The Need to Adopt an Electronic Business System. E-Business in Tesco

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Table of Contents

Introduction
Critical Evaluation and Analysis of E-business strategy in Tesco
Procurement
Conclusion
List of References

Introduction:
- The introduction part of this paper tries to introduce the reader into understanding the need to adopt an electronic business system and why most business organizations are becoming digitalized.
Main Body:
- The body of this paper highlights the impact of introducing electronic data interchange into an organization and further the benefits associated with adoption of an e-business in Tesco.Com.
Conclusion:
- The conclusion entails what Tesco should do in order to enhance its advancement in e-business.

Introduction

Tesco is a UK based retail supermarket with the largest competitive space in the retail industry throughout Europe and its environment. Tesco was founded in 1919 by Jack Cohen as the sole and key founder. Its strategy includes acquisitions, mergers, and adoption of new technologies. Tesco operates in a very dynamic and volatile retail industry offering mainly groceries that includes beverage, home, fashion wares Tesco mobile and financial services.

Its competitors include, Asda, Sainsbury, Safeway, Morrison and many others. In 2001 Tesco was announced the first and only retail business to make online business. This triggered off a flurry of activities featuring new product design and versions. Today Tesco still remains the most competitive retail super market in the United Kingdom. (Nash 2006)

The purpose of this paper is to advance the reader’s knowledge in understanding the contribution of electronic business by critically evaluating how Tesco has successfully achieved the implementation and application of its electronic commerce in the entire industry. This study evaluates and assesses the application of strategic e-commerce techniques and how Tesco has utilized this feature to distinguish itself from its competitors thereby making it more competitive in the industry.

Different organizations have different business strategic options that strengthen their ability to overcome and sustain competitive performance in their respective industries. With the rapid pace in technological advancement every business organization is striving so hard to take the early opportunity associated with the adoption of modern technologies. (Hoggan 1998)

Tesco is one such company and still continues to invest heavily in this digital era. The topic highlights some of the unique ways that an organization can use to underscore in its industry as well as in the global arena. The objective of this paper is to equip the reader with a wide knowledge in understanding specific mechanisms in implementing an information system within an organization. Tesco runs the following electronic business systems; automated distribution, automated inventory, online grocery shopping, and online advertising. (Humby Hunt & Phillips 2006)

Critical Evaluation and Analysis of E-business strategy in Tesco

Automated distribution

Tesco believes that its brand is the strongest in the industry and therefore draws goods from suppliers to the distribution centers. Goods are processed and rebranded the Tesco’s brand. The distribution system is aided by Tesco’s powerful technology known as RFID. This is viewed in the broad spectrum to reduce operational costs and improve reliability. This has enabled Tesco to embark on a program of extending logistical practices to cover collection from its suppliers in the supply chain. (Nash 2006)

This channel has ensured that Tesco is directly linked to its customers thereby eliminating the existence of middlemen who are likely to increase the price of essential commodities desired by its customers. The use of RFID technology has increased procedures where at the same time logistics personnel are able to identify any risks that could curtail the transport network. Due to congestion, increased pollution and fuel prices, Tesco has shifted to other transport alternatives like forming alliance with Eddie Stobart Group and Manchester Ship Canal. (Hoggan 1998)

Online Inventory systems

Tesco runs a computerized inventory system. All the stores run computerized systems from where the items are coded and the codes are used to trace products from the warehouses. This has increased efficiency in inventory management. Inventory coding has also beefed up security and inventory control in the warehouse. Recently the stock management technology has the capability of reminding the storekeepers of the re-order and lead levels every time a requisition is made from the warehouse.

This ensures that the stores are kept informed about the overall movement of stock so that they can make new orders any time a safety stock is reached. This technology is also used by Morrison and Safeway. The system is designed to work on a first come first sold basis. At the stores level the system uses coding to provide all the details of the product i.e. price, date, and quantity. This is important when a customer is making a specific inquiry. (Nash 2006)

Online shopping

According to 2008 survey report Tesco UK online business was the largest in the world with a market share of 27.1% attributed to holdings in the UK retailing industry. In 2007 online sales amounted to $ 748. Under this system customers are able to access Tesco’s website view products and make orders through either on-line via tesco.Com, by phone or in selected stores at the new Tesco direct desks. Tesco.Com then starts picking orders in the morning from 6am followed by drivers who begin to deliver products from 9am to 11pm. (Pagano1987)

