In this assignment I am going to produce a detailed business report on a large size company. So therefore I have chosen Tesco, the report on Tesco will fulfil all the criteria needed for the completion of my 'unit 1' business at work.
Contents Page
Introduction /History 3
Type of Business 3-7
Business Objectives 7-15
Organisational Functions 16-20
Organisational Structure 20-24
Communication 24-26
Evaluation of organisational structure, culture 26-28
And management style of the business
Impact of ICT 28-30
Production and Quality 30-32
Alternative approach to quality control 32
And quality assurance
Bibliography 33
Introduction: In this assignment I am going to produce a detailed business report on a large size company. So therefore I have chosen Tesco, the report on Tesco will fulfil all the criteria needed for the completion of my 'unit 1' business at work.
History of Tesco: Jack Cohen, the founder of Tesco, began in 1919 as a street trader with a market stall. His first stock was ex-army foodstuff, which was no longer, needed, bought for less than £3 - it included Lyle's Golden Syrup and Nestlé's condensed milk. With self-confidence, a persuasive manner, good humour and a fairly loud voice he sold it in a day for £4. The first principle of Tesco approach was born: 'fast turnover generated by low prices and requiring an expanding supply of items'. He quickly established himself as a natural salesman.
Within a few months he was already asking his friends and family for extra help and had exchanged the original wheelbarrow for a horse and cart.
In 1924 he married and the first partnership began. His first branded product was tea bought from a company called Torring and Stockwell. Tesco comes from the initial of Mr T E Stockwell and the first two letters of Cohen.
For the first ten years no proper financial records were kept until he took on a bookkeeper. In 1930 he formed his first business partnership and opened the first retail outlet with Sam Freeman. With the entrepreneurial skill and enthusiasm of jack Cohen the business grew rapidly.
In 1932 a private limited company, Tesco store, was registered, it was already selling the Tesco own brand. In 1947 it became a public limited company.
Most organisation start has a sole trader like Tesco, although few are successful as Tesco. In Sole trader the owner/entrepreneur (investing their own money and taking all the risk) has to carry out all the functions of the business. For Jack Cohen this meant purchasing in bulk and reselling quickly. If the sole trader employs other people (usually friends and family) the structure is likely to be a simple hierarchy with the sole trader being responsible for them. The successful culture in this situation is likely to be informal. To grow, the business will need extra capital. It could borrow funds or take on partners or private shareholders and set up a private limited company. With Tesco this process took nearly 13 years.
Advantages of being a sole trader
There are a number of advantages of being a sole trader:
* The business is simply to set up and there are no legal fees
* The owner has freedom to make decisions and there is no need to consult anyone else, he or she also have the total control of how the business is operated
* As it is likely that the owner will have to undertake all the tasks, buying, selling, delivery, account and so on, there is plenty of variety in the work
* There are fewer regulations concerning accounts than with other organisations
* The owner can enjoy all the profits and working for one's self is highly motivation
Disadvantages of being a sole trader
* All the tasks have to be performed by the owner, unless finance is available to pay for additional help
* Where money is borrowed it may be necessary to name personal property as security for the loan
* The owner may have limited funds and may find it difficult to borrow
* The owner must usually rely upon his or her expertise, as skilled employees are expensive
* Long hours may have to be worked to make ends meet, or keep the business expanding
* The owner cannot afford to be ill for any length of time
* Any losses must be borne entirely by the owner
* The owner has personal responsibility for all of the debts of the business, and has unlimited liability. This means that if there is insufficient money in the business to pay creditors then the owner's private property may be sold off to raise funds
In summary, the sole trader organisation is simple and offers freedom, but it demand commitment and entails risk to one's private property, or personal wealth.
Partnership: most partnership is likely to have a flat structure. Partners are taken on to allow the business to grow and inject extra capital and are likely to specialise by function (finance, marketing, etc.). In the Tesco example it was to enable the business to open its first retail outlet with Jack Cohen providing the financial expertise.
Advantages of partnership
* Responsibilities of running the business and responsibilities for losses are shared between partners
* It may be easier to borrow money as more owners means that more security is available than for a sole trader
* A wider degree of expertise is available to the business than to a sole trader; indeed partnership may be formed by people in a similar line of business because they have a range of expertise between them
* There are few regulations though the Partnership Act does apply
Disadvantages of partnership
* There is a need to consult with partners when making decisions, so there is less freedom than with a sole trader
* As with a sole trader, partners are personally responsible for the business debts (though the responsibility is shared). As a rule partners have unlimited liability for the debts of the business, although limited liability status may be extended to a 'sleeping partner' who invests money in the business but takes no part in management decisions. Where this arrangement exists there must always be at least one partner with unlimited liability for business debts.
* Any profits are shared, irrespective of effort and its continuity may be broken on the death of a partner.
Private limited company: this is the first big step in the growth of any business with ambitions to expand. To gain limited liability the business will have to provide proper accounts and keep financial records. Up until this time Jack Cohen had operated almost entirely as a cash business with almost no formal records or accounts. The driving force behind the new company was still the entrepreneurial spirit of the founder.
Advantages of private limited company
* The access to capital is better than for unincorporated companies because
) There is no limit to the number of shareholders
2) Limited liability means less risk, which in turn attract more investors.
* Some control of the business is possible because the share are sold privately
* No break in continuity if a shareholder dies (shares can be sold to another by invitation)
Disadvantages of private limited company
* The formation of the business requires legal documentation which is time consuming and expensive
* Financial accounts have to be filed with the Registrar of Companies, and can be viewed by members of the public, including competitors
* Shares cannot be sold to general public which suggest it is harder to raise capital
* Profits are distributed to shareholders and must therefore be shared
Public limited company: few businesses reach this stage of development. The business will need to be large and successful with continued prospects for growth and be capable of generating sufficient profits to satisfy the demands of its shareholders if it is to become a public limited company. In contrast to Tesco, which took nearly 28 years to reach this stage, Internet and e-commerce businesses have 'gone public', i.e. become a public limited company, within a few years of starting up, mainly to cash in on the dramatic rise in share prices.
In 1990's Tesco expanded all over the world, at this point the business turned into a public limited company (PLC). This is possible because Tesco offers shares to the general public. A minimum of £50 000 in share capital is required before a company can go public. There are also advantages and disadvantages of public limited companies.
The Advantages of being a public limited company:
* Access to finance (in the present): This is the primary reason why a business will decide to go public. Stock exchanges around the world act as a market for buyers and sellers to meet. This simply makes it easier to raise money, if this is the chosen source of finance for the business. By going public, a business is inviting anyone to buy shares (a new issue) and therefore it is not restricting the ownership. This allows the business access to a much greater source of funds.
* Access to finance (in the future): If the business then decides that it requires more funds, it can either issue share to present shareholders (known as a rights issue) or it can issue more shares to the open market (another new issue). A right issue will be cheaper in that the business will be sending an offer to buy the shares to the present shareholders, so it will not need to spend so much money on marketing the share issue.
