Management at work

Introduction

What I need to do?

In this coursework I need to produce a detailed business report on one

medium–sized or large business. In investigating a chosen Case Study I must

comment and analyze each of the following aspects of the Business:

Objectives

Organization

Structure

Culture

Communication Channels

Quality Assurance and Control

“Adding Value”

I need to examine how these factors interrelate to affect the success of

the business. Also I need to explain how quality assurance and control

systems help the business to add value to its products and services.

As example for mmy investigation I chose Tesco plc., because Tesco is good

example of public limited company and Tesco – is a most popular

supermarket’s network in UK.

How businesses are classified?

I can classify the business by form, by industrial sector, by ownership, by

objective, by size and by location or market.

Forms of businesses.

SOLE TRADER.

Oldest, simplest, most common form of business easy to set up enterprise.

A sole trader exists where a single person owns a business. This is very

common form of organization. Over recent years, tthe number of sole traders

has grown significantly. There are several reasons for this trend including

more opportunities to work for firms on consultancy basis and government

support for self-employment. Most sole traders work on their own .

Initial capital – savings or borrowed. VVery common in retailing, service

trades.

Advantages:

– Easy to set up with little capital and few legal formalities

– The owner controls the business – quick decision making

– Personal contact with customers

– All profits belong to owner

– Satisfaction, motivation, interest in “Working for yourself”

– Business affairs are private – except far tax returns

Disadvantages:

– Unlimited liability for any loss or debts incurred: owner is

responsible or liable

– Cannot “Buy in bulk” and enjoy “Economies of scale”

– Expansions limited by available capital

– Division of labour is difficult

– Continuity a problem.

Good example of sole trader is T. Regan Plant Hire.

PARTNERSHIP

The minimum membership is two partners and the maximum twenty.

Must be at least one general partner wwho is fully liable for all debts and

obligations of the practice. “Sleeping partner” – not active. Partnership

exist mainly in the professions – doctors, lawyers, accountants and

surveyors frequently run their organization in the form of partnership.

Partnerships normally operate in local or regional markets, though advanced

in information technology are allowing many professions to offer their

services more widely.

Advantages:

– Easy to set up

– More capital with extra partners

– Division of labour – specialization

– Responsibility can be shared e.g. long working hhours redused

Disadvantages:

– Partners have unlimited liability

– Disagreement can cause problems – no sole decision – maker or owner

– Lack of capital may still hinder expansion

– Profits must be shared among all co-owners

– Problem of continuity

Good example of partnership is Rolls-Royce.

COMPANIES

A company is defined as an association of persons that contributes money

(or equivalent value in goods and assets) to a common stock, employ it in

some trade or business, and share the profit or loss arising out of that

business. Join stock companies are governed by and registered under the

Companies Act 1985. A company has a separate legal identity form its

members and can sue in its own name. There are two types of company: public

companies and private companies. Both require minimum two shareholders, and

there is no upper limit on the number of shareholders. All companies enjoy

the benefit of limited liability. Capital is raised by selling shares.

PRIVATE LIMITED COMPANIES

Shares can be transferred privately. All must agree.Private limited

companies are suitable for small and medium-sized operations. This type of

business organization is particularly suitable for family firms and for

small enterprises involving just a handful of people.

Private limited companies find it easier to attract capital because

investors have the benefit of limited liability aand this access to finance

makes it simpler for the business to grow.

Advantages:

– Shareholders have limited liability

– More capital can be raised

– Control of company held within the firm

– Shares are transferable

Disadvantages:

– Profit are shared out among more people

– Legal procedures.involve time

– Not allowed to cell shares to the public

– Restricts amount of capital raised

– Difficult to find a buyer if shareholder wishes to “leave”

Good example of privet limited company is Littlewoods Ltd.

PUBLIC LIMITED COMPANY

The second type of limited company tends to be larger and is called a

public limited company. There are about 1.2 million registered limited

companies in the UK, but only 1 per cent of them are public limited

companies. However they contribute with far more to national output and

employ far more people than private limited companies.

Good example of public limited company is Tesco plc. which I going to

investigate.

CO-OPERATIVES

Co-operatives are organised on a regional basis. Members can purchase

shares and each member has one vote at the Annual General Meeting, no

matter how many shares are owned. Members elect a board of directors who

appoint managers to run day to day

business. The Co-operative is run in the interests of its customers and

part of any surplus iis distributed to members as dividend. Shares are not

sold on the stock exchange, which limits the amount of money that can be

raised.

Good example of co-operative is CRS (Co-operative Retail Society).

CHARITIES

Charities are organisations with very specialised aims. They exist to raise

money for “good” causes and draw attention to the needs of disadvantaged

groups in society. They also rise awareness and pass comment on issues,

such as cold weather payments, which relate to the elderly.

Charities rely on donations for their revenue. They also organise fund

raising events such as fetes, jumble sales, sponsored activities and

ruffles. A number of charities run business ventures. Charities are

generally run according to business principles. They aim to minimise costs,

market themselves and employ staff. Most staff are volunteers, but some of

the larger charities employ professionals. In the larger charities a lot of

administration is necessary to deal with huge quantities of correspondence

and handle charity funds. Provided charities are registered, they are not

required to pay tax. In addition, business can offset any charitable

donations they make against tax. This helps charities when raising funds.

