This case study is about Tesco, Discussed Operations, Human Resource, Marketing and IT Strategies of Tesco in details as per given task.
1. Introduction
Supermarket giant Tesco was founded in 1918 when Jack Cohen used his army discharge money to setup a grocery stall in the East End of the London. This very small grocery store was opened in 1929 and this was the birth of this supermarket giant. Throughout the rest of the 20th century Tesco continued to grow with increasing number of new sores openings year by year.
On that time the philosophy that was adopted by this supermarket store was to sell a wide range of quality products at reasonable prices. There was another convenience factor for customer that Tesco stores were located in easy reach of the majority of customers. Stores were opened in many urban and suburban areas of the UK. Tesco store was profitable because of the economies of the scale associated with buying in bulk and selling at very high volume. In this way it was easy for Tesco to keep bit low costs. In the early 1970's Tesco was a major presence in the UK retailing market and it maintained the philosophy of selling basic groceries at low prices. Indeed Sir Jack Cohen recognised this philosophy and he named his autobiography Pile It High, Sell It Cheap.
In 1980's Tesco continue to grow up and expand its products and services. Greater emphases were placed on the physical environment stores and management sought out knowledge of shopping from experts from all around the globe. The Tesco made another strategy to become as strong in non food sector as well as they were in food sector.
Tesco was also benefitted by its deep focus on customers and this was achieved by different ways like the initiative of designed to ensure that queues of customer do not exceed two at any checkout. Although this implementation cost the company millions of pounds but the plan worked since customers appreciated the quick and efficient service provided. Tesco was the introducer of loyalty cards in the UK in 1995 and by 2000 there were nearly ten millions Tesco Clubcard members throughout in the UK.
In 2005 Tesco broke through the 30% market share in the grocery market for the first time. The company was also the first UK retailer to register profits of more than £2 billion. This is hardly surprising given that for every £8 spent by UK consumers, £1 will be spent in Tesco.
Tesco has been able to use the value of the brand to enter the financial services market successfully. Where rivals have struggled to make much impression against traditional financial services retailers, Tesco has used the brand effectively to offer a range of services such as savings accounts, travel and motor insurance, and loan facilities. There has also been an internet mortgage-finder service. A partnership agreement with the Royal Bank of Scotland ensured that customers received a quality service that they could trust. However, one of the most risk-bearing and adventurous initiatives adopted by Tesco was to be first-movers in the online grocery delivery sector in the UK [1].
2. Tesco's Business Strategy
If a strategy follows the wrong direction or is not efficiently communicated then the business may suffer. For a successful business establishment there is a need to understand and properly manage strategic risk in order to manage long term growth and achieve success. Tesco's business strategy is based on four part strategy.
* To grow the core UK business
* To become a successful international retailer
* To be as strong in non-food as strong in food
* Develop retailing services
To ensure that the organisation continue to peruse right strategy these all four aspects are reviewed on a continuous basis [2].
3. Human Resource in Tesco.
This organisation has introduced a high commitment model which offers training and development to all employees. During the past decade Tesco has introduced strategic HR with increased training of employees. The role of HR within the organisation has become much more important. Tesco is a first class provider of training of their employees, and has given the scope for the organisation to expand into new markets.
Tesco ensures that each and every employee has the opportunity to understand his or her individual role in contributing to the Tesco core purpose and values. This requires an innovative induction programme that caters for different cultures, styles of learning and varying commitments to the job. The frontline employees are considered the ultimate reflection of Tesco to its customers, but all employees have a very important role to play in turning core values and customer commitment into reality on a daily basis.
A major Tesco challenge is to ensure to its each and every employee about his or her role they play and it does not matter that where they work. In this way every employee becomes fully aware that against his or her action what would be happen and how it can be damaging for the industry. The training creates a graphical journey through the history of Tesco, its core purpose, values, business goals, financial aims, operations and marketing strategy and its commitment to customers. All employees are receiving more training than before. Future concentrates on providing a clear way of defining roles, responsibilities and activities. The system guarantees that all employees are responsible, accountable, consulted and informed [3].
3.2 HR Practice in Tesco.
Tesco has strategically integrated HR into their overall plans. Managers have been to utilise aspects of HR in their decision making. This has shown high commitment to HR, attempting to gain acceptance from all employees, and offering to all employees basic and extended training. The big picture of Tesco's strategic direction is discussed with all employees. This helps the individual employee to understand their role and importance within the organisation, and therefore, place a high value on their human resource.