* Prestige: The initial PLC following the name of a business add prestige. This may not impress its customers, who tend not to be too concerned with the legal structure of the business, but for the other stakeholders, such as suppliers, having a PLC on the order book of a small company can frequently be used in its own marketing.
* Access to other forms of finance: A bank will look more favourably on a business, which is a PLC because it is larger and therefore more stable. Bank managers look carefully for evidence of security or collateral when granting a loan. The extra security also tends to mean that the rate of interest will possibly be lower for the amount, which is borrowed.
* Reduction in gearing: Gearing measures the ratio of borrowed money to the amount of money raised through shares and is calculated by borrowed money (otherwise known as debt, over equity (the value of its shares)
Disadvantages of public limited company:
* Dividends: These are paid on each share for as long as the share is owned and in the hands of the shareholder. Whenever new shares are issued, total dividends must increase to meet the dividends requirement on the extra shares.
Sometimes, a business will actually find the process of going public and maintaining the interest of shareholders far more onerous than the benefit of extra funds.
* Lack of control: The decision to go public is always more difficult for a family business given that it will bring outside ownership, which may reduce the amount influence the family has over decision making. Although a business will try to ensure that the amount of share capital, which has been, raised means that the family's shareholding is more than 50%, this may well defeat the initial objective of raising finance.
As more shares are issued, each shareholder's percentage of ownership may fall, unless the business uses a right issue to raise more money.
* Threat of takeover: Trading on the open market means that anyone can buy shares. If the shares price of the company falls, there is nothing to stop predator companies from buying up shares and putting in a takeover bid. Alternatively, a predator company, which has a great deal of surplus cash, may buy a company that is not doing well. For example Tesco, Sainsbury's and Morrison bidding to take over a company like Safeway that is not doing so well, with a rising share price. They will pay a premium for the shares because they think that by owning the company (Safeway), it will add much more value to the wealth of their own company, compared with the cost of the target business.
Business Objectives
Business exists to provide goods and services. All businesses whatever their objectives have to make products and/ or provide services that satisfy customers' wants or needs. Business set themselves objectives that affect the way they operate. These objectives flow from its mission and are the criteria against which its performance needs to be judged.
A company like Tesco, need to make a profit or a surplus. Profit is what is left from sales income after expenses have been paid. Profit provides money for further growth and for rewarding the owners. The extract from the Tesco annual review and summary financial statement shown below illustrates this point
Tesco - a growth business
In the UK, Tesco is the leading food retailer with 639 stores, we aim to increase food sale while developing our non-food business, offering the convenience of one-stop shopping to our customers.
Outside the UK, we currently have 182 stores. In the last financial year, we acquired the largest food retailing business in Ireland and we are expecting our hypermarket business in the central Europe and Asia.
By understanding customer needs better than anyone, we aim to increase value for customers, earning their lifetime loyalty and to enhance return to shareholders.
Financial Highlights
* Group sales up 6.3%
* Group operating profit up 7.8%
* Earning per share up 7.7%
* Dividend per share up 6.5%
As one of Britain's leading food retailers and has 586 stores through out Great Britain and various store outside U.K. Tesco has grown greatly and increase its market share from 10.4% to 15.2%. This increase in costumers has also given Tesco a large amount of profit. Tesco has 164,500 shareholders, it's profit is about 505 million pound after the tax has been deducted; about 50% of this is then distributed to the shareholders. The rest is then set aside for investment in stores and improving services for the costumers.
Tesco's objective of product promotion is to give a large and relevant range of product promotion in their entire store. This then should be both the costumers and the product. They aim to differentiate their market and they try to make the promotion strategy to the market they are aiming at.
Tesco has a wide of operation and wants every one to buy their product. Its aim is to get full time loyalty from their costumers and to carry on increasing their goods for the costumers. They want to understand and respect their costumers better than any other supermarket chain. Tesco have also introduced a range of financial services this was started in 1997. This includes newly started pensions, investment schemes, insurance and credit cards. New technology has change the world; Tesco especially has benefit from it. It has revolution Tesco's operationing all aspect of the world. Computer aid ...
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Tesco has a wide of operation and wants every one to buy their product. Its aim is to get full time loyalty from their costumers and to carry on increasing their goods for the costumers. They want to understand and respect their costumers better than any other supermarket chain. Tesco have also introduced a range of financial services this was started in 1997. This includes newly started pensions, investment schemes, insurance and credit cards. New technology has change the world; Tesco especially has benefit from it. It has revolution Tesco's operationing all aspect of the world. Computer aid design is used to plan both the store and how they fit in to their environments. This is one of the technology advances that helps costumers but is not seen. Though there are advances that can be seen and they help us hurry up the shopping.
Things like monitors, till, barcodes and scanner, all of these have been made possible by the introduction of the modern allowing easy. Tesco have also used the technology improvement in communication by allowing costumers to shop on line.
Tesco's objective is to earn a profit and to achieved core purpose through core value which are to use intelligence, scale and technology to deliver unbeatable value to customers in everything they do. No business can exist for long, unless it earns a profit. Earning profit may involve a number of different strategies. In larger enterprises the direction will inevitably be a compromise between the aims and objectives of the separate groups affected by the firm.
Tesco aim to create in it's stores an environment which makes shopping easy, interesting and comfortable and they felt that this could be achieved through the use of an up to date system, i.e.; EPOS. They were at pains to reduce checkouts time and thus introduce the one front policy that state that all available checkouts would be opened if any customer had more than one trolley in front of them, continuing until all checkout were opened.
It's objective of product promotion is given a large and relevant range of product promotion in all it's stores. They aim to differentiate their product from other similar product and offer the best quality of product within the price range that their customers are willing to pay.
In less successful business, the different objectives can lead to conflict, workers may fear the introduction of technology, owner suspecting that the expansion is going to cost money that will drain the profit, managers look to dismiss workers who work inefficiently and produce low quality for customers.
In a successful business the separate parties can probably identify a strategy that will allow each group to achieve their objectives at the same time. Managers may push for innovation and introduction of new technology that improves the quality of the product for the customers, lowers the cost and increase the profit. This may also give the workers a better working condition and the opportunities for a pay rise and promotion through the expansion of the business.
To bring together several schemes that have been developed, for example, offering workers a share in the company profits, encouraging workers and managers to buy shares in the company and linking pay to company performance. In Tesco, their staffs is very important to them so they aim to please them for Tesco's values and also to release their large contribution into Tesco's empire.
MARKET SHARE
Market share is the percentage of the market taken by the product of a business. A business does increase its market share by beating its competitors because the survival of the company often depends upon it. Increasing the market share can be achieved in a number of ways:
> Growth - a policy of expansion to increase sales and market share.