Good example of charity is British Red Cross.

FRANCHISES

A franchise is not a form of business organisation as such, but a way of

managing and growing a business. Franchising covers a variety of

arrangements

under which the owner of a businnes idea grants other

individuals or groups to trade using that name or idea. However, it is

important to realise that a franchise can trade as a sole trader, a

partnership or a private limited company. The legal form of business that

is chosen will depend on the capital needed, the degree of risk, the number

of people having a stake in the franchise and the personal preferences of

the owner. The person or organisation selling the idea (the franchisor)

gains aa number of advantages from the process of franchising. The

franchisor normally receives a share of the profits generated by the

franchise. Usually the franchisee benefits by being granted rights to an

exclusive territory and support from the franchiser in the form of staff

training, advertising and promotion.

Franchising is a cheap and quick way to set up your own business. By the

year 2004, it is estimated that 70 per cent of all new retail outlets in

the US will be franchises.

Good example of franchise is MMcDonald’s.

Industrial sectors.

PRIMARY – extractive organisations.

SECONDARY – manufacturing organisations.

TERTIARY – providing-services organisations.

Ownerships.

PUBLIC SECTOR: Civil service, Government departments, Public corporations,

Local Authorities.

PRIVATE SECTOR: Sole traders, Partnerships, Limited companies, Charities,

Co-operatives, Franchises.

Objectives.

– To make a profit

– To “Break – even”

– To provide service

Size.

– Small

– Medium

– Large

Locations

– Local

– Regional

– National

– Multinational

E1

Tesco plc.

History

Tesco was founded in 1924. Over the last seventy years, as the food

retailing market has changed, the company has grown and developed,

responding to new opportunities and pioneering many innovations. Today it

is Britain’s leading food retailer.

The founder of Tesco was Sir Jack Cohen. He used his gratuity from his Army

service in the First World War to start selling groceries in London’s East

End markets in 1919. The brand name of Tesco first appeared on packets of

tea in the 1920s. The name was based on the initials of T.E. Stockwell, a

partner in the firm of tea suppliers, and the first two lletters of Cohen.

The first store to be opened was in 1929 in Burnt Oak, Edgware.

The business prospered and grew in the years between the wars. In 1947

Tesco Stores (Holdings) Ltd was floated on the Stock Exchange, with a share

price of 75p. The price at the beginning of March 1998 was around 515p.

Self-service supermarkets started in the USA in the 1930s during the

depression. They soon realised that by selling a wider variety and larger

volume of stock and employing fewer staff they ccould offer lower prices to

the public.

Self-service stores came to Britain after the Second World War, and Jack

Cohen opened the first Tesco self-service store in St Albans in 1948.

In 1956 the first Tesco self-service supermarket was opened in a converted

cinema in Maldon. By the early 1960s, Tesco had become a familiar name. As

well as groceries, the stores sold fresh food, clothing and household

goods. Tesco stores were located in the high streets of many towns. The

Tesco store which opened in Leicester in 1961 had 16,500 square feet of

selling space and went into the Guinness Book of Records as the largest

store in Europe.

By buying in bulk and keeping costs down, Tesco should have been able to

sell at very competitive prices to its customers. Until 1964, however,

suppliers were, by law, able to insist that retailers charged a set price

for their products (the system known as Resale Price Maintenance) which

meant that it was difficult to reduce prices. The intention was to protect

small shops against the lower prices that big retailers could offer their

customers.

Tesco introduced trading stamps so that it could bring lower prices to its

customers. Customers collected stamps as they purchased their groceries and

other items. When they had collected enough stamps to fill a book, tthey

could exchange the book for cash or other gifts. Other retailers soon

copied Tesco. Sir Jack was one of the leaders in persuading Parliament to

abolish Resale Price Maintenance in 1964. After this, Tesco continued to

offer trading stamps until 1977.

Apart from opening its own new stores, Tesco bought existing chains of

stores. In 1960 it took over a chain of 212 stores in the north of England

and added another 144 stores in 1964 and 1965. In 1968 the Victor Value

chain became part of the company.

Tesco introduced the concept of a superstore in 1967 when it opened a

90,000 square feet store in Westbury, Wiltshire. The superstore was a new

concept in retailing – a very large unit on the outskirts of a town,

designed to provide ease of access to customers coming by car or public

transport. The term superstore was first actually used when Tesco opened

its store in Crawley, West Sussex in 1968.

By 1970, Tesco was a household name. Its reputation had been built on

providing basic groceries at very competitive prices; the slogan ‘Pile it

high and sell it cheap’ was the title of Sir Jack Cohen’s autobiography.

