Business at work

p> Opened and restricted channel of communications

In most organisations, some internal channels and communication media are open to all employees; stuff at all levels can access the information.
Organisations want to provide some information to all their employees. This would include, for example, information on health and safety regulations, environmental management policies, incentive chemist and any response to resent adverse publicity. This downward information flow from the top of the hierarchy would be open to all.
The content of much downward and upward information flow sis fairly routine, and organisation are not too concerned about people beyond the sender and recipient being aware of what is being communicated. However, access to some information and channels of communications may be restricted. Some information is sensitive – and if it becomes known to people other than the intended recipients, it could create either internal or external problems.

Information and communication technology
Both internal and external channels of communication are increasingly supported by information technology, with computers generating and managing information flows. A computer-based information management system provides the mean to communicate, collect, store, summarise, analyse and present information in a way that best suits the controlling and decision making needs of different managers. Inform received by one department or section can be further processed before it passed onto other departments through the organisations computer network.
Computer systems can help organisations:
. react changes in the business environment
. process complex information
. provides administrative support
. increase job certification
. collect information at source
. communicate via the internet.

The Data Protection Act 1984
The Data Protection Act was introduced to ensure that organisations structured and managed the data held on their computers in a responsible way. These are its main provisions.
. Organisations must register the kind of information it keeps on individuals with The Data Protection Agency (DPA).
. Data must be obtained and processed fairly. People should know if the information they give to organisations will be kept on computer and why it is needed.
. Organisations can only collect the kind if information that they have registered with the DPA, and the data must not be used outside of the purpose for which it has been registered.
. The information held on individuals must be accurate and, where necessary, up to date and it must not be kept longer than necessary.
. Organisations must take precautions against unauthorised access to the information they hold on individuals.
. Individuals are allowed access to the personal data held by organisations and, where necessary they can correct mistakes.
In March 2000 the Data Protection Art was extended to cover records kept on a paper as well as information stored on computers and to provide additional protection for the individual. The protection includes new rights to know who holds information on you. It provides a statutory right to know the identity of the person in a business responsible for data protection issues, right to have a photocopy of personal information held by organisations and greater rights to object to anyone holding personal data.
There are also new rules to prevent organisations sending data to a country outside the European Union in an attempt to avoid complying with legislation on data protection. There are new provisions which can lead to individuals being held personally responsible for not abiding by the rules.

Communication within Tesco plc.

An illustration of communication within Tesco plc.

Figure 2.0: Example of vertical and lateral communication within Tesco.

I have analysed the communication within Tesco plc. and now I can say that
Tesco uses relevant and accurate information to plan and manage efficient development, marketing, distribution and cost control. Information, vertical and lateral, communicated within Tesco very efficiently at the all levels. Every single person who works in Tesco is sure about from whom he should receive information and instructions.
But apart of internal communications Tesco has very good external communications as well. The company communicates with customers and suppliers very well. The quality of Tesco’s external information is very high. Tesco has many communication channels which allow customers easy access to the company, for example, Tesco advertises a customer care free telephone number and e-mail address on its packaging literature.

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Production.
Production involves activities, which combine inputs in order to bring about the physical changes that eventually produce the desired output – the product. The product may be goods for consumers and households or parts and machinery for other producers and manufacturers. Production can create a physical change through:

. Processing

. Manufacturing

. Assembly

. Craft-based processes.

Value added
A common feature of all forms of production is that they are the means by which organisations add value to their operations. Put simply, all organisations add value to the externally sourced materials and other inputs that contribute to their output. Value added is the difference between the value of an organisation’s output, as measured by sales revenue, and the costs of its inputs bought in from outside which contribute to output.
The relative importance of the input costs incurred by a producer depend upon the nature of the business. Most businesses generally consume a combination of:

. Raw materials

. Parts and components

. Energy

. Business services.

