This report will discuss the downturn in Tesco’s profits and will describe the contribution of the key business functions to the changes implemented in the organization. (Finance, Marketing, Operations, and Human Resources). Also, it will explain the key stakeholders of the organization and the key issues in managing stakeholders. Furthermore, it will include a SWOT analysis and a Power and Interest Matrix about Tesco. Business functions In the case study of Tesco, it is stated that they will appoint more staff to win their customers back. This step is related to Human Resource Management.
HRM is activity, which include recruitment and defining the organization’s demand for skilled staff. “HRM includes the training and development of existing staff along with the recruitment of new staff. ” (Capon 2009, p195). HRM is concerned with the overall strategic contribution of people to the organization. This involves developing policies on how to recruit, reward, and retain people. Moreover, HR department is about the contribution of the employees to the organization and what are their skills, abilities, and career development needs.
The key activities of HRM are Recruitment and Selection, Performance, Learning and Development, Appraisal and Rewards. The changes in HRM will help Tesco to overcome the downturn in the most effective and efficient way due to the fact that when there is a strong motivation and enthusiasm to achieve your goals and know how to run your own business it is highly possible to become more competitive on the market and to be a leader in the market place. To increase their revenues, organizations such as Tesco rely on changes in one main area, in our case – changes in HRM.
With this step, Tesco managed to returns its profits and moreover, to increase them with nearly 18% at ? 1. 1bn. For chain as Tesco it is exquisitely important the Operations Performance. The five performance objectives, which affect Tesco, are Quality, Speed, Dependability, Flexibility, and Cost. Firstly, quality means high ‘specification’ of a product or service and it is important for Tesco to have ‘quality’ products in their shops. “Speed indicates the time between the beginning of an operations process and its end. ” (Slack, Lewis 2008, p38). Dependability is to give to the customers a delivery time.
Flexibility is essential for the quick and efficient response to the customers demand. The last and the most important performance objective is Cost. It is important for the retailers because the lower the cost of producing the products or services, the lower they can sell it to the customers. The third business function related to Tesco is marketing. Marketing is about understanding the costumer’s needs and succeed to satisfy their wants and needs. It is a functional activity, which is focused mainly on customers, and will they purchase and continue to purchase the certain product or service.
“Because the purpose of business is to create and keep customers, it has only two central functions – marketing and innovation. The basic function of marketing is to attract and retain customers at a profit. “(Jobber 2010 cited Drucker, p3). Marketing explains that to retain the existing costumers is easier than to attract new ones. The marketing mix is important for Tesco because it covers and explains five different aspects. The marketing mix is composed of Product, Price, Place, Promotion, and People. Firstly, the product is something that you will sell to the customers so it has to be successfully launched.
The second P is price and it can be different- can be reduced or increased. Promotion is about introducing your product, how you will launch it on the market. The certain product can be promoted and advertised in different ways, through press, television, radio, magazines, internet. The promotional activities for supermarket such as Tesco can be loyalty cards for getting extra points. The fourth P is Place and it ensures the delivery of the product at right time and in the right place. The last key business function, which affects Tesco, is Finance.
Finance is related to usage of the finance by the organization and how the finance is managed in the certain enterprise. Because of the growing competition and the growing demand for internet shopping, Tesco started changing its marketing mix from a traditional to a more modern model. Instead of considering only physical placing the products, Tesco needs to devise reliable internet positioning of the products, which could be supported by effective e-marketing and guaranteed efficient delivers. The product life cycle is very useful for Tesco because it allows to determine the stage of your business and if it is prosperous.
The product life cycle is the period of time in which a product or service lasts. Over the course of this cycle, there are five stages: Introduction, Growth, Maturity, Saturation and Decline. SWOT Analysis Strengths Weaknesses Tesco has very solid position in the global market It is a powerful retailer brand It is the winner of the Retailer of the year 2008 By creating a loyalty card they achieving loyal customers Tesco was trying to gain a new markets such as books and it was unsuccessful due to the fact that there are already approved shops Finance profit levels for Tesco were impacted through bad debt
Opportunities Threats Can continue to try entering new markets with new products Trying to meet the needs of the customers International growth Making an online catalogue To create unique products There is a persistent threat of takeover from the market leader Wal-Mart Only in USA. ASDA is owned by Wal-Mart as well and it is threat to Tesco here in UK because of very good internet shopping and low prices Stakeholders Stakeholders are individuals who have an interest in an organization. Some of them can be external and others can be internal.
External stakeholders include customers, competitors, financiers, suppliers, government. Internal stakeholders include managers, directors, employees, shareholders. Stakeholders are able to influence and contribute to the company. (Capon 2009). First main step is to determine your stakeholders, their influence, and power about the organization. Secondly, it is exquisitely important to identify what the stakeholders are interested about. Moreover, you should have answers to some main questions such as: What financial or emotional interest do they have about your project or organization? What motivates them?
The main stakeholders for Tesco are customers. All customers want is variety of products to choose from and quality in services or products at low costs. Like most organizations, Tesco needs their customers because they are the income and they buy their products. Customers apply pressure on Tesco to meet their needs. Meeting the customer’s needs can be done in different ways such as opening a new store or variety of goods. Tesco have a feedback service so every customer can raise questions or express opinion how the store can be improve. This makes Tesco highly competitive at the market.
Customers are the main and key stakeholders for Tesco due to the fact that they can express a certain opinion about improving the store. Moreover, they can say from customer’s view how to make shopping quicker, easy, and enjoyable. In the Power and Interest matrix, customers are in category D – a key player because they have a high power to change Tesco stores and a high interest to be a customer in such a high quality supermarket such as Tesco. Power and Interest Matrix about TESCO Category A Minimal effort Category B Keep informed Category C Keep satisfied Category D Key player TESCO’S CUSTOMERS Conclusion
In conclusion, every aspect from the key business function to the stakeholders is very important for Tesco and can influence over it. Every organization has to deal with the business problems and to know how to run the company. Tesco undoubtedly knows what their customer wants and satisfy their needs and desires in the best possible way. The advantage of Tesco is that they are ready to accept the criticism and are ready to change their stores, products, services. List of References: Baines, P, Fill, C and Page, K (2008) Marketing Principles and Society, Chapters 1 and 2, Oxford: Oxford University Press.
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