But as people were becoming better off, they were starting to look for more

expensive luxury items as well as eeveryday household and food products. In

the late 1970s the company decided to broaden its customer base and make

its stores more attractive to a wider range of customers. Many of the

older, high street stores were closed and the company concentrated on

developing bigger out-of-town superstores. The superstores sold a broader

range of goods, and had wider aisles and better lighting. While still

offering very competitive prices, the emphasis was now on quality, customer

service and a customer-friendly environment. In 1974, the company developed

filling stations at its major sites, selling petrol at very competitive

prices. In line with its new image, Tesco finally stopped giving trading

stamps in 1977, at the same time introducing a price cutting campaign under

the banner „Checkout at Tesco“ which proved to be a major success.

In one year in the late 1970s, the Tesco market share increased from 7% to

12%, and in 1979 its annual turnover reached £1 billion for the first time.

During the 1980s, Tesco continued to build new superstores, opening its

100th in 1985. In 1987 it announced a £500 million programme to build

another 29 stores. By 1991, the popularity of Tesco petrol filling stations

at its superstores had made the company Britain’s biggest independent

petrol retailer.

In 1985 Tesco introduced its Healthy Eating initiative. Its

own brand

products carried nutritional advice and many were branded with the Healthy

Eating symbol. The company was the first major retailer to emphasise the

nutritional value of its own brands, to customers.

By 1990, Tesco was a very different company from what it had been 20 years

before. The Tesco superstore offered customers a very wide range of goods,

a pleasant shopping environment, free car parking and an emphasis on

customer service. Although many financial experts had not believed that the

company could so radically change its iimage, the new approach saw sales and

profits rise consistently. Existing customers took advantage of greater

choice, and new customers discovered that Tesco could successfully match

the offer of any of its retail competitors.

In the 1990s, the company built on its success by developing new store

concepts and new customer-focused initiatives. In 1992, it opened the first

Tesco Metro, a city centre store meeting the needs of workers, high street

shoppers and the local community. This was followed by Tesco Express,

combining a petrol filling station with aa local convenience store to give

local communities a selected range of products. The company also expanded

into Scotland when it acquired a chain of 57 stores from William Low.

Tesco broke new ground in food retailing by introducing, in 1995, the first

customer lloyalty card, which offered benefits to regular shoppers whilst

helping the company discover more about its customers’ needs. Other

customer services followed, including home shopping for those who hadn’t

the time to visit a superstore, Tesco Direct for catalogue shoppers and the

Tesco Babyclub for new parents. Currently, the company is adding financial

services to its provision for customers.

By 1995, Tesco had become the largest food retailer in the UK.

In the 1990s, Tesco started to expand its operations outside the UK. In

Eastern Europe, it has met growing consumer aspirations by developing

stores in Poland, Hungary, Slovakia and the Czech Republic.

Closer to home, in 1997 Tesco purchased 109 stores in Ireland, which gave

the company a market leadership both north and south of the border.

Tesco Chairmen 1947-1998

Sir JJack Cohen 1947-1979

Sir Leslie Porter 1979-1985

Sir Ian MacLaurin (Lord MacLaurin from 1996) 1985-1998

John Gardiner 1997

Chief Executive Terry Leahy 1997

The letters ‘plc’ at the end of its name distinguishes a public limited

company from a private limited company. Most of Britain’s famous

businesses such as Marks and Spencer, ICI, BP, and Manchester United are

public limited companies. All companies with share prices quoted n the

London Stock Exchange are public limited companies.

To become a public limited company, a business must have an issued share

capital of aat least £50,000 and the company must have received at least 25

per cent of the nominal value of the shares. Public limited companies must

also:

• be a company limited by shares

• have a memorandum of association with a separate clause stating

that it is a public company

• publish an annual report and balance sheet

• ensure that its shares are freely transferable – they can be bought

and sold.

Benefits:

• All members have limited liability.

• The firm continues to trade if one of the owners dies.

• Huge amount of money can be raised fom the sale of shares to the

public.

• Production costs may be lower as firm may gain economies of scale.

• Because of their size plcs can often dominate the market.

• It becomes easier to raise finance as financial institutions are

more willing to lend to plcs.

Constraints:

• The setting up costs can be very expensive – running into millions

of pounds in some cases.

• Since anyone can buy their shares, it is possible for an outside

interest to take control of the company.

• All of the company’s accounts can be inspected by members of the

public. CCompetitors may be able to use some of this information to

their advantage. They have to publish more information than private

limited companies.

• Because of their size they are not able to deal with their

customers at a personal level.

• The way they operate is controlled by various Company Acts which

aim to protect shareholders.

• There may b a divorce of ownership and control which might lead to

the interests of the owners being ignored to some extent.

• It is argued that many of these companies are inflexible due to

their size. For example they find change difficult to cope with.

Tesco plc. is large, private sector organisation. As it is providing-

service organisation I can classify it as tertiary sector organisation.

Tesco plc. is a national company, but it is becoming to multinational. Main

objective is to make a profit.

As Tesco is a limited company that means all owners have limited liability.

If a company has debts, the owners can only lose the money they have

invested in the firm.

Main source of finance is selling shares and borrowing from the banks.

Tesco has a thousands of owners, every man who has any shares is owner; but

these people can’t control the company, so ccompany has a board of directors

and chairman who control the company.

