In the last ten years tesco never did services like Telecommunication, life insurance, house insurance, mortgage, home delivery, tesco credit card, club card, and never used to sell some products like their clothing line “CHEROKEE”, but now they sell all these product and also renders these services quicker, faster and better.
The wages and salaries tesco used to pay its staffs last 10 years is nothing compare to what they are paying now, because in the last ten years they used to pay their staffs peanuts but now they are paying much more, this is because they want to retain all their staffs because without their staffs there would be no one to sell their products to their customer.
In this case, they will not have any customers, they will not have any revenue and profit coming into the business and there would be no way for the business to expand, improve their quality.
NEWHAM BUDGET
According to the graph, it shows that the employment growth in Newham has increase within the last ten years. According to the graph, in 1994 the employment growth was 4,469,000, while in 2004 it has increase
This graph is showing that tesco has moved from the number three domestic retailer to being the top three in international retailers in the world.
The total turnover for the tesco in UK shows the total turnover of £24,760. In total, they have 5.2 million banking, Tesco. Com and telecom accounts.
TASK 3
DECRIBE THE CORE BUSINESS ACTIVITIES OF THE TWO BUSINESSES YOU ARE INVESTIGATING FOR THIS UNIT.
The core business activities of tesco are selling foods and drinks. They also sell clothes, household items, and kid’s items. Customers buy these products on a daily basis and these are the core activity that generates revenue and profit for Tesco. They also provide services like home deliveries, mortgages, loans, insurance and telecommunication services. They also manufacture their own products like bread, cookies and crisps.
TESCO RESOURCES
The resources Tesco uses to carry out their activities are as follows:
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STAFF: Tesco employs many people for different kind of jobs like managers, security guards, and cashier. They employ staffs both full- time and part-time.
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REFRIGERATORS: They need refrigerators to keep their products like meat, drinks and ice cream cool. Without refrigerators, they cannot sell frozen foods.
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OVEN: They need oven to bake their bread and cookies.
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TILLS: They need tills because that is the main places where people go and pay for the products they have bought.
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SHELVES: They need shelves to display their goods in order for their customers to choose from their variety of products displayed.
The core business activity of Abbey grorcies are selling food products like bread, seasoning, crisps, milk, biscuit, gift items and drinks in general. These products are the ones that generate revenue and profit for Abbey grorcies. Their core business activity is to sell food and drinks.
ABBEY GRORCIES RESOURCES
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SHELVES: They need shelves to display their goods in order for their customers to choose from their variety of products displayed.
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TILLS: They need tills because that is the main places where people go and pay for the products they have bought.
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REFRIGERATORS: They need refrigerators to keep their products like meat, drinks and ice cream cool. Without refrigerators, they cannot sell frozen foods.
DESCRIBE THE PROCESS OF PRODUCTS OR PROVIDING THE SERVICES.
Tesco produce their own cookies and bread. These products are produced in their bakery. Tesco uses MILLS flour to bake their cookies. The flour is bought in large quantity, which is kept in a warehouse. They also use fat, yeast and water for mixing. All the mixing process takes up to 45minutes because it is in a large quantity. .
This is the process of cookies
Flour added into a big mixing machine
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Eggs, fat, yeast and water is added to the mixing machine
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Mixing all the ingredients
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Keep rising for like 30minutes
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Cut and put into cookies pan
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Add some choc chips on it.
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Kept into the oven for about one hour
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Left outside to cool
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Kept inside wrappers
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Kept on the shelf for customers to buy
Tesco trends are affected by many ways e.g. their competitors like ASDA, SAINSBURY, stakeholders and environmental issues. They always want to sell more than their competitors in other to make more profit, so that their stakeholders and the environment are not affected.
This activity is becoming more common because people like shopping. Eating, drinking. More people are now buying things from Tesco. Tesco is getting popular because they are now working faster and efficiently. Tesco activity has changed over the past few years because in the past few years there were some products and services tesco never sold. In the past years tesco never sold clothes, services like life insurance, house insurance, mortgages, home delivery, tesco credit card, club cards and they also never sold some of the food and drink they sell in this store in the past few years. (For example the EPOS system ELECTRONIC POINT OF SALES) it makes the business aware of the shortage of goods.
DESCRIBE THE PROCESS OF PRODUCING THE PRODUCTS OR PROVIDING THE SERVICES
This process is how Abbey grorcies provides it services for customers and the wider community. Most of the products are bought wholesale at cheaper prices. When these products are bought, prices are fixed on the products, displayed on the shelves for the customer and local community to purchase, customers go into the shop, pick whatever products they want, go over to the tills to pay and leave the shop.
