- Tesco’s shareholder may have little interest in long-term prospects, and simply interested in quick returns, on their investment.
- The original owners may loose most of their control over Tesco, even if they retain a substantial amount of shares.
Objectives of a business;
Aims and objectives can sometimes be found in a company’s mission statement. All businesses exist for a reason, either to produce/provide goods or services. Tesco provides goods to its customers. All businesses, whether they aim to make profit or not have satisfy customer needs in order to survive. In order for a business like Tesco to operate effectively they must set themselves objectives to govern the way they operate. Some of the objectives businesses set themselves are;
- To make profit or surplus; profit is the difference between what the business has earned and what it has spent over a given period. Profit is extremely important as no business can survive without it.
- Increase sales or market share; this is affected by the quality and price, to increase in market share the business has to sell as many goods/services as possible.
- Surviving as a business; they do this by trying to expand, spread over the country/region.
- Provide services to the community; supporting schools offering free books.
- Produce high quality products/services; this will help the company expand and become well known.
- Develop a skilled workforce; make sure that staffs are able to work to the best of their ability; this is done by setting staff training programmes.
- Fulfilling charitable or nor profit objectives such as, caring for the environment; in this case the money raised goes to support the special cause and provide a service for those in need.
Aims/objectives of Tesco;
Tosco’s own objectives are registered as their aims and seem to reflect the theory above. These are;
- Tesco aims to deliver good quality products and services to its customers, through good stores and polite and friendly staff. Tesco aims to attract and retain customers, by improving their services constantly.
- Tesco aims to offer great value on their goods and services, which meet customer needs; they are determined to offer their customers the best products and services at low prices.
- Tesco aims to provide quality goods and services to the community; they sell a variety of their own name brand products as well as other products produced by other large organisations.
- Tesco aims to make higher profit each year which will help them expand; they are able to do this by offering value in their products/services (e.g.) free deliveries for on line shopping.
- Tesco aims to maximise their sales, this means to sell as many goods and services as possible, which in return will help Tesco increase their rank.
- Tesco also aims to provide for the local community (e.g.) sponsoring schools by offering free computers/books.
How functional areas help Tesco meet its aim
All businesses combine ‘Factors of Production’ to produce their goods or services. (E.g.) Labour capital for large business like, Tesco to be successful, must have functional areas, that exist within the business, these functional areas play a major part in the businesses day to day running, these organisational areas can be seen on the organisational chart, some of the functional areas that exist at Tesco are listed below;
Below I have explained what each functional area contributes to Tesco and how they help the organisation meet its objectives;
Production; The production function is split in sections.
1- Production and planning set standards and targets for each stage of the production process, they closely monitor quality and quantity.
2- Purchasing department; provides materials and equipment required to keep production running.
3- Stores department; stock all necessary tools and new materials to service the manufacturing process, stops machinery from breaking as machines can be regularly serviced.
Marketing; Involves carrying out market research, to find out customer needs, they are also responsible for advertising existing products, through television, Internet and the radio. Tesco also gains their customers by offering special offers (i.e.) buy one and get one free.
Human Resources; are responsible for many things, they are responsible for the relationships between staff. One of their main responsibilities is to select and recruit staffs, which are most suitable for the company (i.e.) people who are likely to stay with them for a long period. They set up training and appraisal schemes; they help develop a good workforce by promoting staff, which will help motivate the company. They are also responsible for health and safety issues and other employment duties, at Tesco.
Administration; deals with internal operations within the organisation (i.e.) enquires, communicating messages, producing document for the company, they also provide statistics for the company board, as well as organising training for the administration staff, as well as many other internal operations.
Finance; are responsible for recording financial information, known as book keeping (i.e.) revenue earned from sales and necessary expenditure, they are also responsible for collecting financial information from other departments, to inform external bodies (i.e.) Inland Revenue which collects corporation and income tax, they are also responsible for staff wage/salaries.
Research and Development; The purpose for research and development is to further the company’s aims by helping Tesco create new and better products and services to meet their customer needs.
How the functional areas help Tesco meets its aims;
In order for the functional areas to work effectively, they must be able to communicate with each other, at Tesco some of the ways they do this is by holding regular appraisal schemes, setting up staff training events and other staff development activities, organising induction programmes to familiarise, the functional areas with Tesco methods, which keep them up to date.
The functional areas at Tesco benefit from these activities, as they are able to gain experience, which makes them eligible for promotion, which gives them a chance to broaden their skills and knowledge. Tesco also benefits a lot from this, as it helps them to motivate staff which means Tesco will meet their aims/objectives allot quicker.
At Tesco the administration department has a big impact on the other functional areas as it provides support services for other functional areas to operate effectively.
How the functional areas help Tesco meets its aims ;
The organisational functions at Tesco are the ingredients/instructions that make an enterprise work. The factors of production are;
Labour; Work carried out by employees to help the day to day running of the business.
Capital; Physical capital/assets (e.g.) machinery/equipment, without these no production can take place.
Energy; Is the raw materials, that make the production machinery work e.g. heating/lighting (electricity).
Information; Is the know-how, that helps the factors of production work.
(Tesco don’t make all of their own products, therefore not all of the factors are relevant to Tesco)
Culture and communication channels;
There are four types of organisational culture that can take place within a business, the ‘term culture’, describes the typical approach within a business, culture is the personality, share beliefs and the procedures that a business uses to solve any problems. The four types of organisational culture are the following;
- Power culture; this type of culture will be found in a business that emphasises on making individuals rather then decision making which enables decisions to be made allot quicker.
