2.0 Organisations need to have aims and objectives to be able to focus on the clear direction needed for success in the modern business world.
The aim is the overreaching goal for the organisation, which can then be broken down into a subset of objectives to achieve their ambition.
Establishing objectives may be done in a number of ways for example, looking at corporate aims in terms of looking at the company as a whole and once this has been recognized, it can be segmented into divisional objectives.
For e.g. the main segmented objectives of a business will be:
- Achieving Profit
- Increasing/Maximising Sales
- Increase Market Share
- Expand/Growth through Penetrating new markets
- To Manufacture/Sell Superlative Components/Goods and Services
- To offer a highly Competitive and Quality Assured Service to the Consumer/ Retailing Chain
- To Increase/Solidify Upon User/Customer Perceptions
2.1 The objectives of GE lighting – What they are, Why they are imperative and how they are achieved through both strategy and the day-to-day activities/operations that they perform.
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2.2 To Achieve a Profit – This is effectively the disparity between Sales and Expenses which is the money going out of a business. Not only do GE lighting need to achieve an adequate amount of profit but so does every other organisation because without this vital element, they will not be able to move forward and grow but more importantly, could perish and become insolvent. In addition, without profit, a business cannot afford to modernise itself, install new and innovated technologies or take commercial risks such as penetrating new markets with regards to their products they manufacture/sell. GE lighting can help to aid to this objective by striving to primarily ensure that they sell more units.
They can accomplish this by making sure there are no faults in the products they manufacture otherwise no-one will buy them and by producing more units so that more people buy.
They can directly do this by giving their workers overtime – because they can produce additional units and by doing this there will be further units to sell and more profit can be generated.
They can also introduce different types of light bulbs so that they offer more to customers and make more profit like so. For example when GE lighting first opened up its first outlet the only type of light bulbs they produced was high density discharge bulb which not to say were highly efficient light sources.
To advance with regards to profitability levels, GE lighting being such innovative manufacturers came up with incandescent light bulbs which are warm, dimmable inexpensive light energy, Compact Fluorescent (CFL) which are long lasting and energy proficient, the Florescent light which again are energy resourceful but are also soft and diffused and the last latest light bulb that has come around the corner is the Halogen bulb which is crisp white that creates an excellent and appealing environment with superior colour quality.
Moreover within their production line, GE lighting offer a diverse range of lighting ranging from things such as courtesy lighting for airports to household appliances which thereby results in them being more profitable because they do not just have to offer a small selection of lighting which for e.g. if a retailing company demanded a lighting product such as household appliances, then they would have other types to suit their needs and wants.
Also as G.E lighting are distributed within different regions on the planet, their chances of maximising profit would be high as they have a wider field to attract retailing chains.
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2.3 Increasing/Maximising Sales – A Sale is made when a customer or company purchases goods and services off of them but can alternatively be made on credit. It is crucial to make as much sales as possible because sales will drive to the threshold of growth because the more sales received, there is more money coming in and could result to new business opportunities.
Like the objective above, GE lighting are operating their day to day activities on a wider or greater scale which will enhance their chances of receiving sales because their will be more opportunities to sell. For example, as they operate in 6 different continents this will give them a broader range of companies and customers to target and sell to.
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2.4 Increase Market Share – The term market share is literally the percentage of a particular market from which a company owns over its competitors. It is important for a company to receive the largest ‘slice of the cake’ or market share because you have more control over what goes.
For example, a well-known study by Boston Consultancy Group argued, ‘that on the basis of statistical data, that a ratio of 2:1 would give a 20% cost advantage i.e. you would be able to operate with costs 20% lower than that of your nearest rival’
What this means that if GE lighting dominate the lighting industry, they can produce on a larger scale than that of their rivals. It is also of the essence that GE lighting remain in contention of being a global market leader with regards to being a world lighting leader because as you get larger, the unit cost per item reduces and thus would allow room for profits to be ploughed back into research and development, and other marketing novelties such as advertising.
The activities that GE lighting are accomplishing will help them to strive for market leadership are that they operate globally. This means that they will receive more sales as there are more choices to supply to due to the large amount of outlets they have open and thereby allowing them to attain a large market share because there will be more companies to supply their goods to.
