Tesco is an international company, whose headquarters are in Welwyn Garden City, Hertfordshire, England. They are the third largest retailer in the world (gross revenues) and the ninth largest retailer in the world (revenues). They have 440,000 employees and serve millions of people every week, online and in store.
Tesco was first started in 1919 by Jack Cohen who was selling groceries from a stall in East London. Over the years the company developed and in the 1950s the first Tesco supermarket was built. Since then the business has expanded in order to make more profit. They did this by selling more items and creating slogans to promote the business like “Every Little Helps”.
Features of the Business
Ownership & Liability
Tesco is a Public Limited Company (PLC), meaning it is owned by thousands of different shareholders. When a company is a PLC anyone can buy shares. Because it is a limited company it has limited liability. This will contribute to the business succeeding because there is a limit on how much can be claimed. This will help the owner(s) if the company becomes bankrupt because they won’t lose any personal assets.
Tesco is a private company because it is not owned by the government. This means the owner(s) will take risks as they want to make as much of a profit as possible. This helps Tesco succeed because the owner(s) will take risks to make more money. This could attract more customers to Tesco.
Tesco’s purpose is to provide a service. They are in the secondary and tertiary sectors. This is because they make lots of their own products and they provide a service which everyone needs. This will help the business succeed because their target market is everyone, meaning they have lots of customers, leading to lots of profit.
Tesco are in the secondary and tertiary sectors. They are in the secondary sector because use materials bought from people in the primary sector to make their products to sell to the public. They are in the tertiary sector because they provide a service to the public. These contribute to the success of Tesco because they have a big target market, therefore they are able to sell their products to anyone.
Tesco is an extra-large company. This means they have over 250 employees. Although this will cost more to pay all the staff, Tesco will be able to make more money because they more stores worldwide. This will help Tesco succeed because they become well known throughout the world. They will also get more profit because they have more customers.
Tesco’s project scope is “in support of the company’s well-being and community engagement agenda” . They aim to organise and facilitate a cross-sector partnership between Tesco, the British Heart Foundation and Diabetes UK. And they aim to support the development of ideas to improve the nation’s health. The British Heart Foundation is a non-profit organisation who fund extra research into heart and circulatory diseases. Diabetes UK researches causes and treatments for diabetes to help people who have diabetes. This cross-sector partnership and their project scope will contribute to the success of Tesco because their help to these two charities will increase the support they receive from the public.
Tesco have an organised structure because it avoids chaos in the workplace, allows efficiency and clarity in the business, divides up work to be done and establishes lines of control and communication.
Span of Control
Tesco’s in store organisational structure has a fairly narrow span of control. This will benefit the manager because:
o They will have closer supervision of employees.
o There is more effective communication.
These will benefit Tesco because the manager will be able to help employees if they do something wrong. However, because the span of control is narrow, there will need to be lots of managers, meaning the owner(s) and shareholders will make less profit.
Level of Hierarchy
Because Tesco’s level of hierarchy is flat, there a fewer chances to be promoted, but there is more delegation. This allows senior management to focus on key tasks, which could develop Tesco even more, increasing their chances of success. It also means subordinates are empowered and motivated. This will make them work harder, this means the tasks they are set will be done faster. Also, a flat hierarchy means there is less staff, which therefore means there are less costs. This will benefit the owner(s) because they will save money.
Chain of Command
Tesco also have a small chain of command. The chain of command describes the lines of authority within the business. They also show who the employees can go to for help if they need it. Their organisation chart shows that:
o The regional manager is in charge of the store managers in their region.
o The store manager is in charge of the food trading manager, non-food trading manager and the personnel manager.
o The food trading manager is in charge of the fresh food section manager and the ambient food section manager.
o The non-food trading manager is in charge of the electrical section manager and the clothing section manager.
o The personnel manager is in charge of the personnel assistant.
There are six functional areas. These are Human Resources (HR), Sales & Marketing, Research & Development (R&D), Finance & Accounts, Production/Operation and Customer Service. All of these Functional Areas do their own specific things to help Tesco succeed.
Human Resources (HR)
Human Resources recruit new employees and try and retain as many as possible, they have to dismiss workers and decide whether to make workers redundant in order to benefit Tesco or if they need to cut costs, they are in charge of personal development and training, health and safety, conditions at work and they communicate with trade unions.
Human Resources contribute to Tesco’s success because they recruit employees and train them. They also ensure that they have adequate security and health and safety. This will make employees stay at the company for a while to try and get promoted.
Sales ; Marketing
Sales ; Marketing are in charge of market research, promotion strategies, pricing strategies, sales strategies, sales teams, product advice on new products and the right use of the 4/7 Ps, these are Product, Place, Price, Promotion, People, Process and Physical Evidence.
This contributes to Tesco’s success because they help Tesco promote their products. This will attract more customers and make them more well known. They are able to do this because they are in charge of pricing strategies, this means that they can choose whether to reduce prices to attract customers, they do this using the 4/7 Ps.
Research & Development (R&D)
Research & Development are in charge of new product development, product improvements, competitive advantage, value-added aesthetics, product testing, efficiency gains and cost savings.
This contributes to Tesco’s success because they are making new products to attract more customers. These new products will also keep customers and they will make money from selling the new products.
Finance ; Accounts
Finance ; Accounts are in charge of cash flow (income, revenue, expenditure), preparing accounts, raising finance (shares, loans) and links with all other functional areas.
This contributes to Tesco’s success because they are in charge of money. This means they advise the owner(s), Sales & Marketing and R&D on whether they need to cut costs or that they can spend more money on new products.
The Production/Operation of products are in charge of acquiring resources, planning output-labour, monitoring costs, projections of future output (seasonality) and efficiency.