Quality

Quality has always been an important competitive factor in some markets, but during the 1980s an increasing number of UK producers began to devote more attention to quality improvement. The rise in the spending power of the average household meant that consumers’ choice of goods and services was no longer so dependent on price. At the same time, consumers were being offered a wider choice obliged producers to improve and complete on quality. Because firms producing consumer goods and services sought to raise quality, their suppliers – companies producing materials, parts, machinery and business services – were also forced to improve quality.
A growing number of organizations now operate in markets where product differentiation is rapidly decreasing. For example, advances in technology mean that there is now very little difference between personal computers offered by the different manufacturers in particular price range. A PC producer must therefore strive to gain a competitive advantage by establishing a reputation as a company with high quality and good customer care. Consider training shoes as another example. Manufactures of trainers periodically introduce new features into their shoes in an effort to create a greater degree of product differentiation, but they all remain essentially the same design and product. If the identifying logos are removed, the average buyer might find it difficult to distinguish between brands.
Producers of both consumer goods and consumer durables must therefore place more emphasis on quality when marketing their products.
The increasing importance of quality can also be seen in the market for consumer services. The main features of services provided by airlines, banks and fast food chains are often virtually identical, and product differentiation can only really be achieved by improvements in quality.
Another factor in changing business attitudes to quality was the success of
Japanese manufacturing companies. It was perceived that quality played an important role in helping Japanese companies succeed in European and US markets. By the end of the Second World War very little manufacturing capacity remained in Japan, and in the immediate post-war period Japanese products generally had a reputation as being cheap but inferior quality versions of products manufactured by US and European producers. However by the early 1980s Japanese companies had become closely associated with high- quality products for which they were able to charge premium prices. In the early 1980s, Japan had 18 per cent of the world trade in the manufactured goods, substantially more than the UK’s 5 per cent share.

Quality control

Quality control involves an organisation using some kin of inspection system for identifying materials, parts, components and finished products which do not meet the company’s specifications. Inspection or testing may be carried out at various stages of production to ensure that faulty items do not remain in the production chain.
The operative or inspection department may check every item or just a sample of production. Processing industries, such as the brewing and chemical industries, also test regular samples of their products. Quality inspection is supported by highly sophisticated monitoring, measuring and testing equipment. This allows organisations to make adjustments to machine settings and control devices to improve quality.
There are some drawbacks to a quality inspection system. Using an inspection system to control quality encourages employees to take it for granted that some output is bound to be defective. Less attention is paid to preventing errors and defects in the first place as they will be picked up later by the inspection system.
A quality control system must ensure that there is regular contact between those departments that have a particular interest in quality matters. The marketing department, for example, may identify issues raised by customers, while the design research and development departments should work with production on developing the product so that current defects are eliminated when work is being processed.

Quality assurance schemes

A quality assurance scheme is the means by which an organisation implements its commitment to quality. It helps firms to do the job properly the first time, because the scheme is designed to prevent failures rather than detecting errors once they have occurred. In this way a quality assurance scheme (QAS) differs radically from quality control systems which involve inspection procedures at various stages of production. The design of a QAS recognises that defects do not just happen; they are caused by people.

Assuring quality

Once an organisation has identified the reasons why people are responsible for defects and errors, it can develop a system which eliminates the causes of defects. In this way, quality is assured. There is no single format for a QAS, and an organisation chooses a system which is most appropriate to its particular product or service. What it must do is to insure that every stage of production (or in the provision of a service) that materials, equipment, methods and procedures are used in exactly the same way, every single time.
All employees should be aware of what is expected of them, and should know how their own particular performance has to meet certain clearly identified requirements.

Product Evaluation and Quality Assurance within Tesco plc.

What product evaluation and quality assurance in Tesco plc.
Tesco products are continually monitored and tested for their quality and customer acceptability; this is product evaluation. Tesco staff and management procedures are also monitored to ensure that they maintain the highest standards; this is quality assurance.

Why does Tesco carry out product evaluation?
Product evaluation is carried out for a variety of reasons. These include: testing new products under development testing existing products when a change of supplier is being considered testing Tesco products against those of competitors to update information on the packaging to monitor quality and safety standards.

Changing of packaging information
Even when a product remains the same, packaging information may have to be altered because of a change in legal requirements, changes in nutritional concepts, or advances in food preservation and cooking. For example, a product might have its packaging altered to indicate that it could be suitable for microwave cooking. It will therefore be necessary to test the product in company’s laboratory. Here Tesco inserts fibre optic probes into the product. This allows us to monitor the temperature of the product whilst it is cooking, in order to ensure that it reaches a high enough temperature for it to be consumed with safety.

