Business at work

customers in everything Tesco does

• to maximise profits to provide high returns for shareholders

• to increase sales or market share as much as possible

• advertising should appeal to all customers in a relevant

Tesco’s main mission statements:

• To be world’s best and largest supermarket retailer.

• Completely increase value for customers, and to earn their time loyalty.

How Tesco is going to achieve these objectives?

What Tesco expects from its staff in order to achieve this?

Tesco staff:

• Are all retailers, working as a one team.

• Trust and respect each other.

• Respect all customers, the community, suppliers and the competition.

• Strive for personal excellence in everything they do, leaving no stone unturned in order to get it right.

• Are encouraged to take risks, give support and do not blame others.

• Are rewarded for creating value for customers.

• Are talked and listened to: and their knowledge is shared, so that it can be used.

• Have fun, celebrate success and learn from failure.

What is the comment Tesco has to its customers?

Tesco customers want the best possible value for their money. Tesco is determined to offer its customers quality products, good service, attractive stores and low prices.

To meet this aims, Tesco:

• works closely with suppliers to ensure products are of the highest quality and are delivered to stores in the best possible condition.

• makes sure that its staff are committed to giving the best possible quality of service.

• aims to create in its stores an environment which makes shopping easy, interesting and comfortable.

For example, in 1993 Tesco introduced Value lines, which offer exceptional value for money, followed by New Deal Pricing on leading commodities and brands in 1994. In 1996, Tesco introduced Unbeatable Value with the pledge that nobody would sell the equivalent product for less price.

E3

Organisational functions.

All organisations require resources to carry out their functions. One way of judging the success of a business is to compare the resources it uses with the value of the product that results. For example if it is a small business running by it’s owner, for example small shop, so it doesn’t need any workers, large piece of land and big capital, owner can work alone. But if it is a very large business like car manufacturing so it requires a lot of workers, very large piece of land and big capital.

The resources of the business.

One way of considering the resources used by a business is to classify them into the factors of production. The main capital of production are capital, labour and land.

- CAPITAL refers to any manufactured product used by the business to make other products. This category therefore includes all machinery, vehicles and office equipment used in businesses. It also includes the company’s buildings.

- LABOUR is the human resources used by business organisations during production.

- LAND – site on which the business is located and natural resources it might use.

- ENTERPRISE – owners and shareholders.

Functional areas.

All businesses combine factors of production as an essential part of their production activities. To combine these factors, to engage in production and to achieve their objectives organisations undertake a number of functions. The major business functions include:

• finance

• production

• human resources

• administration

• research and development

Business requirements for functional areas depends on its size, for example small business might merge many of these functions within their administration department, with responsibility in the hand of one or two people. As a business grows the number of people required to carry out these functions increases.

The financial function.

Extensive use of IT

Produces standards

cost data

Customers Auditors Inland Revenue and

(price list) (accounts) Custom & Excise

(information relating

to tax liability)

Figure 1.3: The financial function

A separate department normally carries out the finance function of the business. The finance department carries out a number of key activities:

• records all financial data

• chases up slow payers

• collects payments from customers

• provides information to external bodies

• analyses costs

• advises board of directors

• monitors and analyses financial data

• advices managers and budget holders

Production function.

Production covers all the activities that must be undertaken to make the firm’s products, from the receipt, of raw materials through to the output of the final product. The production function concentrates primarily upon planning and controlling the various stages of production so that the most efficient use is made of business resources.

Production manager responsible for:

• maintaining supplies of components and raw materials to ensure continuous production

• ensuring that the precise requirements of customers are met

• monitoring quality to insure that finished products meet the quality standards expected by customers

• using resources – people, machinery and production space – as efficiently as possible to make the business competitive in the markets in which it trades.

One of the most important issues in production is quality. Modern businesses compete just as strongly on the quality of their goods and services as they do on price.

For example it is vital for a washing machine manufacturer to produce a high-quality product. If the machine is not reliable or does not have a wide range of functions, customers are more likely to purchase a competitor’s product.

Figure 1.4: The links between the production function and other departments

The human resource function.

Personnel management considers the tasks involved in managing people – recruitment, selection and so forth – as separate elements. It does not take into account how these elements can combine to achieve organisational objectives.

The personnel management approach makes decisions relating to recruitment, training and pay systems independently, without considering the impact the individual decisions have on each other aspects of management and the achievement of corporate objectives.

Human resources management (HRM) elevates the effective use of a business’s labour force to an issue to be considered by senior managers as an essential element of the organisation’s strategy. This approach has raised the profile (and salaries) of those employed in human resource management. The human resources function engages in a number of activities to ensure employees are utilised affectively. These activities are carried out with the aim of contributing to the achievement of the business’s objectives.

Workforce plan sets out likely future needs for labour and how these needs might be met. Achieving the workforce plan involves the human resource function in a number of day-to-day activities.

• recruiting employees – both internally and externally

• training new and existing employees

• paying salaries

• dealing with disciplinary matters and grievances

• overseeing industrial relations, by seeking to avoid disputes and maintain harmonious relations and constant production

• developing and monitoring an employee appraisal system designed to assess performance, set targets for achievement and identify any training needs

Figure 1.5: Developing a human resources plan

The marketing function.

The