Tesco has a heavy programme of capital expenditure, investing in new stores

and upgrading existing ones. In the year ending 28th February 1998, the

group capital expenditure was £841 million, compared to £758 million in the

year ending 28th February 1997. This £841 million was divided into £737

million spend in the Great Britain, £63 million in Ireland, north and

south, and £41 million in Europe. Tesco anticipates that in the 1998-9

financial year, capital spending will rise to about £950 million, with most

of the extra spending being concentrated in Ireland and Central Europe.

Profit is also distributed to shareholders in the form of dividends.

For example, in 1998 the profits from Tesco after tax were £505 million.

About 50% of the profits were distributed to shareholders as dividends.

Subsequently approximately £250 million was retained by the company for

investment in new stores and improving their service to customers.

E2

Objectives of the business.

The objectives of the business can vary enormously A charity’s overriding

objective might be to alleviate poverty in the developing world; on the

other hand many companies’ major objective is to generate the maximum

profits possible. An organisation’s mission statement gives an indication

of the purpose of the business and dovetails with the

objectives the

organisation set itself.

Mission statement.

Many organisations attempt to express the purpose of their being within a

few sentences. The mission statements are intended to provide a sense of

common purpose to direct and stimulate the organisation. This statement

represents the vision or mission of the organisation. Mission statements

change over time to reflect the changing competitive nature of the markets

in which business sell.

Mission statement normally set out to answer the following questions:

• What business is the organisation in?

• Who is tto be served?

• What benefits are to be provided?

• How are consumers to be satisfied?

Objectives.

Business objectives are medium- to long-term goals or targets that provide

a sense of direction to the business. Objectives are normally measurable

and have a stated timescale.

Company may have a number of objectives. In general, the objectives

pursued by a business tend to vary according to its size, ownership and

legal structure.

Figure 1.1 illustrates the interrelationship between a company’s mission

statement and its objectives.

Figure 1.1: The hhierarchy of objectives

The goals pursued by any business can be separated into primary and

secondary objectives.

• Primary objectives are those that must be achieved if the business is

to survive and be successful. These relate to issues such as profit

levels and market share.

• Secondary objectives tend to measure the efficiency of the

organisation. They may affect the chances of success, but only in the

long term. Examples include administrative efficiency and labour

turnover rates.

Profit maximisation.

Profit maximisation one of the most important objective for companies which

are owned by shareholders. Profit, at is simplest, refers to the extent to

which revenues exceed costs, so profit maximisation occurs when the

difference between sales revenue and total cost is greatest.

Survival.

Survival is an important objective for many businesses. It is particularly

important when businesses are vulnerable such as:

• during their first few years of trading

• during periods of recession or intense competition

• at a time of crisis such as a hostile ttakeover.

Most recently established businesses have survival as an objective.

Increasing sales or market share.

Growth increases the scale of a business, resulting in higher levels of

output and more sales. Many businesses pursue growth strategies because

their managers believe that this is essential for survival. If a firm

grows, it might be able to attract more customers, earn higher profits and

begin to establish itself in the market.

Growth offers:

• increased returns for the owners of the business

• higher salaries for employees of the bbusiness

• a wider range of products for the business’s existing and potential

customers.

Growth can be important target for managers. It is increasingly common for

managers’ pay packages to be a combination of shares and salary.

Providing social or community service.

A number of organisations provide services to the community. These

organisations are part of the public sector – they are managed, directly or

indirectly, on behalf of the government – yet they are a form of business.

Their overriding objective is to provide the best positive service to the

local community.

Charitable and non-profit objectives.

Charities have a high profile in the UK. Charities have a number of clear

objectives:

• to rise the public’s awareness of the cause that thy support.

• To rise funds to support their projects.

Charities trade with the intention of earning as much revenue as possible

to spend on their particular causes.

Producing high quality products.

Just as many businesses seek to provide high quality service, a large

number of businesses also have the provision of high quality product as an

important objective. Acquiring reputation for top quality can allow

businesses to charge a premium price and to enjoy higher profits.

Reputations for supplying quality products are jealously guarded.

Tesco is committed to retaining its position as the UK’s llargest

supermarket retailer. Customer feedback forms, in-store discussion groups

and a continuous analysis of sales figures has enabled Tesco to recognise

the importance of the key principles of price, quality and service.

The company owes its success to its emphasis on meeting changing customer

needs through service and innovation, while maintaining its commitment to

value and quality.

Underlying its business success is a commitment to upholding certain

values and working and working principles and seeking continuous

improvement in its ethical performance.

Companies are part of the society in which they operate and must take note

of the interests and concerns of many different groups. For Tesco these

includes its customers, its stuff, its shareholders, its suppliers and

people in the local communities close to its stores and in the world

beyond. Each group has expectations of the company which Tesco has to meet

and manage if it is to maintain its position as a leading and successful

retailer.

Tesco must serve its customers by providing the goods they want and the

service they expect. By meeting customers needs better than its

competitors, Tesco earns profits and creates value for its shareholders.

