Business environment refers the total of all macro and micro environmental factors which influences the business. Macro environmental factors are political, economical, demographical forces, technological, legal and environmental factors etc. these factor also known as external factors which gives impact on organization operations. On other hand micro environmental factors are distribution channels, suppliers, customers, employees and public etc. These factors also known as internal factors which gives impact in organization performance. To understand business environment there is an example of Tesco company. It is British multinational groceries' company. It is famous as general merchandise retailer company in UK. This report will cover value chain model.
Value chain model
The set of operation which perform in particular industry in order to present specific goods and their services for business market. This framework comes from business or industry environment. It5 is proposed by Michael Porter in 1985. This model is specially designed take competitive advantage in business market (Yu, Wang and Brouthers, 2016). Value chain model gives direction for two level such as firm level and industry level. In firm level value chain model gives more values to products rather than activities. On other hand industry value chain model gives values to operator who assists to pass products by the mediators such as distributors, suppliers, employees etc. thus value chain model helps to achieve sustain competitive advantage in business market.
Value chain analysis is the procedure which helps organization to recognizes primary activities and supportive activities. These actions enhance values of final goods and their services and examines effectiveness of the activities (Chan and Ma, 2016). Based on the analysis supports to decrease cost or enhance differentiation of products from other products.Â The concept represents internal activities in which organization interconnect with procedures such as transforming raw material into final products. Activities are divided into two forms-
Primary activities: These are essential activities which helps to add values of products so that organization enables to take competitive advantage in business market. Primary activities are -
Inbound logistics: this is important activities in which arranges flow of materials, parts and inventory from supplier to manufacturing, warehouse and retail stores. In simple term particular activity in which includes various functions such as receiving, storing, inventory control and scheduling of transportation within organization.
Operation: To converts input into output is important activity of operation where inputs are in the form of labour, raw material and energy while outputs are in the form of final products and services (MUTEA,Â 2017). The operation activities includes various operation such as machining, packing, assembling, maintenance of equipments, testing and other important operation which helps in transformation of products.
Outbound logistics: The process in which includes movement of final goods in order fulfilment. These activities accomplish by distribution management and transportation.
Marketing and sales: it is important activity of value chain model in which includes various function for selling of products or goods (Mamabolo, Kerrin and Kele, 2017). The functions are channel selection, commercialism, promotion, selling, pricing and retail management. Through the process organization enables to give values of their customers.
Services: This activity helps to retain number of customers with company, in this activity concludes customer supports, installation, training and innovation of services. Thus, these activities helps to hold product working impressively for the buyers etc.
Supportive activities: these activities helps organization to keep primary activities effectively so that organization achieve sustain competitive advantage in business market. In which includes various activities are-
Infrastructure: it is integral part of activities which helps to keep product working influential. In firm infrastructure keeps alignment of all management in well-formed manner such asÂ management, planning management, finance management, accounting, quality management customer relationship management and public affairs.
Procurement: in these activities products or goods and their services are based on external factor such as political, economical and demographical factors etc. (Anwar, 2019). Purchasing decision is also dependent on the external factor in organization.
Technological development: Up-gradation of technology helps value chain activities to make products and their services effectively. In this development includes R&D department, procedure automation, design andÂ redesign of products and services.
Human resource management: it is most essential supportive activities who perform various operations in organization and helps to achieve organization mission (Prajogo and Oke, 2016). Operation of HRM planning, recruiting, training, retention of employees.
Thus, both activities primary and supportive activities leads sustain competitive advantage in firm and helps organization to analyse internal environment.
Tesco is public limited company which is founded in 1919 by Jack Cohen. it is British multinational groceries and general merchandiser retailer organization. While headquarter of company is established in Welwyn garden city, England, UK. It comes in third largest retailer in the world on the basis of gross revenue (Barnea,Â 2016). On other hand based on revenue organization comes in ninth largest retailer in the world. It operates in various countries i.e. UK, Ireland, India, Malaysia, Thailand, Czech republic, Slovak republic, Hungary and Poland. Number of retail shops are 6,800 in seven countries.Â Tesco has products diversification such as trading of books, clothings, electronics, furnitures, toys, petrol, software, financial services, and internal services. Beside of seven countries Tesco retails their products in emergingÂ market and other markets i.e. supermarket, hyper market, super store and conventional shops. Revenue of organization is aboutÂ Â£63,911 million and operating income approx Â£2,206 million (2019).Â 450.000 employees works in Tesco company and offers their services. Subsidiaries are Tesco stores Ltd, Tesco banks, Tesco Ireland, Tesco family dining Ltd, Dunnhumby, Spenhil, booker group and jacks, in which operates products and offers services to customers.
