Already an established brand. Reputation Customer service Operations outside the UK Highest percent of share in the UK market. Weaknesses:

Increasing geographical spread makes focus on specific markets difficult Exposed to macroeconomic difficulties in some markets International expansion requires substantial investment High reliance on UK market Poor CSR and community impact Opportunities:

Investment opportunities in countries like Republic of South Africa and Russia. Can take an advantage of the current recession by decreasing the profit to volume ratio. Threats:

The current recession. Competition of other companies excelling in the same field as Tesco i.e. Wal-Mart and other European companies most notably German companies which is the first country to sustain growth in Europe.

Mentioned Below is the organizational Chart of Tesco

3.

Market analysis

Tesco follows these type operations. Its effectiveness lies in the trust that is build-up between Tescos suppliers and Tesco itself. This system is now is more effective than ever for Tesco because of recession and its policy in this regard shall be appreciated because Tesco is not dealing with recession as a weakness but more as an opportunity. Because of Recession many supply chain firms are going out of business. Tescos market is stable in UK, and it is not facing the threat of bankruptcy, so taping into recession affected companies, it is getting products at a price which is quite cheap despite it operating on an externally and its volume margins are increasing steadily as a result. The practice of sharing critical information with vendors/suppliers is most of the time risky. Reason of which is the loyalty of the vendor/supplier as the risk of the supplier/vendor

switching to other manufacturers for the reason of extra profit is highly likable and they make gave out critical information about the former company to the new company which might consequence in bad results for the former company. Although, the risk of loyalty mentioned above is valid, this might not be a risk for Tesco. Tesco is the biggest supply-chain management in the world, and the effectiveness of its business relies upon its relation with its vendors/suppliers reason of which is Tescos willingness to buy huge amount of stock from their suppliers. No one buys stock in the way Tesco does and that is what makes them effective. Another reason that Tesco maintains a sustainable relationship with its suppliers is the mount of suppliers it had. Tesco does not have any rival in a real sense of the worldTesco has such large no. of suppliers that its rivals supplier fears Tesco of taking them of the list of suppliers. Tescos supplier knows it well that if they dont agree to the prices that Tesco is offering then someone else will. Tesco has a monopoly over its suppliers and manufacturers because they dont have any better place to showcase their products. If a product is not available in the market, Tesco then gets bad attention because majority of consumer base uses it. Distributors are afraid of Tesco influence, Tesco does not need a particular supplier as much as a particular manufacturer such as Nestle, Jockey needs them to get their companies going. Although not initially but since Tesco has evolved into a household, its reputation also serves as marketing strategy for the suppliers. It can be deduced that every American has once in his or her lifetime stepped foot in Tesco and for the supplier what could be better. According to Fastcompany.com, as seeing any of their product in any Tesco store will ultimately boost its credibility.

McKinley model of performance management is immensely vital for Tesco, as it assists the company to reach its strategic plans. This model is highly recognized to portray the challenges that an organization face. (Birch, 2002). This model was constructed by Waterman and Peter in 1984. This model considers various vital factors including the characteristics of an organization that is intangible. A categorical analysis of all the chunks mentioned below give an evaluation of organization for managing the organizational performance for Tesco. Shared values: Shared values portray the policies of conduct of an organization, and it is reflected by widely known organizational philosophy that is depicted by the employees of that organization. (Wensley, 1996, pp.40). These shared values give a motivational boost to the company employees. The synergy formed by shared values assists Tesco to face challenges in the market place that is caused by the macro and micro environment of company. Strategy: It refers to the all the plans, which are intended towards reaching an organizational goal followed by the organization. In Tesco, yearly and monthly strategies are formed. All the employees are encouraged to share their ideas, which may lead to organizational efficiency. These strategies help the implementation and evaluation. Any deficits or deficiency is corrected to form a new and revitalized strategy. Structure: It signifies the relationship that is maintained by the organizational components. Tesco is divided into various departments such as HR, sales, marketing, IT, customer services, and logistics. Further, there are various teams formed inside it for the effective management of them. Each team is supported by its team leader and vice team leader. Systems: It refers to the processes to implement specific actions.