Tesco, like other large companies, however, recognises that its wider

reputation depends on other things such as its stuff relations, its

attitude to the environment, its support to tthe community, and its

relationships with suppliers. Also as a leading food retailer, the company

must ensure that its provides products which are safe to eat or use, as

well as giving customers advice on matters such as healthy diets.

Tesco’s main business objectives:

• to provide customers with outstanding, naturally delivered, personal

service

• to earn the respect of its stuff for the values and appreciate their

contribution

• to understand customers better than anyone

• to be competitive even on the basics

• give customers a broad range of strong relevant promotions in all

departments of the store

• give customers what they want under one roof

• provide an environment that is easy and pleasant to shop in

• upgrade existing stores to the standards that is expected from Tesco

• to recognise Tesco has brilliant people, use this strength to make

customers’ shopping enjoyable in a way no competitor can

• use intelligence, scale and technology to deliver unbeatable value to

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 iin 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 sservice,

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 tto 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 oof 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 ccategory

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 uup 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 aa

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 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 iinside 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. EEffective 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 ppositive 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 oout 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 rresearch 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 sshare 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 ffirst 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 aaround 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 oof 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 tthe 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 customer.

• Administration – adding the customers details to the IT system,

passing on details to other departments within the business.

• Finance – investigating the financial status oof the customer, offering

credit terms if appropriate, invoicing for payment.

• Distribution – receiving details of order and meeting the customer’s

demands, liasing with marketing over delivery dates, rescheduling

other production as required.

• Human resources – at a store or warehouse level – ensuring sufficient

employees are available to meet the delivery requirements of the

order, arranging overtime payments if necessary.

Hence these functions help meet the objectives successfully. All Tesco’s

organisation structure works as links of a chain, if oone link falls down,

all the organisation will experience difficulty. For example, most

important department of Tesco, I consider, is Distribution department. If

this department fails, products will not be delivered to the store, so

customers will go to another store. Tesco’s success is built on the good

work of each department.

E4

Organisational structure

In many small firms, the owner may have a very hands-on approach and may be

responsible for getting customers, hiring any extra labour and acquiring

other inputs and taking all financial decisions. As organisations grow,

however, their structure takes on a greater significance and those at the

top have to pay more attention to its formal structure and presentation.

The various business functions will show an increasing degree of

specialisation as an organisation expands and people will be employed to

manage and take decisions in specialist areas.

In general, an organisational structure sets out:

1. Major roles and job titles, showing who is in control of the business

as a whole and who manages its major business functions within

departments.

2. The level of seniority of people holding different positions and their

respective positions in the organisation’s overall hierarchy.

3. The working relationships between individuals, identifying

relationships in terms of superiors and their subordinates and

indicating who has authority to ttake certain kinds of decisions and

who are responsible for carrying out the work arising from those

decisions.

4. The extent to which decision making is concentrated in the hands of

people at or near the top of the organisation or handed down to those

at lower levels of management.

5. The broad channels through which information is communicated

throughout the organisation, indicating the route by which

instructions flow down the hierarchy and how information flows back up

the hierarchy.

Organisational charts

Organisational charts are representations of the job titles and the formal

patterns of authority and responsibility in an organisation.

Business may produce organisational charts for several reasons. First, it

is important that a company reviews its organisational structure on a

regular basis to take account of any changes in the business environment.

A formal organisational chart helps the company to identify where changes

need to be made and to decide the relationship between any new sections or

departments and the rest of the organisation. Business also produce

organisational charts because they allow a company to review its structure

and to identify areas where cost saving changes and improvements can be

made. Organisational charts are useful when changes take place in the

company. It can be updated to take account of aany informal developments in

its structure that have been good for the company. A revised organisational

chart is particularly useful for informing people about the new structure

of the company after mergers or take-overs.

The organisational chart can also be used during an induction period to

give new employees a useful overview of the company and their own position

within the structure in terms of their authority and the managers to whom

they are responsible. Although an organisational chart has several uses, it

should not be taken as giving an exact description of how the organisation

actually operates. It does not give the exact nature of job

responsibilities or indicate what levels of cooperation may be necessary

between departments.

Function 1.7: Line authority in a production department.

Chain of command – is the line of command flowing down from the top to the

bottom of an organisation. It passes down the management hierarchy, from

director and senior management levels to those in middle and junior

management positions and eventually to employees in supervisory jobs who,

for example may have authority over assembly line workers or staff

providing services to the organisation’s customers. Organisations with a

long chain of command – with a hierarchy made up of many levels of

management – are said to have tall organisational structures.

Span of

control – refers to the number of subordinates a manager is

responsible for and has authority over. Organisations with a long chain of

command will tend to have narrow spans of control. Organisations with a

short chain of command tend to have wider spans of control. This produces a

flat organisational structure because it has a hierarchy with fewer levels

of management.

Flat organisational structures: are generally desirable, there is a limit

to the number of subordinates who can be placed under one superior. Even

very experienced managers wwho have the qualities and personalities that

promote loyalty and hard work can only be responsible for so many

employees.

