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E-retailing by Tesco and Delivery

Francis Perera
21661820

10/17/2010

Executive Summary
The report objective is to state the objectives of Tesco in implementing an e-market place for its customers. Tesco looks forward to penetrate new customer segments and to increase the customer satisfaction and value. The team is consisted of potential employees from the marketing, HR, finance, sales and IT departments. The project team has outsourced a design team to design the web site. The budget for the project should not increase RM260000 and should be completed within a 4month period starting from 1 st September 2010. A feasibility study has been done and cost estimates and a time schedule for the project activities has been organised in a network. The elements for the above activities are based on the Work Breakdown Structure (WBS). The resources used in completing the report involve web sites and articles and academic journals. Clear succinct recommendations have been made in order to improve the current project and future projects.

Table of Contents
Executive Summary.................................................................................................................................. i Introduction ............................................................................................................................................ 4 Background and opportunity definition ............................................................................................. 4 Project Nature and Scope ................................................................................................................... 4 Rationale for the project ..................................................................................................................... 5 Feasibility Study ...................................................................................................................................... 5 Feasibility study initiation ................................................................................................................... 5 Feasibility study team ......................................................................................................................... 5 Planning the feasibility study .............................................................................................................. 6 Stakeholder analysis ........................................................................................................................... 7 Evaluation of constraints .................................................................................................................... 8 Selection of project using a project selection model.......................................................................... 9 Project scope statement and Work Breakdown Structure (WBS) ........................................................ 12 Work Breakdown Structure (WBS) ................................................................................................... 13 Cost estimates for project resources .................................................................................................... 14 Apportion method in allocating project costs using the WBS .......................................................... 14 Project budget for the e-tailing project in Tesco .............................................................................. 15 Time Schedule for project activities...................................................................................................... 16 Costed strategy to shorten the project duration by 20% ..................................................................... 19 Quality management and quality control systems ............................................................................... 22 Quality management system ............................................................................................................ 22 Quality control system ...................................................................................................................... 23 Measure to ensure superior team performance .................................................................................. 25 Monitoring and Evaluation System ....................................................................................................... 27 Monitoring the project ..................................................................................................................... 27 Evaluating project performance ....................................................................................................... 27 Project closure ...................................................................................................................................... 28 Potential obstacles to project success and ways of overcoming these obstacles ................................ 29 Recommendations ................................................................................................................................ 30 References ............................................................................................................................................ 31

which is possible given the size of the company. Through diversification into new geographies. When the results are analysed. This could be done by having a E-tailing business model. The website is to provide an interactive environment for the customer in buying groceries and other products offered by Tesco. This could be accomplished by designing a comprehensive website and an efficient delivery service. Tesco tries cut out the middlemen and source products from manufacturers or developers. Research and development department of Tesco needs to carry out a market analysis research on customers who prefer online purchasing and delivery. 2010) Project Nature and Scope Given the steady increase in core food offers and the aggressive space expansion.Introduction Background and opportunity definition Tesco Malaysia is a prominent actor in the retail industry. the top management can form the project group by adding . Although Tesco has competitors who have acquired a greater retail market share in Malaysia and have used a best opportunity that is offered through the country which is the technology sector and its application in the market. Tesco needs to obtain this opportunity and use it wisely to have a competitive edge on the retail industry in Malaysia (Anonymous. Grocers have benefited from superior destination status and robust footfall in the recession due to the needs-based nature of their core food offers and continued aggressive space expansion. it is high time for Tesco to capture the online market. Also. It also focuses on the delivery system where the purchased products would be delivered to the customer door step. the company is developing a business for the future as this model will be sustainable for years to come. Tesco enjoys several unique competitive advantages which will help the company quickly penetrate the product category. Deliveries outside this area would be charged a standard amount). It is one of the leading retailers in the world and over the years aimed at building a sustainable business model. new product areas and new services. (in a specific geographical area. As part of drive to lower prices for customers. the company offers lower pricing as it enjoys superior bargaining power.