Staffing: It refers to how the entrance of new employees occurs and how the requirements placed on specialization and competition exists. At Tesco, specific departmental heads send the requirement request to the human resource department, and they follow various steps to recruit employees for increasing performance of organization. Skills: It represents the organizational capability and the level of expertise exhibited by members of the organization. At Tesco, there are ongoing sessions of training and development to make employees in line with the organizations strategic goals. It helps them to understand the performance management system. Style: It refers to the treatment of members of the organization in mutual contacts and above all style of management. Various kinds of policy and behavior code of conduct is maintain by Tesco that makes employees understand that what the organization expects from them and how they can make their behavior aligned with the commitment made by Tesco. Tesco currently has workforce of more than 450,00 employees. The work force is highly motivated and has the required expertise in their respective fields. The company operates initial orientation and training sessions to increase the capacity and capability of the employees. Through Tesco analysis of 7S, the managers set targets and evaluate them in its light. Common values are placed in the center of the model, because they are some kind of connector, and it forms the basis for other ingredients. All factors are in some way conditioned by the principles guiding Tesco. Shared values shape the language, the way people communicate, understands the various organizational happenings and languages that is quite alien to other people that are not related to the organization. This unique chunk of organization creates an integral culture of an organization. These factors allow Tesco to create a specified behavior of

employees that is required to the fulfillment of organizational goals and mission. The company must know how these principles assist the employees to exhibit a specified behavior. For Tesco, the Model of 7s is highly versatile that they use it to analyze the internal potential of their company regardless of the industries or markets. Unlike other models of this type, it takes into account the "soft" components in as much as hard. Thus, using this model does not limit the view of the organization. 4. Strategic choices

There are many factors both internal and internal and external which can lead to uncertainty and volatility and may affect the entire organization along a Supply Chain network. It shall be comprehended that such factors arising within the organization i.e. internal factors for example, workers strike, shortage of technical personnel, shortage of electricity can be managed leading to less uncertainty and volatility but factors originating from outside the organization i.e. external factors such as petrol prices, floods bomb threats etc. cannot be managed easily or at all. When Tesco decided to offer it services to its clients through their internet website, people were not using it that much as compared to walking into their store buying things for themselves. This innovation back in 90s was not successful because when it comes to retail items people look increasingly towards customer service not accessibility. Not as the customer dont care about accessibility but they prefer their relation with the company as compare their accessibility. (Dave, 2008) The new millennium is dubbed as the age of information and technology. My department of sales now heavily relies on IT concerning all the tasks we have been assigned.

The best thing about IT is its application in CRM (Customer Relation Management) without which CRM department cannot survive and as result of which our organization will not continue to exist. With CRM continued reliance of sales management softwares, for the management of customer database IT relation with CRM can be compared to the relation of water to fish. It is through CRM that an organization can track its loyal customers or clients and maintain a stable business with safe approach. The way of interaction with the customers is now much easier than was back in the 90s. Back then all, interaction with customer was mainly done with the use telephone, fax or letters. Now with the invention of internet many costs which were incurred with those methods of communications are now next to nothing. We can email our customers and receive reply free of costs as compared to 90s when telephone was expensive to for making new clients. Information technology has made it even easier for the clients to buy our products. With eshopping the can get anything they like whenever they like and all the billing hassles has been minimized in a way that has helped both the company and the client. Even though IT has benefitted the CRM, it also has its disadvantages like the relationship with customer isnt that personal. As a company, one must project its customer relations with a more personalized approach but some companies are still not comfortable with the use of IT for their operations. Tesco was the first company to introduce Bar-codes for the benefit its customers and for its own as well as its supplier accessibility, the above example is quite sufficient to understand Tesco approach to IT. Through this practice Tesco is able to track its products as where it was sent and when was it sold. It has managed them to maintain a highly standardized form of