Tall organisational structure : some organisations have many levels and

grades of staff with a tree-like management structure and strong patterns

of vertical communication. This means that there are many different grades

of staff between people lower down the organisation and the person at the

top. Tall organisations suffer from problems with bureaucracy, as

information needs to be directed through the correct channels before

appropriate action is taken.

The main ffeatures of such a structure are as follows:

6. At each level there are several staff responsible to a person at the

next level up. The process is repeated until the top of the

organisation is reached.

7. In a llimited company the person at the top is the Managing Director

who is ultimately responsible for the whole organisation.

8. As the levels within the organisation are ascended, the number of

people at each level decreases and this gives the organisation a

pyramidal structure.

In an organisation with flat structure there are fewer levels or grades of

staff and much more emphasis on communication across the organisation. This

is more likely to be the structure of a small business where everyone knows

each other and works together more as a team.

In some situations, however, a relatively wide span of control may be

acceptable if:

9. The potential disadvantages of a wide span are outweighed by the costs

of employing the extra managers needed to produce nnarrower spans of

control.

10. Junior employees are engaged mainly in routine work and as a result

the manager is required to make relatively few decisions.

11. Managers are willing to reduce the pressure on their own time by

delegating more decision making and they can identify staff who are

likely to respond well to the extra responsibility.

12. An effective range of financial and non-financial motivational factors

produces a committed group of people who need very little supervision.

13. TThe group within the span are highly skilled or talented and are given

a great deal of scope to be creative and imaginative in their work.

Line structure

In a line structure, a company is usually organised into functional

departments, each headed by a senior manager, below whom there is a chain

of command. This indicates that there is a line of authority and

responsibility as one goes down the structure.

Each person in the line has authority over those below, while being

responsible for making sure that the work handed down to them from their

immediate manager is completed. This applies even if the subordinate does

not personally undertake the actual work.

Advantages:

14. It is hierarchical structure which is simple to understand – staff

know precisely where they are in the structure, who can allocate work

to them and to whom they are responsible.

15. Managers have a clear understanding of the roles of people when

allocating work and spend less time monitoring work because

subordinates are not distracted or confused by instructions from other

sources.

16. A well-established line authority makes it possible for work to be

delegated further down the line – this can be valuable when superior

is seeking to widen the experience subordinates aand develop their

management or supervisory skills.

Disadvantages:

17. It can involve a very long chain of command – instructions may take a

considerable time to filter from the top and impact on production,

which can be an important drawback if the organisation operates in a

rapidly changing market.

18. The flow of information back up a long chain to management may be a

lengthy process, causing a considerable delay before problems are

identified and tackled.

19. Individuals might only respond to requests from the superior, creating

inflexibility in the organisation which may be totally unnecessary if

co-operation with other managers does not effect working relations

with their superior.

Line and staff structure

A line and staff structure combines both a line authority and what is known

as staff authority. The term staff authority refers to those staff, usually

at a relatively senior level, whose are of work often involves dealing with

different departments. Someone with the relevant staff authority can

provide services and advises to those in the line of authority of other

departments. Managers with staff authority do not have the power to control

or give instructions, but rather the authority to deal with different

departments and to offer advice or support services in relation to problems

or eexploiting new opportunities. However, since those with staff authority

are appointed because of their expertise, experience and good personal

skills, their advice, though not binding, is likely to be very persuasive.

Advantages:

20. Staff authority enables the expertise and experience of specialists to

be utilised more fully across the organisation.

21. By having access to all areas of the company, managers with staff

authority, communications between departments are at director level,

and so any inter-departmental communication has to pass up the chain

of command in one department to director level and then down the other

before it reaches the appropriate level.

22. Staff authority prevents individual departments from being too inward

looking – departments remain aware of their interdependence and their

role in seeking to achieve the organisation’s objectives.

Disadvantages:

There is a risk that staff authority may diminish the authority of

individuals in the line management, particularly if those with staff

functions acquire informal power and authority.

Matrix structure

In a matrix structure, a senior manager heads a division or team of

specialists drawn from different departments. These specialists are also

located in departments where they are part of a line authority; they are

therefore subject to two sources of authority.

In a matrix structure the simple chain of command found

in a line structure

is replaced by a very large number of reporting relationships as

individuals report to managers in more than one department or function.

A matrix structure may be used for just some of an organisation’s

activities or it may cover the whole work of the organisation. It is often

used for organising and managing project teams, where people with

specialist skills, perhaps from different levels in the hierarchy, are

brought together to solve complex and urgent problems. Project teams may be

created to deal with iissues which arise every now and again or they may be

an ongoing feature of the organisational structure.

Some aspects of marketing, however, may be handled by an ongoing project

team drawn from other departments, although the membership of the group may

change as different marketing issues arise.

Advantages:

23. It promotes increased co-ordination between departments because it

cuts across departmental boundaries – it encourages greater

flexibility and creativity, produced by the cross-fertilisation of

knowledge and skills.

24. It allows for the involvement of relatively jjunior staff, giving them

valuable experience in a wider field for the expression and

application of their particular skills.

25. Staff lower down a line structure can also gain valuable management

development in a project team, preparing them for promotion tto higher

management positions.

