Executive Summary: Tesco is one of the most promising retail supermarkets which have its operations in and around

the world which is started in the year 1924. Every organisation will also have an objective to which they work for achieving it and so as Tesco has its objective which is improvisation of customer service and increasing the profitability. The impact of operations management over Tesco and also the quality management employed in Tesco has helped them to reach and achieve their strategic objectives. Some of the objectives of Tesco PLC are maximising sales and profit, maintain the number 1 position in retail sector, gain competitive advantage and more customer focused. Strategic quality change management is also effective for Tesco in achieving their strategic objectives. In this report, the researcher have critically analysed effect of strategic quality and change management on Tesco PLC in achieving their strategic objectives.

Ethames Graduate School

Page 1

Introduction: The retail industry in UK is very much dynamic and competitive competitive in nature and hence to survive in such a market it is important for Tesco to set various strategic objectives by implementing various strategic change and operations management. Tesco was able to withstand among the high level of competition from Asda, Sainsburys, etc who compete on price, quality, range and services by applying various strategic objectives like expanding its business to overseas, the core of UK business is made strong. The success of Tesco in UK is manly attracted by the low price, customer loyalty, high standard quality and further expansion into retailing services. Various business operations are overseen, designed and redesigned which forms an effective management of Tesco PLC. Strategies are generalised which is accompanied by the response of individual retailers towards the industry structure and objectives. The situation of the business can change any time depending on the market, because of its dynamic nature, in Tesco for assessing such business situation, strategy frameworks and structuring tools are used. By making risk and value trade-offs as the explicit, the risk factors is reduced. Objectives of Tesco are met by implementing various strategic operations management into the organisation. Strategic change management and quality management are the main business operation concentrated by Tesco in order to achieve their strategic objectives. History: The start of Tesco brand is 1924, but in 1919 was the actual start where Jack Cohen the founder of Tesco was selling surplus groceries in the market. The name is a combination of T.E. Stockwell from where the first shipment of tea arrived to the store and his first two letter of his surname, thus forming Tesco. The first store under the brand name is opened in the year 1929 and the business growth has taken it into stock exchange by 1947 in the name Tesco Stores (Holdings) Limited.

Ethames Graduate School

Page 2

Task1: Operations Management: The traditional understanding refers to the production of products and services by an organisation which has been changes from maintaining separately to merging the both because of the difficulties in handling both these type of operations. The main role of operations management is to increase the contents of activities that maximises the value for any given process and for achieving the best performance from the enterprise the operation management are carried in parallel with the marketing process. Importance: The practise of operation management in an organisation should be stable so that it helps the strategic managers to achieve and fulfil their strategic roles within the business and also it is the heart of the organisation which controls the system of operation. In a business, marketing and finance are most prioritised functions like wise is the case of operations management which includes the designing operation and improvisation of the system that outputs the organisations primary products and services. The strategic managers for operation management have their specific management responsibilities as for the managers of marketing and finance. Among various operations management quality management is treated with great importance. As like other organisation for Tesco the key to their success is by managing the operations in a proper channel and in an effective manner, in other words making use of available resources at its disposal. The success of an organisation depends on achieving low cost on the production function, customer satisfaction and the quality of the product delivered. According to Hill (2005), operations management is the function responsible for (60-70) % of the cost, assets and people. Functions and responsibilities in Operation Management: Various function in the process of operations management are product or services development, purchase section, marketing, accounting and finance, and technical and engineering. The responsibilities are classified as direct, indirect and broad responsibilities. In direct responsibilities the activities like production control, designing, etc which are directly related to production of products and services, and also marketing. Other function or activities of organisation where there is no direct relation, such activities of an organisation are indirect responsibilities. The scopes of broad responsibilities are wide and include various functions like business scanner, environmental factors which are having impact on the organisation. Analysis: Strategy: Operation strategy is defined according to Slack et al. (2004) as, the total pattern of decisions which shape the long term capabilities of any type of operation and their contribution to overall strategy and also he states that the objectives of operations
Ethames Graduate School Page 3

