Aim and Objectives of Tesco PLC

Overview

In this part of my assignment I am going to discuss the aims and objectives of Tesco
plc.

In a business it is most important to ensure within a business that they plan in order to
reach there full potential. Under legislation by both the UK and EU it is required that a
business must have an overall purpose. These statements are mostly short and can be
easily remembered, they explain what the business aims to achieve and also their
purpose, qualities and objectives.

Tesco quotes on their website that their main aim/core purpose “is to create value
for customers to earn their lifetime loyalty”. A business such as Tesco
will have to consider whether their aims are realistic, and they’re should be a reasonable
chance of obtaining these goals.

It is important that Tesco’s employees understand the aim’s of the business and how they
can provide support i.e. to customers to help improve the businesses success and
reputation. They define that the businesses success depends on those that shop and work
within the business. Due to the organisation being in the private sector this means that the
business is owned by a large number of shareholders from the public. These shareholders
will be aiming for the business to maximise as much profit as possible, this will involve
Tesco being able to reach a point of maximum difference between their profit and costs,
and as a result there will be larger dividends for shareholders within the business. Tesco
as a company may lead to earn a satisfactory profit for there shareholders however, they
must plan ahead to achieve this.

Tesco offer a wide range of products which help attract customers of different interests.
By doing so this will then encourage customers to return to the business and shop again.

Tesco’s express these values through;

• Understanding customers
• Make the consumers needs priority
• Act within communities responsibly

Treating those with respect the same way Tesco team would like to be treated;

• By working as a team
• Building respect and trust within one another
• Provide support by listening and polite manners
• Sharing experiences and knowledge
Every business has objectives and it is important for a business to recognise a difference
between an aim, objective and strategy.

Aim – These are long-term goals which are used by businesses to provide a direction
setting for objectives. This are normally expressed within the mission statement of a
business in which this allows a number of objectives/targets to be set.
Objective – These are medium to long-term goals. They must be achievable and
realistic as unrealistic objectives can act as a demotivator to employee’s deterring them
from their targets. These objectives need to be agreed through fellow employee’s to
provide them with a sense of belonging and importance, which in turn will improve
overall motivation.
Strategy – This will be a medium to long course of action, this will enable a business to
achieve their objectives. This strategy will include what needs to be done, resources
available and time provided to achieve these goals. Tesco use a strategy to help them
achieve their objectives.

The business will have;

Primary Objectives – This is an ultimate goal for a business, which is normally based
over a long-term period. This may be for example; the survival of the business, to
maximise profit income, for the business to expand etc.

Secondary Objectives – This is a day to day objective of a business which helps in the
long-term survival and meeting the primary objectives of a business. These techniques
are referred as Tactical objectives. Tesco can perform these techniques by supporting
their customers with more support.

The most effective business objectives meet the criteria of SMART;

S – Specific – This objective will be aimed at what the business does – for Tesco this
consists of selling as much products to maximise their profit.

M – Measurable – This consists of a target set to be achieved. This will be measured

through how many goods are sold, a target of increased profit by £10,000 etc.

A – Agreed – It is vital that everybody included within the business understand the
objective attempted to be achieved, and that everybody participates to ensure success

R – Realistic – Should be made achievable, by setting a target to high, beyond achievable

expectations with the resources available, the business will not succeed.

T – Time Specific – The objective should be made achievable within a certain limit of
time.
Strategic decision

Normally this is a very high risk take for a business. For Tesco this may be an objective
to produce a new product for market sales. Investment would normally be required and
may range from low to high costing. One of the main contributory factor’s towards this
strategy includes; the incorporation of Tesco’s own-brand made produce.

In order for Tesco’s objectives to be met, they must;

• Provide detail of what is to be achieved normally found on a quantitative form

• A time limit when objectives are to be achieved
• Resources required in order for these objectives to be met

Tesco is an international company and so their strategy is well-established and promotes

them with a consistent growth for both the present and long-term future. Tesco’s ‘Every
little helps’ strategy helps them in strengthening their core purpose and expansion into
further market exchange and research.

Tesco’s Strategy

“The rationale for the strategy is to broaden the scope of the

business to enable it to deliver strong sustainable long-term
growth by following the customer into large expanding
markets at home”.

Tesco strategy was founded in 1997 and it has been the foundation of the businesses
success since it was established. Due to the use of this strategy, over the past 12 years the
business has interpreted a large scale within the market and has become very profitable
and competitive.

Tesco group are still continuing to make successful progress within its five elements of
interest. By reflecting on these established areas of focus, the businesses commitments on
the community and environment are still gradually improving. This has provided the
business with momentum to guide them through the troubles of today’s economic
downturn.

Tesco objectives of their strategy;

• To grow the core UK business

• To put the community at the heart of what we do
• To be as strong in non-food as in food
• To develop retailing services – such as Tesco Personal Finance, Telecoms and
Tesco.com
 • To be a successful international retailer

Core UK

With over 285,000 employees and over 2,200 stores this shows significant numbers to the
growth of the business. Roughly 70% of the businesses income is produced through their
stores within the UK. This growth comes from the new space, extensions to existing
stores and also a multi – format approach. Non – food products form a key part of Tesco
strategy. This helps contribute to the overall growth of the business.

There are 4 different store formats which are specifically tailored to meet different
consumer’s needs. These are;

• Express
• Metro
• Superstore
• Extra
• Home plus – this is a trial format.

Community

Tesco believe within the community there are many opportunities for growth, and by
making corporate responsibility integral means they can apply there responsibilities and
values as a business.

Tesco have a large number of retail outlets in different countries which all have different
challenges and opportunities but they all take into consideration that the consumer has the
power to drive a positive change. The business also has an enormous role to play, this
role is success. By being successful this is the biggest contribution the business can make.
Tesco understands the needs of customers such as; those with low income, those deprived
of jobs and aims to innovate to resolve these problems e.g. providing those with jobs and
cheaper costs.

