Business at work

The marketing department carries out a wide range of functions on behalf of the business. Essentially marketing is communications. The marketing department communicates with a number of groups inside and outside the business as it carries out its tasks.

Marketing activities:

• keeping customers satisfied

• discovering the needs of customers and advising the production function accordingly

• carrying the responsibility for ensuring the effective distribution of products to wholesalers and retailers

• liasing with marketing agencies to provide the necessary expertise (small firms)

• if the firm is an export, the marketing department may have contact with government agencies.

Marketing provides the organisation with information about its customers and its markets. Effective marketing can offer businesses a number of benefits:

• early warning of changes in consumer tastes and fashions through regular market research

• knowledge about competitors and information regarding competitors’ product

• the means to present the company in a positive light through public relations activities

• allowing the firm to improve the quality of its products by coordinating and analysing customer complaints

• providing a catalyst for growth by forging relationships with distributors, retailers and customers in new markets

• supplying consumers with the products they want and giving high levels of customer satisfaction, which might permit a business to charge higher prices thereby increasing its profitability.

The administration function.

The scope of the administration department varies enormously between organisations. In a small business the administration function might incorporate a number of the functions like finance , personnel and marketing. However, larger organisations are more likely to operate a specialist administration department.

A typical administration department has a number of functions:

• Administration department carries out organisation’s IT system.

• Clerical and support service. Information processing, data processing, filing and reception services can be provided to all areas of the organisation.

• Security and maintenance. These services are essential to the smooth running of the business and to the effective operation of other business functions such as production in particular.

• In some businesses, the administration function takes responsibility for important public relations activities such as customer services.

The research and development function.

The nature of research and development (R&D) varies enormously between businesses. Traditionally, the term research and development is taken to refer to scientific research undertaken by firms producing manufactured goods, high technology products or pharmaceuticals. However, R&D is equally important to firms providing services.

By investigating in research and development a business seeks to maintain competitiveness against its rivals. Competitiveness measures a business’s performance in comparison with rival firms in the same market. A highly competitive firm has some advantage over other businesses. This competitive edge can take a number of forms:

• lower prices

• more advanced and sophisticated products

• a better image with consumers

• a good reputation for advise and after-sales service

• reliability in terms of operation and delivery dates

Types of research:

• basic research

• applied research

• development

The prime function of R&D is to develop new products that can give the firm a competitive edge in the market. This necessary involves the R&D department in close liaison with staff in market research, design and production.

Function 1.6: The nature of business activity

Functional areas of Tesco plc.

The diagram above shows the key functional areas or departments of Tesco, as one of the leading retailers in the U.K. It is currently the leading supermarket chain in Britain, with a higher market share than its leading rivals, Asda-Wallmart, Sainsbury’s and Safeway.

I have explained earlier the key functional areas of a typical business and Tesco, as the diagram shows, displays this type of structure. For example, the Company Secretary, Rowley Ager is responsible for Pensions, the Company Secretariat (the administrative staff), the Treasury, Taxation, Site Facilities, Transport and all aspects of Consumer Law.

The Finance Department, directed by Andrew Higginson, is responsible for all aspects of finance and audit, and also for European affairs. These functions are shown in Figure 1.3 in my introductory section. I have no detailed information on Finance within Tesco other than financial data available from the Company Accounts and from the Tesco and Bized websites……… and these are more relevant to a detailed finance study of Tesco as a company, a topic to be studied in a later Unit.

The Marketing Department, directed by Tim Mason, is responsible for all aspects of marketing , Customer Service, Advertising, Market Research, Clubcard, Estates and Metros. Since the early 1990s Tesco marketing strategy has been to become the best in terms of price, quality and service. Objectives are set, and ways found of meeting them, in all aspects of company’s operation.

The Retail Department, directed by Michael Wemms, is responsible for all retail operations and express stores.

Tesco first ventured into foreign markets when it acquired stores in Irish Republic in 1978, but these were sold in 1986. The 1990s produced a much better climate for European expansion. Now Tesco operates 80 stores in Central Europe, and 16 stores in two Far East countries trading both under the Tesco and subsidiary fascias. The 13 Tesco stores in the Czech Republic and Slovakia, 29 stores including 5 supermarkets in Hungary, 31 stores in Poland. Also Tesco plan to open 12 hypermarkets in Thailand and in South Korea over the next three years.

The Human Resources Department within Tesco is responsible for many thousands of employees across the whole spectrum of the organisation. Tesco employs 154,000 people in the UK and 27,000 in Ireland and Europe. It does not appear on the organisation chart, which I obtained from Tesco, because this function is somewhat complex and shared between the main headquarters at Cheshunt. Hertfordshire, and the many stores operated by Tesco around the country. For example, there are two Tesco superstores in Leicester, at Hamilton and Beaumont Leys, both of which have a Human Resources officer in charge of personnel administration.

The Commercial Department, directed by John Gildersleeve, responsible for all commercial operations and technical services.

The Distribution Department, directed by Philip Clarke, responsible for Supply Chain and all distribution operations. Distribution Director responsible for products delivery, logistics and transport. Its purpose is to ensure that Tesco stores have the right products delivered against agreed delivery schedules and in good condition, enabling the stores to provide a consistently high level of customer service. Tesco products are sent to stores from distribution centres around the country. Tesco runs 13 centres and a further six centres are run for Tesco by contractors. A typical centre covers 300,000 square feet and handles some 50 million units a year. The centres work around the clock, seven days a week, providing 2,500 deliveries daily, amounting to 19 million cases per week. Tesco employs 6,800 people in distribution (excluding the staff at the contractor-run centres), and has about 1,000 tractor units and 2,000 trailers in its national vehicle fleet.

The Operations department, directed by David Potts, responsible for operations of Tesco stores in Northen Ireland & the Republic of Ireland. In May 1997, Tesco completed an agreement with Associated British Foods to purchase all their supermarkets in the north and south of Ireland. The purchase price was £641 million, giving Tesco a further 110 food stores and a leading position as a food retailer on both sides of the Irish border.

I have considered each of the major functions of Tesco separately. However, it is the effective interaction of business functions that is essential to the success of an organisation in attaining its objectives.

As an example, Tesco has recently introduced a customer-oriented website on the Internet. Company has developed within this service facility a direct order system via E-mail – called “Tesco Direct”. Customers can order their produce/product for home delivery.

There are now many thousands of such deliveries but these all depend upon the successful interaction of the major business functions outlined earlier.

In other word, -

• Marketing - responding to the initial enquiry, receiving and processing an order, distributing the product to