Tesco

Value Chain Analysis According to Lynch (2003), value chain is defined as the links between key value adding activities and their interface with the support activities. Value chain has been implied as a strategic evaluation tool used for distinguishing the strengths and weaknesses in value adding processes (Audrestsch, 1995). The value chain of Tesco has been demonstrated in the following diagram: Fig 6: Value Addition in Value Chain of Tesco Inbound LogisticsThe overall cost leadership strategic management of Tesco is exhibited in its lean and agile inbound logistics function. Drawing upon Abeysinghe (2010), the company uses its leading market position and economies of scope as key bargaining powers to achieve low costs from its suppliers. The analysts have also highlighted the constant upgrading of their ordering system, approved vendor lists, and in-store processes to induce effectiveness and efficiency into the company’s inbound logistics operations.Operations Management T esco has been praised by a number of supply chain management critics for its effective use of IT systems that facilitate the company’s low cost leadership strategy. According to Tesco (2010), the company has invested over ? 76 million in streamlining its operations through their Tesco Digital program, which is a third generation ERP solution for the company. The company has achieved ? 550 million in increased profitability during 2009 alone due to the introduction of this system.This company -wide ERP system has also facilitated the minimisation of stock holdings within the company. Outbound Logistics Tesco holds leadership position in online and offline food retail segments, which is due to its efficient and effective outbound logistics. Drawing upon Mintel (2010), the company has developed a range of store formats and types, which are strategically placed to achieve maximum customer exposure. These formats include Express, Metro, Superstores, Extra and Homeplus, which are s egmented according to the target population.Marketing and Sales Loyalty programs like Tesco Clubcard are being introduced through information technology advances which dissuade the customers from switching over to their competitors. Tesco has introduced its Greener Living Scheme to give consumers advice on environmental issues, including how to reduce food waste and their carbon footprint when preparing meals . Services Tesco has been pursuing a dual strategy of cost leadership and differentiation, which has led to an increased importance placed on customer service.Drawing upon Keynote (2010), this dual strategy is exhibited through the development of self-service kiosks, financial services, focused direct marketing and promotions. In order to put Tesco’s value chain analysis into perspective, it should be noted that despite cost leadership strategy the company has been able to create a high degree of value in comparison with its key competitors. The relative analysis of the value created by the big four supermarket chains, i. e. , Tesco, Asda, Sainsbury’s and Morrisons has been provided as follows: Fig 7: Benchmarking Analysis: Cost as a Percentage of Sales Tesco For this report the organization that I have chosen is Tests and I will be explaining how they use deferent types of business communication to run their organization. I will be looking at all of the functions used by Tests to get an entire observation on the business communication used and the reasons why. I will Identify advantages and disadvantages of different methods used and Investigate strategic decisions made by Tests and what Information they used.Types of Information Example Description Purpose Sources Verbal Detects verbal Information could be a Tests Sales Assistant Interacting with a customer by trying to persuade the customer to buy one of their products and another example could be Tests staff making an announcement over the Tanana system about a lost child. Verbal communication is information that is shared between individuals by talking. It can be done in may different ways such as telephone, face to fact and meetings. The purpose for verbal communication inTests is t hey must respond quickly to any action that is needed to be sorted. The sources for Tests verbal information could be description of products or service. Written Deco's written information could be surveys and questionnaires for the customer service like What you think about fruit and vegetables? Another example is Tests displaying posters promoting their latest offers. Written communication can be interactive communication that is used in words or symbols to convey a message eke memos, emails, letters, reports, leaflets etc.The purpose of written information is that this will help Tests to understand how the customer feels about their services and products and also to understand where they are achieving and where they are failing. The sources for Tests written information are completed customer questionnaires, where Tests can review and make changes and adjustments to meet their customers' needs, for example customers requesting a bigger variety of fruit and vegetables. Tesco For this report the organization that I have chosen is Tests and I will be explaining how they use deferent types of business communication to run their organization. I will be looking at all