This contributes to Tesco’s success because they try and buy the resources needed for as cheap as possible. They also try and plan output-labour to be cheaper and they decide the future output, meaning they choose what and when to produce products. This is so they can save as much money as possible.
Customer service is in charge of distribution, after-sales service, handling consumer enquiries, offering advice to consumers, dealing with customer complaints and publicity and public relations.
This contributes to Tesco’s success because they will help customers resolve a problem, with a product or an order, by offering them advice. They also deal with Tesco’s publicity so if there is a public problem, they will sort it out. This is so they don’t get a bad reputation if they do something wrong or sell faulty products.
Mission, Vision and Values
Tesco was built with a mission to “be the champion for customers, helping them to enjoy a better quality of life and an easier way of living”. This statement hasn’t changed over the years. Tesco knows that customers want great products at affordable prices, which are easy to buy, and they can rely on Tesco doing this the right way. This contributes to Tesco’s success because it allows customers to know that they can rely on Tesco and what they want will be executed correctly. Their vision is to be the UK’s best supermarket. They are currently the 6th best. They will have to be more appealing to customers to be able to become the best.
Tesco’s core purpose is to “serve customers a little better every day”. This is important because serving customers is an important part of the business. Therefore, they must do it well to keep customers coming. In the UK, they serve 66 customers per second, it is their goal to make sure each customer experiences better service on every visit. This contributes to Tesco’s success because if the customer service is good customers will return to Tesco.
Tesco first introduced their values 10 years ago, and since then they have been a crucial part of their culture, and an essential part of their growth and success. The values ensure that everyone who works with or at Tesco knows what is important. Tesco believes these values are universal and they have helped guide people as they have become an international company.
Tesco’s values are very important to them. Tesco’s first value is “No one tries harder or customers”. This is often shown by employees trying to interact with customers and understanding them, and what matters to them. They even try to go the extra mile and help them try and make those things better. Tesco’s second value is that they “treat people how they want to be treated”. They do this because firstly, looking after employees is essential to the success of Tesco. This allows employees to feel recognised and rewarded for their work and the work they do together. Tesco’s third value is that “Every little help makes a big difference”. This is the value they live by to ensure they serve their customer, employees and communities better every day. This value is important because it allows Tesco to see the small things add up and evolve into one big thing.
These values show that Tesco finds customer service very important. They all contribute to Tesco’s success because they show that they treat customers very well. This will give them a good reputation, which will increase the number of customers they have.
Aims & Objectives
Tesco’s main aim is to be the leading supermarket by providing good quality services and products at low costs, making them more appealing because they are cheaper than their competitors. Here is a list of all the UK’s leading supermarkets:
1. Aldi, 74%
2. Marks & Spencer, 73%
3. Lidl, 69%
4. Waitrose, 68%
5. Iceland, 65%
6. Tesco, 64%
7. Asda, 63%
8. Morrisons, 63%
9. Sainsbury’s, 62%
This list shows that Tesco is only the 6th best supermarket at the moment. This shows that they are yet to complete their aim. However, in 2016, Tesco was the UK’s biggest supermarket by market share. This shows that new supermarkets, like Aldi have been very successful and have taken over from older supermarkets, like Tesco.
Tesco has 5 main objectives. The first one is, to maximise sales, increasing their profits. If they maximise sales their profit will increase automatically. This will contribute to Tesco’s success because they will make more money. The second one is, to decrease their prices. Tesco want to do this, so the average household will be able to buy good quality products for affordable prices. But they might have to complete many other objectives to complete this objective. This would contribute to Tesco’s success because they will have more customers. However, they won’t make a profit as quickly because they will make less money from each product. The third one is, to introduce healthier products to promote healthy living, and giving them a wider range of food to sell. This is to attract more customers and to make Tesco a business known for selling healthy products. This contributes to Tesco’s success because there will be more customers, meaning there is more money and more promotion from customers to people they know.
The fourth one is, they will create an online shop. They want to be able to provide food, clothing and electronic products and a few other services. They have done this, and it has been a success. They have attracted more customers, including those who are unable to go to the supermarket. This contributes to Tesco’s success because it allows more people to shop at Tesco. The final one is, they will try and provide jobs in their local community. Tesco want to reduce unemployment and therefore, will try to give lots of people jobs. This will contribute to their success because they have more employees, which will help make the company more successful.
Relationship with Stakeholders
Types of Stakeholders
The types of stakeholders are internal and external. These are the types of stakeholders Tesco have:
Owner(s) Trade Union
The employees want to be provided with the security of employment, with opportunities to be promoted and receive good rewards for their work. Tesco give their employees this, meaning they have a good relationship with their employees. This contributes to Tesco’s success because if the employees have a good relationship with the company they will work harder for the company.
The Managers also want to be provided with the security of employment, with opportunities to be promoted from store manager to regional manager. Because Tesco gives them this their relationship is also very good. This contributes to their success because they will work hard for Tesco.
The owner(s) want their employees to do their jobs properly, to be able to make as much money as possible. This is so they might have the opportunity to be promoted, allowing them to make more money.
The shareholders are the most important stakeholder to Tesco. This is because they have invested their money into them. Therefore, they want the company to make as much profit as possible. This is so they also make more money, making the investment worthwhile.
Internal stakeholders are important for Tesco’s success because they allow the business to run. This means that they can make money and continue to be a well-known, trusted supermarket.
What Tesco does, affects the local community. Therefore, it is in the community’s interests for Tesco to give back to them. This could be them getting jobs or Tesco helping local schools and hospitals. This is so they keep their customers.
The government want Tesco to pay all their taxes and provide as many jobs as possible. This is so the government funded operations can continue to run and there will be lower unemployment. They also want Tesco to make sure the welfare of the local community is good.