P1: Explain the Features of two contrasting businesses
Tesco is a public limited company under the tertiary sector, meaning it is a separate title from the owners, so it has limited liability and it provides a service through distribution. This type of ownership is under the private sector category, meaning their ultimate goal is to make profit. Tesco was originally a self-service that became England’s first supermarket. In 1955 they bought 19 stores and by 1960 they had over 500. This marks a milestone for the business as it was their first big step into expansion. In the 1960s the company started to introduce the green shield stamp, which could be traded in for the selection of goods they had in the catalogue. This obviously gave them a unique selling point (USP) – it made them different to other supermarkets because no big retailer had done something like that at that point
A factor that contributed to the success of Tesco was in 1982. A man called Sir Ian MacLaurin, had the innovative idea to launch ‘Checkout 82’. This would involve cutting down prices from between 3%-27% on over 1000 food items. This idea worked because the demand increased as the price dropped. It also created a need to find out what the discounted items are. This project helped polish Tesco’s success; it added character to the brand and increased the customer loyalty, which overall created a better brand image for the supermarket. The main intention behind it was to drive up sales and increase consumers.
2919095424600Tesco has a hierarchical structure because it has many positions of authority and many ways to progress through the functional areas within the job. Large companies usually have this organisational structure as it has more of an effect because of the close control it brings to the employees and it has different leadership qualities. This ultimately means in Tesco all the workers will have a set of instructions that need to be completed throughout the time period- these would be issued for the benefit of the supermarket. In a hierarchy communications are established throughout the network until it gets to the necessary person, for example a regional manager would set the store manager multiple tasks at the start of the week so that they can begin to issue out the tasks across the team of workers or, if they had caught a shoplifter the security guard would have to contact the store manager because it would be their decision on what happens next. This is beneficial for Tesco’s success because the large company has hundreds to thousands of tasks and each task can be narrowed down to the employee in that profession. Therefore by diverting all these tasks across the board of employees it will allow more things to be done in a shorter space of time. It is important for Tesco to run a hierarchy, so the staff have a goal and a drive behind the work. This is key for the motivation of the overall workplace because without progression it would lack team spirit and decrease the shopping experience as a whole. For employees to recognise the different levels of authority within the structure, it creates an element of respect for the higher powers and it means the higher skilled tasks can be delegated to the correct position.
A disadvantage of having a hierarchical structure is that it allows limited communication between employees which could cause a decline in team motivation. For example, if someone got promoted and another person thought they were doing a better job it could lead to an uneasy atmosphere between the staff and jealousy could arise. Another disadvantage often seen for this structure is that some leaders don’t see the bigger picture which could pre-empt a failure of the overall objective whatever it may be.
Tesco is well known and has won multiple awards for things such as its customer support, retail supremacy and its consistent pricing. It also has a long history in the UK with a consistent reputation for being one of the most profitable distributors. Their records show that it will be recognised as a leading supermarket for the years to come, this is foreshadowed by the annual report in 2014 where Tesco profited £970m then to go 3 years onwards, in 2017 it was £1,280m so in 3 years Tesco made a difference of around £310m in profit. Tesco’s increase of profits will attract a larger base of customers because it will make Tesco seem trustworthy and reliable thus expanding the target audience. A key factor in Tesco’s clout is that they are an international business spread across 13 countries such as France, China, India, South Korea, the UK and the United States. The ideology behind Tesco’s scope is very beneficial for their business because it increases their overall activity and will allow them to gain more net profit.
Though Tesco has many strengths, it also has disadvantages and weaknesses. For example, their competitors, ASDA, Sainsburys, etc. have all started to do price drops which has led to an ongoing war on who creates the best profit margin. Whilst the price dropping occurs it would be wise of Tesco to think of a smarter approach, which effectively they have done by introducing the Clubcard. This will persuade customers to become loyal to Tesco as they can benefit from it through rewards, ultimately boosting sales. An obvious disadvantage is that Tesco are dependent on their UK and European distribution and have not dedicated enough time for research into all the markets their products participate in, so they aren’t as knowledgeable as they ought to be in the key areas, effectively leading to them not capitalising on profit.
Tesco has thousands upon thousands of stakeholders which also means they have a lot of relationships to maintain. These consist of their suppliers, customers, employees, the local community, the government and the trade union. Tesco is a large business because it has over 500,000 employees, across 6,680 stores and is dramatically increasing because of online shopping. Employees are stakeholders in Tesco’s business because they have a common interest in whether the store is doing well or not.