> Price cutting - a business should give discount to attract more customers and within the range that their customers are wiling to pay.
Businesses have different types of policies to increase its market share:
* Increase production, so as to lower costs and thus lower selling prices.
* Increase the number of dealers and retailers selling the product, i.e. outlet
* Increase the size of the sales force and its geographical coverage or its frequency of calls on retails outlets.
* Increase the advertising effort to final users of the product, thus improving, hopefully, the rate of sale in retail shapes.
* Improve the after sale service for the product.
* Improve the quality or performance of the product.
Tesco have a large amount of market share and are currently the leading company within the retailing market. As Tesco's share of the UK market has grown steadily since the early 1990's, which is believed by the company to be as a result of their customers focused strategy. The firm, market share is now over 16.5%. This is how they compare with their existing rivals firms.
Since the early 1990s Tesco Market Share has risen from 10.4% in 1992-93 to 15.2% in 1997-98. Much of the success of Tesco during the 1990s was based on the organisation's ability to increase share. Tesco's market share rose in the following way:
Market Share Percentages (%)
1992-93 10.4
1993-94 10.7
1994-95 12.0
1995-96 13.7
1996-97 14.5
1997-98 15.2
Being able to win an increase market share is an important part of the business success, which Tesco have achieved so far.
Being a market leader brings about a lot of competitors and it is needles to say that Tesco have a lot of strong competitors. But Tesco's two main competitors are Sainsbury's and Safeway.
Sainsbury's: they currently hold a market share of 1.07% making them the current leader in the race against Tesco for market dominance. They may not have as much market share as Tesco but the gap between the two is little and the fluctuation of customers between them is sensitive, so a sudden change in consumers buying habits can alter the market suddenly.
Although Sainsbury's has the top admired for the quality of its food as much as the size of its profit margins ten years ago. Now it is in the second place behind Tesco who's sales are growing at 5% per annum. Sainsbury's is only making progress because of petrol sales.
For years Sainsbury's relied on its reputation failing to invest in stock and distribution systems and made some poor management choice - executive who failed to stop the problem let alone take the steps to solve them.
Safeway: is the last of the major rivals of which exist with Tesco competes against in the race for market dominance. Safeway currently hold 7.6% in market share and are known for their low prices, which will always prove a threat to Tesco.
Safeway is also the fourth largest supermarket chain in the UK, with 480 stores nationwide generating sales of around £9 billion. It also operates 50 forecourt convenience stores in partnership with BP. The company employs 92,000 people, mainly in its stores and distribution centres.
Safeway's overriding business goal is to be the first choice food retailer for those customers who have the opportunity to shop locally in a Safeway store. To deliver this goal, the company is investing heavily in refitting its stores in four distinct formats - convenience stores, supermarkets, superstores and hypermarkets. The common features of all its new-look stores are a strong emphasis on fresh food and customer service. Over the past two years Safeway's aggressive promotional strategy has attracted 1.3 million new customers into its stores. The store investment programme is aimed at converting these customers into loyal Safeway shoppers.
For the year ended April 2002, profit before tax increased by 11% to £355 million, representing a net margin to sales of 4.9% and return on capital employed after tax of 12.2%.
Full details can be found in the 2002 Annual Report and Accounts.
Retail Sales of Top UK Food Retailers (£m)
Retailer
Sales 1998
Sales 2000
Tesco
1,560
6,985
Sainsbury's
1,146
3,570
ASDA
6,010
9,204
Safeway
6,069
7,659
Morrison supermarkets
2,099
2,970
As a food retails, Tesco, Simsbury's and Safeway competition here is by quality, variety, customer's service, loyalty schemes and innovation. There are selective price and special offers but no real price competition. Instead supermarkets talk of 'regular price checks', which means that they keep an eye on their competitors so that in practice their prices tend to stay in line.
Competitive ideas are soon copied as firms compete for market share in other ways. The Tesco Clubcard soon followed by the Sainsbury's reward card and the Safeway ABC. In a competitive market customer loyalty is hard to keep. Loyalty card are not so much about reward points as about giving supermarkets marketing details about who is buying what and when. Traditionally this information was hard to get when most customers paid by cash and were therefore anonymous.
Both Tesco and Sainsbury's have now moved into retail banking in an attempt to widen their customer's base and Tesco has also become an Internet service provider as a prelude to attempt subscribers into on-line shopping. All of this makes it difficult for smaller competitors.
The notable lack of price competition between Tesco, Sainsbury's and Safeway and the relatively high profit margins that have resulted has prompted the Office of Fair Trading to investigate. A report from the Competition Commission was due in April 2000- it looked into the level of competition in the supply and pricing of products in those stores.
Turnover
This figure is the main source of income for business; the value of goods or services sold is obtained by multiplying the sales volume by the price of those goods. The value of the sales revenue will normally be the largest figure in the accounts. From then on that amount appears to get smaller and smaller!
Cares have to be taken to ensure that this figure is realistic. If the amount is inflated for any reason, then a false picture will be given and consequently the level of profit will be inaccurate. The price that the goods are sold for may include taxes that the government has imposed.
For example, VAT, excise duties, customs duties may have been 'added' to the price of goods and therefore ought to be subtracted if a realistic value of sales is to be used (selling price minus taxes equals factor price). It is the price of goods without the tax that is the value that businesses have to use when calculating the sales or turnover. This evidence is in the account book of Tesco and two other foods retail (Sainsbury's and Safeway); these three supermarkets provide figures with or without VAT.
There are other factors that have to be borne in mind when calculating the turnover:
. Any goods that are returned under guarantee or not required for any reason ought not to be included because in reality the good has not been sold. A sale was made but has been subsequently cancelled.
2. Goods that are 'sold' on basis of sale or return and which are returned, as with the previous example, are not actually sales and therefore ought not to be counted. This is a common practice for certain elements of the retail sector, which sell to private customers for special functions.
In graph above Tesco turnover from the year 1997 to 2002 increases, which makes the total percentages change of the turnover excluding the VAT to be 34.6%. To compare this with other UK retails sales such as Sainsbury's, which is 27.6% and Safeway 20.9%, we can conclude that Tesco have one of the highest turnover in the years so far. From these graphs I can back up my statement that Tesco is one of the UK top food retailers and also showing form the evidence below.
Profit
Profit are defined as the reward for taking risks, therefore high profits imply that high-risk strategies have been adopted. Satisfactory profits on the other hand, indicate that a more caution approach has been taken. This could be more appropriate when conditions in the marketplace are uncertain and businesses only have a sketch knowledge of all that is happening in the external environment.
Profit is the return on the enterprise factor of production, a reward to the entrepreneur for his or her endeavours. It is one of the main reasons why individuals start business.
Profit is essential if a business is to thrive and prosper. It is essential for the growth of the business; it allows the business to purchase new machinery to compete in the market place, to take advantage of any economic upturn or other favourable market conditions.
