By Dionne van het Kaar Student no. 09028730 Class: ES3-1C Tutor: Mr. L.J. Harris Course: Management of Organisations in Europe Business Management Review Semester 2 – 2010 BUSINESS MANAGEMENT REVIEW Tesco PLC Introduction Description of the company: Tesco is an international hypermarket chain. It was founded in 1924 in Britain. It is the largest British retailer by its global sales and local market share. Tesco is the third largest retailer in the world behind Wal-Mart in the United States, and Carrefour of France. The chain uses the slogan: "Every Little Helps". Brief History Tesco was founded by British businessman Jack Cohen in 1919, who began to sell groceries from a stall in East London (Hackney). He became market stall holder of a number of stalls and started a wholesale business. In 1924 the Tesco brand made its appearance. The name originates from when Jack Cohen ordered a shipment of tea from tea supplier T.E. Stockwell. He took the two initials of the supplier and the first letter of his surname (TES), and then he combined it with the first two letters of his own surname (CO), forming ‘TESCO’ as the brand name.The first domestic brand sold by Cohen was Tesco Tea. The first Tesco store was established in 1929 in Burnt Oak, Edgware, Middlesex. In 1932 Tesco Stores Ltd became a private limited company (PLC) and by 1939, Jack owned a hundred Tesco stores. Tesco Stores (Holdings) Ltd floated on the stock exchange with a share price of 25 pence in 1947. Expansion and successes During the 1950s and the 1960s Tesco grew significantly, until it eventually had more than 800 stores. It bought up its rival’s shops; in the 1950s the retailer first bought 70 Williams stores, then 200 Harrow stores, 97 Charles Philips stores and it acquired the Victor Value chain in the early 1960s. The company started out specialising in food and drink, however it has since then diversified into different branches such as clothing, telecoms, financial services, retailing and renting DVDs, CDs, music downloads, home, health and car insurance, consumer electronics, dental plans, Internet services and software. A few indications of Tesco’s success were its entry in the Guiness Book of Records as the largest store in Europe in 1961 and its opening of the first Tesco 'superstore' in 1968 in Crawly, West Sussex. Tesco was working on creating a national store network by the 1970s to cover the whole of the United Kingdom. To this day Tesco still seeks to expand this network, while also expanding its product variety. Mission Statement and values Tesco’s core purpose is: “Creating value for customers, to earn their lifetime loyalty.” So its basic mission is to capture long term customers and to keep them interested. Tesco aims to achieve this purpose through two values:'No-one tries harder for customers', and 'Treat people how we like to be treated'. The underlying aim in my eyes is of course to make higher profits, but you can see that, at the top level of the company, there is a focus on customer service. The two values that direct the business are explained below: Core Values No-one tries harder for customers • Understand customers better than anyone • Be energetic, innovative and first for customers • Look after our people so they can look after our customers • Use our strengths to deliver unbeatable value to our customers Treat people how we like to be treated • All retailers, there’s one team... the Tesco team • Trust and respect each other • Strive to do our very best • Give support to each other and praise more than criticise • Ask more than tell and share knowledge so that it can be used • Enjoy work, celebrate success and learn from experience Mission The longterm objectives of tesco’s corporate strategy are: • To be a successful international retailer • To grow the core UK business • To be as strong in non-food as in food. • To develop retailing services - such as Tesco Personal Finance, Telecoms and Tesco.com • To put community at the heart of what we do. Organizational structure: Tesco has three committees: Audit Committee, Nominations Committee, Remuneration Committee Tesco has a flat hierarchical structure with just six levels between checkout staff and chief executive. Corporate strategy According to Citigroup retail analyst David McCarthy, "[Tesco has] pulled off a trick that I'm not aware of any other retailer achieving. That is to appeal to all segments of the market". One plank of this strategy has been Tesco's use of its own-brand products, including the upmarket "Finest", mid-range Tesco brand and low-price "Value" encompassing several product categories such as food, beverage, home, clothing, Tesco Mobile and financial services. Beginning in 1997 when Terry Leahy took over as CEO, Tesco began marketing itself using the