Important Operations Of Tesco Marketing Essay

Published Date: 23 Mar 2015

Currently the organisations survive in high competitive and rapidly changing environment in order to be successful and achieve competitive advantages. To attract new customers and retain existing customers, organisations need to formulate better and high quality operations. Therefore operations have to be considering as a main part of the organisational activities.

F.W.Taylor and other develop work dimension applied ''scientific' 'methods to productions from 1890 onwards. These clearly showed that the productivity of organisations depended on both on the technology available and how the effective management of key resources were managed. This thinking lay to foundations for the operation management. According to the Harrison (1993, p.1) Operations as "the processes by which people, capital and materials (inputs) are combined to produce the services and goods consumed by the public (output)"

The aim of operation management is to ensure the right quantities of goods are produced at the right at the right time at the right cost and with right quality. This is involves managing all the business resources.

History of Tesco

Tesco PLC is a largest retail company based in the United Kingdom. It is leading retailer in the international supermarket chain, operating over 2979 stores in 14 countries and employing 500,000 staff worldwide. Tesco has set up by Jack Cohen in 1919, first Tesco appeared in Edgware in 1929 since then the company has grown and developed, responding to new opportunities and establish many innovations and creativity (Tesco Plc, 2012).

UK considers as a Tesco largest market, it operates below four banners such as Extra, Superstore, Metro and Express. Tesco sells around 40,000 products, including clothing and other non-food. The company's operate with three own-label products levels such as value, normal and finest. Many stores have gas stations, that becoming one of Britain's largest sovereign petrol retailers, Tesco.com and Tesco Financial services (Tesco Plc, 2012).

The heart of Tesco commitment to operating responsibly is providing customers with good quality at reasonable priced, in order to satisfy them and sustain in the market. Based on this every year Tesco make changes and develop their operational activities. The following operations help to perform well.

Innovating different customer offers

Now days Customers focus high quality and low prices of the product, based on that they operate to provide different offers such as sales promotion like buy one get one free, half prices products, 3 for 2 offers and providing different club card points based on their purchase volume. This help Tesco too attract the customers.

Loyalty cards allow customers to collect points when they shopping and they will usually have to return to the shop to redeem them. Tesco encourage shoppers to spend money while also earning back points. The idea of earning points to save customers money on their shopping, based on that Tesco encourage customers to buy more products. The company also very successful in terms of customer loyalty cards system and its general approach to modify services to the need of every customer (Development Area).

Tesco provide summer offers like club card vouchers exchange example £5 pound value voucher can be exchange with £10 value vouchers, vouchers can replace to cash and if you buy £40 or more you will get petrol vouchers 5p off per litre, exchange £10 in club card voucher for £20 in monarch e-vouchers, Exchange £2.50 in club card vouchers receive 50% more flying club miles, and exchange £10 in club card vouchers for £20 in APH - airport parking token codes (Tesco, 2012).

Innovating brand of the products

Tesco recently reviewing their 8000 range of products and create innovative brand of the product, 'Tesco value' product replace to 'Every day value product'. It provides products that have brighter features, colourful packaging, better taste and healthier products and high quality at low price (Tesco Plc, 2012). Cost is important at current environment, where most customers are experiencing recession and Tesco low cost products helps customers to manage their tight budgets.

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Tesco Everyday value products (Telegraph April 2012)

Operations efficiency and Customer satisfaction will increase revenue of Tesco and help Tesco to compete in the competitors market, therefore this operation is very important to Tesco in order to perform well and success in the market.

Tesco online shopping

Currently way of life mean every of busy and have limited time on the hands to go to the supermarket for shopping based on this concept Tesco launched for online grocery. Improvement of technology means most of customers' orders their products through online. Customer can order and pay for the good and services on line, then Tesco can deliver the grocery to customer's doors at their conveniences. Transactions across the internet mean avoid wasting valuable time, queuing in stores while waiting to make payments or when trying to move from one aisle of the store to another trying to look for a particular item.

Based on that operation Tesco achieves 70% of remarkable growth of on-line transaction, these become a strong platform to further develop of revenue stream. Tesco employed these on-line systems and now became the biggest online supermarket in the UK (Tesco Plc, 2012).

Today companies perform in an increasingly dynamic and complex environment, therefore Tesco face more difficulties making forecasts and settle themselves to the continuous changes. In order to be able to compete in this competitive environment, it is necessary to innovate at an extraordinary speed, continuously improving the products, services and processes. Therefore Tesco Best operations can bring real benefit to the communities based on that Tesco become success in the target market.

