Tesco Plc’s Crisis & Communication Management

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Introduction

The company, Tesco Plc, must prioritise its activities, decision, and other factors to resolve the effects of the current economic depression on the company with the resolve to avoid such pitfalls. Tesco Plc’s crisis management and communication management policy includes on maximizing the significant variables in generating revenue-generating balance scorecard recommendations.

The study focuses on the supply chain aspect of profitably resolving the current economic depression crisis affecting the United Kingdom grocery chain market segment. Tesco Plc’s crisis management and crisis communication includes the implementation of a customer-based supply chain crisis management delivery system that retains and increases the current accounting period’s revenues and profits.

Tesco Plc’s crisis management and crisis communication process must continue prioritising the most effective solution to the many factors propping up the current economic depression on the company’s maintenance and increase of its current revenues and profits. Company Profile Tesco PLC (or “Tesco”) is an international retailer.

Tesco Plc’s implementation of the company’s crisis management policies is very effective. The company is currently plagued by economic depression-based issues. The crisis management is tasked to innovatively create strategic plans to increase its decline revenues. The economic depression of 2009 continues to hover over the United Kingdom skies.

The Tesco crisis management issues communications to all interested parties reassuring everyone the innovative company crisis management and crisis communication policies are being implemented to retain and increase the company’s current profit ratios and prevent the company’s slow pull into the bottomless abyss of unprofitability (bankruptcy).

Tesco management correctly strives resolve all hindrances to its return to its former glory in terms of revenues and profits.

The current economic crisis continuously triggers a relentless decline in the demand for the company’s products and services. The economic crisis started in 2009 within the United States. As a United States business partner, the United States economic crisis extended its outstretched arms towards the United Kingdom businesses.

Many United Kingdom businesses sold their products and services to the clients living within the United States. Thus, the United States depression created a decline in the demand for United Kingdom products. To increase its revenues, management focused on its biggest price-based advertising and promotion campaign within the past ten years.

ASDA’s advertising campaign to earmark 250,000 in prices triggered an increase in ASDA’s revenues. Being one of the major competitors of ASDA, Tesco realized that the ASDA advertising campaign may trigger the transfer of many of Tesco’s current and prospective clients to ASDA branch stores.

To resolve the profit decline crises, Tesco management rightfully focuses on first gathering crisis –related financial, economic, and other profit- related analytical data. The analytical data includes PESTLE analysis, SWOT analysis, and Porter’s five forces discussion.

Further, Brenda Sternquist (1994) reiterated the retailing market segments in the United States as well as in Western Europe, Japan, as well as in Australia have become highly mature and sophisticated. Many new retail marketing formats, techniques, and systems have emerged in the past 20 years and have significantly enhanced the nature and character of modern retailing.

Older retailing procedures that include the presence of department stores and supermarkets have reached a stage of modernization and maturity and are today tackling the formidable competition from a new category of retailers classified as “category killers.”

The popular specialty warehouse outlets include competitors like IKEA and Toys R Us, membership clubs such as Costco and Pace, specialty niche retailers, off-price retailers and electronic home shopping.

There is no single variable that can probably explain the remarkable metamorphosis of the United Kingdom retail industry. A series of environmental factors — consumer affluence, new lifestyles, work culture, and technological advances – continue to affect the complexion of world retail industry.

The implementation of computerized data processing systems has helped retailing in many areas — site selection, merchandise planning, and inventory management. It has metamorphosed a retail operation into an automated system of consumer needs management.

In addition, some of the significant outcomes of these developments is what may be coined the internationalization of retailing. Markets are today being globalized. Parallel consumer profiles are emerging in all parts of the world, though in varying degrees.

Just as a new product idea gets parallel acceptance and becomes marketable in several social classes, just like the recent retail market segment theories do new retailing concepts. Innovative retail formats are finding their way into all parts of the world irrespective of disparities in income, culture, and political system.

One can find Benetton in Bombay, Warsaw, and New York. IKEA furniture outlets have created their network all over the world from Europe to North America, from the Middle East all the way to Australia.

Socio Economic Factor

Tesco hires employees from communities where each Tesco retail outlet is strategically located; the company aids to government in reducing unemployment rate (Taylor, 2007).

Economic Factor

In terms of company’s significant macroeconomic situation, the current financial crisis during the past few years precipitated from the current economic recession enveloping the United Kingdom and other parts of the world.

Further, David Giibs (Gibbs 2002) emphasized in recent years the aspect of changing the current environmental change has become a major key area of debate. There is an increasing concern that the consequences of industrialisation are increasingly negative and that action needs to be taken to remedy this.

Although there is no absolute consensus that major environmental changes are occurring (see, for example, the stalwart pressures brought to bear on the US President in the run up to the Kyoto climate change summit in 1997 by representatives of the cars and automobile, steel and oil industries), there is a broad agreement that these changes are in train and that some form of response is needed.

