Agreed - Each candidate that is involved with setting up and meeting targets should all agree that the target is reasonable.
Realistic – The target must be achievable. When an objective appears to be obtainable and worthwhile it makes people more likely to work for what they want, whereas if the target appears completely unrealistic then people will not want to -put in wasted effort.
Time Specific – It is of great importance to make sure every person involved knows how long they have until a deadline to achieve their agreed target, this can also help motivate teamwork.
Tesco’s 7 Part Strategy
1. Growing UK Core :
Tesco are making a £1billion commitment for 2012/13 making improvement to ensure customers receive the best possible shopping experience
SMART Objective : Tesco should grow sales by 5% by 2013 as last year they showed a slight decrease in sales due to high petrol prices. (this is supported by the new stores performance).
Explanation : They will drive a strong pace of improvement for both customers and staff by spending £1bn on the store as the revenue should increase largely. They could spend the money on the appearance and layout of the stores as this attracts more customers being in a clean, modern environment.
2. To be an outstanding international retailer in stores and online :
Tesco represent 30% of the groups profits, in contrast to this they only represented 1.8% in the year 1997 which evidently shows a vast growth which is ongoing.
SMART Objective : To grow sales internationally by 8% in the next 24 -30 months by opening 45+ new stores in Europe (e.g Prague)
Explanation : Tesco’s have improved on group profits by 28.2% since 1997 - 2012 this has now made them a successful international retailer and they are still improving to this day. This achieves the objective as opening new stores is increasing growth opening up more opportunities to upgrade stores.
3. To be as strong in everything we sell as we are in food :
In 1997 Tesco’s were overall only a food retailer, however the company set a challenge of being ‘as strong in non food as food’ . Now the business has expanded they are able to sell a wider variety of products to customers.
SMART Objective : Make more focus towards the electrical and hardware departments by adding at least 2 more helpful and knowledgable staff members in every store, having this completed by July 2013.
Explanation : Tesco’s did not want to just be a food store, but an all purpose store. Now they have expanded this will also increase profits as customers will use Tesco’s more frequently.
4. To grow retail services in all our markets :
Tesco had updated their original strategic objective of developing their retail services in 2011. Now Tesco banks are the key part to the potential that is seen in their retail services, this has generated over £1billion revenue this year.
SMART Objective : Increase revenue from financial service by December 2013, developing retail services in 2014.
Explanation : Tesco generated £1bn revenue by updating their objectives. Some of the examples of growth of the retail services are tesco mortgages, insurance and loans
5. To put our responsibilities to the communities we serve at the heart of what we do :
A fifth point to the Tesco strategy was added in 2007 to be able the ‘underpin’ the commitment they had to the community, this was updated slightly in 2011. The update was that they emphasised their responsibilities in those areas, this created the goal for their responsibility towards the UK customers.
SMART Objective : Expand on the strategy again by gathering more detailed and specific commitment feedback from 30 randomly selected customers from each Tesco store. Using the information recieved, choose which areas had weaknesses and update them to satisfy the customer needs by the end of 2013 depending on what the improvements consist of.
Explanation : Tesco made their aim to emphasise their responsibilities towards the customers and leave them with a quality value service.
6. To be a creator of highly valued brands :
Tesco has vastly improved from the beginning to once having a few small UK stores, to the Tesco logo being a popular world-wide business. Tesco own brand is made appealing to customers all over which gives them high quality products at competitive prices.
SMART Objective : Increase own-brand sales at a minimum of 18% by advertising their own products in busy locations such as towns and cities in the UK within 8 months and in international stores within 12 months.
Explanation : Tesco made their brand appealing to all customers by selling good quality products at lower prices than rival stores. It is also more environmentally friendly compared to leading brands as the productpackaging is very basic.
7. To build our team so we create more value:
Tesco’s final goal is to build on their team, this is due to the expansions Tesco has made as they will need more leaders to be able to run the support functions for the valued customers. This is because Tesco’s ‘most important asset’ is their people, as they provide the best quality support for customers all over.