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2.5 To Achieve Growth/Expansion – This is the process of whereby a company decides to grow on a larger scale. For e.g. GE expanded through penetrating into new markets and diversified their product portfolio - they now make and provide lighting, aeroplane engines etc.
To link this with the activities that GE lighting do would be that ‘quality assured’ – they can do this by using better quality lights parts i.e. if they made lights that ran out within 3 months, they can research into this and use better components in their light bulbs so that their lights have better durability.
By them manufacturing the most superlative or best lighting parts, the companies that they supply too will build up a good perception about them and will hold high beliefs about them and will continuously continue to buy off of GE lighting in bulk. With companies endlessly buying off of GE lighting, their sales and profits should inflate and they will achieve growth.
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2.6 To Manufacture Superlative Components - GE lighting’s day to day proceedings such as manufacturing light bulbs help to donate a highly quality assured service because they are frequently hiring more labour in each different functional area which then helps strengthen and solidify that department to the highest of standards and will make them run more smoothly, efficiently and effective.
As a result, the end result will be that the finished goods will be of elevated quality. Furthermore, GE lighting also have in place a quality assurance procedure and employ TQM.
They have decided to use Total Quality Management to help motivate staff and make the best possible finished components. In GE lighting’s quality assurance system, they firstly define the responsibilities for all aspects of quality and allocate the necessary authority to act on any problems.
All aspects of their quality assurance procedure are documented with accurate information that is correctly transmitted and recorded. For e.g. in their design department they are very frequently asked to modify light bulbs as opposed to buying their normal design.
In such circumstances unless there are manufacturing instructions to that department they will be unable to add the changes requested. Also if a fault is discovered in any of their output, they recall that batch for examination as it may be likely that they were all affected. So therefore, GE lighting mark production in such a way that faults can be traced to the date of manufacture.
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2.7 To Provide a Highly Competitive and Quality Assured Service to the Retailing Chain (Company) – This is the term given to describe the overall activity of identifying and satisfying the company’s needs and wants. GE lighting are achieving this by manufacturing the best quality lighting components from the objective above and have a quality assurance system in place to trace where the mistakes went wrong if there were any at all.
Having said that, with a quality assurance system in place, GE lighting are almost certain to manufacture the best lights as they would have found out and rectified the error or errors that took place and the end result would be that this activity would perfect their lights to the highest of standards and be of outstanding quality. They also offer bulk buying premiums to prospectus retailers and the more they buy, then the unit cost gets cheaper. This will offer good value for money.
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2.8 To Increase/Solidify upon User/Customer Perceptions – This is what customers or in this case, what the retailer thinks and feels about GE lighting. It is perception that drives purchases and customer loyalty.
GE lighting are building up a good reputable status by manufacturing the most paramount and divine quality light parts so that the retailers get vale for money and giving companies who they supply to, a diversified range of lighting which suits different businesses needs and wants, thus offering the best selection to companies and customers.
The objectives of Sainsbury’s – What they are, Why they are imperative and how they are achieved through both strategy and the day-to-day activities/operations that they perform.
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3.0 To Increase Profitability – Sainsbury’s are persisting in doing just this by increasing their product portfolio. This means that by them diversifying into different segments i.e. offering new and a wider range of products/services to their cliental they are generating more profits. For example they own Shaw’s supermarket which is a direct Subsidiary to them and Sainsbury’s Banks.
Conversely though and more importantly Sainsbury’s are making sure that they do not take risks in terms of introducing a broader range of services i.e. luxury based goods that their target audience will not be able to afford because it will mean that their customers will just not purchase from them and then inevitably not making as much profit as planned and them incurring a loss.
Sainsbury’s are striving to ensure that their every day risks are limited by carrying out detailed research beforehand. In addition they employ casual labour during months of high demand because they are not paying for surplus staff to their requirements at that given point.
Also Sainsbury’s are making sure that their labour range is more streamlined in the sense of hiring the required amount of workers and not too many full-time workers. For example, during the lead up to Christmas they take on more casual staff such as teenagers to reduce the cost of paying out as much rather than having their contract workers work for them and paying out more.
The impact of all this is that Sainsbury’s becomes a more profitable infrastructure as a whole as they are reducing/eliminating the every day risks of paying out more cash than what is necessary. Furthermore Sainsbury’s is in addition becoming more profitable by carrying out day to day activities in other companies that they own.
