to market leadership. In South Korea, through Tesco’s partnership with
Samsung, Tesco now has two outstanding hypermarkets which are among the
highest turnover stores in the Tesco Group. Now Tesco should open its store
in Taiwan. These three markets will give to the company access to 130
million people.
In South Korea, a country where 50% of households own a PC and 78% a mobile
phone, the retail industry has huge growth potential. In 1999 Tesco
invested Ј142m in a partnership with Samsung, which brought two world-class
hypermarkets operating under a top retail brand as well as a number of
sites that Tesco will now develop. Tesco should t expand more hypermarkets
in next years.
Tesco now should move rapidly towards global sourcing, which will enable
company to buy quality products at the best prices and deliver them at the
lowest cost. Tesco has already set up three sourcing centres in Hong Kong,
India and Thailand. These now source 30% of Tesco non-food products
(excluding Health and Beauty). Tesco should move this higher in next
years, with the opening of a fourth sourcing centre in Central Europe.
As a student from Russia (I live in Kazakstan) I would like to see Tesco
further expand its activities in Eastern Europe, and therefore why not
Russia? At the present time there is nothing similar to Tesco on the
Russian market, so I think Tesco won’t have any problems to get into it.
It is difficult to suggest alternative approaches for Tesco’s strategy
because the firm is evidently doing very well. I would suggest however that
Tesco continues to seek markets overseas to further develop its growing
global presence.
As mentioned above, Tesco has been very successful over recent years, and
it is therefore quite difficult to suggest “Alternative strategies”.
However, from my I might suggest the following:
. Expansion overseas – e.g. Russia.
. Increase market share – e.g. merge with Safeway. If Walmart took over
Asda, why can’t Tesco take over Safeway, for example.
. Expand into new market / product – e.g. cars, travel.
. Rewards to staff, introduce a widespread – bonus or share ownership (if
Tesco doesn’t do it yet)
A2
Evaluation of the effects that the alternative approaches might have on the
structure and functions of the business, and how it achieves its
objectives.
Alternative approaches, suggested in A1 can affect the functions of the
organisation and how it achieves its objectives very much, but they won’t
really affect structure of the organisation, because Tesco’s organisation
structure is very good and there is no point of changing it.
Expand to Russia
If Tesco expands to Russia, in general, it is going to be only benefit to
the company. Of course first Tesco will have to spend some money to build
and open new supermarkets, but it is not going to be very difficult because
there are no other companies like Tesco. Big advantage of expanding Tesco
into Russian market is that straight way after it Tesco will definitely
become a dominant firm on market, because there are not very strong
competitors and very soon Tesco can become a monopoly on the Russian
market. Disadvantage of expanding is that Tesco can get failure as well.
Russian prices and British prices are very different, so if Tesco retails
goods, which are more expensive then in others stores, not many people will
by it.
Increase market share
Every single organisation wants to increase its market share, and the best
way of doing it is to merge or take over another company. And I suggest
that Tesco also could increase its market share by merging another
retailer, for example Safeway. Safeway is not as big as Tesco, so it is not
going to be very difficult to merge it or take it over. The advantage of
the merger is that Tesco will increase its market share very much (by 10%)
and two dominant firms of UK’s market joined together can easy become a
monopoly. The disadvantage of it that it is not very easy to do, because
now Tesco has 35% market share, and if it merges Safeway, Tesco’s market
share will be increased up to 45%. But British law says that firm which has
45% of market share is monopoly, so competition commission won’t be happy
about it and it will never agree with this merge.
Expand into new market
Non-food retailing now becoming a major part of Tesco strategy. As I said
before, Tesco is increasing competition and offering customers real value
and choice in all areas from sportswear to software, electricals to
spectacles. But still, I think Tesco didn’t get into one very perspective
market – cars. Cars are very important in our time and there is a very high
demand for cars in the UK. I think for Tesco it is won’t be very difficult
do get into this market, because Tesco is known as cheapest retailer in the
UK, therefore people will continue to by everything from Tesco, and cars as
well. But it could be easy and could be not, because currently there are
many different firms on this market, and what I think is that there are
could be some barriers to entry.
Rewards to staff – introduce a widespread
At the present time, many successful firms introducing new types of
rewarding to staff. What I suggest is that Tesco also should introduce a
widespread of rewarding to staff, for example employees could be awarded an
annual bonus, which they can take in cash, vouchers or shares. The
advantage of this type of payment is that if employees take shares, they
will be interested in good work of the company and if they take vouchers,
they will have to spend all salary in Tesco stores. So I think that it is
very good way of rewarding with all benefits to the company.
Affects of the alternative approaches
As I mentioned before, alternative approaches, suggested in A1 can affect
the functions of the organisation and how it achieves its objectives very
much, but they won’t really affect structure of the organisation, because
Tesco now has very good organisation structure with very good consultative
and democratic management style.
If Tesco expands to Russia and merges Safeway, there are will be “Operation
– Russia” department in the organisation chart. More people will be
involved to work for Tesco, so Human Resources department will become
bigger. After expanding to Russia Tesco easy can expand to other countries
of Soviet Union such as Kazakstan, Uzbekistan, Kirgiztan and so on. It also
will definitely help Tesco to prove itself as very strong multinational
firm.
List of resources
1. The main resource was Tesco’s own web site: www.tesco.com.
2. I asked Tesco for some information and they sent me it.
3. Web site: www.bized.ac.uk
4. Business for Vocational A level – book.
5. Newspapers
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Finance department
. accountants
. account technicians
. account clerks
Records all financial data
Chases up slow payers
Collects payments from customers
Provides information to external bodies
Advises managers and budget holders
Monitors and analyses financial data
Advises board of directors
Analyses
costs
Production activities
Research and development department
Marketing department
Corporate objectives
Demand of labour
. numbers of workers needed
. skills required
. location of employees
Supply of labour
. existing workforce
. skills shown through skills audit
. changes in productivity and working week
Human resources plan
This may require the use of one or more of the following:
. recruitment
. training
. redundancy and redeployment
BUSINESS ACTIVITY
Marketing
Finance
Administration
Human resources
Research & Development
Production
LAND
Labour
Capital
Enterp-rise
GOODS
OR SERVICES
WASTE
Chairman (non executive)
Chief Executive
Deputy Chairman
Company
Secretary
Marketing Department
Finance Department
Retail Department
Commercial Department
Distribution Department
Operations:
Ireland
Business
Activity
Managing director
Research and development director
Finance director
Marketing director
Production director
Human resource director
Production manager
Plant manager
Quality control manager
Production control manager
Assistant plant manager
Supervisor:
materials
Supervisor: buildings
Supervisor: mechanical
Supervisor: electrical
Section manager
Supervisor
Operatives
Deputy
Chairman
(non executive)
Chief
Executive
Director
Retail Director
Commercial Director
Distribution Director
Head of
Operations
Section
managers
Supervisors
Dynamic/innovative culture
BUSINESS
CULTURE
Customer driven culture
Bureaucratic
culture
Task culture
Risk averse culture
Technological culture
Person culture
Negative culture
Positive culture
Competitive culture
Power culture.
[pic]
Board of directors
Retail
Department
Employees in Retail Department
Employees in Distribution Department
Employees in Marketing Department
Mission statement
Business objectives
Divisional/departmental objectives
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