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.
C1
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%.
STRONG INTERNATIONAL PERFORMANCE
In 2000 Tesco opened 32 stores internationally adding over 3m sq. ft. of
new trading space. This represents an increase in International trading
space of over 45% on the previous year. International sales were up 50%
over the Christmas and New Year period as a result of existing stores
maturing and new store openings.
RECORD NON FOOD PERFORMANCE
Company’s strategy of offering excellent value in non-food to customers was
a resounding success this Christmas. Tesco achieved sales in all areas
including 14,000 DVD players and 8,000 widescreen televisions.
TESCO.COM SALES QUADRUPLE
The roll-out of Tesco.com to cover 90% of the UK population helped drive
the performance over Christmas with sales up 400% on last year. To meet
this demand Tesco.com recruited 400 new staff, allocated 10,000 additional
delivery slots and delivered 30m products.
Some examples of meeting its objectives by Tesco plc.
Product promotions
Objective: to give customers a broad range of strong relevant promotions in
all departments of the store.
Examples: hundreds of MultiSave, Link Save and Special Offer promotions in
all stores every month.
Product range
Objective: to give customers what they want under one roof.
Examples: constant development of new and exciting food products;
introduction of clothing, CDs and videos.
Pricing
Objective: to be competitive especially with regard to the basic lines.
Examples: Value Lines and Unbeatable Value pricing, giving low prices on
key brands and own-brand products.
Customer Service
Objective: to provide customers with outstanding, naturally delivered
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