David Gibbs proposed this agreement breaks down is in the form of the appropriate response to environmental change. There are many wide diversity of opinion here from deep green ecologists who require a wholesale restructuring of society, through to some economists who believe that market instruments are capable of restoring the ‘environmental equilibrium’ and that the basic socio –economic target forms can remain intact.

On the other hand, the increased influx of immigrants from European countries under the European Union charter increases the demand for Tesco Company’s grocery and other related products and services (Czinkota, 2006).

Technological

In line with Tesco’s crisis management and crisis communication process, the company uses an online website, https://www.tesco.com/, to spread the many advantages of shopping at the nearest Tesco branch within the United Kingdom. The website displays some of the company’s major grocery products. Clients can make an order by emailing the company.

Payments can be down through PayPal, credit card, or other modes. With the advent of the internet, Tesco is currently reaping the laurels of the one borderless world economy through increased online sales of its products and services (Czinkota, 2007).

The Tesco Company pays each subordinate the minimum daily allowable by United Kingdom and other related laws. The company complies with all tax and other statues implemented in communities where each Tesco Company retail outlet is located (Baumueller, 2007).

Profitability of the U.K. Retail Market Segment

Rosemary Varley (2001) reiterated profitability is compulsory if a retail business is to survive, but achieving profitability is a complex task, given the variety of transactions that take place within the retail arena. Profitability is a short term, a medium term and a long term issue.

For example, in the short term enough profits have to be generated on the sales of items to cover the costs of buying in the product; and in the medium term, enough profit has to be generated to pay the costs of running the business (rent, staffing costs, distribution costs and so on); but in order to develop the business a further chunk of profits will need to be set aside for reinvestment, for example, into an additional or larger outlet.

Eventually, there are two methods of increasing retail profitability; one is to increase the profit margins made on the products that are sold, and the other is to reduce the costs involved with selling the products. Chapter two outlined the role of the buyer and merchandiser who, in a traditional organisational structure, share the responsibility for profitability management within the department.

In some organizations, the merchandiser takes on the bulk of profitability issues, such as managing margins and price reductions, however the person who negotiates cost prices with suppliers will also make a significant impact on departmental profitability.

Trade-offs between product features and prices will be the selector’s concern. The role of the category manager, discussed in chapter three, puts a great emphasis on profitability in the guise of efficiency improvements, throughout the efficient consumer response.

U.K. Geography

Hugh Matthews (2000) the key changes in the United Kingdom geography of leisure are introduced and outlined. In the last decade or so there have been significant changes in terms of the location of key types of leisure which have had dramatic impacts on city and country alike. These changes have been both physical and visual affecting the fabric and land-use of cities and countryside.

Certain kinds of leisure that two decades ago were in one kind of location in the UNITED KINGDOM’ now occupy very different locations. In addition there have been important changes in the ‘symbolic landscape’ of city and country. For example, the countryside has hitherto been regarded as a place of peace and quiet, a location for gentle leisure activity that is also small scale.

Current updates have reshaped the countryside in very significant ways, changing what we imagine the countryside to be. There have also been changes in the symbolism of cities, most notably in the revamping of many inner-city districts in response to new investment and demand for dance and music clubs, with zones of decline being transformed into symbols of new youth culture.

This review of changes in the geography of leisure in the United Kingdom makes particular reference to the process called consumption, which will be more fully explained in a later section (pp. 268-71). Here, suffice it to say, leisure has become much more commercialised during recent years and this has led to new patterns and locations of leisure development and activity.

The attraction of the United Kingdom leisure sites, in terms of global tourism, is an important influence on the kinds of places and sites that have been developed. Tourism and leisure overlap as activities and many attractions are valued for both.

Environmental

The company does not throw its waste products into the crystal clear waters located near its display stores. With the current climate change issues, Tesco can reduce transportation delivery schedules to reduce Tesco’s vehicle pollution activity.

U.K. Retail Market Segment Demography

Hugh Matthews (2000) theorized the United Kingdom demography provides an important backcloth to the developments taking place in the United Kingdom, but it is neither unchanging in its nature nor neutral in its effects.

The term is used here to refer to the size, distribution and composition of the population and the patterns of life-course events which maintain or alter these, notably the three basic components of change in population numbers (births, deaths and migration), but also the many factors that affect household formation and family building.

The demography of the United Kingdom’ has undergone some major changes over the past three decades, including greater longevity, lower fertility, higher divorce rate, accelerating cohabitation, later marriage and childbearing, increasing lone parenthood, larger numbers living alone, a fluctuating migration from the busy large cities, a switch from net emigration to substantial international migration gain and the increase in the number of persons belonging to the United Kingdom’s non-white population.

Each of these raises policy issues for society, most of them immediate and obvious in their implications but some with major long-term impacts such as the continuing passage of the 1960s/1970s baby boom and bust through the age structure.

Market Structure

The grocery retail chain in the United Kingdom is focuses on serving the basic needs of clients. The three major players are Tesco Sainsbury, and ASDA.