Training: Tesco is giving more importance to training because it has been founded that employees are getting more training now than ever before. This is a result of the HR department's strategy. HR is not an administrative department in Tesco, they are really proactive and do participate in strategy making as well. According to them growth can only be increased by using fully trained employees that know everything about their work. Each employee is considered a part of the overall strategy therefore they are instructed on the importance of their role, how important their role is for the organisation etc [4].
Below discussed are some important factors as well behind the success of Tesco and its department HR.
a. Job Security
If organisations don not offer a life time job then there is no guarantee of a desired results from its employees. In this case every employee cannot give its 100% because in his mind there is always a doubt that this is not his permanent job. In Tesco, every employee is trained about his/her work with no loosing job threat in their minds that's why they give their 100%. This is an easy way to increase production as well. Another big disadvantage of less job security for an organisation like Tesco is that the transferable skill. Its a best reward for any employee to reward him skills that he can use for any other organisation.
All given skills to an employee can give benefit to any other organisation may be one of the big competitors in the market. So in this case it would be worst for any organisation to hire employees, give them full training and ask them to leave [4].
b. Motivation
Motivation is a big factor to get 100% from an employee and it is a big satisfactory element for employees as well. Pension as a reward for loyalty, promotions, annual bonus, paid holiday are the mostly used motivations. Tesco is offering all these with to its all employees [4].
4. Marketing In Tesco
It is very important step for any industry or organisation. By adopting a good marketing technique any organisation can earn big benefits.
“Marketing is the planning and execution of the production, promotion, pricing and distribution of gods and services to create exchanges that achieve individual and business objectives” [5]. In simple words, marketing is all about matching your business with you customers so that
* You meet their needs
* And arrange such activities to create awareness to customers that you are meeting their needs.
* Customers are motivated by you to buy your products
* Motivated to keep buying from you
4.2 Marketing Process
1. Research your Marketing Environment
3. Review and Improve
1. Develop and Implement
Your Marketing Plan
Source: http://www.business.qld.gov.au
4.3 Tesco's Marketing Strategy
In the last decade Tesco brought lot of changes in its marketing strategy and has become UK's number one retailer. Tesco's almost entire marketing strategy is based on one thing, “Club Card Scheme”. Tesco has successfully introduced its club card scheme in its all customer sectors and has attracted and retain its customers from all sectors. It is a phenomenal achievement of this particular industry. Due to this scheme Tesco defeated its competitor “Sainsbury” with a good margin and also strengthened its market share year by year [6].
4.4 The Tesco's Club Card
It is a membership scheme which allow customers to save money on shopping . Tesco is offering price-off to customer by giving them price-off vouchers. Before customers were able to get one point after expending one pound in Tesco but after the success implementation of this scheme Tesco is offering double points. ASDA has ran a similar pilot scheme in the store but it wasn't work for them and even the more popular Nectar Card from Sainsbury is not been able to match with the success of Tesco's Club card [7].
5. Information Technology In Tesco
At Tesco, technology is the heart of the business. The use of IT not only has simplified operations, it has also helped in the timely decision position of the organisation. Such a vibrant and fast growing organisation needs IT, and integrated systems to monitor sales, customers needs, inventory, decision support, marketing and advertising, R&D just to mention a few. Tesco has heavily depended on IT for its involvement in the innovation approaches it has embarked on. Three areas of it will be discussed and these are: Online shopping,
5.2 On line shopping
Success goes with convenience. Tesco as usual is always looking at better means of meeting customer demand. The introduction of online shopping not only is strategic low cost cutting strategy, it is also a means of knowing which fast moving items are sold in a day or week or monthly. With online shopping, its utilises that with gathering information through online survey, which otherwise would prove difficult if it were to be physical. Online shopping also brings the shopping to any other part of the country.
5.3 Electronic Point Of Sale Systems
To ensure that customers do their shopping with a piece of mind, Tesco has ensured that the Electronic Point of Sale Systems are indeed Enhanced to control fraud and ensuring that customers have control of their accounts. The use of PIN and Chip is the norm of shopping. Tesco has also put in pipeline line what is thinks could be a viable element of security by introducing biometrics.
5.4 Self Services Tilling Machines.
These machines have been deployed by Tesco to give the customers best service ever. They are convenient for busy customers, they cut down pressure on the man manned tills, and it promotes privacy especially where a PIN and CHIP is to be used. Like any other super store, Tesco seems to be leading especially with the introduction of Tesco Express, which is found at every corner of the city.