Abbey grorcies buys products in wholesale in large quantity
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Put prices on the goods
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Displayed on the shelves for customers to buy
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Customers buy the products
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Pay what they have bought
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Finally leaves the shop
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This is how the process goes on and on.
This core business activity has become more common because most sole traders sell these products.
TASK FOUR
- IDENTIFY THE REASONS WHY EACH OF THE BUSINESS HAS CHOSEN THEIR LOCATION.
Most business can choose where to locate but sometimes choice of location is critical. In other cases, it is less important. The competitors influence all business.
Tesco has chosen it’s because the location because there are better chances of tesco selling more products, have more customers shopping with them and also make more profit. When choosing where to locate or re-locate premises, company need to select right piece of land. When Tesco has chosen their location because:
- The cost relative to other potential sites. Tesco must compare purchase price of alternative sites, consider whether renting would be more effective and compare the level of business rate in each location.
- The amount of space available for current needs. Some businesses require large areas of land. For example parking space.
- Potential for expansion. It is important that firms look into the future when locating premises.
- Good Infrastructure. Facilities such as good road links, appropriate waste disposal facilities and other public utilities.
- Environmental consideration, some firms like tesco do face pressure from the public opinion when locating premises. There can be opposition from pressure group if they attempt to locate in environmentally sensitive areas.
- Geological suitability: Some businesses require particular geological features. A nuclear power station must be sited on a geological stable site.
- Staffs: Tesco needs staff because they need staff to attend to their customers, give accounts at the end of the day, clean their environment, solve the customers and the company’s problem and they need them for profit and expansion purpose.
- History and tradition: The reason for the location of a particular industry may be a mixture of what is essential, history and tradition.
- Nearness to customers: Being close to customers and individuals is very important. Nearness to the customer is less important if transport costs are cheap and customers are spread all over the world. Being close to customers is important where smaller industrial companies service the need of larger organisation in a particular trade.
HAVE ANY OF THESE REASONS CHANGED
4b For Tesco I do not think that there is any of these reason are changed because this business is expanding a lot in nationwide and one thing that is good for this business is the location they have chosen because it is easily accessible for the customer and their suppliers, and it is near and many buses go there.
4c) Identify which of the factors is the most important as far as each business is concerned.
The factors that are important for Tesco are as follow:-
- Competitors
- Suppliers and raw materials
- Transportations
- People and Skills
- Government and other incentives
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Customers are important because they are the ones that buy the products and services. The business aims are to make profit, expand and provide goods and services to the wider and local community.
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Competitors: Marks and Spencer there competitors are in that area are Sainsbury’s, Asda, Safeway and Somerfield. These are the competitors of Tesco because they sell the same products Tesco sells.
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Cost of the Premises: This is important because everyone would like to know that the premises they are buying how much does it cost. Because some businesses have a limited amount of capital to spend on the premises.
4b) Have any of the reasons changed?
For Abbey grorcies, I do not think that there is any reason, which is changed. Because the location they have chosen is good because there is no other near that shop and local people go to that shop so often. The location is good for the business because there are no other competitors in the area, so there are better of the business to survive.
For Tesco I don’t think that there is any of these reason are changed because this business is expanding a lot in nationwide and one thing that is good for this business is the location they have chosen because it is easily accessible for the customer and their suppliers, and its near by the tube station and many buses go there
4c) Identify which of the factors is the most important as far as each business is concerned.
The factors that are important for Abbey grorcies are as follow:-
- Customers
- Cost of the premises
- Suppliers
Customers are important because they are the ones who are going to buy the products and people open shops because they want money and want to make profit so if you have no customer, that is mean no profit
Cost of the premises is important because it is a sole trader business and an owner will have to find out the cost of the land before he or she buy the premise because they might not have enough capital; to buy the premises.
Suppliers are important because after one stock is finish you need to order for another stock and if you do not have a supplier who will supply you, the products you need for your shop. Then you will not have customers coming to your shop
These are the most important factors of Abbey grorcies.
The factors are important for Tesco is as follow:-
- Suppliers and raw materials
Customers are important because they are the ones who are going to buy the products and people open shops because they want money and want to make profit so if you have no customer, that is mean no profit
Cost of the premises is important because it is a sole trader business and an owner will have to find out the cost of the land before he or she buy the premise because they might not have enough capital; to buy the premises.
Cost of the premises are important because you need to know who much it will cost you to buy the premises and if have enough capital you will buy the land and if you don’t have enough capital or you think its expensive you can go and look for other premises in other areas or rent the property.
Suppliers and raw materials are important because it is a public limited company. In this kind of business, you manufacture your own goods as well so that why it is important that you have suppliers who supply you the goods you need for your business.