Tests on existing products
Quality control tests are conducted regularly on all existing own-brand products at Head Office, in Consumer Advice Centres, and in specialist laboratories. These include tests on food safety.

Consumer Advice Centre
The purpose of five Consumer Advice Centres in Sandhurst, Shoreham,
Southport, Cheshunt and Perth is to carry out practical research with customers into new and existing products. Each centre is staffed by two consumer service officers who are qualified home economists. Their most important role is to conduct consumer acceptability tests and sensory analysis. Over a four-day period, six to eight products will be tested.
Their role also includes being available to the customer for any queries concerning diet, health and nutrition, PR work at a local and national level, quality control, and giving talks and demonstrations to local community groups.

Organising a taste panel
Market researchers will recruit customers who are shopping in the store.
These customers take part in the test only if they fulfil the recruitment criteria that have been established for the product being tested. For example,Tesco might ensure that all participants are heavy users of the product, or a product aimed at children will be tested on children only.
As far as possible, consumers test Tesco products against a benchmark. This other product is normally the market leader; testing against it allows us to ensure that product matches or exceeds this quality standard. Products are tested "blind" and identified by codes so that consumers do not know which one is the Tesco product and which one is the benchmark.
The questionnaire is designed so that consumers give scores for various questions, such as their opinion as to the appearance of the product; they are also asked to tell us what they liked and disliked about the product.

Sensory analysis
Sensory analysis is a more technical evaluation of a product which is carried out by consumer service officers who have been specially trained to analyse the product using uniform objectives and technical descriptions.
They will evaluate the product and forward a description of it to Head
Office for use in the final report.

What is done with the data?
Data from sensory analysis, questionnaires and customer comments are collated and subjected to statistical analysis at Head Office which will lead to a product either passing or failing the tests. If it is failed, the product is reformulated according to the comments made by customers in response to the questionnaire. Products are then re-tested and will be launched only when they achieve a pass result.

Implementing of quality assurance
Quality assurance is implemented at all levels in Tesco. Everyone is
"focused" on giving the customer the best possible shopping experience in terms of service, quality, availability, price, car parking facilities and store design. This "focus" is set in Annual Trading Plan and is implemented through various departmental objectives and through specific training programmes. Tesco invests large amounts of money in training, so that Tesco can achieve specific objectives, for example First Class Service initiative.
Usually each initiative has a sponsor, normally a Main Board member. It is the directors and managers who brief the teams, and then it is up to individuals to "buy in" to an idea. Tesco has found that this process works well as it is not prescriptive and it allows people to implement new ideas in their own way.

Setting standards for quality
A common tool for creating "benchmarking" standards is called SWOT analysis. This stands for "strengths, weaknesses, opportunities and threats" and it provides a useful way of evaluating quality standards.
Standards cannot exist in isolation, and SWOT allows comparison with competitors to be taken into account. Tesco therefore uses SWOT a good deal for specific products, for example in evaluating a new range of merchandising or evaluating a new process provided by a supplier.

Tesco Packaging design.
Tesco has many "Own Brand" products, and in order to promote its own brand correctly Tesco has its own Packaging Design Department. Products sell for a variety of reasons; in the first instance, the visual appeal of a product is important to attract customers to the product initially, as it is only after the first purchase that the customer is attracted because of the quality of the product and its value for money.

How does Tesco add value to its product?
Usually value for product depends on one very important key – quality of the product, better quality – more tests are done – bigger value, but Tesco tries to keep prices lower than all other national supermarkets. Tesco adds value to its products by means of buying it from contractor for lower price, testing it, and selling it for higher price.

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Success of the business in meeting its objectives.

Tesco is one of Britain's leading food retailers and has 586 stores throughout Great Britain. In Europe Tesco has 41 stores in Hungary, 32 in
Poland, 13 in the Czech Republic and Slovakia, 33 in Northern Ireland, 76 in the Republic of Ireland and 1 in France, to prove that business meets its objectives successfully I’ll present some diagrams and company’s financial records.