of the functions used by Tests to get an entire observation on the business communication used and the reasons why. I will Identify advantages and disadvantages of different methods used and Investigate strategic decisions made by Tests and what Information they used.Types of Information Example Description Purpose Sources Verbal Detects verbal Information could be a Tests Sales Assistant Interacting with a customer by trying to persuade the customer to buy one of their products and another example could be Tests staff making an announcement over the Tanana system about a lost child. Verbal communication is information that is shared between individuals by talking. It can be done in may different ways such as telephone, face to fact and meetings. The purpose for verbal communication inTests is t hey must respond quickly to any action that is needed to be sorted. The sources for Tests verbal information could be description of products or service. Written Deco's written information could be surveys and questionnaires for the customer service like What you think about fruit and vegetables? Another example is Tests displaying posters promoting their latest offers. Written communication can be interactive communication that is used in words or symbols to convey a message eke memos, emails, letters, reports, leaflets etc.The purpose of written information is that this will help Tests to understand how the customer feels about their services and products and also to understand where they are achieving and where they are failing. The sources for Tests written information are completed customer questionnaires, where Tests can review and make changes and adjustments to meet their customers' needs, for example customers requesting a bigger variety of fruit and vegetables. ï » ¿Tesco Tesco is a British multinational grocery and general merchandise retailer headquartered in Chechens United Kingdom. Tesco is the third-largest retailer in the world measured by revenues. It has stores in 14 countries across Asia, Europe and North America and is the grocery market leader in the UK. In Tesco stores we can buy a huge range of food products and some non food product. Every successful business there is aim and objective behind them. Aims and objectives are the marketing targets that must be achieved for company to achieve its overall goals. The main aims of Tesco for 2012 are: 1.Offering customers the best value for money and the most competitive prices 2. Meeting the needs of customers by constantly seeking, and acting on, their opinions regarding innovation, product quality, choice, store facilities and service 3. Providing shareholders with progressive returns on their investment improving profitability through investment in efficient stores and distribution depots, in productivity improvements and in new technology 4. Developing the talents of its people through sound management and training practices, while rewarding them fairly with equal opportunities for all 5.Working closely with suppliers to build long term business relationships based on strict quality and price criteria 6. Supporting the well-being of the community and the protection of the environment Each objective needs to be SMART so that they are practical objectives that are capable of being monitored and achieved. SMART is an acronym, standing for specific, measurable, achievable, relevant and time specific. Specific objectives need to have precise description. For example Tesco set an objective of at least 70% of people spent more than ?10 in Tesco. It needs to show clearly what the aim is.Measurable is an objective able to measure correctly so the manager knows their aim has been achieved or not. For example Tesco club card can record the money which customers spent at a period of time and what product do they choose. Achievable is an objective which not beyond the reach of the organisation and individual employee. For example Tesco mangers need to estimate the aim is feasible for Tesco. Relevant is an objective which able to help to achieve the aims of Tesco. For example open new stores can help achieve the aim of growth for Tesco. Time specific is an objective which set a time for finish and start.For example Tesco manger tells their employee to achieve the sales target in this week. Survival Survival means generating on aim at enough revenues to cover all the business expenses and so to break even. Survival is usually an aim at the start of the business. I am sure Tesco UK don’t make survival as an aim any more. This is because Tesco has been running since 1924 in UK. I believe when Tesco starting to break into the Northern Ireland market, their biggest aim is survival. To survival of Tesco has done lot of promotion to attract customer to build t he loyalty of the customer such as window displays, discount etc.As we see Tesco group sales is ?72bn this has grow from 7. 