Feasibility study team Feasibility study team comprises of the sales manager who operate as the leader. Marketing. R&D and Finance. This would tend to attract more customers and would provide greater benefits for the customers who would enable Tesco to improve its customer value and retention and a greater competitive advantage. Rationale for the project The rationale for the project is to target a greater customer base and provide the flexibility to the customers to shop online. HR manager and finance and accounting manager. IT developer. The persons involved in the feasibility study should be involved in the project team and needs to report back with the findings within two to three weeks after the feasibility team is appointed. The budget required for the feasibility study is RM 1000 which would be for the industry experts and other miscellaneous activities. The project to be undertaken is implementing an E-tailing environment and a delivery system for the customers.prominent employees from different departments that is connected with the project scope. HRM. Feasibility Study Feasibility study initiation The research director of Tesco is responsible for the feasibility study that will ensure the whether the project is viable. Such as from IT. . Other team members consist of a marketing manager.

Competitors’ activities.Planning the feasibility study Concept :. and if not viable. . If there are any inconsistency between what is required and what has been done. define successful outcomes and assess the range of costs and benefits associated with the project. the team must consult and obtain assistance from experts such as e-business developers and web designers. determine objectives. the feasibility team would combine their results and findings. and they will check if their findings are relevant to and have addressed the required information. identify problems and opportunities. refer to other secondary sources of information such as government departments regarding the legal requirements needed to set up the e-tailing function.the actions of the feasibility study is to analyse the situation around the expansion of the project. Implementation:.in order to carry out the feasibility study. and is executed over a period of two to three weeks.the feasibility study is carried out by the team according to plans made in the design stage. Most importantly. the team will record it and rectify the problems in the coming days. This will involve the most amount of effort during the entire feasibility study. recommend alternative solutions. the feasibility study team must undertake their own research. These will be compared to the plan stating the requirements of the feasibility study. layout and service will also need to be checked. Design:. Commission:.every two days.

Stakeholder analysis This section analyses the needs and expectations of the stakeholders involved during the project life cycle and whose interests are affected by the final outcomes of the project. The organisation needs can be classified as having a greater customer base and providing them a valued service which would help to retain the customers in the competitive retail .

Another objective is that the above approach would lead to an increased profit and sales. 2010. The budget for the project should not increase RM260000. There should be a trouble less way of maintaining the website and the database with no questions about the online payment security by the customers. Most of the younger generation consumers tend to use technology as a mode of shopping and busy working class employees are more viable to buy products online and delivered them to their door step due to their busy schedules. There is a high competition by other hypermarkets who retail online. Evaluation of constraints . The deadline to host the website should be within a 4 month period from the date of the approval of the project which is1st September . although having the right know-how and interactivity with the customers would provide Tesco with the competitive edge. Therefore the project should completed by the end of the month of January.market. There is also a boom in the resources required to manage online businesses such as frequently upgrading software and hardware and the technical savvy human capital in the field. The viability check – the target market of this e-tailing activity is the younger generation and the working class consumers.

 Checklist Model This approach uses a list of questions to review potential projects and determine the acceptance or rejection. These method involves the checklist model which involves using a list of questions to determine the acceptance or the rejection of projects.Selection of project using a project selection model The selection criteria used in selecting a project is the Multi criteria selection model which are considered as nonfinancial criteria. The second method is the multi-weighted scoring model which uses several weighted selection criteria to evaluate project proposals. .

.Although this method has many shortcomings where it fails to answer the importance or value of a certain project to the organisation and does not allow the comparison with other projects. Therefore to overcome these shortcomings it is essential to use the multi-weighted scoring model.

As per the above ratings it is concluded that project A is considered a better option which is having an online retailing and delivery service by the organisation. . Multi-weighted scoring model This project screening method has used five weighted selection criteria to evaluate the project proposals.

It is important for the finished project to meet the legal requirements required by the government to do retailing online. The time frame for this project would be 3 months with a cost not exceeding RM280000. It is essential for the organisation to have a team to update the database and manage customer complaints online.Project scope statement and Work Breakdown Structure (WBS) The project objective is to have an online marketplace to provide greater customer service and to obtain a greater market share for the organisation. The investment provided by the organisation would be covering 60% of the costs while the remaining amount would be covered by a bank loan. .