The laissez faire economic environment influences the Grocery market segment. Ash Amin (2002) emphasized A central role that the local United Kingdom directory social economy is expected to play is that of creating new forms of employment in excluded communities. The European Commission (EC), for example, has identified nineteen fields of activity on the basis of which it has proclaimed an ‘Era of Tailor Made Jobs’ (CEC 1998a).

The other centre-right national governments for whom the local social economy offers the promise of ‘bottom-up’ regeneration with new sources of employment flowing from the conversion of ‘needs into markets’. The special hot economy organisations normally contribute to employment outcomes fall into two main categories: direct employers and labour market intermediaries.

The direct employers are expected to create jobs by exploiting new areas of anticipated growth. These include, for example, environmental schemes as a basis for socially useful employment

Each competitor influences the other competitors’ revenues and selling prices. The retail grocery chain market segment is giving its best to attract as many U.K. clients as possible. The company advertises its products in and sets up shops to reach current and future clients (Palmer, 2004).

In addition, Alfred Marcus reiterated (Marcus 1984) brainstorming and t mere discussions about regulatory changes involve fundamental questions about the power of the federal government and its relation to the private sector. An increase in federal authority over business and as well as the imposition or assertion of business power are among the most notable changes in business-government relations in recent years.

To date, the analyses of some regulatory changes has often been limited to obvious indicators–readily available statistics on the number of employees and the budgets of regulatory agencies, the cost of regulation to the private sector, and the number of agencies and regulatory enactments.

The effectiveness of the sales owners’ implementation of the new motives or usefulness of the measures, however, is limited in considering governmental activity and its impacts, as several crucial and interesting questions are tainted with tour political in nature. This chapter criticizes conventional measures and develops a political viewpoint on the topic of regulatory changes.

Conclusion

Based on the above discussion, crisis management and crisis communication focuses on resolving the effect of the current economic depression on the company’s retention and increase of its revenues. Tesco Plc’s business organisation maximises many scarce but significant variables in generating balance scorecard recommendations.

For example, the financial statement ratio data shows Tesco gets a high passing grade for maximizing its assets to generate profits. To eliminate the crisis, Tesco Plc advertises the many benefits of its grocery brands. Next, Tesco Plc implements a customer based supply chain crisis management delivery system to increase revenues by increasing grocery inventory.

The company’s balanced scorecard indicates the company successfully resolved its major crisis issue, decline revenues, by maximising its scarce resource. The company continues to generate net profits for 2008 and 2009 alone from satisfied clients. The current favourable financial success must be continued by offering high quality products at the same affordable Tesco- style shelf prices.

In terms of the balanced scorecard’s customer crisis management and crisis communication aspect, the company correctly continues its current strategic direction of advertising the company’s picturesque image as the best client-based retail store over the next ten years.

To the other stakeholders, including the 2008 and 2009 Tesco income statement’s net income data as part of the crisis to support solutions to persuade the stockholders, suppliers, customers showing the company generated profits to persuade the stakeholders the company will be able to increase its revenues within the next five years.

The income statement indicates Tesco sold more than enough products and services to cover its daily store operating expenses. Definitely, the crisis communication correspondences will include audited income statements showing profitable sales figures for 2008 and 2009.

The advertisements will show that the company is slowly regaining its former lead in the United Kingdom grocery market segment by filling the discriminating needs of the local clients.

In terms of the balanced scorecard’s internal business crisis management and crisis communication process, Tesco management must continue its current strategic direction of improving the company’s current high quality supply chain strategy over the next ten years.

The Tesco Company’s internal business process balanced scorecard status indicates the company has a passing grade; the company offers high quality grocery and other related products and services at acceptable prices, Consequently, Tesco has a huge chunk of the Retail industry.

In terms of the balanced scorecard’s learning and growth crisis management and crisis The surveys will serve as starting point to enhance the Tesco currently economic depression crisis management and crisis communication process in terms of retaining the company’s brand image, service quality, and grocery customer loyalty.

Lastly, Tesco Plc must innovatively implement crisis management and crisis communication strategies to remove the current economic depression that incorporate the recording and avoiding actions, activities, and other factors that will precipitate to the decline in the company’s current revenues and net profit figures.

Indeed, Tesco was able to resolve its key issues of generating revenues and profits by managing (maximizing) its scarce but significant resources fully.

References

Amin, A. Placing the Social Economy. London: Routledge Press, 2002.

Baumueller, M., (2007) Managing Cultural Diversity. London, Lang Press.

Gibbs, D. Local Economic Development and the Environment. London: Routledge Press, 2002.

Marcus, A. The Adversary Economy. London: Quorum Books, 1984.

Matthews, H. The Changing Geography of the United Kingdom. London: Routledge Press, 2000.

Sternquist, B. European Retailing’s Vanishing Borders. London: Quorum Press, 1994.

Varley, R. Retail Product Management. London: Routledge Press, 2001.

Czinkota, S., (2006) International Marketing. London, Wiley & Sons.

Palmer M. (2004). International retail restructuring and divestment: the experience of Tesco. Journal of Marketing Management, 20(9)