For example, Shaw’s Supermarkets, JSD, Sainsbury’s banks and Sainsbury’s Property companies are all contributing profits to Sainsbury’s.
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3.1 To Grow/Expand – Sainsbury’s have decided in persisting in this as primarily being one of their main objectives because recent years show that their market share as depreciated and Tesco have emerged as for now the most successful service provider in terms of gaining a ‘larger slice of the cake’ or market share. For example, TNS Market research group TNS said the chain's market share fell to 16.1% in the 12 weeks to 14 September 2003 against 17.2% in the same period last year.
Tesco extended its market lead to 27.1% as the hot summer of 2003 boosted sales of barbecue foods and beer. Asda, which recently overtook Sainsbury’s, retained the number two slot, boosting its share to 16.9%. Sainsbury’s has been trying to reinvigorate its performance by moving into the non-food arena, where Asda has had particular success.
Its brand new product range that it has extended includes the likes of George clothing and this range has proved to be successful at luring shoppers away from traditional high street stores - so much so that its US owner Wal-Mart has now exported the brand to the US.
Sainsbury has now retaliated by launching its new non-food range, which includes soft furnishings, books and home entertainment products. Sainsbury's market share is down 1.1 percentage points since this time last year and it was the only major to deliver an underlying sales decline this month.
Despite its extensive refit programme and heavy opening schedule, Sainsbury is even underperforming Safeway. Elsewhere in the supermarket league, Safeway which is currently subject of a takeover battle held fourth position, despite its market share slipping to 9.2% from 9.7% a year ago.
Sainsbury’s have grown mainly through external growth i.e. they merged with the ‘Bank of Scotland’ – Conglomerate Integration where Sainsbury’s merged with a business of no connection with itself. They also achieved growth through setting up a property company under their name, with JSD developments and by buying Shaw’s Supermarkets in America.
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3.2 To Increase Levels of Service – They are doing this by for example opening earlier and closing at later times so that their customers have longer shopping hours and more time to buy.
They are also improving levels of service by ensuring that their employees are better trained and this is done by continuous ongoing training which is carried both in house and using external methods which then makes employees more motivated and efficient in the work they do. If their staff are trained in Sainsbury’s ETHOS and virtues their customers deem that staff are friendly and courteous at all times then they are more likely to remain loyal to the Sainsbury’s brand rather than shopping at their rivals such as Tesco or Asda.
Additionally Sainsbury’s like GE lighting are also hiring more staff in each different functional area so that they become more efficient, effective and overall helping to assist to make the business run smoothly.
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3.3 To Increase in Customer Perceptions – Sainsbury’s are doing this by spending out more money on producing better quality goods so that their customers get the best value for money and in return, gain for e.g. the benefits of eating better food.
Quality food is seen as a priority for Sainsbury's customers. Sainsbury's have in place quality control at many stages of the food retailing business; in the development of new food products, the company's Food Centre operates a three stage process of quality assurance: Quality Control; Sensory Appraisal; and Development. In Quality Control, new and re-developed products are sampled by product managers and buyers; in Sensory Appraisal, focus groups are used to find out what consumers think about current and new products; and in Development, the Food Centre is interested in identifying trends in food to produce new recipe ideas.
Moreover Sainsbury’s are also making sure that stock is being replenished on a more frequent basis so that customers do not have to ask if something is in stock and are also striving to ensure that all products are kept in their designated product areas/aisles so that customers do not have to complain and enquire about where a particular good is located/kept.
If Sainsbury’s are doing this regularly, then customers will have a good image/belief about how well and organised they are presented to them and will think that Sainsbury’s really do care about their customers.
In relation, Sainsbury’s are in addition making sure that their staff have tiny details such as their uniforms being crisp in physical appearance because physicality plays a vital role toward customer belief as it indicates to the public that they are well presented again and will be of the highest assistance where required.
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3.4 To Increase Market Share – The business activities of Sainsbury’s are assisting in ensuring that they contribute towards this goal/objective by opening up more stores so that more customers can buy at more stores, refurbishing current stores so that it makes shopping an enjoyable experience rather than a every day chore. Through opening up more outlets than they can also target new areas.
