Since the position of Tesco in the market has always been inclined, the negotiations would be positive as they would receive the lowest prices from the suppliers. As suppliers don’t want to lose their contract with the big stores they would go for huge quantities for supplies with low pricing. Competitors to Tesco Malaysia:- Tesco has a rigid competition locally, one of them is Giant hypermarket; this market has been cheapest store place in Malaysia to shop everyday groceries and products besides
The economic aspect of an organisation can be illustrated by the economic environment by investigating the business cycle such as growth, inflation, employment and international trade. The management system of Tesco has great concern about the economic environment as it is very significant to influence the entire process of the cost of the product, demand, profit and price of the product. The economic arrangement creates a great impact on the suitable allocation of the respective resources as per the suitability of the corporation. Tesco is the UK’s largest and most resourceful supermarket chain corporation on a global market. Tesco is an international brand, which can be easily understood by its expansion on the global platform.
By applying their unknown comparative strengths, Tesco’s resources and capabilities reinforce the company’s active performances. However, for the suppliers and communities, Tesco is a corporate bully robbing the community. Like the pilgrims and Native Americans changed the culture of America. Tesco’s growth comes at the expense of small businesses while diverting trade and wealth from local economies. On the other hand, the clarity of Tesco’s vision of continuous growth via diversification supports the organizational effectiveness in the marketplace (Pitt&Koufopoulos,2012).
Frankly, as a customer in low and middle classes, usually will look at the price first before they make decisions to buy things. Tesco has higher cost products if we compared it to other grocery retailer stores, but Tesco always has smart strategy to attract consumers, such as specific product offers, special discounts or price cutting. “The lower the cost of producing your goods and services, the lower can be the price to your customers. The operation will spend its money on staff costs, facilities, technology, equipment costs and material costs”. (O’Brien, p45, 2004).
Efficiency on the other hand reveals whether the planned objectives of the policies bring forth the anticipated returns to the business. The bone of contention here is to establish a matrix of the policy objectives and the intended outcome. James et al., (1979) state that effectiveness is measured in terms of achieving and with the use of limited resources. They emphasize that; the concept of efficiency must be added to that of effectiveness. Though these two concepts are related, they however have some common differences.
a) Using evidence from the facility, explain the importance of 3’s. In today’s competitive era, it is necessary to implement the concepts of economy, efficiency and effectiveness to a company operations management. However, holding right balance in the implementation of these three E’s permits an organization to be more flexible and helps it to respond quicker to the current and future challenges. Thereby, three E’s analysis is very significant to the Mr. Winggz eatery as this tool is used for determining the health of operation management of the restaurant. Each of these three E’s proves very efficient in the improvement of overall quality of production.
So pricing a product too high and too low can cause a serious loss for the sale of the organisation. So there are several pricing strategies that Tesco has adopted to meet its organisational objectives as well as be in competition market. Penetration pricing This is happen when product is sold into a market at a low initial price in order to generate sales before the price is hiked. This type of price strategy is used to break down any barriers but not necessary designed to generate profit. And sometime this pricing strategy is used a short-term to again market share so once Tesco has captured the market price is slowly increased.
According to the article by Perreau, one of the methods was the price reduction of its products, which would stimulate more demand, thereby still making small profits from reduced prices. Another method that Tesco had used in order to bring up its profits was to invest in research and learnings of neuromarketing. This method would allow its management to know the real customers’ needs. Moreover, it has come up with a customer record system in order to check the routine of its customers (Perrau, 2006). These methods made it possible for it to make profits again.
People: High performing people are key to strategy implementation as they work with principles and processes of an organization to achieve its purpose and improve the company performance. Performance: The metrics are important to see how the organization is performing and reward the people as necessary or to take corrective action to improve its performance. The 5P’s must be aligned with each other in order to achieve maximum efficiency and effectiveness. (Pryor et al. 2007, p. 11).