Safeway Plc.

• Able to gain tighter control of your company as you decide whom you issue shares to
• Able to have greater success
• People see share prices quoted in newspapers and seem to be more interested in them than an LTD

Disadvantages of being a PLC

• Setting up cost can be very expensive some run over millions of pounds in some cases
• Since anyone can buy the shares, it is possible for an outside interest to take control of the company (e.g. WalMart take over ASDA)
• The size of the company means they are not able to deal with their customers at a personal level in case they got a problem.

• Members of the public can inspect all of the company’s accounts. Competitors may be able to use some of this information to their advantage. They have to publish more information than the private limited companies
• The way they operate is controlled by various companies which do aim to protect shareholders

• PLC annual reports are available to the general public

The advantages and disadvantages listed above are for public limited companies.

What are the key objectives of any business?  

What are Safeway’s objectives as a company?

All businesses have objectives. These are goals a business aims to achieve, for example the efforts of small self employed carpenter may be directed towards increasing the numbers of products that he sells his goal may therefore be to increase sales by 10% over the year. Other examples would be profitability, growth in market shares.

Market share simply measures the proportion of total sales in a particular market achieved by the business. One of Safeway’s key objectives is to try to maintain its present market share in the face of fierce competition from its major rivals Tesco, Asda (Wal-Mart), Sainsbury’s, Somerfield, Co-operative Societies, etc.

Companies may have a number of objectives. In general, the objectives pursued by a business tend to vary according to its size, ownership and legal structure. Larger businesses may aim to maximise profits, especially if they are public limited companies whose shareholders will want the highest possible return on their investments.

Safeway’s mission is:

“Our Goal is to be the first choice for those customers who have the opportunity to shop locally in a Safeway store.”

“To deliver this goal we will focus on:        

Product and price, and be

Best at fresh

Best at availability and

Best at customer service”

The key objectives of business usually concentrate on the following:

Making a profit

A firm, which wants to maximise its profit, can do one of several things to achieve its objective.

• It can try to save as much as possible on its factors of production – this means, to use the cheapest premises, labour and machinery. Nowadays, firms often find that using machines is cheaper than employing people, and so they invest in machinery and reduce their workforce.
• It can concentrate on making goods or providing services for which demand is growing. This needs very careful planning, and can sometimes result in too many companies all providing the same goods and services.
• It can work out the level of production at which the levels of profit are greatest, and remain at that level of production.
• A very large business organisation can adjust its prices or the amount it produces in order to achieve the highest profits.
• In order to stay ahead of competitors, it can try to provide new products. This can be done through a research and development programme and is very expensive, so only very large organisation can do this.
• Making a profit is vital in order to satisfy shareholders. Often this can be the major objective in order to provide value to investors through increasing share prices.

Increasing sales or market share 

Delivering increases in sales or market share is a key component of Safeway’s strategy.

Simon Laffin, Finance Director identifies “Driving profit through sales” as a major objective for the group. To achieve increases in sales Safeway has to bring new customers into its stores and encourage those new and existing customers to purchase more once in store.

The introduction of “Best Deals Ever” featuring deep price cuts on volume lines was the key tactic used in store to encourage shoppers to buy more. Local advertising spread this message locally and “flyers” direct to homes. Thereby bringing new or lapsed shoppers back to Safeway.

Having got the early response to this approach Safeway are now concentrating in turning new customers (or clients as they are known in Safeway) into local supporters.

Increased customer numbers together with higher spend per visit will show increased sales. Safeway have seen a 12% increase in customers and a 7.1% increase in sales during the past year.

The current policy will impact on others in the sector and Safeway’s current market share is likely to grow as a result of its current strategy. Market share going in decline leaves a company in a weak position to competitors.

Companies who achieve dominance in their respective markets can increase prices and profitability.

Providing services to the community/ awareness of environmental issues

Companies increasingly recognise their responsibilities to the communities in which they operate.

In the case of Safeway Plc a key point of their strategy is their “Best at fresh” this means that they will work with their suppliers (farmers + fruit etc) in order to promote best practise and later prime produce for Safeway customers. This degree of teamwork provides employment far beyond the actual stores. Thereby involving communities across the country and beyond with a better interest in the Safeway brand.

On a local basis individual stores get involved in local activities. Sponsorships of a wide variety of projects for hospitals, schools, disabled sports, and student work placements for example a feature in Safeway’s local community activity. Safeway Plc made contributions in excess of £100k in the year 2002, to a wide range of charities.