Additionally Sainsbury’s have decided in persisting in this as primarily being one of their main objectives because recent years using the 2003 annual report show that their market share as depreciated and Tesco have emerged as for now the most successful service provider in terms of gaining a ‘larger slice of the cake’ or market share.
Sainsbury’s day to day activities of owning Shaw’s Supermarkets, Sainsbury’s bank, JSD and Sainsbury’s property company are all contributing in Sainsbury’s as a whole to increase market share because they are all putting forward more profits and sales in their name.
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3.5 To focus on Customer/ Market Segmentation of its Activities – Sainsbury’s do this by dividing their customer base into 10 separate segments. Customer intelligence is gathered through analysis of Nectar Card (formerly Reward Card) purchases.
This information is used to tailor what Sainsbury's offers in terms of goods and services to an appropriate market segment. Sainsbury's try to do this by having stores that are differentiated, reflecting the variety of market places that they occupy.
In order to make the most of their 463 stores, these are classified according to three different formats:
275 stores are classified as 'Main Mission' outlets. This means they concentrate on providing for the weekly family shop. These stores vary in size between 20 000 and 48 000 square feet
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3.6 To make a ROCE – ROCE is the measure of the operational efficiency of a business. Sainsbury’s have to assure that their ROCE is as high as it can be, because if it is lower than interest rates in the market, it is very unsatisfactory, as it will indicate that they have prospered better by depositing money in the bank.
They can and are doing this by depositing as little as possible money in the bank because they are not making anything if it is just sitting there. So they are investing in different things i.e. developments so that they can reap the benefits of making a larger return on what they’ve spent on.
. Task 3
4.0 The functions of a business are simply just the different departments that it contains or is sub divided into.
For example, at the top level in an organisational chart there may be a managing director who has the authority and has the responsibility to delegate tasks to sub functions such as the Finance and Human Resources Department.
4.2 Even more so large organisations tend to be divided into many departments or functions such as Sainsbury’s because with large organisations it can be said that there is no realistic chance of ensuring that the business is running as efficient as it can because when businesses are large in size, it would be a rather tedious and rushful task of trying assure that all departmental functions such as finance and marketing are kept up to date and are running as best as they can be and this cannot be achieved if there are just two or three bodies running the organisation like for small businesses such as sole traders and partnerships. Also when businesses grow in structure, communication between various types of employees breaks down which is another reason for the need to breakdown an organisation by delayering them.
4.3 For e.g. 7 functions would be almost impossible to run by just two or three bodies within Sainsbury’s because it would be too far time consuming and would not be efficient in the sense that the employees would be working long hours trying to do various tasks and so may have to sacrifice other things.
So it makes business sense for large organisations to be divided as each functional area will produce the highest quality of work as they do not have to rush and is less time consuming and work will be carefully and critically researched because the amount of work is stretched out evenly between functional areas which takes a lot of pressure off of employees.
4.4 Moreover, using the functional principle, jobs are grouped or linked together to form departments because they involve similar or related sets of activities which provide a key service to the organisation and maximise their chances of achieving their goals/objectives.
4.5 Some of the functional activities that are carried out in Sainsbury’s are as follows:
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4.6 Sales – The Sales function within Sainsbury’s main duty is to create the orders for their goods and services.
In terms of organising the efforts of the sales employees, the sales department will draw up a detailed sales plan which will include vital information such as targets that have to be met by each area or region of the sales force. In the plan itself, will also be included the level of profit that can be expected to be gained from each and every product.
4.7 Working really closely with its sister department (the marketing department), the sales department will on a frequent basis supply essential information with close considerations to sales levels, activities of competitive firms and various requests from customers for improved or new products.
4.8 In order for Sainsbury’s to stimulate and achieve their objective to ‘increase their level of sales’, the sales function will produce an assortment of Point of Sale materials such as posters and leaflets.
Posters will help increase Sainsbury’s level of sales because they deliver a high exposure rate if they are placed in and around the local town centre because that is where the high proportion of people are often seen. So the OTS of posters will be high.
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4.9 Finance – This department covers areas such as financial planning, raising finance, cash control, financial statements and records. The finance department will help Sainsbury’s for e.g. identify how much it will cost the company to expand through opening up more outlets.