26. The involvement of specialists from different areas reduces the risk

of resources

being wasted on projects with no future – in non-matrix structures an idea

originating

in, say, the marketing department may be pursued for a long time before it

comes to the attention of production which might find that it is

simply not practical.

Disadvantages:

• The existence of a matrix structure and project teams can lead to

confusion as individuals are involved in a large number of different

relationships creating a complex pattern of authority and

responsibility.

• A line manager may resent a subordinate receiving instructions from

managers based on other departments, especially if they are at a lower

level of management.

• This also raises qquestions as to who has priority over the

subordinate’s time and what information arising out of the work of the

project team should also be reported through the line authority. This

can be a potential source of conflict and relations may also be

strained if the subordinate suffers from divided loyalty.

Centralised structure

Organisations are centralised when the majority of decisions are taken by a

few people at the top of the organisation and little decision making is

delegated to those further down the oorganisational structure.

Even if many important decisions are delegated to subordinates, some

aspects of the business are always likely to remain totally under central

control. In general, senior managers or a centralised department takes

responsibilities for: major financial issues, wages and salaries, manpower

planning and personnel records, purchasing.

Advantages:

27. Senior management have more control of the business, eg budgets.

28. Procedures, such as ordering and purchasing, can be standardised

throughout the organisation, leading to economies of scale and lower

costs.

29. Senior managers should be more experienced and skilful in making

decisions. In theory, centralised decisions by senior people should be

of better quality than decentralised decisions made by others less

experienced.

30. In times of crisis, a business may need strong leadership by a central

group of senior managers.

31. Communication may improve if there are fewer decision makers.

Decentralised structure

Complete decentralisation would mean subordinates would have all the

authority to take decisions. It is unlikely that any business operates in

either of these ways. Even if authority is delegated to a subordinate, it

is usual for the manager to retain responsibility.

Some delegation is necessary in all firms because of the limits to the

amount of work senior managers can carry out. Tasks that might be delegated

include staff selection, qquality control, customer relations and purchasing

and stock control. A greater degree of decentralisation – over and above

the minimum which is essential – has a number of advantages.

Advantages:

32. It empowers and motivates workers.

33. It reduces the stress and burdens of senior management. It also frees

time for managers to concentrate on more important tasks.

34. It provides subordinates with greater job satisfaction by giving them

more say in decision-making, which affects their work.

35. Subordinates may have a better knowledge of ‘local’ conditions

affecting their area of work. This should allow them to make more

informed, well-judged choices.

36. Delegation should allow greater flexibility and a quicker response to

changes. If problems do not have to be referred to senior managers,

decision-making will be quicker. Since decisions are quicker, they are

easier to change in the light of unforeseen circumstances which may

arise.

37. By allowing delegated authority, management at middle and junior

levels are groomed to take-over higher positions. They are given the

experience of decision making when carrying out delegated tasks.

Delegation is therefore important for management development.

Delayered structure

Delayering involves a business reducing its staff. The cuts are directed at

particular levels of a business, such as managerial pposts. Delayering

involves removing some of these layers. This gives a flatter structure.

Delayering is likely to play a major role in a policy of decentralisation

as the removal of management layers allows authority for decision making to

be shifted to a lower level in the organisation.

Advantages:

• The savings made from laying off expensive managers. It may also lead

to better communication and a better motivated staff if they are

empowered and allowed to make their own decisions.

• However, remaining managers may become demoralised after delayering.

Also staff may become overburdened as they have to do more work. Fewer

layers may also mean less chance of promotion.

Management style

Management style refers to the approach that an organisation takes in

setting objectives for its employees and the way it manages relations

between superiors and subordinates.

Management or leadership styles can be categorised as:

Autocratic: A manager that adopts an autocratic management style takes

entire responsibility for decisions and, having set objectives and

allocated tasks to employees, expects them to be carried out exactly as

specified. Employees are told exactly what, how and when work must be

started and finished. It is the kind of management style often associated

with a corporate culture centred almost exclusively around production.

Power is focused at the top, and

the centralised decision making is geared

to getting the goods out of the factory and to customers. Little regard is

paid to any non-monetary needs of employees; they are not consulted or

involved in decision making.

Democratic: A democratic management style seeks to involve employees in the

decision-making process, either by consulting them directly or through

their representatives. This approach reflects a corporate culture which is

more human resource centred and recognises the organisational benefits from

meeting its employees’ non-monetary needs – such as a need for job

satisfaction aand a sense of belonging. A consultative approach is

particularly important if an organisation is planning to change product

design or working conditions, methods and practices.

Laissez-faire style: This style gives people complete freedom to organise

and carry out their work. It is a very person centred approach. A laissez-

faire approach may still impose some constraints, such as completion dates

for certain key tasks or the earliest and latest arrival times for a

flexible hours working day. There is no formal structure for decision

making as decisions aare taken by a variety of processes depending upon the

nature of the problem, the opportunity to be explored and the individuals

involved.

Consultative style: Leaders consult with others before decision are made.

There will be a group influence in the final decision, even tthough it is

made by the leader.

