Tesco Operations Management

Tesco is currently the biggest retail company dealing with groceries in the UK. For many years, the company has managed to maintain a competitive advantage because of embracing effective operation management. In the current world market competition is very high and every company should effective operation management. The company is facing a lot of competition from other companies but it has established itself as a great retail industry. This company has over the years come up with operations capability so as to meet the ever-changing needs of customers. The aim of doing this was mainly to outdo its competitors. Basically, Tesco has in one way or the other responded to the complexity, risk, and competition effectively. This has been made possible through the application of various effective and ambitious strategies of the Company’s operations. In addition, the operations strategy which is employed by Tesco can be evaluated and broken down into three main aspects. These key aspects include the business-unit strategy, functional strategy, and corporate strategy.

Question 2

Leaders, as well as managers, have a big role when it comes to operation management of Tesco. The company has the right management systems which ensure quality improvement the managers of Tesco ensure the employees are involved in decision making in order to make work with the focus on quality improvement. Managing leadership has been key to the success of this company because every department operates accordingly. One of the important role and responsibility of the Company’s leaders and managers is to ensure that they look at the operations which need improvement as well as justification. This is a very important strategy because Tesco is facing a cutthroat competition, saturation of the domestic market and the need for self-development and expansion. In this regard, the company has gone ahead and expanded its operations to other countries and as a result getting a new market. In addition, the company is still using the store as one of their main business model in countries like Turkey, China, Poland and many more other countries. Mostly, the success of the company when it comes to an international market can be in one way or the other be attributed to the well-structured corporate strategies which it has put in place. It is true that Tesco in the recent years has captured a large share of the foreign market rapidly because of its good strategies. The company ensures that the store found in a given country goes hand in hand with behavior habits of the people in that given country. Tesco needs to expand more to many more countries because it has succeeded in penetrating the current number of countries. This is because Tesco has only captured countries despite its success (Zhao 2014, p.184).

When it comes to functional strategy as well as the business-unit strategy, the company is following what is referred to as consumer-centric concept whereby it has broken many of its past strategy of retailing. This is one of the reasons this company is performing better than some of its competitors in the ever competitive market. In this regard, Tesco is now focused on giving its customers various benefits Through the use of Strong and well planned customer-focused concept, Tesco is now adopting what it refers to as low-price policy in order to protect and retain its customers. In addition, the customer loyalty has been improved after the inception of the Tesco-club cards. For many years, the Company’s competitive has been based on the price of its goods. This means that the company ensures goods are sold at considerably low prices. This has been made possible through the use of the cost-cutting technique. In this regard, managers and all leaders work hand in hand to ensure that prices of goods are lowered at all times. In addition, the managers ensure that other employees are implementing this strategy of lowering prices in various countries. In order to ensure that the prices are reduced the company usually buys inputs in bulk and also ensure that wastage is minimized. In addition, the company buys non-food stuff cheaply from the developing countries and as a result reducing the price of the goods. From the performance of the company both domestically and internationally it is clear that the company has maintained a competitive advantage over its close competitors. The only challenge found in price cutting is that it is not possible in all market segments. This is because some of the high-income earners consider low prices as an indication of low quality (Lewis & Brown 2012, pp.1-11).

Tesco has also put a great focus on improving the delivery channel as well as innovating effective supply chain for its products. For example, in the late 1990s, the company came up with an online platform for grocery shopping. Although online shopping to some level increased the unit cost for some of the products during that period, the company managed to increase the level of online sales. Currently, the company has greatly invested in online shopping because it has expanded the same to foreign market. The company needs to work more in this area because many of its competitors are using this platform to market their goods. For example, in many countries the number of stores owned by this company is small and as a result, it is difficult to deliver some of the orders to the customers because using the store-approach. In order to improve the distribution channel, the company has now adopted new technology through the use of RFID technology. This technology is important because it ensures that no goods are lost throughout the distribution channel. In addition, this technology improves employee efficiency because they ensure that goods are handled accordingly. This technology comes with his own challenge because its security can in one way or the other be compromised. For example, the hackers can interfere with the type of technology and as a result affecting the operations of the company. Moreover, this type of technology is expensive and can add a cost burden to the company whereby it can increase the costs of operation (Mahadevan 2015).

Question 3

Tesco has key operational approaches which are carried out by the management in order to enhance its operations. These approaches are usually carried out by the company in order to ensure that it is improving in all operational areas. These approaches are aimed at improving the services and products or in other words the operations through incremental improvements. Continuous improvement entails improvement management strategies. One of the Improvement technique carried out by the management is education and Training. Improvement management in some cases compels the organization to use education as well as training as a tool for improvement. Tesco in most cases allows the employees to be trained on how to handle some of the technical approaches in order to improve these operations. For instance, some of the operations which need new technological improvement will compel the organization to train its employees on how to use the new equipment. In this regard, education, as well as training, is one of the ways of managing improvement (Dawson 2013, pp.339-347). Employee’s management is another strategy of improvement. In this regard, the management of Tesco ensures that employees are taken into consideration. Employee’s management is important because sometimes employees are resistance to changes aimed at improving efficiency of various operations. In this regard, Tesco has various strategies of improving the employee’s morale. For example, the management have various incentives like promotion, higher pay and rewards in order to improve the performance of the employees. This is a good strategy because if the employees are motivated to work it would be hard for them to develop any resistance and as result improving various operations of the company. Lastly, the company is involved in strategic-planning management. In this regard, the management of Tesco is involved in evaluating the impact of the said improvement strategies for the organization. Evaluation is important because some of the strategies put in place can backfire and as a result bringing about undesired outcomes and costs for the organization. In this regard, Tesco first conducts what is referred to as scenario analysis so as to predict the desired outcomes (Benjaafar et al 2013, pp.99-116).