4% from last year. I think Tesco has been survival successfully in UK is because they have focused on 6 key points. They are service staff, stores formats, price value, range quality, brand marketing and Clicks Bricks. Those are the key point make customer has a nice shopping trip. Clicks Bricks is other option for customers to shop which is online shopping. Customers can use internet to enter online shopping wed side easily, also Tesco has offer Tesco online shopping app for customers. This can achieve Tosco’s objective of meeting customers need and starting to use new technology.However Tesco in the USA market started trading in 2007. Their brand name in USA is fresh & easy. I find this name is very good because it is assonated with health. Healthy eating is becoming a popular social trend. So this name can attract those people come to their supermarke t. This can achieve their aim of participating in the formulation of national food industry In March 2011 Tesco opened first stores in Northern California around San Francisco and the Bay Area. For those stores their aim for now is to survival, which means they destroyed by other competitor such as Kroger.After a Tesco has achieved the aim of survival, this shows Tesco has growth successfully. Tesco has set an objective of to be an outstanding international retailer in stores to help them to achieve the aim. Maximising stakeholder needs Maximising Stakeholder needs mean taking account of the different needs of people involved in the business. A stakeholder is anyone who is interested in the business. This could be the owner, manger, employees, bank, investor, suppliers. For Tesco maximising stakeholder needs means they need to meet the customer needs, having good relationships between suppliers and pay its employees a decent wage.Customers are very important for the Tesco business. Tesco must keep them happy, so Tesco can achieve their aim of maximising sale. If Tesco doesn’t satisfy make, the customer will complain about Tesco and not return to Tesco again. Also they will spend their money in other retailers. To attract and make those customers happy, Tesco has made an objective be to be a creator of highly valued brands, which means Tesco has own label appeals to different customer needs. Tesco has providing them with the quality products, the best value and the most competitive price.To achieved this aim Tesco done well in customer service. Their staff always help customer when they need to keep them happy. This help Tesco to achieve offering customers the best value for money and the most competitive prices. They also set the objective of build team so that create more value foe customer. There jobs is keep thinking how to create more value for them. They also use self check out services to give customers a new experience. Tesco also use the club ca rd system to give customer best value.For example if you collected 150 point on your club card, you will get ?1.5 to spend this money in Tesco. For Tesco club card use to know customer when, where spent their money in Tesco. Club card help Tesco achieve the objective of to be a creator of highly valued brands. And achieve their aim of offering customers the best value for money and the most competitive prices Also Tesco can see which product is most popular. To attract different groups of customer and give offer them good price. For example Tesco set up Baby & Toddler Club’s. This club is aim for parent, so they can get easier and save lot of money in exclusive offers.To get easier mean Tesco will help them every step of the way from bump to toddler with useful advice. Tesco also provide the cheapest price of product ‘Tesco Value’. This is very good for low income family. However the quality of product is not very good. If high income family want to buy high qual ity product, they can buy ‘First range’ product. As we know First range product are more expensive than ‘Tesco Value’ product. For example a Tesco Value tissue cost 65p and the first range tissues cost ?1. 25. Tesco has the objective of meeting the needs of  customer and create more value for customers.Tesco has well trained customer service staff. Also Tesco build teams to create more value and keeping up to date the need of customer in different area. Moreover Tesco has provided a user friendly website for customer to find out more information about Tesco. They have well trained staff to answer customer questionnaires. Tesco always continues to improve the customer service and meet customer needs by acting upon feedback. Those can help to keep sales of Tesco up. The staff in Tesco has many benefits. They are not just having good pay.Also Tesco offer a whole package of other ways to help staff make more of their money, safeguard their future and look aft er their health. For example, Tesco is offers flexible working hours, offering part-time roles and encouraging job-sharing opportunities and shift-swapping. Tesco also provide a Training Options Development Programmer, offering an Apprenticeship or encouraging the studying for a qualification whilst at work. Currents in Tesco there are 7,000 members of staff taking part on development programmer which is designed to help them gain the experience and skills they need to move on to the next Tesco challenge.This can help Tesco to achieve developing the talents of its people through sound management and training practices, while rewarding them fairly with equal opportunities for all. The other important stakeholders are investor and shareholders. Tesco can’t grow without them. For example if Tesco want to open a Tesco store in overseas country. They must have local investor put money in it and look after them. The benefits for the shareholders and investor in Tesco are Tesco is a successful