How your chosen organisation links its operations to its overall corporate strategy

According to Johnson, et al. (2008, p.03) 'strategy is the direction and scope of an organisation over the long term, which achieves advantage in changing environment through its configuration of resources and competences with the aim of fulfilling stakeholders expectations'. According to Johnson, et al. (2008, p.07) following diagram shows three levels of strategies

Levels of strategy

Each organisation has different corporate strategy therefore in order to achieve that strategy they need to create excellent operations within the organisation. Overall strategy of Tesco is to expand the scope of the business to enable it to deliver strong sustainable long term growth. Tesco corporate strategy is as follows (Tesco Plc, 2012).

To create value for customers to earn their life time loyalty

To be creator high brand product and cost efficiency

High Speed and low cost delivery and differentiation

Based on that above corporate strategy, Tesco process its operation to obtain sustainable competitive advantages in the market. Tesco success depends on customers and employees.

Innovating different customer's offers will help to achieve Tesco corporate strategy of, to create value for customers and to earn their life time loyalty, if customer like what Tesco are offering customers will be happy to come back and shop with Tesco compare to other competitors such as Sainsbury, ASDA, and Waitrose. Not only that Tesco reward their employees who more likely to go that extra miles to help their customers based on that techniques they treat people as we like to be treated.

Tesco attains the corporate strategy of high brand product with cost efficiency by Innovation of different range of every day value product. In Tesco Cost Leadership, make every effort to have the lowest price in the market by offering everyday value product. So, this strategy is based on its capability to control their operating costs, and they are able to price their products competitively and be able to generate high profit margins, thus having a significant competitive advantage. Tesco's differentiation strategy is that it tries to offer unique feature products which have customer's value and they will be able to create brand loyalty for their offers.

Improvement of technology will help Tesco to gain advantages, Tesco use different computer system (Team pad) for picking online orders. In early days Tesco used small computers with wires going all over place created difficult and trip hazards. In order to achieve corporate strategy of high speed and deliver product within one hour, Tesco use wireless computer systems to pick customers online orders and deliver it as soon as possible. Based on that online operation they can achieve strategy of speed delivery. Tesco charge for delivery, maximum £5 and minimum £3 per customers for per delivery based on these operations Tesco achieve corporate strategy because more customers attract to consume Tesco products because of high speed and low cost of deliveries (Development area).

Tesco operation is essential in order to achieve, corporate strategy of the organisation, both needs to be link to gain competitive advantages and success in the target market. Therefore Tesco management needs to perform proper operations in order attain corporate strategy, mission and strategic direction of the organisation.

How the organisation tries to ensure that their products and service meets the quality expectations of their customers

According to the Perry (2009) Quality means ' getting everyone to do what they have agreed to do and do it right the first time consistently conforming to customer requirements'. The growth of global competition has resulted in dramatic improvements in the quality and the efficiency of the products and services. Quality could translate into reduced cost and that could be reinvested in other product improvements.

According to Peppard, et al. (1995) main aspects of quality are as follows

Consistency - How consistently the product or service conforms to what is expected (Example - its specifications or previous experience)

Capability - How well the product or service actually fulfils the needs of the customers (Example - fast, how comprehensive is it? How is it perceived?

According to Garvin (1984) eight dimensions of quality the most useful for the product such as, performance, Features, Reliability, conformance, durability, serviceability, aesthetics and perceived quality. All organisations need to consider the above features of quality in order to ensure the quality for their customers. Therefore Tesco use different process or methods in order to ensure the quality expectation for their consumers.

Tesco always need to understand that they are selling branded product, its quality serves as the core strategic advantage. The company was spreading like wildfire transforming the generic into the quality-specific, largely through carefully quality packaging and the promotion of an "every penny counts" environment. The company has a strong brand image, and is associated with good quality, trustworthy goods that represent excellent value.

Tesco believes the secret of success is to focus on quality not only in food but in every aspect of operations. Therefore Tesco developed its own management tool called 'steering wheel' in order to ensure their quality expectation of their customers.

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(Tesco Steering Wheel unchained March 2008)

Tesco quality requirements of commitment, competence, communication and continuous improvements should be achieve through this wheel. Every store receives a monthly updates on steering wheel performance report based on that they ensure commitment of senior managers from each department towards quality requirement, quality can only be achieved by competence in the jobs example Fresh food is an area where customers really appreciate having dedicated, specially trained and knowledgeable staff. With the additional investment in staffing, training and equipment, the Fruit and Vegetable team can focus on fresh produce, improving product availability, quality and presentation for customers (Tesco Plc, 2012).

