• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Introduction to Tesco.

Extracts from this document...

Introduction

Introduction to Tesco Tesco is Britain's leading food retailer employing 160 000 people in the U K throughout its 702 stores. Over the past five years Tesco has expanded from a traditional U K based supermarket into new countries, products and services including a major non food business, personal finance and internet shopping. Tesco has progressed into a truly international retailer employing a further 140 000 people throughout 214 stores in nine markets worldwide. The increasing scale and internationalization of Tescos sales and purchasing operations contributes to a significant increase in efficiency and profitability. In this assignment I will be examining Tesco's position in the economy, explaining the role of economies of scale within Tesco and drawing up a detailed swot analysis of the organisation. I will also be examining the role of production within the firm. Tescos position in the economy Tesco is a public limited company (plc). Public limited companies are businesses with share price on the stock exchange. To become a public limited company, a business must have an issued share capital of at least �50 000. The company must have reissued at least 25% of the nominal value of the shares. Tesco can raise significant sums of capital by selling shares to the general public. Shares are bought and sold on the stock market. Management of Tesco is in the hands of the board of directors who are appointed by the major shareholders at the annual general meeting (AGM). Tesco has approximately 100 000 active shareholders within the company. Tescos share holders do not have any say in the day to day running of the company. There is a distinct division between ownership and control within Plc companies. ...read more.

Middle

Internal economies of scale - Growth in Tesco is evident by the rise of sales and turnover as discussed in the financial analysis of Tesco. As a result Tesco can enjoy certain benefits that arise within the firm. These are known as internal economies of scale. They occur for a number of reasons. Managerial economies - Specialist managers are employed by Tesco in different areas of the company such as finance, marketing, personnel and customer services. These are required due to the sheer size of the business. Managers specialise in their own departments rather than attempting to perform several different roles. This results in high levels of efficiency and will ultimately reduce average costs. Financial economies - Tesco is a huge company and a financially stable institution. Therefore they find it easier to get large bank loans. This is the case as Tesco is considered less of a risk and can offer large assets as security. Tesco can also negotiate lower rates of interest on loans as banks see them as less of a risk compared to smaller companies. Selling shares are also an easy way of raising capital. Purchasing and Marketing economies - Tesco will benefit from lower rates when buying assets in bulk. Tesco enjoys special privileges from their suppliers as it is considered a valued customer. The sheer volume of materials it buys from its suppliers will result in lower rates and prices. Tesco also has the financial power to use the media to advertise its products and legendary service. Risk-bearing economies - As Tesco grows it has moved into different areas of retail such as non-food products and financial services, therefore it is diversifying to reduce risk. ...read more.

Conclusion

This method is cost effective as it replaces the need for expensive 100% inspection of every item. Quality problems can be caused by poor staff performance. In many cases this can be addressed by training, improving the manual skills of workers through training courses or improving management techniques through management development programs. Stock control in Tesco Modern stock control systems make use of bar coded information that is scanned into computers. This ensures that the computer knows exactly which products have entered and left the stockroom. Tesco uses a new system called the EPOS system. The system is used at the checkout to scan barcodes in a new and efficient way. This allows staff to serve many more customers and ultimately leads to reduced costs as it means less staff will be required to work on the tills. In addition to this the new system is used to record exactly what has been sold which allows up to date stock records to be kept. This data assists staff when deciding how much to order and when to order. This in turn, can help to reduce cost as there will be less wastage in the stock room. The new system employed by Tesco will also give a permanent electronic link with suppliers that can automatically reorder stocks. Again this reduces costs. Tesco will not need to employ staff to process all of the paper work that is involved in the ordering of goods, as computers will do it automatically. All stock information can be held in a database. Tesco can then use this information to produce a printout of the stock in order of age. This can help the manager to make decisions about future stock purchases. Management can reduce orders of goods if there is a surplus. Again this helps the business to reduce costs as there will be less wastage. 1 ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our University Degree Microeconomics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related University Degree Microeconomics essays

  1. The Sport Obermeyer case

    During this stage is where the initial designs are developed. Important events are the Munich show and the Las Vegas show in 1992. These two events are where the ideas come for the colors and style for the new line.

  2. Quality control and Quality assurance within Sainsbury's

    To show how important quality control is to Sainsbury's here is an example; the production manager reviewed the production of the same soup for the last six hours, just to ensure they were to 110% satisfactory. This will help to add value as there will be less faulted products, therefore

  1. Benetton Group: The evolution of a network to face global competition.

    By outsourcing, it is possible to send the firm's workers to the outsourced firm to carry out the task, in which case wages will still be paid, but other labour overheads eliminated. If the firm chooses not to send its workers then it is able to reduce its workforce, also reducing costs.

  2. "Mass production is the curse of management thinking and workers' lives"

    This had such an impact on Ford's workers, particularly, that a large proportion of them went on strike on 10th of January 1914. The Machinists' Monthly Journal noted at the time: "The strike is one in support of skilled labour against unskilled labour...

  1. Production Costs

    run average cost curve, at which further expansion may lead to an increase in unit cost. This lowest point is known as the minimum efficient scale (MES), this is where the internal economies of scale have been fully exploited. (Tutor2u., 2005).

  2. Lean, flexible and agile in manufacturing and public sector

    It corresponds to the private sector that is the part of an economy in which goods and services are produced and distributed by individuals and organisations that are not part of the government or state bureaucracy. Usually, public sector contains health care, housing, education, local government, personal social services, criminal justice, income maintenance, post, telecommunication and so on.

  1. Please read the article below by ABC journalist Ashley Hall dated 29 th April ...

    But the changes have brought an angry response from tobacconists, who say they are ill-equipped to adjust to the change within the time allowed. Charity workers are also dismayed at the swift change in price and are anticipating a surge in calls for help as people divert money from the necessities of life to feed their smoking addiction.

  2. Monopoly. A monopoly may arise as a result of natural forces, or it ...

    the diagram that, with the supply curve, SC, an output of Q1 is produced and sold at a price of P1. The monopolist, however, facing the same situation (that is, with a long-run average cost of LAC1) maximizes his profits by reducing output to Q2 and raising price to P2 , thereby creating profits represented by the area P1BAP2.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work