inventory and because of which its Warehouses distribute products to stores more efficiently than any other supply chain firm. Its CRM strategy was also effective in this regard. With more and more people buying products from Tesco stores IT softwares has made task easy for them to develop customer loyalty. The first and foremost challenge that Tesco is facing in trying to establish web-based linkages with suppliers is that of intruders. If details of Tesco dealings with suppliers are hacked by its rivals then Tesco business will certainly incur losses and its position as dominant force in supply chain arena will be weakened. The second challenge is that of information management. Tesco must use the same softwares as well the same warehouse managers just to make sure both the suppliers and Tesco work in harmony with each other and no problems arise as result of both the parties not being on the same page. Very recently, Tesco has been importing products from China. Very recently Chinese hackers have hacked into American firms email accounts to get information which might be detrimental to the operation of these firms. Even though China is a partner and Tesco imports close to 9% of all exports from China, a Chinese pull out because of another Taiwan crisis would badly damage the reputation of Tesco according to bbc.com article on in March 2011. Another issue with web-based linkages is Tescos ability to exert the same amount pressure it used to exert when they are not following this model.

Tesco is in the lead in supply-chain firms since its inception that means that the strategy that it is using now shall be implemented in the future. The status-quo shall be preserved and shall not be changed under any circumstances. The biggest fear that Tesco will most certainly face in the near future will be merger of two big names next to Tesco in the list of supply chain firms. This will certainly make things difficult for Tesco because right now it has a kind of monopoly over the supply chain industry. Its an external environmental factor that is beyond the control of Tesco, but the thing that shall do in such circumstances is to pursue an even aggressive approach towards these firms such as opening a store next to its rivals to make them realize the power of Tesco. Globalization has supply chain a much bigger industry than it was 20 years ago. Tesco now imports $12 billion of products from China (9.6% of total exports from to US). Its strategy of owning the truck that would supply inventory from warehouses or distribution centers or suppliers to its stores has been one of the reasons of its effectiveness in Supply Chain Management. It shall adapt the same policy with respect to China, have its own fleet of Cargo aero planes or Cargo ships that would import the stock as the cost of delivery by aero planes owned by Tesco itself would be considerably less than the cost of delivery by someone else, according to Robert E. Scott on CGI.com. 5. Conclusions and recommendations

All in all the Tesco at the moment does not face a tough competition but with the rise of Germany as well as and recession affecting its operations in US as well as other European countries. Adding to Tescos problems is the sale of cheap Chinese goods because of Chinas of policy of devaluating or under valuing its currency.

The recommendations for Tesco for keeping a reputable name as well as business operations it needs to formulate the following steps: Increase its stores in China and India; these countries are cashed based economies as well as in addition to being least affected by the recession. The lifestyles of these countries are such that recession or no recession the middle class does not feel the burden as it should or comparing to US or France. Taking a considerable market share in these countries is extremely important for Tesco to survive in a competition which is increasing second by second. Virtual Integration is also a good way to increase profits by which can lead us to downsizing Tesco. Virtual Integration, by definition means replacing physical components of a company which holds information with internet. This practice is relatively new as compared to other types of information management but is quite popular among some of the big names in business community. The best example of such company is Dell Inc., which is in the process of converting its entire organization into a virtual organization. Dells supply chain in the near future will be just being composed of Dells brand and its customers. Dells direct business model is now obsolete in this age of information and technology and Virtual integration is its only way to stay on top of business. Another example is that of Sharp Inc. which plans to make an $11 billion costly LCD panel and will get all the outside suppliers and distributors to work inside its walls forming a company that is virtually integrated. Through this approach, Sharp will minimize the costs of suppliers and distributors and will be working through internet to for all the work necessary to keep the operations going.

Virtual Integration is the future of all supply chain firms particularly those firms which are follows the external supply chain management policies and computer hardware firms such as Intel or HP can adopt the Dell model to be virtually integrated for their maximum profit. The same models of Sharp and Dell can be used an ideal example for Tesco to continue its presence in the UK as champion as well as beating out Wal-Mart in Foreign territories. Look for markets in developing countries, such as China and India. Both these countries have a combined population of 2.5 billion and are home to some of the strongest middle-classes in the world. Tesco have stores mostly in developed European Countries, it needs to tap into the above mentioned markets. References: Birch, D. L. (2002). The job generation process. Cambridge, MA: MIT.

Chaffey Dave. (2008), E-Business and E-Commerce Management , New Delhi: Pearson Education India Ltd..

Wensley, R. (1996). Another oxymoron in marketing: marketing strategy. In Marketing in Evolution, edited by S. Shaw, ed. & N. Hood, ed. London, MacMillan,