Tesco has own website www.tescoplc.com. Tesco has the largest shop in England and on the basis of floor is approx 17,230 square metres to walkeden. While Tesco express shop is established in London which is famous as conventional shop, in which retails food on higher margin such as sweet, crispy, chocolate, fizzy drinks, biscuits and proceed food. Tesco offered loyalty card which was branded as club card in 1995, later offered internet shopping services to customers. The main objectives of Tesco is to meet customers objectives by offering expected products (food and non-food items) at lower cost. Mission of the organization to differentiate organization from other organization in global market. To develop customers loyalty regarding products and company and enhance customers shopping experience by developing new purchasing technique is strategy of Tesco.
Examine the internal environment
Value chain analysis helps Tesco to examine internal environment. Through the framework Tesco enables to identify activities of operation which leads values of products or goods and helps to lead competitive advantage in organization. Internal environment of Tesco analyses by value chain analysis into from primary activities and supportive activities.
Inbound logistic operation of Tesco is complex because it supplies a hundred different categories' product through 7817 Tesco shops which is established in whole world. Economical scale of Tesco is large due to large scale of operation (Aithal,Â 2017). Organization enables to elevate economical in large scale because appropriate leadership doesn't apply by manager to motivate supplier or employees. In that state supplier unable to perform well-formed at workplace as resulted Tesco unable to take operational profit margin. Due to autocratic leadership Tesco unable to build good relation with suppliers. That's why organization unable to manage flow of goods in company.
Operation of Tesco is divided into three large segments retail, manufacturing and banking. In retail sector, Tesco operates in eleven countries around the world where stores are operates in four forms such as Metro, express, Extra and Superstores. Metro stores are large type of stores in which sells wide range food items and general items such as cookware and greeting cards. On other hand Express is smaller size shop which is specially designed for high level purchasing and small shopping meeting. The main goal of the stores is to provide fresh food as possible to home and work to customers. Extra store are the largest type of stores in which offers non-food items such as clothing, health and beauty services, financial services and equipments. While superstores offers both items food and non-food items in market. Tesco retails own brand products such as groceries in market on affordable prices (Corbett and Montgomery, 2017). Organization introduces 78 lines with fictitious farm in which grows natural groceries and offers to customer, thus Tesco give values to their money by offering standard quality products. In banking formate organization offers financial services to seven million customers in bank. In 2008 Tesco launched Joint venture and Royal bank of Scotland. While in 2014 Tesco earns 4.4 percent interest of profit margin and trading profits of GBP approx 194 million.
Tesco's out-bound logistic is quite profitable rather than inbound logistic because supermarket chain provides various home delivery option of goods for purchasing. Thus, online selling of products makes easier to cover large number of customers and offers services.
Marketing strategy of Tesco is quite impactful for retailing of products in global market. To retain stakeholders by enhancing trust for brands and diversification of products and offers the best quality products on low prices is strategy of Tesco.
Organization analyses customer loyalty which is based on customers shopping frequency. Tesco applies cost reduction strategy to cover large customers by additional services enhances product prices as result organization doesn't get profitable outcomes in company.
Infrastructure of Tesco is systematic in organization. Tesco differentiate each department of management on the basis of responsibility which supports business to monitor whole operations. Organization gets negative impact of external factor. For example organization unable to retail their products in various countries due to political factors. Organization gets positive impact of technological factor because internet leads selling option for Tesco where can retail products on wide scale without paying extra taxation (Anwar and Hasnu, 2016). Human resource department also impressive of Tesco because manager introduces various strategy which helps organization to achieve economical scale. Thus value chain analysis helps organization to examine whole operation which is performed in industry.
As far as I think value chain model helps me to understand internal environment of organization where I learned about organization operations. Value chain model is categorized into two sections primary activities and supportive activities. Primary activities helps to understand about flow of material and their operation which is accomplished by various management within company. For example inbound logistic operation helps me to understand about flow of material and suppliers activity. Where I understand organization unable to establish good relation with supplier which decreases performance of supplier at workplace. That's why organization unable to get optimum output. While operation activities helps me to learn about operations which is performed in organization. I learn Tesco divides their operation into three formate retailing, manufacturing and banking where organization offers food and non-food item to customers in well-formed. On other hand outbound logistic helps me to understand about supermarket chain where I learn organization introduces various selling strategy for elevating economical scale in global market. Service also an essential activity of primary activities where I understand Tesco service strategy. Tesco applies cost leadership strategyÂ to meet customers objectives but organization doesn't get optimum profit in company because additional services enhances cost of products as resulted organization gets lost. Supportive activity helps to learn about Tesco infrastructure and management. Infrastructure of organization helps me to understand about operations of management in different department. Infrastructure supports me to align each department. While HRM department plays vital role in Tesco organization who introduces various strategy to achieve mission of organization. I learn previous leadership of HR unable to motivate supplier to perform better at workplace but Tesco focuses on the employees' performance at workplace and change leadership so that employees perform better at workplace. Thus value chain model supports me to learn about internal business environment.
It can be concluded value chain model which supports organization to achieve sustain competitive advantage in business market. In this model describes about activities which is divided into primary activities and supportive activities. Primary activities analyses flow of material and their operations within organization while supportive activities analyses infrastructure and management of organization. In this report has been concluded internal business environment of organization which is analysed by value chain analysis
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