Profit can be a source of income for investors in the business, for example shareholders or, indirectly, members of the public who subscribe to a pension fund. It can also be an additional source of income to the employees of a business who have a profit sharing scheme and consequently have an interest in the level of profit made by the business.
Profit is used as a measure of performance; it can be used as a tool by the business to ascertain if management policies have been successful. Prospective lenders can also use it to the business as a mean of telling whether a potential loan will be paid back.
From the graph above Tesco has the highest annual profit from the year 1997 to 2002, followed by Sainsbury's then Safeway. The total percentage change for the six years profit of Tesco is 37.5%, for Sainsbury's is -28.4%, and for Safeway is -23.8%.
Growth
Sales begin to pick up as customer interest grows. Sometimes the growth period can be sudden and without warning, resulting in the business losing orders if it has not built up its stock accordingly.
As the product moves into growth phrase, the increase in volume means that unit cost can fall due to economies of sale, although there is a possibility of other businesses producing copies of the product. This is when patents become significant, because if the product is protected against copying then it will grow more quickly and earn more profit. Customers are known as 'adopters' at this stage as the trend begin to take off. Due to the growth in demand, the distribution of the product needs to be wider in order to satisfy the demand; this can sometimes catch the business unawares as to outstrip supply.
In the growth stage advertising must be mixture of information and persuasion as more consumers need to be told about the product, but also because competitors may seek to gain a foothold in the market at this stage
Since the early 1990s Tesco have undergone considerable growth, particularly in the market share
Tesco Plc (£m)
Feb-97
Feb-98
Feb-99
Feb-00
Feb-01
Feb-02
Total % Change
Turnover (excluding VAT)
3,118
4,971
5,835
6,958
8,372
20,052
34.6
Annual Growth (%)
2
5
7
8
8
Profit
760
875
919
993
,100
,213
37.3
Annual Growth (%)
3.1
4.8
7.5
9.7
9.3
No. Of Stores
568
618
639
659
692
729
22.1
Annual Growth (%)
8.1
3.3
3.0
4.8
5.1
Source: Tesco Annual Report
J Sainsbury's Plc
Apr-97
Apr-98
Apr-99
Apr-00
Apr-01
Apr-02
Total % Change
Turnover (including Tax))*
0752
1,564
2,097
3,267
3,894
4,860
27.6
Annual Growth (%)
7
4
9
5
7
Profit**
661.5
734.6
714.1
541.5
470
515
-28.4
Annual Growth (%)
0.0
-2.8
-24.2
-13.2
8.7
No. Of Stores
378
391
405
432
453
463
Annual Growth (%)
3.3
3.5
6.3
4.6
2.2
*Includes Financial Services
** Before profit sharing & exceptional costs
Source: J. Sainsbury's Plc Annual Reports
Safeway Plc (£m)
Mar-97
Mar-98
Apr-99
Apr-00
Mar-01
Total % Change
Turnover (including VAT)
7066.4
7493.6
8098.9
8327.8
8937.3
20.9
Annual Growth (%)
5.7
7.5
2.7
6.8
Profit
294.4
241
243
67.2
224.3
-23.8
Annual Growth (%)
-18.1
0.8
-31.2
25.5
Source: Safeway Plc Annual Reports
Organisational Functions
Every organisation will need to acquire, use and change factors of production in order to produce goods or provide services. The factors of production are the input s that an organisation uses. To a greater or lesser extent, three input are needed: labour (people) to carry out the work: capital, i.e. the machinery and equipment; and land or buildings. The goods and / services are the output.
In order for the functional are s to work effectively, they must be able to communicate with each other, at Tesco some of the ways they do this is by holding a 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 keeps 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 objectives quicker.
Factors of production: Before looking at the functions of a business, it is a good idea to look again at the factors of production.
. Land - this factor includes not only the premises of a business and the actual land on which a factory or business stands, but also natural resources, e.g. coal, mental ore, oil, etc. many businesses needs large area of land, while others use only a small building or a part of a building.
2. Capital - this is the money used to set up and run a business, and also includes all equipment and machinery used.
3. Labour - this resource is people, without whom no business activity could take place. Everyone in a business organisation, from an ordinary worker to the managing director is part of this factor of production.
4. Enterprise - this factor of production is unlike the others in the sense that it is intangible. It refers to the way in which those who start businesses, the entrepreneurs, formulate policies and carry them out. Entrepreneurs take a risk that their venture might fail, in which case they will lose their investment. If the venture is successful, the surplus of money made (the profit) goes to the entrepreneurs.
These factors must be combined in the most efficient way for the organisation to achieve its objectives. All organisations must carry out a number of separate functions. These functions put together constitute the business system of the organisation. In a small business, as we already know, there might not be a formal structure, and one or two people might carry out a number of functions. In a large company like Tesco, each section or department specialises in carrying out a particular function. In most businesses there are six organisational functions, and a specialised administrative office supports each.
Tesco combines factors of production (land, labour, capital, enterprise) to produce their products and services. Combining these factors means they carry out range of function:
- Finance
- Production
- Human Resources
- Marketing
- Administration
- Research and Development
* Finance - the main activities of the finance department is:
. To record all business transactions - this means that they record in their logbooks all expenses that have been paid and all the incomings.
. Measure the financial performance of the business - this means that the business look at how well or badly the business is doing financially.
. Control the finances and cash flow so the business stays solvent - this means that they make sure that there is enough money in the business to pay off debts. Also make sure that there is enough money to stay afloat.
. Take timely financial decision by comparing the predicted performance with actual performance. This means that if the company wants to invest more money in the business, then it would be up to the finance department to make the decision on whether there are enough funds to do so.
They would do this by looking and comparing the financial situation in previous years with the financial situation of the present year. By this they can see whether the expense will leave them with enough at the end.
If we look at the information above and then look at Tesco I can say that Tesco 's finance department have a similar sort of system, which looks at the future finance events. They
* Production - it is the economy activities needed to manufacture or create products (goods and services) with exchange value, i.e. which people are willing to buy. The function of production is to change inputs into outputs, for example Tesco produce goods and services that are to be bought by customers.
If production fails, the organisation as a whole will fail. No business can survive if it does not produce enough goods or services to satisfy the needs of customers.
* Human Resources - the human resources in an organisation is the second most important department, simply because this is where all new employees are chosen from. The main purpose of human resources department is to recruit, select, train and develop staff.
This means that they have to find the right people at the right place at the right time. Once the new employees have been found it is the human resources responsibility to train and develop them to make sure that they reach their full ability.
This recruitment process starts right with the application form, with this they judge whether the employee is going to make a good new recruit. Tesco's human resources department makes sure they read what the applicants have written in the application form. The application form is very important to Tesco and that is why they ask a lot of questions about personal qualities and communication skills, because they want the right employee who will do a good job.
