BUSINESS REPORT

Business Report

Business Report

Tesco is the UK's leading food retailer in an extremely competitive market. For this reason it has decided to expand operations across Europe. As part of this expansion programme, the company moved to Ireland again in May 1997. It now has a total of 109 supermarkets and 46 off licences in Northern Ireland and Eire, making it one of the leading food retailers in both markets.

Tesco's target market

The grocery retailing market is divided into geographic segments. For a supermarket as Tesco it is important to focus on the different consuming habits in each region and neighbourhood to reach its target market efficiently. A typical location for a Tesco store is a suburban or urban place with good access to roads and public transport. Tesco has strong national coverage, but most of its superstores are in South and Southeast England. (http://www.mintel.com)

Another way of segmenting the market is by using the ACORN ( =A Classification Of Residental Neighbourhoods), which is a geodemographic segmentation method. The ACORN is based on census data. Every postcode in the country is given a group name from A-F. When using ACORN, Tesco can easily define its local customers and make its products and services suit them. The consumers are divided into ACORN categories and their demographic location.

Operations Strategy

According to Slack et al. (2004), operations strategy is defined as "the total pattern of decisions which shape the long term capabilities of any type of operation and their contribution to overall strategy". Slack et al. (2004) also states that operations performance objectives relate to the interests of the operation's stakeholders. Applying to Tesco, customer's satisfaction is particularly important to its business. Therefore in order to satisfy its customers and contribute to competitiveness, Tesco's operations performance objectives are mainly reflect on cost, quality, speed, dependability and flexibility five aspects. And they will be analysed in detail as follows:

With regard to pricing, Tesco every week check over 10,000 prices in Asda, Sainsbury's and Morrisons stores to guarantee its customers have low prices every day. And it also took steps to reduce cost in order to ensure that the way they work is better, simpler and cheaper. For instance, the reason of Tesco has an effective supply chain is because of implementing an appropriate information technology G.O.L.D. application suite successfully. This software provides Tesco with complete control over warehouse stack. Moreover, the automatic order proposals and warehouse optimisation procedures facilitate a fast and flexible business with minimal logistic costs (Kocevar, 2003).Therefore, by doing things cheaply, it will allow Tesco to reduce its price in order to gain higher volumes or increase their profitability on existing volume levels externally. And internally, cost performance is helped by good performance in the other performance objectives.

As Slack et al. (2004) points out that quality is a particular important objective to all operations, as quality is an important aspect of customer satisfaction or dissatisfaction and quality operations could both reduce costs and increase dependability. For a grocery retailer, quality could mean goods are in good ...