Work Breakdown Structure (WBS) Online Retailing and Delivery Approval Finance Design Sales Marketing Equipment Sending project for approval Organisation Capital Web Developers IT Consultants Sales Representives Manage Stock Movement Arrange Promotions Advertising For Delivery For Website Bank Loan Design the web page Make the database learn to Interact with customers online Manage the delivery of products For outsiders Delivery Personal Network of computers and Server Learn to manage secure e-payments Arrange Interactive Facilities Arrange online payments Making descriptions and categories of products Promote the web services Delivery vans Designing Software .

The apportion method is used where the project team has recruited expert knowledge on the going online business which has given the estimation of costs a reasonable accuracy.Cost estimates for project resources The project manager is required to implement the project budget with the accounting personal in the project team. They are using the top-down estimating methods to evaluate the project proposal. Apportion method in allocating project costs using the WBS .

Project budget for the e-tailing project in Tesco Amount Designing Web development software (HTML editor) Website maintenance software Subscriptions to net business publications Payment to IT consultants Payment to Web designers and developers E-security payments (paypal) web site hosting Online database Sales Advertising for new recruitment HRM fees for recruitment processes Training for sales reps Stock movement systems (JIT systems) Marketing Designing online promotions printing banners about online retailing designing and printing handouts on how-to-use promotion through over counter advertising on complementary websites Equipment Additional PC's Server Backup systems GPS systems Delivery vans Auto responders Miscellaneous Payment to the project team Project team expenses Use of organisation resources Cost of obtaining a bank loan Legal check Total cost Contingency cost (20%) Grand total Source of funds Organisational investment (60%) Bank Loan (40%) Grand Total 10000 10000 7000 8000 10000 10000 3000 3000 4600 500 600 2000 1500 13000 2000 3000 2000 1000 5000 97000 6000 2800 2500 4000 80000 1700 26500 20000 2000 1500 2000 1000 202100 40420 242520 Total 61000 145512 97008 242520 .

There is a lot of free slack in this project in the activities such as B. I. K.Time Schedule for project activities The diagram above is the time scheduled for project activities in a network. L and M because this path has the least slack in common. The critical path for this network is A. C. This means that any of the activities in this path were to be delayed there would be a delay in the overall project with the same amount of time. F. . It shows the dependencies and the duration for each activity with the early start. late start and late finish times. early finish. J. E and H where a delay in these activities would not affect the rest of the project as these activities have shorter duration as compared to the critical activities.

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Therefore project duration = 125-10= 115 days The cost would increase by 300 x 10 = RM3000 . First activity to be crashed Activity C can be crashed by 10 days at a cost of RM300 per day.Costed strategy to shorten the project duration by 20% Initial project duration = 125 20% reduction in the project duration = 125 x 20% = 25 days which means that the project should be reduced by 25 days to an overall 58 days.

Therefore project duration = 115-5= 110 days The cost would increase by 500 x 5= 2500 Third activity to be crashed Activity J can be crashed by 5 day at a cost of RM 1000 per day. Whereas the activities D and G has a reduced slack from 10 to 5. Therefore project duration = 105-5= 100days The cost would increase by 500 x 5= RM2500 An reduction in 20% of the total project duration has been achieved by reducing 25 days with an increased cost of RM13000. After the reduction of the duration of the critical activities it would cause a change on the slacks of the other activities where for example activities B. E and H had a slack of 5 but after the 20% reduction the slack has increased to 20. .Second activity to be crashed Activity I can be crashed by 5 days at a cost of RM500 per day. Therefore project duration = 110-5= 105 days The cost would increase by 1000x 5= RM5000 Fourth activity to be crashed Activity L can be crashed by 5 days at a cost of RM500 per day.