Transportation: It is important because Tesco they do home delivery so that is why it is important that they have some kind of transport so they can supply the product, which they have ordered.
People and Skills: this is important you do not want peoples to work in your company without skills and qualification. If an employee have a good skills and qualification it is going to be good for your business because then the staff will know how to deal with the customers and how to solve their problems
4d) Are these reasons more or less significant now then they were originally.
I think for Abbey grorcies these reasons are less and more significant. The reason I think it is less significant that these kind of business are interested in making profit coming in the business that it because it a sole trader all you want is money coming in to your business. The reason I think its important as well because with out theses factors your business will not be able to run so well because like this you will have no money coming in your business.
I think for Tesco these factors are more significant. I think these reasons are important because it is a public limited company, it is important to them to run the business fairly and give all the details to the shareholders as well, and all these factors are important for this business.
4e) how do they affect the businesses now?
The factors for Abbey grorcies are Customer, Cost of the premises and Suppliers. The way these factors are affecting the business is that customers are important for the business and if there is no customer there will be no profit coming into the business, cost of premises I do not think that this is affecting the business in any way. The suppliers the way they are affecting the business in good way because they supply the product always in time that is why the business is still running properly.
The factors for Tesco are Customer, Competitors, Cost of Premises, Suppliers and raw materials, Transportations, People and Skills, Government and other incentives. The way these factors affects this business now is that all these factors are important for this business with out these factors business cannot achieve all their main aim and objectives.
EXAMPLE OF MAIN STAKEHOLDERS IN TESCO
- Customer
- Employees and managers
- Shareholders
- The local community
- the government
- Suppliers
EXAMPLE OF MAIN STAKE HOLDERS IN ABBEY GRORCIES
- CUSTOMERS
- SUPPLIERS AND WHOLESALERS
- THE GOVERNMENT
- THE LOCAL COMMUNITY
THE INTEREST OF STAKEHOLDERS IN TESCO.
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CUSTOMERS: The interest of the customer are:
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Availability of products: All customers expect tesco to always have all the stock available, so whenever they go shopping they always want to see the products available.
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Value for money: The customers expect tesco to always sell products that have value for money.
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Good quality products: The customers expect tesco to sell quality products.
- To be treated fairly: The staff expects the tesco to treat them fairly; there should not be any discrimination, through race, sex or disability.
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To be paid well: The employee expects all their payment adequately, correctly and to be paid at the right time.
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Safe working condition: They expect to work in a safe environment and conducive area.
- health and safety: They expect tesco to have all first aid equipment available whenever there is any accident
- Give interesting work to do which matches with the job description.
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SHAREHOLDERS: Their interest is
- Their interest is that the company should do well and the value of your investment should increase.
- Their interest is that the company should pay a good dividend twice a year.
- how well the business is doing
- Bulk buying
- More orders
- More revenue
- hygienic environment
- Exporting goods abroad
- Health and safety
- Paying of tax
- Job employment
- Building o new road links and amenities like hospitals build new-ring roads, noise and air pollution.
- Provide social activities like amusement arcade, fun fairs and trips.
THE INTEREST OF STAKEHOLDERS IN ABBEY GRORCIES
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CUSTOMERS: The interest of the customer are:
Availability of products: All customers expect abbey grorcies to always have all the stock available, so whenever they go shopping they always want to see the products available.
Value for money: The customers expect abbey grorgies to always sell products that have value for money.
Good quality products: The customers expect abbey grorcies to sell quality products.
- How well the business is doing: all suppliers always expect the business to do well in order for them to get more their sales and also make profit.
- Bulk buying: the suppliers expect tesco to always give them orders in bulk.
- More orders: they expect tesco to always give them orders frequently.
- More revenue: The governments expect abbey grorcies to always pay their revenues.
- Hygienic environment: The government expects abbey grorcies to always keep their environment clean.
- Paying of tax: The government expects abbey grorcies to always pay their tax.
THE LOCAL COMMUNITY
- Building o new road links and amenities like hospitals build new-ring roads, noise and air pollution.
- Provide social activities like amusement arcade, fun fairs and trips.
TESCO STAKEHOLDERS EXPECTATION.
- CUSTOMERS: tesco customers expect Availability of products, Quality products, Value for money, Suitable opening an closing hours, Continuity of business
Clear, informative, accurate advertising
To be treated fairly, to work in safe condition, Good wages, Staff discount, Prompt payments and Clear communication
- SUPPLIERS: they expect tesco to pay Prompt payment, be Loyal customers and also interested in the Progress of the business
- SHAREHOLDERS: they are interested in the Progress of the business, Steady flow of dividends and Responsibility to the society.