- Role culture; this is usually found in big companies where all staff have a defined job role, this culture is split into two functions that are organised in a hierarchical way, this culture works by logic.
- Task culture; emphasises on team building, combining to complete projects, teams need to share values and aspirations, also individuals may work on more than one task at a time.
- Person culture; focuses on individuals being centralised, the business exists to fulfil interest of staff, this culture is usually found in non-profit businesses, (i.e.) charity, voluntary businesses, individuals have complete freedom to go ahead in the direction they want, in this culture hierarchies are impossible except by mutual consent.
Backward facing culture;
- Controlled by traditional managers who have been in the business for a long period
Forward-looking culture;
- Looks at what its customers want
- Looks outside itself at the world around it and what its competitors are doing
- Keen to introduce new managers with fresh ideas
Culture and communication channels at Tesco;
Tesco is looked upon as a forward-looking company, which means Tesco uses forward looking culture as it looks at the following;
- Looks at what their customers want
- Is prepared to take risks
- Is keen to introduce new managers with fresh ideas
- Looks outside itself at the world around it and what its competitors are doing.
These are some of the things that can have an affect/influence on culture within a business;
- Economic- Change of environment
- Social- providing services to the community
- Environmental- providing services/working atmosphere
The culture that a business uses as an affect on the objectives and the structure of the business, which has an affect on the success of the business. Looking at the type of culture Tesco uses they seem to be meeting their aims/objectives head on.
A Description Of The Management Styles & Culture At Tesco;
Management Styles;
Management style is the way someone behaves whilst managing people over a period of time.
There are four main types of management styles that occur within an organisation, which are;
-
Autocratic- Managers give instructions, rather than staff having their own opinion, the manager makes all the decision.
-
Democratic- Empowerment is involved as individuals are given the responsibility to group up and make their own decisions within a given framework.
-
Consultative- Managers consult others in order to get a variety of opinions, rather than just their own, this allows members of staff to feel recognised.
-
Laissez- Faire- This type of management is more relaxed as it allows employees to carry out activities freely with broad limits.
Management Styles At Tesco;
The type of management style that occurs at Tesco is democratic; the reason for this is because the managers at Tesco encourage staff to be more independent, so that staff has more responsibilities, which will help broaden their skills and knowledge. The management style at Tesco is progressive as Tesco look ahead in to the future, especially in information technology and communication.
Tesco’s management style is really successful as their mission statement is on target and will be met.
A Description Of The Use Of ICT For Internal & External Communications Of The Business;
Information and communication technology has totally transformed, over the last few years, which has led to a major change in the way communication flows through a business.
This has had a massive affect on the way Tesco operates today, as they are a service-related organisation, as they don’t produce their own goods. Some examples of changes in technology that have had an effect on the way Tesco communicates internally and externally are;
Email- Is used to replace old methods such as faxes, telephone calls and letters, as e-mail is a lot quicker, especially if the message has to be sent to more than one person, it is more convenient than conventional methods, it is also used to correspond with suppliers.
Internet- This allows Tesco to create a communication link with the global market; this allows better communication between staff and customers that are overseas.
Tesco’s website allows its customers to see what they are doing externally (e.g.) how they help the local community, it also allows them to explore Tesco’s range of products and services. Customer can browse through 24 hours a day from anywhere in the world.
Network Databases- Has allowed Tesco to replace the old traditional ways of filling and storing information.
Customer Service- At Tesco any questions or complaints can be dealt with over the phone or through the Internet, this makes the communication process a lot quicker.
Payment Methods- There are a number of ways in which Tesco’s customers can pay for their goods or services, some of the payment methods that are accepted at Tesco are;
Cheque- Details can be printed out at the till, using the information given to produce a receipt. Cheques can be used to pay up to a given price.
Debit Card- This allows the customer to pay for their goods or service without any cash, the transaction is automatically checked at the customer’s bank account, the payment is guaranteed once it has been checked if there is enough in the persons account.
Credit Card- This is a similar process however, the money is not taken from the customers account, the sale is paid for at the time. Customers may also ask for up to£50 cash back.
Payment Methods;
The new payment methods that have been made available thanks to ‘Electronic Funds Transfer at point of Sale’ (EDTOS) allows Tesco to change their customers at the point of the Sale. These payment methods have proven to be popular innovation with their customers, as it saves them the time of having to go to a cash point (ATM) or bank.
IT in store Operation;
Information Technology is essential for any large organisation affectively, it is used for many in store operations (E.g.) monitoring sales, ordering stock etc.
Tesco sell thousands of products, therefore they use computerised merchandising systems, to order the correct products to the correct place without these type of system it would be a very long process.
Goods are no longer entered manually, which means accurate pricing is guaranteed, because Tesco sell thousands of products, each item has an individual barcode usually printed somewhere on the package, this allows Tesco to monitor their stock levels, which means that once a certain amount of a particular product is sold the computer will automatically re-order the product, this is known as the ‘Sales Based Order (SBO).
Home Shopping;
Tesco has introduce a home shopping service with the use of information technology, this enables people to order their shopping from home using the internet, this is done through a computer programme, it allows its customers to order any of the products that the particular branch sells, orders can be placed 24 hours a day, orders are delivered to the customers home. These home shopper customers have to register and are given a personal ID number, payments for shopping can be made by debit and credit cards.
How The Production Process & Quality Assurance Help Tesco Add Value To Their Products/Services;
