Examination of Information Systems and Technology in Tesco

Tesco PLC is one of the world’s leading retailers. Tesco started by one businessman name Jack Cohen on 1919. Tesco brand first appeared in 1924. The core of the business is in the UK. Tesco had branched into numerous nations: Czech Republic 1996, Hungary 1994 Poland 1995, Rep. of Ireland 1997, China 2004, Japan 2003, Malaysia 2001, South Korea 1999, Taiwan 2000, and Thailand 1998.It has now more than 2,318 stores and over 326,000 employees. Tesco provides online service trough tesco.com .This Company sells almost 40,000 foods, including Tesco clothing and other non-food items. This company also have its own product, gas station, Tesco finance.

Mission statement:

Mission statement is the very fast step for any organization. This statement makes one company apart from other companies or competitors. Mission statement defines the basic role of the company, and their main motto.

Researcher Christopher Bart sys , “A good mission statement captures an organization’s unique and enduring reason for being, and energizes stakeholders to pursue common goals. It also enables a focused allocation of organizational resources because it compels a firm to address some tough questions: What is our business? Why do we exist? What are we trying to accomplish?” (Bart, 1998). Mission statement helps everyone understand the nature of the organization. “Every company no matter how big or small, needs a mission statement as a source of direction, a kind of compass, that lets its employees, its customer, and even its stockholders know what it stands for and where its headed,” (Abrahams, 1995).

Tesco mission statement

“To create value for customers to earn their lifetime loyalty”

Goal:

Offer customer best product in competitive lowest price as possible. Cost leadership. Gain the trust of the shareholder and customer and shareholders. Believe in customer satisfaction. Become a successful international retailer.

Objective:

Increase sales activity by understanding the customer’s needs. Choose Strong suppliers and qualified partners. Keep up-to-date the business strategy, structure and quality than competitor. Product qualities maintain and update according to customer survey. Derive growth in the developing market. Give importance and earn trust of shareholders. Provide best customer service that available .Growing the market and maintain number one position Retailer in the UK. Become stronger in food like non-food.

Environmental analysis:

Environmental analysis has significance influence on strategic planning of the organization. This factor could be a barrier between goals and objective.

Environmental factors could affect the strategic development for Tesco in political, economic, social, technological way its acronym is PEST.

(i). Political factor: It has deep impact on any business such as taxation that may increase product price and material cost so customer will be unhappy. Environmental regulation such need to use 100% recyclable packaging or if the material that use is it harmful for environment or protected. International trade regulation, consumer protection, government regulation etc. can have deep impact on Tesco and it can stop the growth of the organization.

(ii).Economical factor: Economical factor could affect Tesco in many ways such as economic growth means industries sector ,government spending or specific spending priorities, unemployment , minimum wage , benefit , taxation has impact on companies profit margin ,exchange rate has impact on imported materials, inflation means cost and selling price.

(iv).Social factor: On international market, product needs to be appropriate. different kind of people and religion, education, living style attitude to work like if it’s not a western country people food choice will be very on the daily needs and if its Asian country than food style or health & welfare will be change. To get the all customer Tesco needs to choose appropriate products for appropriate region.

(v).Technological factor: Technology changing rapidly every day and who follows the right technology they get the right output from it. The daily shopping is now in internet people getting use to with it and so the company needs to be. Tesco need to use that kind of technology that can be change or can be cope up with new technology of their competitors. Tesco direct is the online shopping solution but the delivery system need to update.

The SWOT analysis

Strength –

Tesco is the number one retailers in UK, its cost effective solution for customer is great. More than 2,026 stores and their half of income come from outside of the UK. Employee benefit and employee childcare voucher and two-share scheme “Save as you earn”, buy share in lowest price “Buy as you earn”. Tesco also have online shopping for customer especially for disable people, Tesco Direct have 50% profit rate on 2010. Tesco have other non-food item like clothing and Tesco filling station. Tesco introduce new customer loyalty scheme “Club card” its shows powerful customer relation management.

Weakness

One of Tesco great weakness is the dependencies in the UK market. Tesco international market needs more improvement like other organization. Need more quality food or non-food own brand product in the international market to grow up and for brand image. Comparing with other online seller needs to be more efficient and quick delivery and refund policy.

Opportunity

Tesco clothing is in the growing state now .In future customer will know about it and aware about lowest price with quality. Tesco online books sell Tesco telecommunication system now depends on O2 but on future, it can build its own network and mobile phones.

Threats:

Political factor can change business rules. Raw materials price increase suddenly. Economic and environmental factor can reduce profit. Competitors take over the market. Economic collapse, customer-buying pattern changed and over productivity. Innovation strategy takes the customer other competitor.

Business strategy:

In early 1980’s most business used generic strategy, with the help of the new information technology and architecture the strategy become more powerful and effective for the competitive market. A strategic information system can be any information system such as TPS, MIS and DSS by the use of the three or any one, organization can gain enterprise objective, reduce a competitive disadvantage, and increase competitive advantage.

Five basic competitive strategies are:

Cost leadership strategy: Cost leadership is an effective solution for any company to gains competitive advantage by produce in low cost. It is a solution to shave on every aspect from training the new employee to value chain. Cost leadership does not say those products need to be in low price but in a competitive price.

Differentiation strategy: It’s mainly form the good or services point of view that satisfy the needs of customer in a competitive market. This allows the organization to look at the value of the product and the completive higher price in a better profit margin. By market segmentation and price, service an organization can achieve higher price than average.

Innovation strategy: In this strategy its shows the business a new way. It could be related to the unique products and services or entering unique markets.