Environment

As governments place environmental issues higher on their agendas companies too are making efforts to improve their practices either by complying with legislation or by paying particular attention to areas such as:

• Energy conservation
• Waste managements
• Packaging development
• Sustainability of raw materials

Safeway Plc has an environmental way of life “We strive to operate in harmony with the global environment and promote environmental protection as an integral part of our business activities”

The companies’ record in recognising its responsibility has resulted in a number of “FIRSTS” for example; way back in 1971 Safeway was the first supermarket to introduce recycled carrier bags.

The government supports such initiatives in terms of tax breaks on fuel, so the company benefits. Safeway has seen a 24% saving on fuel costs when compared to the diesel equivalent since 1999.

Cost savings such as these have a beneficial impact on profits.

Current market value

Safeway Plc has a market capitalisation of £3.8 billion pounds as identified in ‘The Sunday Times’ dated October 7th October 2001. 

The following chart identifies Safeway’s progress versus the FTSE 100 over the past two years. This timescale is the same as the C.O.O’s (Chief Operating Officer) revised strategy.

Over a million extra customers are now shopping at Safeway compared with last year. This success reflects the radical changes we have made in the way we do business. Our strategy is based on four key objectives:

1, Focus on product and price - we will be recognised for offering great value and above all, great offers. Our highly successful deep-cut deals programme communicates great value direct to our customers. Stores leaflet over 9 million homes with around 50 and 60 local deals every week. This has attracted over one million new customers in the past 18 months.

2, Best at fresh – we offer outstanding fresh foods of consistently high quality, sold in a stimulating and different way. We’re making radical improvements to our stores in this area. You’ll find better lighting, improved layouts, wider assortment, and a real sense of abundance in merchandising as well as more colour. Fruit and veg, meat, bakery and deli are all being transformed. We’re also building an exciting merchant culture so our staffs understand their products and engage our customers with a real passion for what they sell. The impact of these improvements will grow over the coming months as we continue to enhance our fresh foods presentation. We’re also transforming our fresh prepared foods range, such as pizzas, sandwiches and ready meals. ‘The Best’, our new range of premium quality products, is proving really popular with customers.

3, Best at availability - we will be first for availability at all times. Our goal is that our customers will always find the product they want to buy on our shelves whenever they want it. We are working closely with our suppliers, and on new supply chain systems, to deliver this objective.

4, Best at customer service - we will offer the best all-round customer care in the sector. We have invested in increased store staffing and better training. Our people at all levels are being given the skills, resources and authority to deliver truly exceptional service that goes well beyond what is expected by our clients. We call this the ‘Wow” experience and every week we receive more letters from delighted clients who have already experienced exceptional customer service.

Our strategy is to divide our store portfolio into convenience, supermarkets, superstores and hypermarkets. This will enable us to adapt our offer to meet the needs of our customers locally.

Other things involved in their improvements are:

Petrol stations

Around 170 Safeway stores have on-site petrol stations offering extremely competitive fuel prices and convenience shopping. In addition, we now have convenience stores on 50 BP forecourt sites.

Financial services

Through its partnership with Abbey National, Safeway has developed a range of financial products to meet the needs of our shoppers:

• Safeway Direct Savings Account, which offers highly competitive rates of interest.
• Safeway Individual Savings Account, a cash mini ISA giving customers the opportunity to benefit from tax free saving.
• In store Abbey National banks

Awards Safeway has collected

Safeway walked away with two first prize awards at the Nantwich International Cheese show re-affirming its commitment to be best in fresh.
The Nantwich International Cheese Show is one of the largest cheese shows in the world with over xx countries competing. This year saw xxx cheeses on display - the highest number of entries ever!
The Safeway cheeses won 2 first prizes and these cheeses were submitted from the successful the Best food range.
Safeway the Best Mature Blue Stilton 200g/£ - won the blue vein cheese category - this stilton is matured that little bit longer to give it a creamy texture and rich taste.
Safeway the Best Farmhouse Red Leicester xxg/£ - won the farmhouse regional cheese category - this cheese is matured for 9 months to give it a distinctive farmhouse taste and nutty flavour.
Trevor Young, Buyer at Safeway, says, 'It was great to win these awards, for products that have been identified as the Best and have now won awards to justify this.'

Safeway win supermarket of the year award [28/11/00]

Safeway has won the Daily Express Supermarket of the Year award.
This new award is for the High Street retailer which has done the most to promote British food and support British Farmers.
Daily Express readers were asked to vote through a special phone poll, and National Farmer's Union vice president Michael Paske also took part in vetting the entries.