And also in Tesco, employees records are now stored on computer and personnel department have to be aware of what they can and cannot do with the information under the Data Protection Act 1984. However, all personnel records must be kept safe, secure and confidential.
* Marketing - The function of marketing is to identify and anticipate customers' need. This is done through a variety of activities, including market research, advertising, promotion, packaging, pricing and distribution. Tesco's marketing and manufacturers look at ways of satisfying their consumer's needs. The marketing department for Tesco's tries to find out what people want and how it can be made available to them in a form they find attractive.
In order to fulfil these responsibilities, marketing department will have to work closely with all the other organisational functions. There need to be a mechanism for investigating and correcting failures in the administration department.
* Administration - every business needs to be organised in order to achieve its objectives. If we try to imagine what will happen to an organisation if there were no system for:
. Recruiting new employees
2. Dealing with customers
3. Dealing with suppliers
4. Paying wages and handling cash
The purpose of the administration system in a business is to create an ordered routine, which enable the business to function smoothly. It co- ordinates or brings together the various part of the business so that all work towards the same goals.
* Research and development - the purpose of research and development is to enable an organisation to compete successfully and achieve a permanently sustainable competitive edge over its competitors by becoming more efficient and profitable giving customers added value. To achieve this the activities of research and development section could include:
. Developing new product, materials and processes
2. Creating new services, for example, Tesco now gives loan to customers.
3. Changing and improving existing products
4. Finding new uses for products
5. Testing product for strength, quality, safety, etc
6. Collecting, analysing and cataloguing data from worldwide research which could be helpful for the business.
In all these organisational functions that has been mentioned and explained above there is a connection between them and also the organisation needs to work with each other to achieve their objectives. For example marketing needs to work with research and development to develop new products based on the market research, human resources needs to work with administration on amount of labour needed to meet demand and finance needs to work with production to determine the price of product
The administration department also have a big impact on the other functional areas as it provides support services for other functional areas to operate effectively.
Tesco launching a new product: I am going to research on a new product of Tesco, which is Tesco's own 'Drink', for the product to be successful and satisfy the customers need the whole organisation functional department must work together to achieve these objectives.
For the new product to be launch successfully the business functions must interact
Decision
Function
Activity
What new flavour of drink might the customers like?
Marketing
Marketing Research
How do we create this flavour?
Research and development
Product design
What equipment and staffing would we nee to make it?
Production
Production planning
What price should we sell our new flavour for?
Marketing
Marketing research
How much profit will it make?
Finance
Costing and financial planning
Should we go ahead with the new flavour?
Administration (management)
Decision making
Do we have the staff we need? If not how do we get them?
Human resources
Manpower planning, recruitment and selection, training
Do we have the equipment and material we need to make the new drink?
Production
Purchasing
How can we make our customers want to buy this new flavour?
Marketing
Product promotion
How do we get this product to our customers?
Marketing
Distribution
If we look at these six functions, I can see that Tesco have all them. Also these entire also department are an essential part of Tesco's success as they are the basis at which all planning and ideas come from.
This organisational function will help to create new and better products and services to meet their customer needs. 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 scheme, setting up staff training events and other staff development activities, organising induction programmes to familiarise, the functional areas with Tesco method, 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 benefit a lot from this, a it help them to motivate staff which means Tesco will meet their aims/objectives a lot 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.
Organisational Structures
Organisational theory is common practice to illustrate the organisation by means of a structure chart.
Tesco is a very large firm with several positions of responsibility. Being such a large organisation provide a lot of power as well as responsibility which is why I believe the company has chosen the 'Hierarchical Structure' for its level of responsibility.
This structure is in shape of a pyramid. It begins at the top with the chairman where the ultimate power lies and broadens out towards the base with the lowest amount of responsibility being given to the workers.
Marketing
Within the organisation there are different functions areas each, which control different section of the business. It is up to the managers of each department to ensure that each member of staff within their department carries out the correct tasks to ensure that the business is run successfully.
Management style and culture
Management style: for managers to be effective they need to adopt a style of management, which suits the structure, and culture of the organisations in which they work. It is also important that a manager is able to change his or her style of management depending on the situation.
There are four main styles of management, which are recognised as being effective if used at the right time, but in this assignment I will look at only three different style of management:
Autocratic management: Managers who adopt an autocratic style of management will take full responsibility for everything and take all decisions with very little or no consultation: they expect their orders to be carried out without any disagreement or question.
Democratic management: these managers take great care to involve all members of the team in discussion. It is a 'we need to find out what everyone thinks' approach. Although the style can work well with a small, highly motivated team, it can fail when the group cannot make a decision and needs real guidance and direction.
Consultative management: this is similar to the democratic, this is the management where the manager actively encourages the employees to take part in the decision making process.
Tesco management style is consultative, their staffs are their assets and they depend on the skill and commitment of their people. Its aims to be a good employer, attracting and retaining the best staff and making Tesco a rewarding place to work.
Tesco also aims to manage people openly, honestly and fairly. They aim to employ people who reflect the diverse nature of society and also value people and their contribution, irrespective of their age, sex, disability, sexual orientation, race, colour, religion or ethnic origin. Four of five applicants at Tesco are their customers.
As an innovative and energetic company in highly competitive retail environment, learning and progression from within the company is core to their operation. Training forms an important part of staff development and give opportunities for al staff to develop their talents to the full.
A key business priority is to serve customers better and to so their ongoing training programmes seek to ensure their people understand the group's customer service objectives and strive to achieve them. Tesco support their people to achieve their potential through access to training programmes and all staff personal development programme (PDPs) to ensure they have the right skills to do their job.
All employees of Tesco will be able to access learning tailored to their own personal development needs, from induction and operating and leadership skills, such as project management, personal efficiency, effective meeting management, presentation skills and facilitation. All retail employees complete basic training as well as job-specific training, as part of their overall training framework. Last year, they set themselves a target of training 95% of their retail staff and achieved 93%. All these are done to encourage the staff to take part indecision making and to create a highly motivated team.
Culture
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 organisation culture are
* Power culture- this type of organisational culture will be found in a business that emphasises on making individuals rather than decision-making, which enables decision to be making a lot 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
* Task culture- in this type of culture, the company selects a team to work towards a specific project, there is no formal hierarchy involve in this culture.
* Person culture- in this type of organisation the administrative back-up for an individual to perform his or her own things, there is no formal structure at all and this are mostly practice in a professionals, e.g. architect and entertainment 'stars'.
Tesco's employees practise the 'Role' business culture, since all employees are provided with appropriate job skills training, so they follow the job description scheme. This encourages the employee to work harder, since they are giving the chance to express their selves
Further more Tesco treat all employees fairly and honestly regardless of where they work. All staff will have a written contract of employment, with agreed terms and conditions, including notice period s on both sides.