business and I am sure they are making profits. This shareholders return will increase.Also the investors get good and fair dividend each year. This has achieved Tesco aim of providing shareholders with progressive returns on their investment improving profitability through investment in efficient stores. Maximizing sales revenue Maximizing sales revenue is an ambitious aim in which the business seeks to generate as much income as it can. For Tesco when it aims to maximize sales, Tesco make some products half prices to attract more customers to buy it. Tesco also use club card to do promotion. Customer use club card to get more points, so they buy more products and discount.Tesco also use TV advertising to increase revenue the product. TV advertising is expensive and needs lots of people to make an advertisement. However there are many people watching the TV. Now there are very useful and very popular promotions, which are mobile apps. People can use mobile everywhere. M obile apps allow people to find the nearest Tesco store from the customer and show how to get there. People also can use this app to shop for 1000’s product from Tesco direct. If people use club card, they can scan the club card to see vouchers and order club card Rewards.When people have free time they can sit at home to so the shopping online. This can make the sales of Tesco higher. This can achieve their objective of outstanding international online retailer. In Belfast Tesco offer petrol in one of the biggest stores. It can maximize the sales of shop. It can increase sales of product because customer must buy the petrol. Also it can achieve the objective of meeting customers need. Tesco has created their brand, so all brands under Tesco name all profit will be return. Tesco offer a wide range of products for customers to choose.From increases choice can increase the sales because customer can buy more kind of product than other supermarkets. When Tesco sell the chicken, they will show us how they cook the chicken. It makes the customer want to buy it. The layout of stores is very important. The most people come to supermarket to buy bread, so Tesco sell their bread at the end of the shop. This make customer walk thought the shop. Maybe the customers just want to buy bread, but come out with a lot of products in the check out. There also place their products at the front of the store or points of sale in order to increase sales revenue.This also achieves the objective of to be as strong in everything we sell as we are in food because food product helps increase the non food product Tesco always continues to improve the customer service and meet customer needs by acting upon feedback. Service can upgrade the value of Tesco for example Tesco provide good customers service, customers will shop more happily and customers would like to return to Tesco. If customers buy lots of products or large product Tesco will offer delivery services. More over custom er buy online product will get delivery servers as well.In every Tesco stores there are boards in the air show customer what kind of product in that area. This make customer easier to find the product they want. Tesco has service like Club card Helpline, Customer Service, the Tesco Direct Flowers & Wine Telephone Ordering Service and the early Grocery Home Shopping service. Those services can upgrade the value of Tesco and make customer want to buy more product. Moreover those service cam help Tesco increase their sales to achieve their aim of maximizing their sale. This can increase sale to achieve the aim of maximising profit.Maximizing Profit Maximizing profit means Tesco is attempting to make as much profit as possible, so this make the total revenue of the business exceeds all the total costs. Tesco going global, it can maximize its profits as its services and sales are greatly sort across the world. To be able to do it that Tesco need to retain loyal staff and customer. Tesco need to loyal of staff to create a good working environment between staff and the owner. So staff will be happy and they will work harder for the owner. Tesco also need to keep the shareholders happy by putting money in their pocket.And the most important thing is get their customer happy, so Tesco has keep their profit rising. Tesco group sale is ?72bn this has been growth 7. 4% from last year. This shows Tesco are growing lot of profit. Tesco can use their objective to achieve their aim of maximizing profit. Tesco can use the following objective of create of highly valued brands, growth, be strong in everything they sell as they are in food. Increase sales prices Tesco can increase sales prices on the product which is high demand product, for example Tesco could increase milk from 65p to 75p. Although it is only slight increase, it wills a big effect on profit making.However if Tesco increase prices for many product, they will start losing customers. This will be losing profit. Th erefore before setting new pines Tesco needs to take such issues who careful consideration. Decreasing cost of product Tesco can maximise profit by decreasing cost of product. Tesco can open more stores, so Tesco can get cheaper price on economic of sales by order more products. Tesco need to get good relationship with supplier. They can pay all the product or ingredients by cash, so