Safeway and Scania scoop top environment award [17/07/01]

Safeway has been awarded the Motor Transport environmental award in conjunction with vehicle manufacturer, Scania (Great Britain Ltd), in recognition of their development in re-engineering diesel trucks to work on compressed natural gas (CNG).
The event, dubbed the ‘Oscars of the Transport World,’ was held at the Royal Albert Hall on 12th July where judges praised both companies for their “ambitious and innovative programme, and determined approach.”

Hat Trick of Awards [24/05/01]

Food retailer, Safeway, proved just how far it had turned its business around in the past 18 months - scoring a hat-trick of awards at the Retail Week Awards last night (Monday 5th March).
The passionate Argentinian responsible for the major u-turn in the supermarket's fortunes, Carlos Criado-Perez, was named`Retail Personality of the Year'. Communications Director for Safeway, Kevin Hawkins, believes the title could not be more deserved: "Carlos really has breathed new life into the business," he said. "His enthusiasm is infectious and his lively, hands-on style of management has cascaded down through the business."
One of Carlos' innovations has been to devolve power to individual store managers and let them take responsibility for more of their own decision-making and marketing.

A key cornerstone of this has been Safeway's revolutionary `Lift-Off' campaign which won the `Marketing Campaign of the Year' award. This new approach has proven so successful that Safeway has won over one million new customers since its introduction in October 1999, and copycat campaigns have subsequently been launched by rival supermarkets, Somerfield, Budgens and, most recently, Tesco.
The third award won, Retail Technology Solution of the Year was achieved because of Safeway's Shelf Edge Computing (SEC) project - an exciting new concept which has also resulted in Safeway's listing in the BT Vision 100. In a `market first’ use of such technology, Safeway is rolling out mobile, hand-held computers in store which provide a real-time view on sales, help improve product availability and freshness, and enable staff to give better overall customer service.

The awards show that Safeway has achieved a lot of success this is due to all these awards they have received.

FIRST QUARTER TRADING STATEMENT [11/07/00]

The first quarter of this financial year has been strong. Like-for-like sales growth remains well ahead of the industry, with an increase of 5.0% in the first 12 weeks of the New Year, which includes volume growth of 11.1%. Total first quarter sales rose by 8.6%. Disinflation has risen to 6.1% as we have cut prices and increased investment in our promotions.

SECOND QUARTER TRADING STATEMENT [24/10/00]

Strong trading performance has continued during the second quarter. Like-for-like sales grew by 5.1% during the 16 weeks to 14 October and remained well ahead of the industry average. Like-for-like volumes have continued to grow rapidly, increasing by 10.3%. While disinflation has fallen slightly, at 5.2% it remains at a high level, driven by our increased investment in deep-cut promotions, which will enable our customers to save £660 million this financial year.

THIRD QUARTER TRADING STATEMENT [16/01/01]

Safeway's strong sales performance has continued. During the first twelve weeks of the second half, ended 6 January 2001, total sales increased by 7.7%, including growth of 5.9% on a like-for-like basis. Third quarter like-for-like volume growth was 9.2%, after disinflation of 3.3%.
Constant strong trading performance reflects buoyant Christmas trading, continued growth in customer numbers and increasing average spend from our existing clients. Our two year sales growth in the third quarter was 12% and volume growth almost 20%.

PRELIMINARY RESULTS 2001/02 [15/05/02]

11% PROFIT GROWTH AS NEW SAFEWAY ROLLS OUT
Strong Results:
11% growth in profit (before property and tax) to £355 million (last year £320 million) representing two year profit growth of 45%.
£417 million operating profit after charging £34 million transitional revenue costs of store reformatting, including £27 million in second half.
11% growth in earnings per share (before property) to 24.5p. Final dividend 6.61p.

5% like-for-like sales growth, with 4% in second half.
Return on capital employed (post tax) up to 12.2% (last year 11.5%).

 MORE RESULTS

Sales Total sales grew by 7.3% to £8,937 million and sales growth in like-for-like stores was 5.2%, including volume growth of 9.7%. A further 1.9% was contributed by net new space and 0.2% from an extra Easter trading period. Disinflation, reflecting our investment in lower prices, reduced sales growth by 4.5%.

We sustained strong like-for-like sales performance in the second half, with 5.4% growth, despite passing the anniversary of the successful early phase of implementing the new commercial strategy. This was offset by a reduced sales contribution from net new space, which slowed to 1.2% from 2.6% in the first half as a result of opening no new stores during the year. In the fourth quarter, like-for-like sales grew by 5.0% (8.3% volume) and total sales by 5.4%.

What is Balance sheet?