This is meant to increase customer satisfaction and convenience. Products sold through online are DVDS,CDS, books, electrical items as well as Tesco Personal Finance and the Telecom services, music downloads, gas, DVD rentals, flights and holidays and dieting clubs. (Humby Hunt & Phillips 2006)

Contribution of Online sales to Tesco’s success (benefits)

Tesco.Com persuades its clients to shop online through in-store advertising and marketing to the supermarket’s Club card loyalty scheme customer base. (Nash 2006)

Personalized marketing

Customers are able to access the interactive websites and view some of Tesco’s newest products and services and then decide accordingly. This has helped Tesco to minimize operational costs by eliminating the need to employee field marketers. Online selling also means direct contact to customers and therefore most clients who are loyal to Tesco brands are able to get the information they want without the need to rely on intermediaries who may delay important information. (Hoggan 1998)

Globalization

Recently, Tesco operates in many countries in Europe, Asia and United states. Through supply of online information Tesco has managed to build and establish a reputable brand across the international borders as well as in the domestic markets. This has opened up external opportunities for Tesco and hence expanding its Market niches abroad to the chagrin of its competitors. The success behind its global activities lies on its online nature of business. (Humby Hunt & Phillips 2006)

Electronic payment

Having made orders online customers do not need to travel to the physical stores to make payment. They are issued with debit/credit cards through which they can use to make the payments. This provides customers with the greatest payment convenience and thus reduces the backload of using currency coins and notes which may be bulky and insecure if offline payment was to be used. In the wider sense electronic payment has made many business organizations to lock in their customers and thus achieving customer satisfaction. Tesco supermarket is one such organization. (Simms 2007)

A 24-hour Business

Tesco operates a 24 hour business. In fact some of its superstores in urban cities like Newcastle and Manchester are busy throughout recording the highest sales volumes. This has increased Tesco’s reliability and popularity within and outside the United Kingdom. It has also led to Tesco surpassing its sales target. This implies that the company can easily meet its strategic objectives. (Nash 2006)

Procurement

Tesco runs an online procurement system where it is able to source for quotations from different suppliers. The supplier listing is generated from the stores data base. Through this method Tesco is able to view all the details relating to different suppliers in the industry according to their ratings. This has always ensured that Tesco gets the services of the most professional suppliers. There has been a lot of industry politics with key rivals asserting that Tesco is suffering from little knowledge of customers and suppliers. Over the past period, online procurement has erased this believe from the minds of many. (Sir Ian 1999)

Tesco SWOT Analysis is shown below

Strengths	Opportunities
Operates 24/7 Strong Liquidity ratios Increase sales revenue and trading profits Strong Balance Sheet most competitive Supermarket Chain Strong brand Awareness Access to professionals Online Shopping	New Markets opportunities globalization Health awareness growth –GM crops Creativity, Innovation & Alliances Efficient brand growth Diversification of products and services Non-food – offers undiscovered new markets with reasonable margins
weaknesses	Threats
sensitivity of low quality –(Tesco brands) little knowledge of customers and culture overseas brand	Volatility in Price of raw materials Economic downturn Market shift to globalization invasion bids by other players

Conclusion

Tesco has identified itself as the industry leader in providing unmatched needs and services. This has been achieved successfully through e-business. However to be on track and maintain the lead in the industry Tesco is facing a hard task. There is already pressure from the domestic markets. This is evidenced by the presence of other giants in the industry including Asda, Sainsbury, Safeway, Morrison’s and etc. Tesco must be able to improve its existing manpower and employ new talented IT professionals who are creative and innovative enough if has to survive.

List of References

Sir Ian, M 1999, Tiger by the Tail: A Life in Business fromTesco to Test Cricket. London: Pan Books. ISBN 0330337714.

Simms, A 2007, Tescopoly: how one shop came out on top and why it matters? London: Constable. ISBN 1845295110.

Humby, C, Hunt, T & Phillips, T 2006, scoring points: how Tesco continues to win customer loyalty. London & Philadelphia: Kogan Page. ISBN 9780749447526.

Nash, B 2006, Fair-Trade and the growth of ethical consumerism within the mainstream: an investigation into the Tesco consumer. Leeds: University of Leeds. ISBN 75272130.

Hoggan, K 1998, “Tesco Tycoon: Interview with Tesco’s fortunes Chairman Ian MacLaurin”. Marketing (Haymarket Publishing Services).

Pagano, M 1987, “Shocked Hillards attacks greed of Prudential: Hartley disgusted with institutions after Tesco wins takeover battle”. The Guardian (the sun).

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