All staff are entitled to reasonable rest, break, access to toilets, rest facilities and potable water at their pace of work, and holiday leave in accordance with the legislation of the country where they work. Any employee who suspect infringement of policy has the right to inform the authority without fear of persecution and the allegation will be investigated, and take appropriate action ass necessary. This applies to all Tesco employees whether they are in full time, part time, or temporary employment.
Tesco aim is to ensure that their company is a satisfying place to work by giving their staff the opportunity to be themselves, actively encouraging their health and well- being and supporting their work/life balance needs. The staffs are entitled to various kinds of leaves such as; maternity leave, career breaks, parental leave etc.
Health and Safety in Tesco: A safe place of work for the staff is much more than a legal requirement, it's about providing a working environment that allows Tesco's staff to concentrate on their customers and fits with their values. Good health and safety makes for good business.
Every year member of staff in Tesco will have a career discussion with their manager. At this staff will be able to discuss their career aspirations and managers will be able to give them advice on the best way to develop their career in Tesco. This may take some specific training courses or it could be having a planned experience in a new area. It could be their manager coaching them so when the right opportunity comes along the member of staff will is ready to take on that new challenge.
They also recognise that they have over 296,000 talented staff working across the world. One of the problems of employing this many people is ensuring that the talents they have are noticed and developed. Although it helps to deliver better to their customers as they are using the talent within Tesco to develop the business at the same time as retaining the talented people that makes Tesco what it is today.
Tesco use extrinsic reward for a vast majority of employees in order to motivate them and gain as high level of output possible. Extrinsic rewards include extra bonuses based upon quantity and quality depending o the employees' job. For example an employee who have an excellent attendance and punctuality will receive a bonus. This provides the employees with an incentive to success and provides Tesco with a motivated workforce.
For Tesco employees, some or all of these review systems usually complement the monitoring process outlined:
* Appraisal
* Self-evaluation
* Peer evaluation
* Degree evaluation
Appraisal: it is a system used by Tesco to review the standard of work being undertaken by people within the organisation and to assess the value or contribution of individual employees. Tesco to uses appraisal and performance review interviews to:
> Reinforce company goals- ensure that the employees is aware of the aims and objectives of which Tesco aim to achieve.
> Recognise good performance-reward an employee for a good performance, and reinforce the employee's value to Tesco.
> Identify training needs and career opportunity-if vacancy was to arise Tesco initially need to assess their current staff to investigate into whether any current employees has the potential to take on the job once he or she has been fully trained.
> Review and set targets-this is where all departmental manager conduct a consultation with employees to discuss their current achievements and targets before ensuring that the new targets are set specific, measurable, achievable, realistic and timed.
Good appraisal have positive effect on an employee's motivation, but bad appraisal can be costly, time consuming and have a negative impact on the manager to employee relationship. A poor approach is to simply appraise employees by rating their performance against specific factors such as knowledge of the job, accuracy, reliability and output capacity. This system discourages employees to be faithful or hardworking to their performance.
Communication
In this part of portfolio I will explain how Tesco communicates internally and externally. In Tesco they use a variety of communication method to be able to keep in touch with all the people outside the business such as their suppliers and their customers and also with each other. Within Tesco communication methods are divided into two basic categories: written and Oral.
Written methods include:
Fax-; the businesses uses this to send important message to other firms, as it is used to communicate both internally and externally
Bulletin/company reports-; these are written statement of profitability or loss.
Notices-; these are used to display data on board about the firm's activities, job vacancies internally.
Letters-; used occasionally for notices of appointment and promotion or dismissal
Memorandums-; these are a form of letter used to transfer message between sections of organisation which are at different sites
Agenda-; this is a list of schedule items to be discussed at meetings.
Formal communication at Tesco-; the managing director communicates with the managers on a daily basis. They have formal team meeting to discuss the company's policy. Then the managers have to delegate authority to run their own departments. So they use their supervisors to communicate with the staff on how they want things done.
Informal communication in Tesco-; these are channel in the company, that are gossip and rumours get around, for example when there is a rumour that one the staff has not been coming in regularly to work, the co-workers could feels de-motivated to work although this could be a lie.
Upward communication in Tesco: (from lower to higher)-; this communication starts from the bottom of the operative going through all the levels of command to the CEO
Internal communication at Tesco-; Tesco transmit instructions or request up and down in the lines of command, say from managing director to accounts manager to ledger clerk. Tesco also brief staff of new document s or processes, to request information needed to help make decision, analysis situations or provide feedback on past-instigated action. The firm uses this to motivate staff or reassure them when required. When making proposals or suggestion and transmit ideas up, down and across the organisational structure.
External communication at Tesco-; Tesco uses external communication to provide information to customers about new products or services that are being launched and to handle incoming enquiring about their product and services. They provide information required say by status to the Inland Revenue, to promote contracts with the company's network of associations, local public sector and customers.
Downward communication in Tesco: (From higher to lower)-; this is the communication starting from the top of the firm with the CEO going all the way down to the levels of command to the bottom with the operatives.
Between departments and in all direction in Tesco-; in this type of communication there is no restriction that sees or receives the information. So every one who works in Tesco can see or receive information from the authority or head office. The information is sometimes in the notice board or in the newsletter where everyone can have access.
Database: Tesco use database for internal communication so that employees can access records and information about all aspect of the business, it is also use as an external communication in Tesco for making orders and payment to suppliers, sending out promotional material to customers, mailing information to client.
Using ICT to produce daily report to analyse their sales on a daily basis. Kept on track on a database, this is a relatively successful system as these report shows information such as sales, profit, budget etc.
Spreadsheets: is used to display the account and to show the growth of a product. These are mainly used in handling data, budgets and forecasting. Tesco also uses the spreadsheet to keep up statistic data and numerical data of accounts.
Word processing: Tesco uses this for typing letters to customers or suppliers, to cancel or amend an order as the details can be written clearly, record of letters sent can be kept for reference purpose.
Telephone: this form of communication would come under the internal mail category in terms of speed. This is the most common form of communication that is used in businesses today. This form of communication is very quick and easy; it lets you communicate with people nationally and internationally, as every country in the world would have telephone system. An example would be that at Tesco store, if a member of management is needed on the shop floor and they in the warehouse, then the front end staff wouldn't have to go upstairs to get them they would have an internal extension that they can use to call the manager in his or her office.
Internal mail: this method of communication is very quick and reliable. An example of the important of the method of communication is in Tesco head office, where every one would be working on different levels or floors, so in order to communicate they would have internal mail option where they can send and receive message from their fellow employees without having to get u from their seats.
Websites: Tesco have their own website in order to advertise and sell their goods and services, where customers can buy online. Tesco customers can find information on the website without having to come in or book an appointment to see anyone. These upgrade technologies have improved Tesco's status in the market share and sale.