Process management is another important approach carried out by the Tesco. This approach is important because it ensures that the processes bring out the desired outcome while at the same time cutting down the costs. This means that the Tesco management mainly focuses on the reduction of breakdowns and success of the process. This improvement-management strategy ensures that innovation as well as optimizing the process is made possible. This means that the end product will have improved quality and the capabilities of the employees will be harnessed. Finally, customer-focus management is very important of Tesco because it ensures that the customers are fully satisfied. This means that the improvement of the operations should go hand in hand with the customer satisfaction. When the customers are satisfied it means that they will keep on buying from the company (Hill & Hill 2017).

Question 4

We have various external environmental factors which should be put into consideration when Tesco management is making a decision. One of the external environmental factors is the political factors. Political factors can affect the operation of the company and as a result, they affect the decisions made by the company. Tesco operates in different countries and the political factors can affect the performance of Tesco. These factors involve laws, tax rates, and political stability. Some of the governments are good because they encourage Tesco to operate in their countries because it provides employment opportunities. In other countries Tax rates are and as a result, hindering the operations of Tesco. Economic factors are also of great concern because they affect the profitability of the company. It usually affects the decisions of the company because it must be aware of the change of various policies like taxation. In order to avoid the negative impact of economic factors, the company has diversified its operations although it largely relies on the UK market whereby it controls around 30%. Moreover, technological factors also affect the decisions of the company because currently there is the advancement of technology and the operations of the company should go hand in with the changing technology. For example, online shopping is now becoming common and the company should come up with ways of improving the online shopping techniques. Lastly, the environmental factors should also be considered when making decisions because the environment should always be kept clean for a healthy society (Wood et al 2016, pp.31-57).

Question 5

We have various ways of improving the operational efficiency of Tesco. Although the company has proved successful in operation management it should try as much as possible to improve its operational efficiency. For example, the company should add more strategies in order to enhance customer satisfaction. In addition, the company should use a cost-effective technology in order to cut unnecessary operational costs. The other way of improving operational efficiency is through improvement of the delivery system (Alam 2013). For example, the company should increase the number of stores in various countries as well as fully adopt online shopping. Moreover, operational efficiency can be improved through coming up with proper inventory control. Lastly, it can be improved by integrating various strategies like business-unit strategy, corporate strategy, and functional strategy. The supply chain should also be properly designed in order to ensure smooth operations (Sparks 2014, p.149).

Question 6

Conclusion

Tesco requires to undertake improvement in various operations in order to continue being competitive. This will be very important because the company will be in a position to spread its risks. Tesco operates in few countries and there is need to venture into various countries for future growth. In addition, it imperative for the company review its pricing strategy because the low-price policy is not applicable in all market segments. Another thing which the company should relook is the use of loyalty because sometimes this strategy can scare some potential customers who would deem not fit to share some of their information with the company. Moreover, the come should try to adopt online shopping due to the fact in foreign countries there are few stores and there is need to reach more customers through online shopping.

Recommendation

From the above conclusion, it can be realized that Tesco needs to focus on certain key areas. For example, it should fully adopt a customer-focus approach in order to give its customers maximum benefits. This is due to the fact that many operations which are in great need of improvement are directly related to the customers. However, the company should be very keen when adopting this strategy because the company can end up ignoring the other key strategies. The best method which incorporates all the strategies is the “continuous-improvement management strategy” but it is a bit more expensive and difficult to sustain because it entails other elements like leadership, employees as well as process management.

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References

Alam, J., 2013. An analytical case study on existing corporate communication strategies of TESCO PLC, UK.

Benjaafar, S., Li, Y. and Daskin, M., 2013. Carbon footprint and the management of supply chains: Insights from simple models. IEEE transactions on automation science and engineering, 10(1), pp.99-116,.

Dawson, J., 2013. Retailer activity in shaping food choice. Food Quality and Preference, 28(1), pp.339-347.

Haerifar, P., 2011. Performance management in Tesco.

Hill, A. and Hill, T., 2017. Essential operations management. Macmillan International Higher Education.

Lewis, M.A. and Brown, A.D., 2012. How different is professional service operations management?. Journal of Operations Management, 30(1-2), pp.1-11.

Mahadevan, B., 2015. Operations management: Theory and practice. Pearson Education India.

Sparks, L., 2014. 07 tesco’s supply chain management. Logistics and retail management: Emerging issues and new challenges in the retail supply chain, p.149.

Wood, S., Wrigley, N. and Coe, N.M., 2016. Capital discipline and financial market relations in retail globalization: insights from the case of Tesco plc. Journal of Economic Geography, 17(1), pp.31-57.

Worthington, S. and Welch, P., 2011. Banking without the banks. International Journal of Bank Marketing, 29(2), pp.190-201.

Zhao, S., 2014. Analyzing and evaluating critically Tesco’s current operations management. Journal of Management and Sustainability, 4(4), p.184