5.0 Once this has been achieved, the Finance department will notify the board of directors and they will discuss whether planning permission should go ahead. This function principally manages and forecasts the capital expenditure surface of the business.
5.1 This department will also help to ensure that as little as possible debts are attained so that customers do not fall back on payments and by the department checking this by employing the usage of records i.e. Aged Debtor Records then it will help the firm become even more financially healthy as they will be reducing their debts.
5.2 The Finance department within Sainsbury’s helps them fundamentally to complete the aim of survival in the sense that they manage and strike the balance between cash inflow and outflow to the best possible way thus depreciating the company’s chances of insolvency and liquidation.
5.3. This function will also help to help boost Sainsbury’s achieve their objective relating to profitability levels by ensuring that they cut they’re costs.
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5.4 Customer Services – It has become noted that increasingly, organisations have recognised the value of not only responding to customer needs by adapting or diversifying their product ranges, but also employing particular staff whose solitary accountability is to liaise and co-operate with the public.
5.5 The customer relations department is the foremost point of contact for customers who have complaints about the product or for that matter even services that have been supplied to them by the organisation.
The smooth and courteous response to customer complaints is an instrumental and chief corporate tool in ensuring that the company’s elevated reputation is maintained.
Task 4
6.0 For this task, I have decided to make use of Sainsbury’s and will select a number of functional activities and examine them in detail making connections with as to how each functional activity will help them achieve their objectives/aims.
I have decided to follow a line of investigation within Sainsbury’s following functional areas:
- Distribution
- Marketing
- Human Resources
6.1 Distribution
This function within Sainsbury’s is concerned with ensuring that goods are stored, processed and delivered to warehouses and stores in the best possible way. In order for the distributional function within Sainsbury’s to perform at its optimum, the following criteria must be carefully looked into.
6.2 Warehouses - Sainsbury’s stores are serviced by several strategically located central warehouses. These warehouses are modern and large enough to cope with the needs located within the warehouse’s jurisdiction.
6.3 Packaging – It is essential that packaging is legible by this I mean the use of colour has to be carefully chosen otherwise it will not be purchased and could affect profitability levels.
They must also ensure that all the necessary nutrition information is displayed on goods. Sainsbury’s only have control over the packaging over their own branded goods.
6.4 Dispatch and Transport/ Vehicle Maintenance – In order to increase customer satisfaction, Sainsbury’s and in particular the warehouses have to ensure that all goods are sent out on time everyday. They must ensure that their warehouses are fully stocked and strive to certify that perishable goods linger as fresh as possible when they arrive in store.
6.5 Freshness can be guaranteed by keeping fresh produce for the minimum amount of time in stock at the warehouse and by transporting goods in temperature controlled lorries. By assuring the above, this will go a long way in achieving the objective of increasing levels of customer satisfaction/ perception, thus having a direct impact on the objectives relating to growth and expansion and becoming more profitable.
6.6 The trucks, which are a crucial link between warehouse and each store, cover a lot of miles every day; they must be serviced regularly to reduce the risk of breakdown. Typically, these lorries have a ‘shelf life’ of 3-5 years after which are phased out to be replaced by new trucks. Sainsbury’s rely heavily upon their trucks as their single and core ‘supplier’, a large fleet of trucks and vans are used to deliver goods not only to the stores but also to our homes for those who wish to have their shopping delivered to them.
6.7 Documentation/ Records – All orders and despatch notes must be correctly logged, because each warehouse will service a number of stores at any given time, it is imperative that the correct goods are sent to the right store.
6.8 Making a small error in the number of items to be sent to any given store, or sending out the incorrect goods could essentially cost Sainsbury’s a vast amount of money, in the broader sense. Consistently getting orders wrong will be detrimental to achieving the objectives Sainsbury’s have set, in particular it will be disastrous with regards to increasing customer perception.
6.9 Sainsbury’s operate in a very competitive area of the food retail sector. It is a booming business, which can bring about great rewards and failure equally. Sainsbury’s are playing ‘catch up’ to the market leader Tesco, and have done for a few years now. Tesco have set the benchmark for all supermarket chains to follow.
7.0 The key is to realise that all these objectives are universally linked, much akin to a link in a chain, if one objective fails, in all probability they all will. This is why Sainsbury’s have to strive to ensure that every division within their company is operating at its optimum at all times.