•Analysis how the Organisational Structure, culture and management style of the business affects its Performance and operation and helps to meet its objectives
Organisation structure, culture and management style of Tesco affects its performance and operation and helps it meet its objectives. When we talk about the separate stores that Tesco plc have we also can say that even though is decentralised because they have separate stores, each stores has a tall structure within them. This is because there would be different levels of authority, for example there would be managers, supervisors, till workers, shop floor staff and cleaners.
So Therefore Tesco is organisational structure is a hierarchical structure. And you can clearly see from the levels of authority the hierarchical structure goes well with the management style because it lets the staff have a say, but they know their position. The culture has a big effect on the organisational structure and the management style, due to thee fact that the culture has a principle to help gain the objectives; with all these together the organisation will make the objectives achieved.
Advantages of hierarchical structure: there is a clear management structure. The lines of responsibility and control are clear and the functions are clear and distinct.
Disadvantages of hierarchical structure: there are many layers of communication, authority and decision-making. Also the cross-departmental communication within the firm can be difficult.
Perhaps of more significant and potential value to manager at Tesco's and academics attempting to understand motivation in the workplace is the work of McClelland's (1961) ''Needs Achievement Theory'' identifies three basic needs that people develop and acquire from their life experiences. These are needs for
Achievement
Affiliation
Power
Individual develop a dominant bias or emphasis towards one of the three needs. For example at Tesco, those with a high achievement need such as Duty managers or departmental managers tend to seek situation where they have personal responsibility for solving problems, manager projects or overall performance, where feedback is often clear and rapid, and where tasks are moderately challenging and where innovation is require.
Tesco's Hierarchy
Hierarchical organisations are those where the whole structure conform to a triangle shape. In the hierarchical organisation there is a clear line of authority from the top of the organisation to the bottom.
However certain Tesco employees become more concerned with there own achievement than they are with broader organisational needs. Therefore Tesco continuously reinforce the fact that all aims and objectives achieved are via a hardworking and dedicated workforce. This means that Tesco reward employees where reward is due, but the overall appraisal is shared between all the employees giving them further motivation and sense of security and unity within the workforce.
Power appears to be the main determinant of success, particularly when success is measured in terms of status and promotion to senior posts. McClelland distinguished between socialised power and personalised power, the formal being useful in assisting managers and leaders in their attempt to achieve organisational group goals whereas the latter often merely serves the individual in seeking his or her need for domination. The need to achieve is linked to entrepreneurial activity and is viewed as an essential ingredient of organisational and national economic success.
Directors
Head of Department
Middle management
Management Supervisors/co-coordinators
Shop floor Operatives/clerical Staff
They are in order of Line of Command.
As seen from the hierarchical structure, Tesco have different structure going from the store manager to the cleaners. This organisational structure shows all job roles within the store.
Managers at Tesco seem to have higher achievement needs and lower affiliations needs than non-manager. The reason for this being that mangers desire control, responsibility, power and achievement. We are all, perhaps, aware of people who appear, at least, to demonstrate a high need for one of the three drivers identified by McClelland. However, for the achievement of organisational success, those with high achievement needs are generally considered most essential.
For example an ideal manager at Tesco would be someone who is motivated by success, responsibility, achievement and enhancement for these people, money is often considered a measure or indication of success or a method of feedback, but is not particular a strong motivator in its own right, hence the reason why Tesco believes that success-led employees are those who help develop and improve the level of output and profitability of Tesco.
The impact of ICT in Tesco
Businesses need to communicate with a range of individual and organisation including heir customers, their suppliers, as well as their own employees. In this section I am going to discuss the communication channels that exist within the business.
In Tesco a programme of communication exists and is constantly being developed, to ensure that all staff are aware of the parameters that constitute acceptable business performance and the expectation of the Board in managing risk. This provides clear definition of the group's purpose and goal, accountabilities and the scope of permitted activities of companies, executive function and individual staff.
Computers are also used to check up the information, but are kept update by the most frequently used form of external verbal communication, which is the telephone or mobile phones. They are contacted by this communication nearly everyday by the directors or manager. The shareholders also can be in direct contact with the directors or managers by the use of e-mail. They have all the e-mail addresses of the directors or managers to find out more detailed information.
ICT is now being used throughout every business in the world. The use of Internet is growing literally exponentially. As the Internet expands so will the knowledge, having a knock on effect that has the potential to transform businesses in new and unforeseen ways. It is used in things such as database where business keep information on clients, employees and finance. ICT has had impact on the way in which Tesco runs, when communicating both internally and externally.
Email -The use of e-mail within the Tesco means that their systems are efficient and quick. E-mail means that they are able to communicate better with the rest of the business and are able to pass on jobs and ideas to each other with ease. E-mail is virtually important for the productivity of the business and making sure jobs are done quickly and that everyone involves knows what is going on. They can be used to send important job briefs or small notes. The main advantage is that they are instant. This mean that the person who they are sending the mail is going to receive it instantly and without any worries that it is going to get lost. Without this Tesco would be far less efficient and decision and jobs would be done much slower. Due to most mail sent by letter it would take days for it to reach its destination.
Computers have change the way in which Tesco operate. When looking at how Tesco order in stock that too is done electronically. They have a system called ESPO whereby when stock gets below a certain level (determined by how many times the items is scanned through the checkouts) computer automatically order more. This has huge advantages like it saves time and money; problems could arise if items are not scanned through the checkout properly.
ICT is also used when advertising, recipes and current promotions are put on the Tesco website. This is cheaper than advertising on the television. Although Tesco could not rely on this alone. They also send e-mail to customers telling them about various special offers, they would get customers e-mails address from those who have Tesco Club Packs. On Tesco computer they have database on everything that each customer purchases so they could send them offers on things that interest them.
Analysis and Evaluation on impact of ICT upon the internal and external communication in Tesco
The use of ICT communication has had many impacts on Tesco both internally and externally. 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.
Internally it has increase the way information is sent and shared through out the whole business. This has change the ways the company carries out its tasks, it has improved the companies efficiently since information is delivered quickly. The different management department can communicate more easily and efficiently by internal communication links saving the company a lot of money. Stock is easily controlled, as it is automatically re-ordered when running out so company does not have to write letter and inform their suppliers. Tesco can easily recruit workers by advertising on its website which is another way of communicating to the wider public.
Externally the company can communicate with its partners outside the country easily. Since 90% of households in UK have access to Tesco home shopping, the website allows customers to register and shop on-line for goods. It also allows them to check out special offers and find out information about Tesco. The website allows customers to e-mail the customer service department about enquiries, information and what the customers want. Tesco have a very good communication link with their customers, which helps them to meet the changing needs of their customers and meet their objectives.
How the organisational structure, culture and management style interrelation in the business and evaluate their impact and that of ICT on the performance of the business
An organisation structure, culture and management style all relate to one another. Many of the internal styles and choice of management interlink with one another. The strategy Tesco chooses in each is essential to the overall profit and general running of Tesco's system. Without the other aspect the one would not function as well.