performance depends on how much interest and involvement that operations stakeholders possess. There are five important aspects or functions which Tesco is interested are cost, quality, speed, dependability and flexibility, these are the primary objective of operation performance Tesco employ for achieving very good customer satisfaction which adds to the competitive advantages. The cost is one of the important factors which guide customers to choose their favourite shopping store, and so Tesco has plans for providing low prices every day. They do price checks every week over many products in other store which make sure they are providing customers with the lowest price. By implementing technological advancement in the working environment, Tesco was able to control their pricing and expenses very effectively, talking about technology the best example is the G.O.L.D. application suite which is in effective operations in Tesco. The logistics cost are reduced immensely by the implementation of various optimisation techniques and automatic order proposals. All of this expenditure will reflect on the product pricing and hence it is important for Tesco to control and manage these expenditures. After the product pricing, the quality of the products is other main factor which affects the rate of customer satisfaction, this operation will determine the costing and the dependability is high on such kind of operations. Customer has many queries to which Tesco responded well by implementing various checkout advancement like self-service checkout which reduced the size of the queue by a great margin, staffs are given hand-held computers through which information are obtained about products, pricing etc. By implementing advancement in various operations, Tesco was able to improve the speed, the quality and the flexibility of their customer services. The operational performance objectives of Tesco which are cost, quality, speed, flexibility and dependability are dependant and has interaction over each other. While delivering the operation strategies of Tesco, it is important for them to take accountability of all of them, in particular the objectives which contribute more towards the success is cost and flexibility. Planning and Control: Whatever is decided for the future in a structured manner is planning and control is the adaptation of an organisation during situational changes. Both these operations of Tesco is affected various factors in a business operation which are capacity, supply chain and quality, all these factors influence Tescos planning and control. Capacity refers to the resources required in production operation for delivering products and service of the organisation. The resources for example are human resource, facilities, machines and raw material supplies and it should be well planned and controlled for an effective and controlled production. Tesco human resource is high and each resource is very capable who are selected through very challenging recruitment process. The facilities in Tesco stores and warehouse are latest refrigeration systems, and logistics is very good in operation and connected. Machineries are latest and very specific for particular set of tasks. The raw material suppliers are the best in UK who runs the business on the objective of delivery in time. It has wide range of suppliers from small scale farmers to large scale distributors (Tesco PLC, 2005).

Ethames Graduate School

Page 4

The supply chain management is very much important factor while considering planning and control, where it is flow of products and services between various operations. A product will reach the end of the chain (i.e.) customer through a network starting from manufacturing operations, marketing operations, and sales operations. The supply chain network determines how well the customers are satisfied by maintaining the standards and speed in the network of operations. An approach named steeling wheel is in action throughout Tesco which is used for monitoring the operation performance. Operations like health and safety, efficiency in delivering their customers in time, accuracy and the commitment. Customers are satisfied by delivering products and services of high quality and standard. Tesco has also requested all their suppliers to maintain the quality, high quality and environmental standards in the production of goods. A scheme is implemented by the government and Tesco wanted their suppliers to maintain that scheme at all times. Customer expectation for the lowest price as well as the standard in the quality is being satisfied by Tesco by choosing the suppliers of sustainable sources. Performance Measurement and Development activities: The level of satisfying the customer needs is measurement in terms of performance, and the degree with which an operation achieves the five strategic objectives of Tesco. There is no management without measurement, hence it is necessary for Tesco to monitor or measure the performance level at all times. As mentioned earlier the five performance objectives are pricing, quality, dependability, flexibility, and speed. The tool used by Tesco PLC for the performance measurement is steering wheel and it is used along with some indicators for performance check to monitor the operational targets is achieved. The retailer industries general trend is to maintain high standards in cost, quality and time particularly. The development in Tesco can be noticed as two types, one is the continuous improvements, and breakthrough improvement, but a breakthrough improvement is in leading proportion. Technological advancement can be implemented in many areas of operations, which includes the integrity pricing and processing stock at the self edge. As a technological advancement through business, Tesco has started using Imtermec 700s which has various functions like in-store price changing, inventory transactions are logged besides these functions Tesco also checks accuracy in delivery by using GPRS connectivity and it is checked against the invoices. Pricing are always kept updated by using 700s system. The system is not only used for cost saving but also it is used as a cost effective tool; for improving the productivity of price change, at stock control routines and staff. The system has made working conditions very convenient easy for the Tesco staffs. Cost reduction is achieved through developing IT solutions and the implementations of G.O.L.D. As a part of their development programme Tesco had plans for future in implementing a new project named X-Dock project, the main objective of this project is reducing the time of goods preparation. With the help of G.O.L.D. software suite, Tesco was able to establish a complete control over warehouse stock. Warehouse optimisation has made
Ethames Graduate School Page 5