It helps to identify how quality should communicated through the organisation example Tesco Dot com manager inform all pickers, they needs to pick fresh vegetable, meats, chilled foods and bakery items expire dates should be mentioned in more than six days, if expire date is around four days then this products needed to be put that item in blue bags and mentioned to customers about product quality and help to identify continuous improvement (Development area). In stores look and feel of many of fresh departments using more engaging signage, stronger graphics, warmer colours and better lighting, based on steering wheel Tesco ensure their quality to customers (Tesco Plc, 2012).

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Quality Assurance

According to Perry (2009)'Quality Assurance is a system which ensures quality to the customers by meeting their quality excpection'. Tesco follow the system of quality assurance on the online shopping, in order to ensure the quality of food to customers before delivery. Tesco.com computer system randomly select one trolly for every day for the quality assurance based on that dotcom manager or teamleader need to check all items in trolley and confirm that produccts are meet proper quality, after that they allowed to deliver their product to customers. This helps to identify the quality problems before the products reach the customers hand (Development area).

Total productivity Maintenance (TPM)

According to Perry (2009) Total productivity maintenanace is aimed at increasing the productivity of the organisation equipment. The fundamental objective of TPM is to prevent quality failures caused by equipment failure so TPM might usefully contribute a quality management programe.

Tesco online shopping newley launched wireles device instead of small computers with wire in order to picking online products. Based on the new equipment employees pick product quickly compare to old one, so it will help to deliver product on time to the customers, customers become happy and higly satisfy and shop with Tesco. Based on speed of Wireles device Tesco ensure the serviceability of the organisation, which also help to ensure quality of theorganisation.

Tesco first need to consider direct attention to market and customers before designing process of products and service, Quality specify level of purchasing power of consumers and reflect empowerment to all stakeholders, therefore ensuring quality expectation of consumers, is important for the organisational success.

How the organisation attempts to gain competitive advantage through its supply chain

All organisation face severe competition therefore it has become necessary for the producer to work closely with the suppliers and distributor in order to deliver the product to the consumer in the shortest possible time and the appropriate quality. This created integrated supply chain and help organisation to gain competitive advantages.

According to Perry (2009) the supply chain is the network of organisation that are involved through upstream and downstream linkages in the different process and activities the produce value in the form of products and services in the hand of ultimate consumer.

Cousins (2000) strategic supply wheel, conducted research to establish the level of collaboration between leading UK companies, suppliers and customers. In supply wheel all components are interconnected with each other. The five key components of the strategic supply wheel as follows

Tesco survive in high competitive markets, therefore they carry out its operations to become a market leader and gaining competitive advantages through improving efficiency of supply chain. Based on the cousin's wheel supply they use some aspects of strategies in order to improve their performance and gain competitive advantages.

Cost and benefit analysis

Tesco Overall strategy is to expand the scope of the business to enable it to deliver strong sustainable long term growth, in order to achieve this, they need to maximise customer satisfaction, in order to attract customers and retain customers. Now a day this approach is very difficult to achieve because we are survive in highly competitive market. Most of customers' consumption depends on price and quality, based on that concept Tesco selling their products with high quality and low price. These techniques help to change customer's behaviour and attract more customers towards Tesco. This is a substantial competitive advantage for Tesco.

Tesco lower price translated into following key aspirations such as reducing cost of packaging of products and transport cost from suppliers, to create no waste and to sell products that sustain resources. This year onwards Tesco start to testing new policy that lets customers to remove and leave plastic and paper packaging from products purchased in store. This operation helps to reduced packaging in many products, Based on that they got idea of which product can be less packaged.

In UK Local Government Association (LGA) arguing that supermarket should pay for the recycling cost of packaging from product they sell. Therefore Tesco plan to avoid recycling cost and reduce the weight of packaging, recently Tesco did a campaign to make customer aware product packaging, this movement become highly successful for Tesco.

Among UK retailers, Tesco seems to be leading the race for less packaging - The British Market Research Bureau was commissioned by the LGA to look at eight supermarkets and the weight of food packaging they use in a typical shopping basket. The survey found that Tesco had the lightest load (645.5 grams). The packaging policy of Tesco helps to gain competitive advantages in the target market.

Tesco delivery vehicles are powered by natural gas. This is produced by rotting fruits and vegetables of Tesco. The waste that used to go to the landfill will now become fuel Tesco vehicle, and this help to reduce tax which pays for waste rot in land fill. Because of these actions Tesco predicts that the fuel bill will drop by 7%, resulting in less emissions and better fuel economy. Not only that they find nearest suppliers to supplying the product in order to reduce transport cost example, buying orange juice from Spain rather than shipping it from Brazil.

Tesco encourage customers to use their own bags in order to reduce carbon emission, achieve corporate social responsibility and reduce cost of carrier bags, as a result they providing club card point to customers who use their own bags.

