Business at work

decision-making delegated on a regional and individual store level.

From the information I have managed to access I believe/consider that Tesco

has a very good democratic and consultative management style. It is a very

successful firm, as seen earlier, it is now the U.K. market leader with

positive leadership from above and a notable corporate culture.

The directors present their annual report to shareholders on the affairs of

the Group together with the audited consolidated financial statements of

the Group for the 52 weeks.

The principal activity of the Group is the operation of food stores and

associated activities in the UK, Republic of Ireland, France, Czech

Republic, Slovakia, Hungary, Poland and Thailand. A review of the business

is contained in the Annual Review which is published separately and,

together with this document, comprises the full Tesco PLC Annual report

Accounts.

Culture

Culture in organisations is often described as the set of values, beliefs

and attitudes of both employees and management that helps to influence

decision-making and ultimately behaviour within them. Each organisation has

a unique culture. This is what makes studying business behaviour so

fascinating. The business culture helps to determine how things get done in

firms and defines, quite simply, how the company works. The fact that

organisations are themselves organic, composed of workers constantly

interacting with each other and their environment, suggests that the

culture in firms is not static and constant – the way firms operate can

change, either intentionally through management action or more likely

through natural evolution.

Corporate culture

Corporate culture is a set of values and beliefs that are shared by people

and groups in an organisation. A simple way of explaining corporate culture

might be to say that it is the ‘way that things are done in a business’.

The corporate culture of a business can influence decision-making. It also

encourages low level managers to behave like entrepreneurs. Business

leaders are able to create a corporate culture to achieve a corporate

objectives and strategy of the company. It is important that the corporate

culture of a business is understood by all the people that work in the

organisation. It is usually transmitted to new members and reinforced

informally, by stores, symbols and socialisation, and more formally through

training.

Advantages of a strong corporate culture.

. It provides a sense of identity for employees. They feel part of the

business. This may allow workers to be flexible when the company

needs to change or is having difficulties.

. Workers identify with other employees. This may help with aspects of

the business such as team work.

. It increases the commitment of employees to the company. This may

prevent problems such as high labour turnover or industrial relations

problems .

. It motivates workers in their jobs. This may lead to increased

productivity.

. It allows employees to understand what is going on around them. This

can prevent misunderstanding in operations or instructions passed to

them.

. It helps to reinforce the values of the organisation and senior

management.

. It acts as a control device for management. This can help when

setting company strategy.

Figure 1.8: Types of business culture.

Culture, presented within Tesco plc.

Tesco has achieved its position as Britain’s leading food retailer by

offering excellent value and service to its customers. Underlying its

business success is a commitment to upholding certain values, working

principles and culture within the organisation, and to seek continuous

improvement in its ethical performance. As a measure of its achievement to

date, in 1997 the company came top in the Christian Aid league table for

ethical commitment.

Customers.

Tesco must serve its customers by providing the goods they want and the

service they expect. By meeting customer needs better than its competitors

do, Tesco earns profits and creates value for its shareholders.

Customer service is at the heart of Tesco business culture. The base line

is quality and value, but customers also look for a shopping environment

which is attractive, well planned, and enjoyable. They also expect staff to

be helpful, responsive to their needs, and sympathetic to their problems.

Tesco is constantly seeking new ways of meeting customer needs. These

include introducing Customer Assistants dedicated to helping customers at

every point during their shopping, establishing a Customer Service Centre

to deal with customer enquiries, providing facilities for customers with

disabilities, and organising customer question times when Tesco can hear

customers views.

Staff.

Tesco employs 154,000 people in the UK and 27,000 in Ireland and Europe. It

is constantly told by customers that its staff are the company’s best

asset. This means that the company must motivate and train its employees to

give the best possible customer service, and provide opportunities for all

members of staff to develop their talents to the full.

The company believes that the welfare and safety of its employees is of

paramount importance, and applies high ethical standards to protect

workers’ rights and reward employees fairly for their work. Full and part-

time staff have had their benefits harmonised, including salaries, purchase

discounts, pensions and profit-sharing. The company has a national

agreement with USDAW, the shop workers’ trade union.

The approach of Tesco to worker welfare goes beyond its own employees. The

company insists that its suppliers meet certain employment standards in

matters such as fair pay or minimum working ages. Tesco believes it can

play a positive role in influencing working practices around the world.