A balance sheet is a financial statement which shows the assets, liabilities and capital of a business at a certain date.

Cash Flow and Balance Sheet The group generated £111 million of net cash during the year, primarily as a result of our strengthening profit performance and our lower capital expenditure on new stores (last year £252 million net usage). Net debt has fallen to £1,110 million, representing gearing of 51%, down from 60% at the last year-end.

Capital: capital is the amount of the owners finance put into the business and profit builds up like Safeway.

Liabilities:  liabilities are amounts owed by the business, such as creditors, loans or any bank over draft.

This is Safeway’s profit and loss summary of 2000-01.

From this profit and loss summary you could see that the total sales group has increased from 8,327.8 to 8,937.3 which is an increase of 7.3%. In business this is more then it sounds.

The profit after interest had increase by 30.7% which is a lot in a year.

Here is a graph showing the increase of Safeway sales from the past 5 years.

 

 

From the following graph you can tell Safeway’s sales have increase gradually which is a good sign of success.

However, the operating profit shows that 2003 is not had the best profit of the five years but 1999 has had the best (421.8) m and 2002 was not bad at all.

        

 

   

Capital Expenditure

Capital expenditure can be defined as expenditure incurred on the purchase or improvement of fixed assets.

Included in capital expenditure is:

• Delivery of fixed assets and installation
• Improvement (but not repair) of fixed assets
• Legal cost of buying property

Safeway’s capital expenditure shows capital of new, existing and other stores. From the capital expenditure you can see that in 1999 capital expenditure was quite high then 2000-01 which were not high at all. However, in 2002 it increase again and 2003 is estimating about 500 from the graph you see.

2003  

is estimated to be 500

                 

     

From all these graphs and information you can tell that Safeway is at its best and is improving a lot as years go by. I personally think looking at this information that Safeway is improving more then people would expect.

What are the functional areas of Safeway Plc?

Safeway’s main business is to operate 460 store plus markets in the Retail Food Sector.

        

All businesses combine factors of production as an essential part of their production activities. To combine these factors, to engage in production and to achieve their objectives organisations undertake a number of functions. The major business functions include:

• Finance
• Production
• Human resources
• Marketing
• Administration
• Research and Development

How Safeway helps to meet its objectives

Finance:

A separate department normally carries out the finance function of the business. The finance department carries out a number of key activities. These are summarised below:

• The finance department records all the financial activities of the business, listing the revenue earned by the business and the expenditure necessary for production.
• Employees in the finance department monitor the expenditure of all parts of the business and advise if expenditure appears to be too high.
• They see customer’s accounts to ensure that the business receives the money to which it is entitled and is therefore able to pay its own bills.
• Accountants in the finance department analyse the costs incurred by the business and work out standard costs associated with various aspects of the firm’s activity.

The human resource function

The human resource function engages in a number of activities to ensure employees make use effectively. Activities are carried out with the aim of contributing to the achievement of the business’s objectives. The organisation’s need for employees is regularly monitored and included into a workforce plan.

Achieving the workforce plan involves the human resource function in a number of day-to-day activities

• Recruiting employees – both internally and externally.
• Training new and existing employees.
• Paying salaries.
• Overseeing industrial relations, by seeking to avoid arguments and maintain appropriate relations and constant production.

The company has a huge workforce of over 80,000 people. Personal records have to be maintained on each member of staff.

The Human Resources Department provides on going training and development of Personnel. It also has responsibility for recruiting, developing and rewarding the staff.

Staffs are encouraged to improve their knowledge and skills across the company. The introduction of a performance bonus system has ensured that more staff enjoys Safeway’s success.

The Marketing function

The marketing department carries out a wide range of functions on behalf of the business. Essentially marketing is communications. The marketing department communicates with a number of groups inside and outside the business as it carries out its tasks. Some of the marketing department’s relationships are shown below: -

•  Keeping customers satisfied is a key objective for the majority of businesses and marketing plays a central role in attaining this target. The marketing department carries out the market research to discover the needs of consumers. This research is likely to be an on going activity to ensure the firm is aware of changing tastes and fashions. The department is also responsible for organising advertising campaigns, special offers and other activities designed to promote the company’s products. The marketing function may also deal with customer complaints.
• The production department. This is possibly the most important internal relationship between business functions. The marketing department discovers the needs of customers and advises the production function accordingly.

The Trading Function in Safeway Plc

In order to meet their goal of “Best at fresh” the function of this department is to source the best fresh foods in the market. A team of traders buy, develop and price all fresh goods ensuring they are of the highest quality.