Non – food

As stated in Tesco strategy their initial aim is to be as strong within their non – food
based products as they are in food products. By offering the same quality, range of
products, price ranges and services the business can then adapt to succeed within this
objective.

With the use of facilities such as Tesco Extra stores and home plus stores allow the
business to offer their widest range of products and services such as; pharmacies and
opticians. Tesco Direct was launched in 2006 which offers a range of products through
the use of the internet and catalogues.

Retailing services

Within this area of Tesco they offer various services such as;

• Tesco Personal Finance – The UK’s most successful supermarket bank which
offers 28 services to the public. These product services range from savings
accounts, credits cards etc. to car insurance.

• Tesco.com – This has become a revolutionary facility for Tesco and its consumers
with busy lives. It gives those with less time and immobility to purchase their
goods online and have them delivered straight to their front door.

• Tesco Telecoms – Tesco provide their customers with value for money Tariffs
including; mobile networks, home phone services, internet access and also
internet phone services.

International

Tesco operates 13 markets outside the UK, in Europe, Asia and North America. Within
these international markets over 180,000 employees are employed serving a total of 2,026
stores. These stores generate an overall sales income of £17.9 billion and over £700
million profit. There are 5 key points of maintaining this international strategy. These are
as follows;

• Be flexible – Each market is different and so requires a different approach

• Act Local – Local customers, local cultures will require offers suited to their
tailored needs e.g. Thailand customers will be use to shopping in wet markets
meaning, they will rummage through produce and chose which item they wish to
purchase. Whereas a western approach supplies products neatly packaged and of
convenient proportion.
• Maintain focus – Tesco realise that in order to achieve this success and become
the local leading brand that this is a long-term process.
• Using Multi-formats – Tesco believe that no single format can achieve all the
needs of different individuals, and so with a various mixture of stores this resolves
this issue.
• Develop capability – skills are an important key within the businesses success
and so Tesco insure they have capability through people, systems and processes.
By investing in people this then helps to show Tesco’s values.
• Build brands – Tesco have trusting brands which allows the business to build
strong relationships with its customers.
Key Performance Indicators

The table below shows the steps taken in order to achieve the goals of the business. This
table was presented by Tesco Plc. providing feedback of the business actually performed
in the objectives in which they set.

KPI Target Actual Target Comment

2008 performance 2009

Reduce CO2 emissions 5% 7% 5.5% This target is measured against a

from existing stores baseline of our stores and
and distribution distribution floor space in 2006, i.e.
centres by at least 50% emissions from extensions and new
by 2020 against a space are excluded to provide an
baseline of 2006. accurate comparison. It excludes
Annual target reported emissions from refrigerant gases
as percentage because we are still developing a
reduction against consistent strategy for reducing
previous year refrigerants across the Group: we
are working hard to do this as quickly
as possible.

Reduce CO2 emissions Develop an New store format 25% We have already made strong
from new stores by environmental developed 20.5% progress towards our KPI on
50% by 2020 against a format reduction versus reducing the carbon emissions of
baseline of 2006 2006 new stores across the Group,
achieving a 20.5% reduction this
year and our stretching target will
help us to continue this progress
over the coming year.

Reduce by 50% the 10% in the UK 9.2% in the UK 10% Improved double-deck utilisation and
amount of CO2 used in across revised delivery frequency to stores
our distribution the Grouphelped us to continue to lower CO2
network to deliver a emissions per case delivered. This
case of goods by 2012 year we have extended the target
against a baseline of across the Group.
2006. Annual target
reported as percentage
reduction against
previous year

Percentage of store 80% in 85% in 95% in Due to significantly different

waste recycled the UK the UK the UK recycling systems across
the countries where we operate, it is
KPI Target
2008
Staff and customer £2.73m
fund-raising (£)
Donate at least 1% of 1%
pre–tax profits to
charities and good
causes
Helping customers live 3.5m
healthy lives
Staff and customers
active (millions of
people)
Helping customers N/A
choose healthy food
(number of promotions)
Increase the number of 78%
eligible own-brand
lines with nutritional or
front-of-pack GDA
labelling (% of total
number of eligible
Actual Target Comment
performance 2009
difficult for us to
measure waste recycled across the
Group. Our 2009
target reflects our work in the UK.
We are working
to develop a more meaningful
Group-wide target.
£8.2m £5m This year’s performance was helped
by the UK raising £6.2m.
Next year’s target reflects the fact
that customers may donate less in
the coming year because of the
economic downturn but is almost
double this year’s target.
1.9% 1% This year we donated £57m to
charities and good causes,
equivalent to 1.9% of pre-tax profits.
4,659,310 5.3m We exceeded our target to get 3.5m
people active in 2008, with a
particularly strong performance in
Thailand.
New 110 We have introduced a new target for
the number of promotions with key
messages about health to raise
awareness and provide customers
with information.
92% 99% We have exceeded our Group target
with 92% of eligible lines labelled.
We reached 100% in all countries
except the Czech Republic, Hungary
and Slovakia where we plan to reach
100% in the first quarter of 2009/10,
KPI Target Actual Target Comment
2008 performance 2009

brands) and South Korea where GDA

labelling is on the 2009/10
Community Plan with an aim to
reach 95% by the end of the year.

Supplier Viewpoint N/A 68% 70% We have introduced a KPI to grow

the response rate from suppliers
Average score (% of whilst maintaining their average
scores that are score.
favourable)

Response rate of N/A 37% 45%

suppliers (%)

Staff being trained for N/A New 10% We have introduced a KPI to
their next job measure the number of Tesco staff
around the world being trained for
their next job, for example through
our Options programme.