Tesco use a hierarchical structure system. The system goes well with the management style because it lets the staff have a say, but they know their position. The culture has a big effect on the organisation structure and the management style, since it has a principle to help gain the objectives, with all these together it will form a complete organisation, they will get together to make the objectives achieved. To design and make a successful business, an organisation structures have to be built. The organisation structure is to make the company a team.
The hierarchical structure will show the employee their responsibility and the task to do. So the task are broken down through the level of communication, by this all the employees know how and when they contribute to achieving Tesco's objectives and this will lead to the success of the company.
The cultures also have a big influence on the performance of the business because the culture has principles to aim for and address them to the objectives. By putting this culture into Tesco it will help the employees with increased motivation and this will help the employees to work more efficiently. Once the employees have been motivated, it will be easier to ensure the objective of Tesco is met.
Meanwhile the management style that Tesco adopted helps the employees feel useful by contributing to Tesco, having a voice in Tesco will make the employees feel more motivated. As a whole the organisation structure and culture are likely to help in the completion of the objective that are set.
As Tesco is increasing, ICT becomes increasingly a bigger part of Tesco. It is used in all areas of the organisation, from the till to the manager who uses ICT for report, memos and a variety of other aspect of the running of the business. One of the impacts ICT has is the field of effective trade communication. It enables Tesco to sell more goods through online shopping.
Explanation of how the production process and quality control system employed by Tesco helps to add value to its product or service
What is production; production is the process by which businesses provide the goods and services, which meet the needs of their customers. While quality can be defined as all he features and characteristics of a product or service which affect its ability to satisfy the needs of customers
Tesco buys its own brand products from suppliers. All products are supplied to Tesco in a finished state, i.e. they have been washed, processed and packed prior to delivery to the Tesco store and so no processing is done by Tesco.
The suppliers buy the raw materials for their products from a variety of other suppliers, producers, growers or farmers and then process the product in some way to produce the finished product that Tesco sells.
So, Tesco does not buy directly from any primary producers, growers or farmers. Tesco buys finished products, washed packed and ready for sale from suppliers. That is why Tesco is indirectly the biggest customer of UK agriculture.
Identifying and descriptions of the Quality assurance and quality control system used by Tesco
Quality control in Tesco defines the maintenance of specified standard by inspecting, sampling or testing quality at various points in the manufacture of a product or delivery of a service, this is usually applied during or after production. This is a major part of the environmentally free business by making quality checks that everything is going smoothly.
Quality Assurance is built in from the design stage, through the choice of suppliers at all points of the production process, to the finished product. If Tesco does not make quality, a central theme of their mission purpose and culture will find it increasingly difficult to succeed, particularly if their consumers become more sophisticated and less loyal to one supplier.
Quality assurance and quality control is very important to Tesco, in order for Tesco to sell quality products the business must meet the quality requirement and customers need. One of the main prime concerns of Tesco is to convert inputs materials into outputs (finished goods and services) to satisfy the needs of consumers
Total quality management is one of the alternative methods of quality assurance Tesco uses. TMQ is best described as an ethos/philosophy adopted by companies that place the pursuance of quality at the heart of the organisation and everything it does. To emphasise what a shift change this represented from the traditional approach of quality assurance.
This is concern with creating quality culture so every worker seeks to delight customers. T.Q.M require that every employee is devoted to doing the best job they can, raising the probability of the customer getting what they want. In order to communicate this spirit of quality, they promote the idea of internal customers that an employee should see the colleagues he or she works with or for customers to whom they should provide the best highest quality service.
In order to motivate staff to provide such quality, employees are shown in training the importance of their own job in relation to the end product/ service, encouraging them to see themselves as a key link in the 'quality chain'. In addition, staffs are hired with the appropriate level of education, experience and more importantly aptitude.
Quality circles are relatively small groups of staff that meet at regular intervals to discuss the work they do and develop ideas to improve the quality of their work. Management is more often not represented in such meeting instead control/ responsibility for the meeting is handed over to the workers present. As a result of such meeting a quality circle will either have the authority to implement changes to production, or will present their recommendations to management.
ISO 9000 is another quality system method, which is important to Tesco. This service is reliable suppliers of goods and service to use. Tesco are well known for providing high quality of goods and services for many years; they have also extended their own quality control procedures into their suppliers' organisation to ensure reliability.
A reputation for quality is important, but it can be established only over a period of time. These present problems for organisation tendering for orders from new customers. The international standard ISO 9000 certificate indicates to potential customers that the quality procedures of the certificate holders are reliable and, by implication, they are capable of delivering consistently the promised quality product and service. This shows that Tesco buys goods and services that meet the quality standards.
Benchmarking is use by Tesco so that it set the competitive performance standard against which process can be measured. These standard are based on the achievement of the most efficient procedures. Tesco ensure that production manager's focus upon the competitive environment, instead of looking purely at this year's achievement compare with previous years. Benchmarking is seen as a vital element in achieving a world-class manufacturing.
Training and development is also used in Tesco to meet its objectives and to provide the best service for it customers. The main aims that Tesco has in training and Developing employees are:
- To introduce new employees; when new employee join Tesco it will take time to settle in and learn about the business and its role within it.
- To improve skills of existing employees; Tesco wants to improve the skills of their existing employees, to make the workforce more efficient.
An evaluation of the alternative approach to quality control or quality assurance and the effective it could have on the functions of the business and how it achieved its objectives.
The quality assurance where all the employees in Tesco have the responsibility of all the stage of the production process. This means the employees check the production process and the quality is at a high standard.
This means the shift workers will have to make regular check for the ingredient to be made into health care products. This helps improves the quality of the production at each stage. This means the finished product will reach the consumers at the highest quality. When the quality is always high the consumers will keep buying from Tesco, this will make the market get higher because they won't lose any customers but gain through the quality of the product.
The quality-controlled system is not just used in production, it is also used in the finance department because they need to make sure that all money transactions are correct, if not the account will go wrong and the overall figures will be inaccurate, this can lead to misunderstanding what the consumers want.
The quality of service from Tesco will mean it is able to meet it objectives. The increase in quality will lead to increase in sales as the consumer will be happy with the product they purchase from Tesco, leading to an increase in profit and eventually increase the company's market share.
Bibliography
To complete my assignment on Tesco, I have to make use of some background information on the business. This are the various website and test books I used to update my assignment:
* www.Tesco.co.uk/history
* www.Sainsbury's.co.uk/history
* www.Safeway.co.uk/history
* www.guardian.co.uk
* Tesco annual review and summary financial statement
* Tesco plc annual report
* Sainsbury's plc annual report
* Safeway plc annual report
* 2002 annual report and account
* AVCE Business by Roger Lewis & Roger Trevitt
* AVCE Business by Michael Fordon
ABIMBOLA ALLIU BUSINESS @ WORK
AVCE IN BUSINESS - 1 -