7.1 For example, Sainsbury’s dispatches lorries from their warehouses that are usually 40 footers to assure that the greatest quantities of goods are transported and also helps reduce the number of trips that have to be made to the store. Through doing this, it helps Sainsbury’s company increase their level of service because it is being more efficient in the sense that the goods are being delivered faster so therefore customers will be receiving their desired goods whether they be groceries or any other product quicker.
Marketing
8.0 The main purpose or objective of the marketing function within a business is to try and identify customer requirements.
8.1 There is also the key element within this function of trying to predict customer needs in the present and in the future, and to do just this, the marketing function performs an extensive amount of research known as market research which is carried out within the particular market that the company is wishing to target their products.
8.2 The reason as to why firms such as Sainsbury’s pursues market research is to try and discover just exactly what it is that their customers want, where they want it, how much they are willing to pay for it, and the most effective method to try and get the message across. This key criterion is known as ‘The Marketing Mix’.
8.3 One of the more apparent duties of the marketing department is the design and development of advertising concepts and marketing campaigns. For example to help Sainsbury’s achieve their corporate objectives of increasing sales and profit maximisation, the company have recently brought in a business coup.
8.4 Jamie Oliver (the TV chef) has helped the group to generate £1.12bn extra in sales and the 'Naked Chef' has been a chief success for Sainsbury's. Arguably, the £41m spent on the promotional campaign has helped to generate £5 of profit for every pound spent on the campaign.
8.5 The supermarket group has increased turnover by £2bn over the last two years and the report is attributing over half of this to the advertising campaign.
The reason as to why this particular function has helped generate profit, increase sales and increased customer loyalty within Sainsbury’s is because Jamie Oliver is such a well known chef that is the best at what he does and is brand recognised for his cooking excellences and capabilities to a wide range of people. So he acted like a ploy in order to reel in customers.
8.6 In Addition, Sainsbury’s marketing function recently launched their brand new loyalty scheme known as ‘nectar’ and their Sainsbury’s club card.
Both these two campaigns proved to be marketing success’s because the club card has helped Sainsbury’s enhance their customer base and solidify it because the idea behind it was that the more goods clientele purchased from outlets, the more points and incentives they’d receive, and in turn helped to accumulate more customers because they would be in return, receiving free goods and discounts.
Human Resources
9.0 The fundamental function of the HR department is the recruitment and organisation of respective employees required for the various functions that are required to run the organisation. This function in Sainsbury’s is also responsible for Staff Welfare, Staff Wages and Salaries, Training, Recruitment and Selection and Manpower planning.
9.1 The elementary responsibility of the human resources department is attained through a close monitoring procedure which begins with the selection of prospective employees, continues on through promotion and training of existing members of staff, to the termination of contracts through death, retirement, redundancy, sacking and those who have been promoted.
9.2 The personnel department also maintains records and files regarding their employees which includes features such as holiday entitlements, sickness records, qualifications and experience, salary and reports from their line managers. For e.g. HR will help to aid in assuring that labour are smooth and conversant in their working environments because they will help provide the highest quality of training.
9.3 In turn, this will help Sainsbury’s employees become more motivated and geared up and they will supply the finest customer service which in turn will help them repeat trade and assist the organisation accomplish customer satisfaction and increase the level of service.
9.4 Furthermore, any organisation that truly values their key personnel highly will take all the necessary steps to ensure that they are motivated and contented with the work that they carryout. If key employees within Sainsbury’s felt that they could receive a improved salary elsewhere, much better working conditions or even enhanced staff fringes such as company cars and reduced rate mortgages, then they could seriously consider leaving Sainsbury’s.
9.5 Also Staff Welfare will help to provide a highly competitive and exceptional service because if staff are treated in a fine way i.e. they may get rewarded commission or perks such as company cars for working extremely well and if they feel satisfied then they will do the same in return by continuously providing the best service to customers and will help Sainsbury’s attain their objective of good customer perception.
GE Lighting official website
bbc.co.uk/hi/English/business/newsid Oct 2003.
j-sainsbury.co.uk/education/operation Oct 2003.
Sainsbury’s website/education
Marketstudies group website 1998-2003.
bbc.co.uk/businessnews 2003.