Tesco manage their employees by developing new surveys and operations such as the “listen and fix” operation which was introduced to improve the working environment and to cover all the areas that are essential to be covered within a business. This was launched to better the two way communication between the employees and employers performed through multiple platforms such as: internet, text and emails. This benefits the success of Tesco because it improves the workplace for the staff which would fundamentally improve the working environment. As a result of this, customers would also be more inclined to shop in a happier and more motivated place because it makes them feel included in the stores lifecycle whilst shopping.
Customers are stakeholders within Tesco because they want high quality products at a reasonable price and Tesco states that no one tries harder for customers. They do this by meeting the customer’s needs with respect, trust and support. This is valuable for the relationship as trust and respect only works if it’s two ways. If the purchaser trusts the supermarket with the product they are going to get the sale and the loyalty will begin to increase with each individual. I believe this is a key factor for Tesco’s current accomplishments because without the customers they would get no sales which would then lead to their brand image and reputation not being as substantial as it is at this point in time. A good example of the customers loyalty to Tesco is when the value of the company dropped by £300 million because horse meat was found within the Aberdeen Angus burgers. This is a good example because it shows the resilience of Tesco as customers would’ve began to doubt the quality and integrity of their products. Even though they had betrayed the consumers trust and damaged the reputation of the brand name, the loyalty of the customers still stood with Tesco which meant the dependability on the quality of the products was still high and Tesco had the resilience to recover due to the customer loyalty.
Tesco’s vendors have common interests as they want persistent orders, reliable payments and to be associated with companies that have high prominence in the industry. This is what makes them stakeholders as there is something in the exchange for both of them, Tesco get their supplies and the suppliers get their money and prestige. However, reports from news agencies such as the BBC and Telegraph show that the ties between the suppliers and Tesco have had some controversy. The BBC’s report shows that Tesco’s relationships with the suppliers isn’t at top spec due to “delaying payments to benefit its own financial position” this brought dramatic exposure to the supermarket, consequently their stock dropped by 32% in that year. This also led to Tesco being threatened with a financial penalty of £500m for its accounting infringements however they were not persecuted. The Telegraph go on to say in their report that in 2015 Tesco is trying to re establish relationships with their suppliers by introducing the ‘Tesco Supplier Network’ which will allow 5,000 suppliers to have their input on how they’re being treated, what the issues are and how the issues can be dealt with. Following this project Tesco’s shares rose 35% in a month due to the positive reaction from the forward-looking investors. This reaction would’ve been very beneficial for Tesco as their damaged reputation was slowly fixing as they were actually sticking to its values and it marks a turn around in their behaviour towards clients.
One of the biggest stakeholders within Tesco is the local community, this is due to the fact that Tesco does a lot of charity work for schools and with the many other charities. The relationship is maintained through many ways, one of which is donations. Each individual Tesco store is set a community budget to help aid local fundraisers that have put in a request with the community champion team. The community champions team are a group of individuals that work as ambassadors for Tesco to help support societies and allow them to prosper. The partnership with the British Red Cross is also valuable, in the terms of reputation and management. Tesco have donated £10.8 million since the beginning of the partnership, which was in the late 1990s. That’s roughly over 500,000 a year and in 2004 they were nominated as Tesco’s charity of the year. This would’ve contributed to Tesco’s success because the community always like to see its leading retailer devoting time and money into people’s everyday lives and activities. A good example of this is Tesco are now the first UK supermarket to launch larger sized nappies for disabled children.
One of Tesco’s main aims is to be the consistent leading retailer that sells products at low prices but at the same time maximise profits. They would do this by introducing many in store deals and also carrying out their expansion process, which would be key to Tesco’s success because to be more renowned they need to expand more, across different continents. With Tesco saying that acting responsibly for their customers allows their customers to have faith, trust and respect in them and especially since they serve 66 shoppers a second in the ideal world for them, they want to better the customers experience each and every time. A significant value is creating a healthier place to live in, by promoting healthy living it innovates a new lifestyle for a lot of people and over time will dramatically decrease the amount of junk food people eat. In my personal opinion the most key value for Tesco’s success is making a positive contribution within the local communities because without a good relationship with their customers and neighbours the supermarket wouldn’t be very credible as it creates the opportunity for global dominance to become more realistic.
At the other end of the spectrum there are non for profit businesses such as Oxford Committee for Famine Relief (Oxfam),, UNICEF and British Red Cross, all these businesses come under the tertiary sector meaning they provide a service. Oxfam is a private limited company which means it has limited liability so the company is a separate entity from the owners.
it was established 75 years ago in the city of Oxford by Cecil Jackson-Cole, who was an English entrepreneur in the 1900’s who studied economics at Oxford university. The companies first relevant milestone was their fundraiser, for the Greek Red Cross in 1943, that raised £10,700 which is the equivalent to around £370,000 today which was a significant amount for England considering it was during the war. This aided Oxfam’s journey as it led them to open their first charity shop 5 years down the line, in 1948.