the logistic costs to the minimum. The quality of their products and services is further improved by Tesco working with Business Systems UK Ltd. Quality measurement is processed by using very technically advanced systems from BSL. Task 2: Total Quality Management effective in Tesco: Quality is defined in many ways and depending on different ideas, but considering retail industry, quality refers to the first place about meeting the needs and customer expectations. In Tesco quality is defined under two perceptions, one is producers perspective and the second is consumers perspective, where end result remains the same for both which is eligibility for consumer use. Quality management is so important for an organisation like Tesco which relies on their customers for organisational performance and development. Poor maintenance of quality results in loss of dependability and trust with the brand, loss of business which affects the organisational performance. The other areas affected by poor quality management are productivity and cost. Competitiveness is achieved by improving the standard of quality and this is done in Tesco by focusing on four principles related to their customers which are customer-driven, customer focus, customer feedback, and customer satisfaction. The customer principle helps Tesco in achieving competitive advantage; because these are the principle through which they show their involvement in the organisation quality management. Quality Managements Process: The quality management process can be formulated into many elements, which are Time Management: The service or the product that customer requires is delivered with effective management of time, so that the customer waiting for that service is very less which increased the standard of quality. Not necessarily quick, but when the time is committed then it is the responsible of Tesco to deliver within that committed time. Product or service completion: The customer who expects their product in very good condition (i.e.) fully finished product should be satisfied by taking necessary steps for achieving it. Courtesy: Customers expect to treat them with dignity and hence the behaviour of the employee towards customer should be polite and very calm, they should be pleasing in nature. Consistent: All the products with same specifications should be consistent in the quality they are manufactured, because the quality depends on consistency very much. Consistency is more looked upon the quantity of the products. Convenience: The ease of accessibility is the convenience of customers, in Tesco there are various type of stores like Tesco metro, extra, etc which are more convenient because it has many branches in main town and high streets.
Ethames Graduate School Page 6

Accuracy: The products delivered from Tesco store are maintained in their standards. The products like milk and other refrigeration products are looked upon for accuracy of the temperature maintained till the point of sales. Responsiveness: The customers relation should be maintained at all time even after the purchase of products by means of customer call centres which is in place in Tesco. Tesco responds to customer issues and queries with the effective working of their call centres. Various tools are in place for checking the quality which is maintained throughout the process of product service. The tools are flowchart, check sheet, cause-effect diagram, Pareto chart, and histogram and scatter diagrams. For implementing the quality improvement initiatives, methods like six sigma, benchmarking, and quality circles are in place. Task 3: Strategic quality change plans: Quality is one factor regardless of the nature of the industry is demanding progress as the organisation grows. So it is necessary for organisation like Tesco which delivers high quality products, to develop a strategic plan that can be adopted to any changes. It is the systematic approach of a business in formulating their long term business goals for the improvisation of the quality and plans for achieving the goals. For gain competitive advantage Tesco has created own vision and mission to which they work towards attaining them. Tescos vision is achieved through the integration of goals with quality programs and to the strategic plans which ensures the sustainability of the new plan. Tesco concentrated on four important factors considering strategic plans which are focus, direction, alignment and reason. Through strategic quality planning, the attainable benefits for Tesco are goal are achieved, quality of products is improved, and more focus on customers. The organisational long term goals are defined in a systematic manner which is referred to as strategic quality planning. The main goals of Tesco are in relation with the quality and customers, and in business plans both these are integrated which in turn enables Tesco to achieve competitive advantage. The various stages of implementing a strategic plan in Tesco are, Launching Stage: A strategic plan is launched with the involvement of the leaders in person, decision are made from the best analysis reports. During this process the customer focus is one factor which is never left away and elements that help for the launch of strategic plans in Tesco are mission, vision, values, and policy. After the launching stage, the next is the development stage. Development Stage: The deployment of the plan begins with the vision which is more customer focused. It is important that the vision statement of Tesco is very much compelling and should be spread throughout the organisation. Unlike mission, vision statement remains on the paper which is used as a reminder for understanding what the business is pursuing. Vision should be kept
Ethames Graduate School Page 7