Turnover and profits of Tesco in 1997-1998
The turnover and profits for the year ending 28th February 1998 were as follows:

1. Group Turnover (incl VAT) - Ј17.8 billion (Ј17,800 million), an increase of 18.7% on the previous twelve months. This figure is for 53 weeks compared to 52 weeks for the previous year and includes the newly acquired businesses in Northern Ireland and the Republic of

Ireland. On a comparable basis with the previous year, excluding the

Irish acquisitions, turnover was Ј16.4 billion, and increase of 9.2%

2. Profits on ordinary activities before tax, integration costs and disposal loss - Ј832 million, an increase of 10.9% on the previous twelve months.

Changing of company's financial fortunes 1992-98
The changes in the company's financial fortunes are shown in graphs 1 and 2

Graph 1,2: Group turnover and operating profit 1992-8

Graph 3: Share earnings and dividends 1992-8

Profits share
In 1998 the profits from Tesco after tax were Ј505 million. About 50% of the profits were distributed to shareholders as dividends. Subsequently approximately Ј250 million was retained by the company for investment in new stores and improving their service to customers.

Changing of share price in recent years
Between February 1997 and February 1998, the Tesco share price rose from
349p per share to 517p. It reached a peak in the period of 539p. In the year 1998-9, the price continued to rise, being 586p on 21st April 1998, and having peaked at 603p at the previous stock market high.

Market share of Tesco
In February 1998, Tesco had 15.2% of the UK retail food market. The company's share has increased consistently since 1992 when it held 10.4% of the market.

Graph 4: Market share growth 1992-8

Turnover, profits and market share of Tesco in 1999-2000

Profit and loss account

This year was another successful trading year for Tesco plc. Total sales increased by 9.8% to Ј20,358m and underlying pre-tax profit increased by
8.4% to Ј955m. Adjusted diluted earnings per share rose 8.6% to 10.18p. A final dividend of 3.14p per share is proposed, making the full year dividend 4.48p, an increase of 8.7% over last year.
UK retail sales have grown 7.4% to Ј18,331m. Like-for-like sales were 4.2% which consists of volume of 3.2% and inflation of 1.0%, with new stores continuing to perform well, contributing 3.2% to sales.
UK operating profit increased to Ј993m up 8.1% on last year. Tesco’s UK operating margin remained broadly flat at 5.9% in a year when Tesco made substantial investments in price.
Company change programmes continue to deliver increasing levels of efficiencies enabling us to invest for customers and grow profits.
Sales in the rest of Europe accelerated with total sales up 18.8% to
Ј1,527m and contributed an operating profit of Ј51m, up 6.3%. Sales in the
Republic of Ireland in local currency are up 6.1%, reflecting the benefits of company’s store rebranding programme. In Central Europe sales are up
76.8% at constant exchange rates. Tesco 11 new hypermarkets across the region have all traded strongly since opening.
Business in Thailand has seen good growth and the three new stores have contributed to sales of Ј357m up 96%. In South Korea, Tesco Homeplus achieved sales of Ј140m in the period since acquisition. In the Asian region Tesco made a small operating loss of Ј1m.
Tesco Personal Finance has now been trading for nearly three years and share of losses this year are Ј4m compared to a Ј12m loss last year.
Tax on underlying profit has been charged for the year at an effective rate of 27.4%.

CHRISTMAS & NEW YEAR TRADING STATEMENT

Monday

15 January 2001
GROUP SALES GROWTH CONTINUING TO ACCELERATE
Group sales for the seven weeks ending 6 January 2001 increased by 15.4%.
This growth was driven by excellent performances from all four elements of
Tesco strategy: a strong core UK, increasing non-food sales, rapidly developing international stores and expansion into retailing services.

OUTSTANDING UK GROWTH UP 10.5%
Total UK sales for this seven weeks, covering Christmas and the New Year, were up 10.5%. Compared to last year this period included one extra day's trading over the New Year. Like-for-like sales were up 6.9% driven by excellent sales volumes of 7.3%. This performance reflects determination to deliver the best offer for customers as Tesco continue to cut prices.
Overall deflation was -0.4%.

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