As diagram above shows, Tesco has many levels of staff: directors on the

top, and step by step to employees on the bottom, therefore I can think

that Tesco is a hieratical organisation, where each individual knows who he

must report to. Communication in a complex organisation such as Tesco will

be dependent on the organisational structure, but this will be discussed

later in my section on “Communication”.

I can see that Tesco has a centralised and decentralised form of

organisation because people on the top, who control the company, take the

majority of decisions and also the company’s Head office is centralised at

Cheshunt in Hertfordshire.

Tesco is very big organisation and has very many stores in different places

– this fact shows that Tesco iis a decentralised organisation, with much

decision-making delegated on a regional and individual store level.

From the information I have managed to access I believe/consider that Tesco

has a very good democratic and consultative management style. It is a very

successful firm, as seen earlier, it is now the U.K. market leader with

positive leadership from above and a notable corporate culture.

The directors present their annual report to shareholders on the affairs of

the Group together with the audited consolidated financial statements of

the Group for the 552 weeks.

The principal activity of the Group is the operation of food stores and

associated activities in the UK, Republic of Ireland, France, Czech

Republic, Slovakia, Hungary, Poland and Thailand. A review of the business

is contained in the Annual Review which is published separately and,

together with this document, comprises the full Tesco PLC Annual report

Accounts.

Culture

Culture in organisations is often described as the set of values, beliefs

and attitudes of both employees and management that helps to influence

decision-making and ultimately behaviour within them. Each organisation has

a unique culture. This is what makes studying business behaviour so

fascinating. The business culture helps to determine how things get done in

firms and defines, quite simply, how the company works. The fact that

organisations are themselves organic, composed of workers constantly

interacting with each other and their environment, suggests that the

culture in firms is not static and constant – the way firms operate can

change, either intentionally through management action or more likely

through natural evolution.

Corporate culture

Corporate culture is a set of values and beliefs that are shared by people

and groups in an organisation. A simple way of explaining corporate culture

might be to say that it is the ‘way that things are done in a business’.

The corporate culture of a business ccan influence decision-making. It also

encourages low level managers to behave like entrepreneurs. Business

leaders are able to create a corporate culture to achieve a corporate

objectives and strategy of the company. It is important that the corporate

culture of a business is understood by all the people that work in the

organisation. It is usually transmitted to new members and reinforced

informally, by stores, symbols and socialisation, and more formally through

training.

Advantages of a strong corporate culture.

• It provides a sense of identity for employees. They feel part of the

business. This may allow workers to be flexible when the company

needs to change or is having difficulties.

• Workers identify with other employees. This may help with aspects of

the business such as team work.

• It increases the commitment of employees to the company. This may

prevent problems such as high labour turnover or industrial relations

problems .

• It motivates workers in their jobs. This may lead to increased

productivity.

• It allows employees to understand what is going on around them. This

can prevent misunderstanding in operations or instructions passed to

them.

• It helps to reinforce the values of the organisation and senior

management.

• It acts as a control ddevice for management. This can help when

setting company strategy.

Figure 1.8: Types of business culture.

Culture, presented within Tesco plc.

Tesco has achieved its position as Britain’s leading food retailer by

offering excellent value and service to its customers. Underlying its

business success is a commitment to upholding certain values, working

principles and culture within the organisation, and to seek continuous

improvement in its ethical performance. As a measure of its achievement to

date, in 1997 the company came top in the Christian Aid league table for

ethical commitment.

Customers.

Tesco must serve its customers by providing the goods they want and the

service they expect. By meeting customer needs better than its competitors

do, Tesco earns profits and creates value for its shareholders.

Customer service is at the heart of Tesco business culture. The base line

is quality and value, but customers also look for a shopping environment

which is attractive, well planned, and enjoyable. They also expect staff to

be helpful, responsive to their needs, and sympathetic to their problems.

Tesco is constantly seeking new ways of meeting customer needs. These

include introducing Customer Assistants dedicated to helping customers at

every point during their shopping, establishing a Customer Service Centre

to deal with customer enquiries, providing facilities for customers with

disabilities, and organising customer question times

when Tesco can hear

customers views.

Staff.

Tesco employs 154,000 people in the UK and 27,000 in Ireland and Europe. It

is constantly told by customers that its staff are the company’s best

asset. This means that the company must motivate and train its employees to

give the best possible customer service, and provide opportunities for all

members of staff to develop their talents to the full.

The company believes that the welfare and safety of its employees is of

paramount importance, and applies high ethical standards to pprotect

workers’ rights and reward employees fairly for their work. Full and part-

time staff have had their benefits harmonised, including salaries, purchase

discounts, pensions and profit-sharing. The company has a national

agreement with USDAW, the shop workers’ trade union.

The approach of Tesco to worker welfare goes beyond its own employees. The

company insists that its suppliers meet certain employment standards in

matters such as fair pay or minimum working ages. Tesco believes it can

play a positive role in influencing working practices around the world.

Like other llarge companies, however, Tesco recognises that its wider

reputation depends on other things, such as its staff relations, its

attitude to the environment, its ...