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Last phase is the customer service and support that shapes the overall online shopping experience. It is important to have a QMS where it can find the defects of the project while it is being implemented rather than having them detected once the project completed. and it was found that customer perceptions of convenience. As per Tamimi. merchandising. Therefore it is important for the leaders in the project team to implement the QMS by making the other team members aware of customer needs and providing the necessary training and experience. E-satisfaction is a measure of satisfaction with Internet shopping. The second is the selection of products from the e-catalogue. Use of these tools would lead to providing a better serviced website for the customers which would increase the value and customer satisfaction (Field. Rajan and Sebastianelli (2003) there are four phases that describes the entire shopping experience in an e-marketplace. e-service designers have the opportunity to use the developed tools and software to design an eretail market place. . According to Lin (2007) customer satisfaction plays an important role for long-term welfare of the online retailer. Audits must be carried out to make sure that the project is in line with the quality management systems requirements. The first phase is the sites home page which is the initial point of entry for the customer. With the development of new software design tools. website design and financial security plays an important role in achieving e-satisfaction. The third involves completing an online order form with the customer information. 2004). e-service designers have the opportunity to use the developed tools and software to design an e-retail market place.Quality management and quality control systems Quality management system The Tesco e-tailing system should have an effective quality management system (QMS) which could coordinate activities to direct and control the project in order to continually improve the effectiveness and efficiency of the project. With the development of new software design tools. Heim & Sinha.

It is the project team members to maintain the TCM framework in the project. They need to classify the quality tools according to actions during the project. An “PosiTrol” plan involves giving an overview as the control chart and the “PosiTrol” log and set-up checklist are the most common on-line quality tools to prevent and detection of any lack of quality systems. 1998). They also need to analyse the quality tools and fitted into the model as appropriately as possible. .Quality control system The project would be using the Total Control Methodology (TCM) model to control the quality of the project. offline quality review and driving forces for quality review. A flow chart is shown below to better understand the process of the TCM model (Kwok & Tummala. The Out-of-Control action plan (OCAP) would help the project team in correcting the out-of-control conditions. There are three levels which the quality tools lie on which are online quality review. There are many elements in the TCM such as control charts and setup check lists. The quality tools need to bundeled to each activity such for designing the website the project team can employ the “PosiTrol” and the online checklist.

Kwok & Tummala. (1998) .

the project manager of the implementation of e-retailing in Tesco undertook a number of activities before and throughout the project until its completion. they are given the opportunity to mix with the employees from different departments whom they would be working for the coming months. initiative and energy. The recruitment process was based on the employee’s ability to work under uncertainty and have strong problem identification and solving skills.  Establishing a Team Identity The team members lack the full involvement in the project due to their other concerns and work in the organisation.Measure to ensure superior team performance In order to gain superior team performance. importance. They tasks were divided for each team member to accomplish before the dead line. Subsequent meetings were held every week to analyse their improvements on the project and to solve any problems regarding the tasks.  Creating a shared vision A shared vision is created to encourage commitment of the team members to achieve the same goal. The shared vision followed by the project management team . procedures and the ground rules . Therefore the project manager needs to establish a unique identity to which the members could attach to. Effective use of meetings to communicate with the members would help define team membership and reinforce a collective identity.  Conducting Project Meetings The first project meeting was held with all the recruited team members to knowledge them about the project objectives. These measures are as such: Recruiting project members It is essential for the project and the organisation to have a team of employees with greater potential. It is essential to have members with a great expertise on the online business area that would provide their know-how to the project with their ambition. schedule.

Members are free to make decisions on minor matters under their department. This should be done before it creates irreconcilable divisions between the team which would affect the productivity of the team. It is mainly encouraged through the creation of a shared vision and shared goals. Therefore group decision making is made use when major matters are to be discussed where input from all the departments are needed to achieve superior quality. There was some dysfunctional conflict between the team members.  Decision making process Group decision making would improve the quality of the important decisions. This concept is new to the organisation where the project members are excited and eager to learn about e-retailing. project manager is to organise a small celebration by taking them for lunch or for drinks to motivate them to do better in achieving the project goal.  Managing project reward systems The project members have a monetary reward at the completion of the project. .  Managing conflict within the project Conflict is aroused when there is disagreement between the members of the project team.is to provide a better customer service through greater interactivity using the emarketplace. If all the members are to finish their work on time in relating to the budget. Group input would reduce resistance and secure support for the decision made which would allow the e-retailing activity to be in superior quality. Group input is important in making decisions on the format of the webpage and implementation of promotional products. They are also rewarded by the recommendation given by the project manager on their competencies which could reward them by a promotion. This was managed by the project manager by listening to both parties and imposing his own solution and presenting it to the parties. Functional conflict is encouraged where the project manager can manage the new ideas coming through it.