A famine arose in Ethiopia between the years 1983-85 because of extreme drought and drastic weather conditions. Once this news landed in the UK many fundraising events took place such as LiveAid, which was a concert held in 1985 lead by Bob Geldof where the most famous bands and pop stars of that era came together to name a few: Madonna, Queen, The Who and Michael Jackson plus many more. This was done to encourage governments to partake in contributing to the relief of Ethiopia, overall this event raised around £150 million. Donors contributed £12.5 million over the period of 4 months to Oxfam, to provide the urgent help needed for the thousands of starving Ethiopians.
Since 1 in 3 people live with paucity of food, water and warmth the ultimate purpose of Oxfam is to build as well as maintain long lasting solutions for a poverty free future across the globe. Oxfam’s vision is to induce a world without poverty where everyone is treated the same and to ensure every individual enjoys their rights as a full citizen. The company Is part of a chain of charities partnered up with The International Confederation of Midwives (ICM), who also works closely with The United Nations Population Fund (UNFPA) and The United Nations International Children’s Emergency Fund (UNICEF) plus many more organisations who all share a common goal of caring for mothers and children.
In this day and age Oxfam is part of 19 organisations within ICM that all work together in more than 90 different countries to tackle the bigger issues such as inequality, hunger and climate change. Oxfam alone has 23,000 volunteers and 650 shops nationwide, worldwide they have 31,000 volunteers plus 2,500 members of staff. This is advantageous to the success of Oxfam as it boosts their scope of activities meaning they can go on to get more donations across the world and accommodate themselves to the increase of the demand/help needed. However, a downside to this can be since they are such a stretched organisation that they can’t meet everyone’s needs and desire’s which could result in a downfall of trust for the company as whole which could also result in damage for the name and brand image.
Stakeholders within Oxfam:
Employee/volunteers- This is someone who works within the company and is employed by an employer. The employees interest in the company is that they get paid the correct amount for the hours completed also, another common interest is that their voice is heard whether its through meetings for additional qualifications or to put across a problem in the staffing area. Volunteers however are not working for profit, they are either working for self-fulfilment or experience within a firm.
Either of these could influence the company in different circumstances. For example, if the job brief is slightly different to the actual job then the volunteers/employees are most likely not going to be motivated to do the work because it isn’t what they signed up to do, which could impact the chances of Oxfam achieving their overall aim. This could be stopping inequality by providing support for those in the necessary circumstances. The ideal way to manage that situation would be for the manager to write the job brief with enough essential information about the work to abolish any chance of disruption throughout the course of the job.
Donors- A person that contributes materials such as funds, clothes and food. They are usually focused, in this instance, on the growth of Oxfam. They have the same values and aims to cure poverty and famine across the world.
If a donator is unhappy with the productiveness of the Oxfam staff, they may decide to stop donating which could have a lasting effect in the long run for the charity. So for the sake of the donors Oxfam need to make the most of each individual donor.
Suppliers- The employed suppliers expect regular payments, that are on time. These people are held account for the quality of the products that are being sold to the customers. A selection of people can come under this category for Oxfam it can be: Vendors, or donors for things such as products, materials, food, clothes etc.
If a supplier was not being paid on time they might decide to cut off the relationship and get on with other work. To prevent this from happening Oxfam would need to make sure that all payments to the suppliers were paid at the right time.
Government- the government are responsible
Oxfam’s relationship with the government is crucial for their success, though it seems in the earlier months of this year the bond appears to have plummeted due to the Haiti sex scandal. This is where 4, unnamed, employees were fired for sexual misconduct on 26 occasions which completely goes against the values of Oxfam and destroys the concept of human dignity. This caused serious dilemma’s for the poverty saving organisation for a number of reasons. Firstly, Oxfam UK were banned from operating in Haiti which puts an immense decline on the reputation of which they heavily rely on for things such as donors, volunteers and clients. Secondly, it brought on the resignation of the CEO, Mark Goldring, who announced his personal apologies and also expressed Oxfam’s apology, Goldring also stating “Someone else should help rebuild the group.” This would have been detrimental for Oxfam as he has been the CEO of their company since 2013, so a very influential individual that had been lost causing dismay throughout the charity. Thirdly, a consequential factor in this all is that Oxfam lost 7,000 regular donors leaving them very exposed in the terms of they won’t be able to progress with projects due to the decline from respect larger organisations and foreign governments.