Based on the above activities Tesco achieve more benefits than the cost, Tesco CEO inform only 7% are their carbon emission are direct from operation, The other 93% are in supply chain. Therefore supply chain help to achieve competitive advantages towards other competitors.

Relationship portfolio

Relationship with suppliers will have impact on strategic success of the organisation. If there is good relationship with both suppliers and customers work together resulting in exchange knowledge between both parties. Tesco got lots of opportunities to improve availability, in order to achieve that they need to improved forecasting and collaboration with suppliers. Therefore they develop 2degree system in order to build strong relationship with their suppliers.

Tesco 2degree system

1st of April 2012 on wards Tesco is leading the way in using a collaborative approach to address supply chain sustainability, launching the world's largest supply chain collaboration program on 2degrees through its Tesco Knowledge Hub. It helps to co-operation between retail suppliers, and endeavour to reduce energy costs, waste and the environmental impacts of the products.

Tesco deal with different suppliers from different countries in order to make progress they use knowledge hub based on that they share ideas, practise, knowledge, and problem solving discussion across the industry and national boundaries. The supply chain management solution provided by 2degrees tries to achieve meaningful reductions in energy, materials, and waste (retail gazette, July, 2012)

Applying advanced technology in its communications and cooperation with the suppliers, the company aims to control the work of its suppliers and heavily relies on their efficiency. Tesco 2 degree technique help to improve their performance achieve their target and help to become market leader and compete with other competitors like Sainsbury, ASDA and Morrison and facilitate to gain competitive advantages.

Conclusion

To achieve organisational mission, vision, objectives, and strategies, need for the Operation management is important. It controls and implements process of operation. Tesco Operation involve innovating different offers and branded product, online shopping, Human resource management, corporate social responsibility, health and safety etc, all those operation help to increase long term efficiency and effectiveness of the organisation.

All organisation operate with different corporate strategy based on their nature of the business, Example manufacturing organisation corporate strategy is differ from service organisation strategy, therefore firm need to perform their operations based on their organisational strategy in order to be sustain and attain long term growth in the market.

Tesco overall strategy is expand the scope of business and deliver sustainable growth in the market, therefore in order to maintain level strategy, organisation need to consider quality of the process of the product and service, not only that it help to improve the productivity of the organisation, Tesco lean method help to reducing waste and cycle time, avoid process of product in large batches and produce only what has been ordered. Based on that company reduce the cost of production and selling product with reasonable price and high quality.

In today's highly competitive business environment, Tesco has to adopt new market expansion strategies or expand the existing one in order or lead the market position in retail market. The company must constantly adapt to the fast changing circumstances. The quality of a formulated strategy and the speed of its implementation will therefore directly depend on the quality of Tesco's cognitive and behavioural learning processes.

Organisations face severe competitions in the market which has taken the form of time based competition and therefore it has become necessary for the organisation work closely with suppliers and distributor in order to deliver the product through the consumer in the shortest possible time an at appropriate quality. This has created and integrated supply chain. Tesco supply chain management is strengthened by the development of communication technology such as knowledge hub. It is now possible to communicate efficiently and effectively using this network. Tesco and their suppliers and distributors are developing a joint and coordinated strategy of serving end users. Therefore Tesco supply chain management is help to achieve competitive advantages for the organisation in order to be success in the target market.

Recommendation

Tesco continuing growth is depends on customer satisfaction, therefore Tesco need to improve their customer service towards customers. In order to maintain that, Efficient and effective training and development need to be providing for employees. Tesco requires employees who are committed and flexible in the work to aid its expansion of the business. The expansion of Tesco relies on retaining existing customers and acquiring new ones. All customers need to be confident and happy with shop in Tesco. This relies on committed and flexible employees delivering the highest standards of service to meet Tesco's objectives.

In big stores like Tesco Extra, Tesco super store needs to improve proper map of the product place, where the customers easily find the product. They need to develop different colourful images in order to find product easily to the customers, because now a day's customers are very busy life, they don't like to spend more time on shopping therefore they need to come and pick product very quickly. Therefore to satisfy them Tesco need to format proper map with in the stores.

Tesco growth is expanding day by day but they did not recruit employees and reduce overtime for existing staff. These become an issue for them, because of that, only less people working but they cannot manage all the work. Example Tesco.com contributes high percentage of organisational revenue, which is strong flat form for organisational income. Main objective of online shopping is delivering products on time to customers, now a day's it's difficult to deliver product on time because of reduction in overtime less people are working, this will make Tesco to lose customers. Tesco management think reduction of overtime will help to manage their budget, but it will make huge problem for organisational growth. So I highly recommended Tesco need to recruit more people and providing overtime for the existing employees, in order to sustain in the growth of the business.