6. Effective Targeting of Customer Segments
It is probably the most difficult thing for a retailer to make a loyalty scheme that can cover customer from all segments. For a retailer like Tesco a customer can be a ten year old kid or eighty years old man or woman. So in this scenario the loyalty program should be in such a format that all kind of customers can take benefit from it. By keeping in mind this thing Tesco has designed its Club Card Loyalty program and offers this benefit to all members of the family. They have introduced different Clubs such as Tesco Kids Club, Tesco Baby and Toddler Club, Tesco Healthy Living Club, World of Wine Club (They have introduced this for wine users and unfortunately this segment does not cover non wine users like me and many other Muslim who are non drinkers, but we can take benefit from other Club card segments) etc. Tesco is offering free membership to all these Club Card holders and they can register online as well [8].
7. Analysis and Conclusion
Tesco is a biggest Retailer in the UK and has captured the market from all around the UK and effectively running in some European countries as well. There are some very serious factors behind the success of this big organisation. One of them is low price of good quality products. Tesco is following this strategy very effectively that buy in bulk and selling it in very big volume. In this way it is very much profitable for this organisation and full of benefits for customers also. The Other reason of success is that Tesco is in the reach of almost every customer. Tesco has opened its store in almost every sector.
Tesco has defined a very good business strategy and following this strategy very well too. The Direction of the business should be right. There is always a need of rechecking the direction or alignment of the business after every specific period of time. And Tesco is on the right track, This organisation has define in its strategy that they want to become number one retailer of the globe and they are going to be number one of this globe without any doubt.
Human Resource is another very important aspect of any organisation. Employees are very big and valuable asset of every organisation. Tesco realises this fact and pay a special attention to this key issue. Perhaps this is the main reason behind this organisation's success alongside its customer values. A business can grow and increase its production by training its employees. If every employee knows everything about its work, knows each and every responsibility and has knowledge of the results of its jobs, how it would be damaging for the organisation or how his activity is helpful for the organisation than there is no any other big advantage for any organisation rather this one.
Tesco is giving training to its every single employee on periodic bases and fully motivating them too by offering them rewards like increment in salaries, promotions, and giving them 10% cut-off prices on each and every item from store. They can buy all items from store on cheap prices.
Marketing is a very essential tool for increasing sales of an organisation. After a good production there is always a need to good sales as well. Identify customers needs is very important in marketing. After this process there is a need of delivering this message to customers that our organisation knows about your needs and is trying to fulfil your needs. After this the organisation has too encourage the customers to buy their needs from you as you are best among the market and in the end keep them buying from you only. If any organisation do adopt these four steps of marketing then can get some very good results. This has done Tesco with a great effect and that's why Tesco is standing here on the top of the list of UK's retailers.
Tesco has introduced a very effective loyalty scheme with the name of Tesco “Club card” and introduced in such a way that they can cover all members of family in this scheme. Many other its competitors try to adopt this scheme but could not get success in such a good fashion as this organisation has done.
The Tesco's “Club Card” scheme is not only reason of this giant's success. There are some other aspects as well behind this success. If we think that this is the only reason of success then Sainsbury and ASDA also did offer same loyalty schemes but could not get success. But Tesco knows their customers very well and Customers know Tesco.
8. References
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2. Tescoplc.com. (2006). Annual Report 2006.Risks and Uncertainties. [Online]. Available from: http://www.tescoplc.com/plc/ir/ar/archive/ar2006/arfs_06/4615306.pdf [Accessed: 18th February 2010]
3. Business Teacher. (2010). Tesco HRM Essay. Tesco's HR Policy. [Online]. Available from: http://www http://www.businessteacher.org.uk/free-business-essays/tesco-hrm-essay/ [Accessed: 22nd February 2010]
4. Business Teacher. (2010). Tesco HRM Essay. Analysis of HR Practises at Tesco. [Online]. Available from: http://www http://www.businessteacher.org.uk/free-business-essays/tesco-hrm-essay/ [Accessed: 22nd February 2010]
5. Queens Land Government (2010). Marketing. [Online]. February 22nd 2010. Available from: http://www.business.qld.gov.au/dsdweb/v3/documents/objdirctrled/nonsecure/pdf/3019.pdf. [Accessed: February 22nd 2010].
6. Queens Land Government (2010). The Marketing process. [Online]. February 22nd 2010. Available from: http://www.business.qld.gov.au/dsdweb/v3/documents/objdirctrled/nonsecure/pdf/3019.pdf. [Accessed: February 22nd 2010].
7. Business Teacher. (2010). Tesco's Marketing Essay. Tesco's Club Card and How it works. [Online]. Available from: http://www.businessteacher.org.uk/free-marketing-essays/tesco-marketing-essay/ [Accessed: 22nd February 2010]
8. Business Teacher. (2010). Tesco's Marketing Essay. Effective Targeting of different Customer Segments. [Online]. Available from: http://www.businessteacher.org.uk/free-marketing-essays/tesco-marketing-essay/ [Accessed: 22nd February 2010]