The data collected by the project team should be reported once in two weeks to the project manager and the top managers of the organisation. Qualitative measures are used for on-site inspection which is by the use of the web service. corrective action needs to be taken to bring the project back in line with the original or revised plan. a monitoring system is essential. Lastly if there is a significant deviation of the actual from the planned. the current status on the project time and cost and solutions to solve earlier problems and would help to identify new problems. (Gary & Larson. . whether the critical path is early or on schedule and keeping the project on the budget. analysis and reporting the current progress. They need to monitor if the applications are up to date and compatible with the current organisation technology. These stored data would contain information such as the weekly progress. The data should be stored in a database for later retrieval and for statistical purposes. comparing actual against planned and taking appropriate corrective actions. This system is used to determine what data to be collected during the project and who. how and when the data is to be collected. This is established from the information found on the WBS on cost and duration and data from the network and resource scheduling decisions. Second step is to measure the performance and progress in a qualitative and quantitative method. 2008). Evaluating project performance Evaluation of the project can be done by setting up a baseline plan. The actual duration and costs should be compared to the planned duration and costs to check whether the project is on time and within the budget. Third step is to compare the plan against the actual by the use of periodic monitoring and measuring the status of the project. (Gray & Larson. 2008). Quantitative measures involves the measurement of time performance and the budget. measuring progress and performance.Monitoring and Evaluation System Monitoring the project In order to measure and evaluate the progress and performance of the project. First a baseline plan should be set which provides the elements for measuring performance. The quality of the software and hardware used by the designers should be compared with the project team’s specifications.

They need to review the evaluations to assess the strengths and weaknesses and the areas for future improvement. Finally the team and individual evaluations are needed to be carried out. The project was to finish on the 31st January 2011. The team evaluation can be carried out by the HR department. The finishing of the project will be marked by the opening of the e-market place for Tesco where its consumers can buy products online. Form of project closure The project manager is responsible for the closure of the project when nearing the end of its life cycle. A checklist must be created so that the project team can analyse the tasks done and nothing has been overlooked. The project duration was already reduced compared to the initial plan of eight months due to the increased man power employed on the project which helped the team to reduce the duration to 5 months. However the costed strategy managed to reduce the project time by 25 days where the organisation is able to capture a greater market with the instant implementation of the online retail industry. as the project is expected to completed by the revised planned date. The type of project closure involved here is a normal closure where the project ended completing all its objectives as planned with implementing an e-retailing service for the consumers.Project closure Expected closure conditions The conditions for the project closure are expected to be normal. It is also essential to survey the current customer base on whether the project outcomes meet their satisfaction and to see the areas for future improvement. Then the project manager is responsible for the appraisal of the individual performance by having informal sit-down sessions with each of them. .

The language barrier of some of the outsourced members were an obstacle for communication between the members and their input on meetings were low which affected the team decision making. In order to manage these obstacles the project team had gatherings and dinner after work to let the members bond and know about each other’s cultures. Due to the premature closure of the project. Therefore it was easy for the project manager to keep the employees motivated during the project duration. Some of the outsourced employees were interfered in the designing process by the in-house employees by giving them negative criticism which would de-motivate the outsourced employees. The decisions made were negated by some employees who lead to dysfunctional conflict among the team. There was insufficient time to provide English training for some of the members even though this was pointed out by the HR department.Potential obstacles to project success and ways of overcoming these obstacles The differences of cultural backgrounds lead to a cultural conflicts between the project team members. the members who understood different languages were to help in understanding them in meetings. This lead to a greater understanding of the team members from different cultural backgrounds. . The project manager made a head for each department involved in the project which terminated the interference by others and negative criticism received.

There should be effective communication between the team members and this should be mainly analysed in the recruitment process.Recommendations Based on the analysis above the project is a feasible project which could be implemented in a short duration. Most of the members are within the company which would be an advantage due to shared values and the organisational environment. The project is financially feasible and would give a great return on investment because the e-tailing would increase the sales of the organisation. . The main reason for the project is to gain a competitive advantage and to manager greater markets share in the retail industry. There should be adequate transparency between the team members for an effective team performance. The goals and objectives of the team should be clear and achievable and having an effective monitoring and control system would be sufficient to be in line with the planed and estimated duration and budget.

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