phrase "The Tesco Way" to describe the company's core purposes, values, principles, and goals. This phrase became the standard marketing speak for Tesco as it expanded domestically and internationally under Leahy's leadership, implying a shift by the company to focus on people, both customers and employees. A core part of the Tesco expansion strategy has been its innovative use of technology. It was one of the first to build self-service till and use cameras. In order to protect its brand image, and given its expansion plans in Thailand, Tesco has recently been employing a policy of launching defamation proceedings. In November 2007, Tesco sued a Thai academic and a former minister for civil libel and criminal defamation. Tesco is insisting that the two pay £1.6 million and £16.4 million plus two years' imprisonment respectively. They have been alleged to have misstated that Tesco's Thai market amounts to 37% of its global revenues, amongst criticism of Tesco's propensity to put small retailers out of business. Tesco's main advertising slogan is "Every little helps". Its advertisements in print and on television mainly consist of product shots (or an appropriate image, such as a car when advertising petrol) against a white background, with a price or appropriate text (e.g., "Tesco Value") superimposed on a red circle. On television, voiceovers are provided by recognisable actors and presenters, such as Barbara Windsor, James Nesbitt, Jane Horrocks, Terry Wogan, Dawn French, Ray Winstone, Neil Morrissey, Martin Clunes, David Jason and Kathy Burke among others. (http://en.wikipedia.org/wiki/Tesco ) Corporate social responsibility Tesco has made a commitment to corporate social responsibility (CSR), in the form of contributions of 1.87% in 2006 of its pre-tax profits to charities/local community organisations. This compares favourably with Marks & Spencer's 1.51% but not well with Sainsbury's 7.02%. Will Hutton, in his role as chief executive of The Work Foundation recently praised Tesco for leading the debate on corporate responsibility.However Intelligent Giving has criticised the company for directing all "staff giving" support to the company's Charity of the Year. In 1992 Tesco started a "computers for schools scheme", offering computers in return for schools and hospitals getting vouchers from people who shopped at Tesco. Until 2004, £92 million of equipment went to these organisations. The scheme has been also implemented in Poland. Starting during the 2005/2006 football season the company now sponsors the Tesco Cup, a football competition for young players throughout the UK. The cup now runs a boy's competition at Under 13 level and two girl's cups at Under 14 level and Under 16 level. Over 40,000 boys alone took part in the 2007/08 competitions. In 2009 Tesco used “Change for Good” as advertising, which is trade marked by Unicef for charity usage but is not trademarked for commercial or retail use which prompted the agency to say "it is the first time in Unicef’s history that a commercial entity has purposely set out to capitalise on one of our campaigns and subsequently damage an income stream which several of our programmes for children are dependent on”.They went on to call on the public “who have children’s welfare at heart, to consider carefully who they support when making consumer choices”. Here you see Tesco’s steering wheel. Its purpose is to ensure that Tesco makes balanced decisions that need to be made regularly. It helps operate and monitor the business on a daiy basis and the underlying philosophy is that if Tesco looks out for its customers well, the outcome will be growth in sales, profits and returns. With this wheel Tesco believes that they can serve their stakeholders best. International operations Countries in which Tesco operates.Tesco's international expansion strategy has responded to the need to be sensitive to local expectations in other countries by entering into joint ventures with local partners, such as Samsung Group in South Korea (Samsung-Tesco Home plus), and Charoen Pokphand in Thailand (Tesco Lotus), appointing a very high proportion of local personnel to management positions. It also makes small acquisitions as part of its strategy for example, in its 2005/2006 financial year it made acquisitions in South Korea, one in Poland and one in Japan. In late 2004 the amount of floorspace Tesco operated outside the United Kingdom surpassed the amount it had in its home market for the first time, although the United Kingdom still accounted for more than 75% of group revenue due to lower sales per unit area outside the UK. In September 2005 Tesco announced that it was selling its operations in Taiwan to Carrefour and purchasing Carrefour's stores in the Czech Republic and Slovakia.