it can save bit of money to maximise. Tesco can use all the ingredients to which they order.For example order a chicken or cow use all part of those animals to cook a dish. Tesco have their own brand product, so they can sell those products straight away after the production. This can save time, so Tesco have more time to sell those products to maximising profit. Sell a range of products Tesco need to sell as many kinds of product as they can to attract as many customers as possible to maximise their profit. Tesco have the objective of be strong in everything as in food. For example maybe there is a cus tomer just looking for milk in Tesco. Suddenly he sees a good TV then he decided to buy it.This shows range of product can attract customers to buy more products. Some product Tesco has provided different size to maximise profit for example there are different size of 7up which give customer to choose. If a customer wants to drink the 7up immediately they will buy the small bottler of drink. This show size of product can meet customer different needs and they will buy more, so Tesco can maximise their profit. Growth Growth means a business is increasing its size, either by employing more people, increasing it product range and opening more branches. This show Tesco has been growth strongly.Tesco has growth up to 13 countries. They have stores in China, India, Malaysia, South Korea, Thailand, Czech Republic, Hungary Ireland, Poland Slovakia, Turkey, and USA. Also there are over 500,000 employees’ works for Tesco. Tesco has become third biggest retailer in the world. In 1997 is the time Tesco start to growth the core business and diversify with new products and services in existing and new markets. From 1998 Tesco has expanding the range of product that sell, for example by stocking clothes, household products and electrical. During those years Tesco starts to offer car and house insurance, loans and credit card.In 2003 Tesco has entering to telephone market. This shows the new range of products has attracted new customers. This suggests that it will be easier for Tesco to achieve it aim of growth In 1924 Tesco start growth in UK. In 1995 Tesco started trading in Hungary and now there are 212 stores in Hungary. Tesco has achieved their objective of being an outstanding international retailer, new technology and protection of the environment. For example In Hungary Tesco has developed range of technologies to reduce our carbon emissions including solar panels on stores, natural refrigeration  systems and energy efficient lighting systems.The most success ful international business is in South Korea call Home plus. This business first opened in 1999 and now has more than 450 stores consisting of both large hypermarkets and small Express stores. Home plus has employed more than 27000 people. In each week there are more than 6m customers go into the shop to buy things. I think they have growth so successfully around the world because they give very good value for the customers and provide a big range of products. In the UK Tesco operates a home shopping service on the Tesco.com wedside.In May 1984, Tesco has become the world's first recorded online home shopper. Tesco has operated on the internet since 1994 and was the first retailer in the world to offer a robust home shopping service in 1996. Tesco has entered online music in 2004. In 2011 Tesco has brought Binkbox which is an online movie streaming. This has achieved the objective of to be an outstanding international online retailer and growth in UK core. It shows the increase of T esco’s selling space during the last decade. This chart also shows the growth of Tesco.(Source: Tesco annual reports) Tesco use quantitative and qualitative information to measure the degree to which they are achieving their aims and objective. In quantitative information, Tesco is looking for some number or figures. For example actual, target sales figures over time, number of people went to Tesco in a week, percentage of customer use the self check out service etc. Tesco will use club card data to find out the information. After find the information Tesco will know they have achieved the aim or objective or not.In qualitative information, Tesco is looking for some opinion from stakeholder. Tesco can done by questionnaires to customer ask them what they feel about Tesco and how Tesco meet their needs. Also Tesco can use consumer panels involves taking response from people who regularly sit on panels and give Tesco opinions on given products. That information can help Tesco t o achieve their aim and give some information about improvement. Overall Tesco is a very successful business. In 1924 only one person start the business of Tesco and now Tesco become the world third largest retailer.Before we only can find Tesco in UK, but now we can find Tesco across the world. This shows Tesco has achieved the aim of growth successfully. Most of Tesco stores have achieved the aim of survival which is very good. We also find Tesco try very hard to achieve fully to their aim of maximising profit and sale. Tesco also meet the stakeholder needs very well. They always find their way to make their employees, investor, suppliers and the most important stakeholder customer very happy. This is the reason why Tesco is the world third largest retailer.