- LOCAL COMMUNITY: they expect tesco to Build motor ways, Planning permission e.g. amusement arcade.
- GOVERNMENT: the government expect Safe environment-control of harmful emissions, Investment and Secure employment for the local people
ABBEY GRORCIES EXPECTATION
- GOVERNMENT
- Efficient use of resources
- VAT and income tax
- Recruiting the unemployed
- Protecting smaller business
- Monitors business operations through the watch bodies
- LOCAL COMMUNITY
- Safe environment-control of harmful emissions
- Investment
- Secure employment for the local people
- Prompt payments
- Loyal customers
- Progress of business
- CUSTOMERS
- Availability of products
- Suitable closing and opening hours
- Quality products
- Value for money
- Continuity of business
D)
The customers interest and expectation has changed in the last ten years so therefore tesco is responding to their changes i.e. tesco has a customers service department were the customers can complain about certain problems, tesco is responding to it now by allowing the customers refund unwanted goods.
The employees interest and expectation ha changed because if he employees are not satisfied with the working condition they can report to their line manager and supervisors, if the line manager don not resolve the issues the staff, the staff has he right to carry up the case further to employees tribunal that will settle the employees problems so tesco is responding to this by allowing them work in a safe working environment, allowing them to sign up contract of employment which will make them know their rights at tesco.
The government interest and expectation has changed because the government don’t expect tesco to sell alcohol to under 18’s, so therefore tesco responds to this by training their staff and informing the not to sell alcohol t people under 18 and also by asking them for ID’s to proof their ages.
The supplier’s interest and expectation as changed because the suppliers expect tesco to pay promptly and order more products so therefore tesco is responding to this by paying them promptly and ordering more products. Tesco is also responding to the suppliers by paying frequently and given them more orders.
PEST ANALYSIS
- Politics, government, taxes and the law affects tesco. For example, the tax environment will affect the price of goods (through VAT), investment (through corporation tax) and the number of workers employed (through national insurance contributions and pension legislation). customers and suppliers will have certain rights in law which need to be taken account of when trading
- The economic environment is very important to tesco. Whether the economy is likely to be in boom or recession could have an important impact on sales. Levels of unemployment will affect both customers demand and ability to recruit staff. Inflation will affect pricing policy; barriers to the international trade will also affect tesco’s export.
- The social and cultural environment covers areas such as education, demographics (i.e. population), migration, and religion, roles in men and women and change in consumer’s tastes.
- Changes in technology can have a radical impact on tesco. Manufacturing has been transformed by automated machinery. Computers have eliminated large numbers of jobs in tesco banking and insurance. Quality has been considerably improved through applications of information technology.
The external factors of abbey grorcies
- Unrealistic objectives: the objective may have been unrealistic. There is often tendency for the sole trader to set objectives, which are too ambitious.
- Uncontrollable variables: Even if the abbey grorcies strategy is well executed, events outside the control of the business can knock the strategy off course. For example, the economy may go into recession. This can have a severe effect on sale s and profitability.
- The sole trader may be content to run the business making its current level of profit, so therefore many small business in markets where changes only occurs slowly will loose low cost and risk of strategy.
- There are many sole trader business competing in the market, however, there is weak branding of products. As with perfect competitions, barriers to entry are low and so new small businesses can set up easily i.e. the influence over price is weak because the product is weak.
THE EXTERNAL FACTORS
INTERNATIONAL EXPANSION
- International expansion is expensive, that is entering new markets with a new brand requires heavy investment and marketing as well as land prices (which are currently low) and extra distribution and operation expense. Tesco’s debt may increase before it begins to decline. Tesco international profits in 2003/4 are currently low due to UK current unrest.
WAL-MART/ASDA CHALLENGE
- Since the US shopping giant wal-mart purchased ASDA, tesco’s rank as the top UK supermarket has been threatened; ASDA can now compete extremely well on price and range. Tesco is well aware of this, and has so far been quick to keep up with price cut or special offers at ASDA. Wal-mart may have decided to wield buying power more heavily in the UK, and this could spell the end of tesco’s brand dominance in the future.
OVERSEAS RETURNS COULD FALL
- The buy case of tesco is predicated around investment overseas driving higher group returns as each country moves past critical mass. This might not happen, because of economic conditions, competitor’s action, or failure in tesco’s business model. It also could come as a consequence of an aggressive move into a larger market.
UK SRUCTURAL CHANGE COULD SPARK A PRICE WAR
- The price followers in the UK market are about to become aggressive investors in price. Morrison is reducing Safeway’s price by up to 6% and Sainsbury is bound to see lower prices as one of the basic changes necessary to drive its recovery. With both Asda and tesco committed to price leadership, this could result in a step down in industry profitability.