SMART Objective : Introduce one experienced leader in each department (food,hardware etc.) of every store internationally by March 2013.
Explanation : Tesco set a final goal to get more team leaders in so they can successfully run support functions for the customers.
PESTLE
Pestle is an environmental framework used to understand the environmental factors on the organisation and can be used as a strategic technique for different businesses. This creates fair competition for business, while holding all the necessary laws in place for both consumers.
It is used to examine the current and future states of the industry. This will help by giving business time to be greatly strategic and holding a competitive edge towards other businesses in a similar industry. For example companies such as Tesco’s should concentrate more on their departments other than the organisation as a whole as they have a diversified product range, meaning there may be more competition in certain departments.
Political
These factors affect the organisations in terms of government regulations and legal issues and they define formal/Informal rules which businesses mostly operate.
For Tesco the political factors can be local, national and international this means that many governments will be involved.
Examples of these could be –
Political stability : Where the community are generally a happy and respectful community who follow the laws set by the government.
Tax policy : A system of certain services that are set to reach the publics needs .
Employment and labor law : This is the relationship between the workers, employers and trade union. This will ensure that all employees will recieve a minimum wage of £6.19 for over 21’s, 28 days paid holiday and the right to leave for childcare.
Environmental regulations : The laws and regulations put into place by the authoritative figures to control the behaviour and actions of businesses.
Trade restrictions : A certain restriction on the trade of goods/services between two countries.
Tariffs : The charges for a businesses service or product, this is what makes imported goods more expensive
Economic
These factors are the ones which will affect businesses and the initial decision making in the business, an example of this is the recession that’s prevents the organisations from increasing in workforce.
More examples of this are –
Interest Rates : A rate which will be charged for the use of money, this is usually shown as an annual percentage. To work out the interest rate the amount of interest is divided by the mount of principal, the principal is the amount that was/is borrowed.
Inflation Rates : The increase in percentage of the price of goods and services, this is usually an annual occurrence.
Economic Growth : A positive growth in the level of production of goods and services by a place over a certain time scale.
Social
These factors relate to the more cultural aspects of the environment, an example of this is an increase in the health consciousness. This may affect the demand for the product being sold.
More examples of this are –
Population Growth Rates : How fast members of a group increase in numbers over a time scale. This helps marketing experts use the population growth to help customise their products to the target audience.
Career Attitudes : Responding positively or negatively to challenges or other individuals ideas.
Age Distribution : The percentage of the complete population or the population of each sex.
Emphasis on the Safety aspects : Strongly enforcing all the safety procedures to ensure the safety of all customers and workers are monitored and well looked after.
Technological
These affect the costs and the quality of outputs, which can determine the difficulties to minimum production level.
These will include –
Rate of Technological change : The rate of innovation in technology, how is is upgrading.
Automation : Machinery that is operated solely by computers, this reduces the price of production and increases the quality.
Technology incentives :
Legal
Influence to the companies costs and operations, also the demand toward a certain product on the market.
These factors will include –
Employment Law : This protects employees from abuse/torment from employers)
Health and Satefy Law : This protects the health, safety and welfare of the general public)
Consumer Law : Focuses on giving protection to the consumer when buying a product, they are designed to ensure fair competition and free flow of truthful information)
Anti-trust Law : This is what makes businesses compete fairly, they are also referred to as ‘competition laws’)
Environmental
These refer to the more weather related aspects such as climate changes and general weather. In the modern society, climate change is an important factor to companies and organisations as they are restructuring their operations to give them space to be able to innovate and build on being an environmentally friendly business.
Value System : A set of values created by a person or organisation to guide its behaviour in all situations.
Management Structure : Certain methods created in which the management of a company is organised, this helps businesses to hit their business aims. e.g. (become an environmentally friendly institute.
Research Development : Gathering new knowledge on products and services and creating a better product or service that will fill the markets needs.
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businessman12 (student)