Growth strategies: Expanding the capacity to produce more products and services, expending into the global market. Introduce more people with brand.

Alliance strategies: New business linkage and alliances with customers, suppliers, competitors, consultants.

TESCO is a world known famous brand with its vast product collection. TESCO competitors always try to beat each other. Without changes or new products, it is hard to keep their place in number one and need to remind about the cost as well. For TESCO, Innovation strategy will be a great strategic model to follow, because this model helps the organization to keep their place number one by introducing unique products and services. By this, TESCO can get unique market internationally and can beat competitor.

When the IS/IT attach with the strategy, for its improved research it becomes time consuming, reliable, cost effective solution. Information technology helps to identify right solution for the company and how it needs to be done. Now all well-known brand or organization turned to information system to increase their profit margin, that is what all organization need.

Growth Maturity

Market

share Emarging innovation Decline

Time line

Figure 1.

TESCO managerial decision-making levels:

Strategic level CEO(long-term decision)

Management level Directors (Efficient usage of resource)

Knowledge Line Managers (New ideas)

Operational supervisor (day-to-day decision)

Strategic level: In this level the owner or Board of directors, take long-term decision.

E.g.: New Product lunching, New Branch opening etc.

Management level: In this level Vice president take decision about resources e.g.: Buy new Place, Buy raw materials from new place etc.

Knowledge level: In this level managers introduce new ideas of business e.g.: New product packaging, service, selling etc.

Operational level: In this level supervisor take day-to-day decision e.g.: Product promotions.

Management Level

Decisions they make

Information Required

Recommended IS

Strategic Level

New Branch opening

New Market strategies

Market share Values

Total cost for new branch

Research results before new strategy implement.

Profit and loss based on share values.

Executive Support system (ESS) is recommended.

Information System to suggest about the profit and loss for the organization.

Management Level

Performance of the employees

· Services provided to the customers

· Customers review decisions

· Monitoring the salary of the employees

· Employees‟ performance reports

· Customer satisfaction reports

· Feedbacks about the employees from the customers

· Annual financial report

At this level Management Information systems (MIS) and Decision Support Systems (DSS) are recommended.

· Information system that can perform decision analysis on employees‟ performance.

· Compensation analysis system which can monitor salaries, benefits, etc.

Knowledge Level

· Quality of the product and services provided to the customers

· Feedbacks from the customers about the quality of the products and services.

Knowledge Works systems (KWS) are recommended at this level.

· Managerial Work stations systems are recommended here.

Operational Level

· Processing order

· Processing customers‟ requests

· Tracking employees‟ presence

· Answering customers

· Product details

· Routine presence report of the employees

· Information on the requests of the customers

· Brief detail on the

Transaction Processing systems (TPS) are recommended in this level.

· Information system which can provide training & development to the

Information system defines what information and system need by business analysis, business environment and business strategy. In addition, Information technology defines how the needs will be met by priorities, IT requirements, which new technology available.

ERP(enterprise resource planning )is a IS/IT based software solution for TESCO. ERP automats the task that performing a business process, all information save in a single database system from employee details to order or cash received from customer. All the necessary information can be access from anywhere in the organization. ERP normally take 1-2 years but it depends on the organization structure.

Advantage of ERP for TESCO

ERP will integrate financial data, standardize manufacturing processes, and standardize human resource information. ERP system suggest best product price according to the data analysis of different market base. This system can analysis many years data and suggest production rate for any product according to the customer needs. ERP in human resource help to organize employee payroll,

Cost of ERP

ERP is an expensive system to create if its implement wisely it will bring a new era for a organization. ERP cost includes training, integration and testing, data conversion, data analysis, consultancy, staff replacement etc.

ERP vendors are SAP, Oracle, PeopleSoft + JD Edwards, BaaN, QAD (Mfg/Pro), Microsoft and many more.

ERP in Customer relationship Management (CRM) for TESCO

Customer is the heart of any organization. CRM helps to understand the valuable customer and their needs and their interactions. CRM improves company’s financial performance and it’s a backbone of any business.

http://www.erpsoftware-enterprise.com/wp-content/uploads/23.erp-crm1.jpg

Figure2.(source website: “http://www.erpsoftware-enterprise.com/erp-crm”)

ERP system takes the data and analyses the buying pattern. Analyze customer feedback about the product. ERP ensure that customer knowledge is not lost. With ERP, data entry will be more reliable and secure because it will not support manual data entry. TESCO will know how the product is selling and how much productivity need to increase or decrease. TESCO can check product quality using ERP and CRM from the feedback. TESCO can offer many customer loyalty program throw the ERP system and gain more customer by this (e.g. Sainsbury’s Nectar card, Tesco Club card). With this TESCO will, get the idea of customer buying patterns using ERP. Customer will be more loyal to the company by this kind of promotional offers. ERP also suggest which season is best for which promotion by analyses the selling pattern of any product.

Ethical Issue in use of IS/IT

Information system or information technology improves the business style, customer dealings, business policy and so on. In IS/IT there is some ethical issues such as security, customer details, Credit card details, Online theft, hacking or cybercrime , system copy . One unethical issue can be a great ethical issue for other country for business etc. Information system use computer and other hardware and air for network, It can cut down some employee who doing things manually and increase unemployment. Day by day information system changing its security level and strategy so there is only little ethical issue left for solving

Refference

Abrahams, Jeffrey. (1995). “The Mission Statement Book”. Berkeley, California: Ten Speed Press.

Bart, Christopher. (August 1998). “Mission Matters.” The CPA Journal. v68 n8 p56-57.