        The area of impact stretches from Fish to ready meals, from Bakery to Organic Yoghurt, from Indian plus Chinese takeaway meals to traditional English cheeses.

The I.T. Function in Safeway

This forms part of the Finance area and links all parts of the business from hand held shop floor computers for stock recording/ordering to the Main Frame at a Central location. Computers plan journeys for the trucks and notify the precise time that truck will require unloading. All company records are stored centrally and senior management can have a “snapshot” of the business at any time.

The administration function

        The administration department varies enormously between organisations. A typical administration department has a number of functions:

• The provision of information throughout the organisation. It is common for a business’s information technology section to be a part of the administration function. The IT system within a business provides management information for decision-making throughout the organisation.
• Clerical and support services. Information processing, data processing, filing and reception services can be provided to all areas of the organisation. These duties play a vital role in linking together the activities of other functions within the business.
• Security and maintenance. These services are essential to smooth running of the business and to effective operation of other business functions such as production in particular.
• Putting all paper work together.

Administration is heavily dependant upon the use of information technology. This technology allows businesses to collect information from within and outside the organisation, to analyse it and to provide important data for decision-making.

In the effect, the technology enables small and separate ‘mini’ administration functions to operate within other areas of the business.

The Distribution function

The whole operation is dependant upon I.T. The loading + despatch of trucks to the stores complete the process. Tight control of stock management throughout the supply chain ensures that product is in store to satisfy consumer needs and stock go right place and time.

The research and development function

This Department is equally important to firms providing services.

By investing in research and development a business seeks to maintain competitiveness against its rivals. Competitiveness measures a business’s performance in comparison with rival firms in the same market. A highly competitive firm has some advantage over other businesses. This competitive edge can take a number of forms:

• Lower prices
• A better image with consumers
• A good reputation for advice and after-sales service
• Reliability in terms of operation and delivery dates

Types of research

• Research and development can be broken down into three components:
• Basic research
• Applied research
• Development

Basic research is undertaken mainly to achieve advancements in scientific knowledge that have commercial possibilities. The discovery of digital technology in broadcasting is an example of basic research.

Applied research then takes forward the scientific discovery and attempts to develop it in a way that results in a saleable product.

The development aspect of R&D uses the results from applied research to bring the product to the stage where it is marketable.

I have considered each of the major functions of my organisation separately.

However, it is the effective communication of Safeway’s business functions that is essential to the success of an organisation in attaining its objectives.

Management style and culture of Safeway

Management style of a business can be looked in two different levels these are:

1, Organisation as a whole

2, An individual branch

I am going to look at Safeway Plc as a whole.

There are 3 main management styles these are

1, Autocratic

2, Democratic

3, consultative

All these three have advantages and disadvantages.

Autocratic

One person (or group) having absolute power. In an autocratic management style the manager makes all the decisions without any ideas from the workers. Employees must obey instructions without questions.

Advantage

Autocratic style has the advantage of enabling decisions to be made quickly, with no time wasted on discussions.

Disadvantage

Workers become unhappy and feel that they and their views are not important to management.

Democratic

A system based on equality of all members of a community. In democratic management style, employees are encouraged to participate in decision making.

Advantage

This encourages the employees and makes them feel that they are real holders in business. Unlike autocratic manager, the democratic leader listens to his/her staff and is prepared to take their suggestions and ideas.

Disadvantage

The management style does motivate workers much more. In order to enable the employees to participate in decision making, they must be well informed about the company, its aims, objectives and its plans.

Consultative  

This management style takes the democratic principle even further, with workers being asked for their opinions as a matter of course.

Advantage

Here, before any decision is taken, the manager will consult his/her team. Employees are given a chance to discuss the problem in question, and their views are taken in consideration.

Disadvantage

Although, at the end, the manager is the one who makes the decisions, it is based on conclusions reach by the group as a whole. This system also acts as a good motivator but like the democratic style, it takes time.

From the three listed above Safeway fits in the democratic this is because Safeway is not controlled only by the manager and also Safeway lets employees participate in decision making. Employees are part of Safeway so they feel they are a part of a huge team. However we can also say Safeway fit in Consultative this is because Consultative takes democratic further with workers being asked for there opinions as a matter of course, but the manager is the one who makes the decisions in the end.

Examples of democratic management in Safeway

Culture management of Safeway

   

Hierarchical structure of Safeway Plc

A hierarchical is a series of levels of people, each level controlled by the level above it.

This is a hierarchical of Safeway plc showing managers, supervisors, assistants and specialist. The store manager is the head of Safeway then the deputy manager which is as important as the store manager and would take the store managers place if he was not in store on a particular day.