simple which allows participation from all employees and also it should be possible for achieving it. The purpose of organisation is cleared by using mission statements and hence by using vision and mission statements, decision are made in Tesco. In order to develop strategies, assessment is carried out in 5 particular functional areas which are loyalty to customers, cost effectiveness, culture in an organisation, business processes, and benchmarking which is very competitive. For these strategies to be successful, it is necessary for Tesco in maintaining 7 areas of operations which are product performance, business improvisation, competitive achievements, cost depending on the quality, customer satisfactory, and customer loyalty and retention. Participation from the top management is an essential factor for these strategic plans to be successful. Progress Measurement: An organised way in measurement progress is in active in Tesco, this is because the performance measurement Indicates the degree of the objectives that is accomplished Improvisation of strategic plans are noted by this measurement process Required by the management for conducting periodic reviews Task 4: Strategic Quality Change Management: The management process of strategic quality change is a part of the organisations strategic planning, because it is the responsibilities of the organisation to anticipate change. There are various change management models in use and they are, Force Field Model: It was introduced by Lewins named as Lewnis Force Field Model, and according to him the change is brought by altering the equilibrium in an orderly way. This was achieved by strengthening or weakening the force to or against the change. The model described by Lewin includes unfreeze, change and refreeze. Continuous Change Process Model: The model which manages the change in a continuous process is referred as continuous change process model. The people from top management have a great influence over the vision of the organisations and planning for major changes. Emergent Approach: The functions of management play a vital role in the management of change. This approach is very much different from other model where it indicates the change can be managed from the bottom level of an organisation than the top levels. Kotters Model: The Kotters model is designed with 8 stages which is sense of emergency is established and also the coalition, vision is developed, obstacles are removed, progress are indicated, change process is fixed, and new culture is shaped for the supporting the improvements and innovations.

Ethames Graduate School

Page 8

Cause for the changes in Tesco: Tesco was a mid-retailer by the year of 1990, but as the years passed and by the application of the strategies in an effective manner, Tesco was able to develop to the position the largest retailer in the global market and the triggers which helped Tesco for such development are discussed below, Generation of customer value: The main strategy of Tesco is to retain customer are a regular and attracting new customers by developing more values. The self checkout process is as result of this. Growth in customer base: One of the factors that helps the success of Tesco is their strong customer base, self checkout is in use which enabled customer for flexible and quick purchasing and it also helped them from preventing standing in long queues. Advancement in Technology: The modern world is full of technological advancements and hence to cope up with that Tesco had implemented various technology advancement systems. Operational efficiency is attained by installing self checkout systems. Competition: A healthy competition in the business as always helped Tesco for further development and advancement. Providing the low price products in order to gain competitive advantage are few examples. Cost of labour: To maximise the profit, the labour cost should be controlled, because in pricing the major component of cost is labour cost. Self checkout systems was introduced which helped Tesco to achieve both operational capacity and cost saving on labour. Task 5: Development and Recommendations: The self check out system is received with good review for the retail industry; there are few challenges to be evaluated in the systems. Anyway the self check out system has helped Tesco to increase the sales, cost effectiveness, and customer satisfaction. More advanced self check out systems which is a modification from the current one with more customer focused and customer friendly can be developed. Tesco should focus on opening more stores with low-income and for underserved communities. As a support to the greener environment, Tesco must adapt the principle of green design and also the smart growth system which will minimise the climate change impacts, a small contribution to the environment. The store based work force should be converted to full time employees paid with their living wage and health benefits. The inputs from the community are so important that Tesco should develop a mechanism for gathering such inputs.

Ethames Graduate School

Page 9

Conclusion: The introduction of self checkout systems is accepted by the customers in every retail unit of Tesco, there are few modifications to be done to such systems, and modification like the weight reader should be included in the system. Tesco has adapted itself as an organisation with social responsibilities. Customer access to fresh and low cost food, employee relationship is positive in nature, environmental issues are dealt at first priority and in all these factors the quality management is running the business with good success rate. Because of an effective strategic quality management system in place in Tesco the operational performance of the organisation has increased and also the organisation was able to achieve competitive advantage in the business world.

References: Book: Web:

Ethames Graduate School

Page 10