Like other large companies, however, Tesco recognises that its wider

reputation depends on other things, such as its staff relations, its

attitude to the environment, its support to the community, and its

relationships with its suppliers. Also, as a leading food retailer, the

company must ensure that it provides products, which are safe to eat or

use, as well as giving customers advice on matters such as healthy diets.

Health and safety

Tesco customers rightly expect that their purchases will be safe to eat or

use. The company applies the highest standards in meeting these

expectations and makes special provision for those with special dietary

needs. Following government recommendations on the nation’s diet, Tesco was

the first retailer to promote healthy eating.

Environmental policies

Tesco is committed to protecting the environment and to using its

commercial strength to put its principles into practice. In many cases, the

company’s standards far exceed legal requirements. Its environmental

policies cover matters such as recycling of packaging, working with

suppliers to minimise the use of pesticides, energy conservation, and the

siting and design of its stores. Tesco also works closely with

environmental organisations in areas relevant to its business.

Animal welfare

The company aims to set the highest standards of animal welfare in the

industry, and has introduced a code of practice on the treatment of animals

to which all its suppliers must adhere. The company is also funding

research to improve understanding of animal welfare, and will continue to

promote and implement high standards in order to improve animal husbandry

still further.

Relationships with suppliers

Tesco has relationships with thousands of suppliers in the UK and overseas,

and works closely with these suppliers in order to ensure that products are

of the highest quality and delivered in the best possible condition. By

working in close partnership with its suppliers, Tesco is helping them to

meet its own high standards, not just in efficiency and product quality,

but also in environmental protection, animal welfare and employment

practices.

The community

Tesco is very much part of local communities throughout the UK and is

committed to playing a positive role by working with community

organisations. The company’s community contribution covers support for

education, groups dedicated to helping people with disabilities, and a wide

variety of other organisations. The company has introduced schemes which

enable its own staff and customers to help raise money for good causes.

Each large supermarket retailer in Britain has its own corporate identity

and culture. Often these are very similar, yet each organisation seeks to

present its own individual image. Of the types of cultures that I have

discussed above, I think that Tesco displays many of these differing forms,

especially customer driven or customer orientated, task culture,

competitive culture, innovative culture and positive culture. It is often

said that in business “the customer is King” and this is very true of

Tesco, which operates in a very competitive market. It must be very heavily

customer orientated as satisfied customers will usually regularly return,

but dissatisfied customers may not …. and go elsewhere! It is also very

innovative, always encouraging new ideas and products, e.g. the possible

introduction of car sales. Tesco used to be a food retailer, but now it

also sells clothing, electrical goods, books and stationary, computers,

mobile phones, etc. It has a very positive culture as it is always

searching for new opportunities for its staff and also its retail products.

Its success is now a good indicator of how this blend of business cultures

has led to market growth and market leadership.

E5

Communications

The efficient communication of information is particularly important for

organisation that operates in competitive markets. Relevant and accurate

information is needed to plan and manage efficient production, marketing,

distribution and cost control. Information – whatever it is nature and

purpose – must be communicated as efficiently as possible.

All people in an organisation are part of an information flow – they are

involved to varying degrees in providing and receiving information.

However, there are three main levels at which information is required:

. operational level

. middle management

. senior management.

Operational level

At the operational level – on the factory floor, in the office or at

premises where consumer services are provided – there are charge hands and

supervisors who must ensure that work is planned and carried out as

efficiently as possible. In a factory, for example, a supervisor giving the

task of overseeing the production of a particular item needs to know:

. the quantity to be handle

. the completion date

. the availability of plans and machine capacity

. the operations to be performed

. the kinds of labour needed and its availability

. the materials and components required to produce the order.

The kind of information assists the supervisor in planning and controlling

he work and it is essential for decision making at an operational level.

Activities at the operational of an organisation produce data that will be

processed to provide much of the information required by middle management.

Middle management

Middle management needs to know how efficiently work at operational level

is been carried out and the extend to which any resources under their

control are being used to achieve the organisation’s objectives. Much of

this information relates to the productivity of labour, the utilisation of

machine capacity and the rate at which materials and other inputs are being

consumed.

Middle management also needs a great deal of financial information about

the costs of the resources consumed in relation to output. This financial

data can be used to determine and monitor total costs, revenues, profits

and the achievement of business objectives for example, it will be possible

to identify any fall-off in productivity or rise in labour costs which

might contribute to arise in unit labour costs or to detect the excessive

use of materials which might suggest an increased in wastage.

Senior management

So far, I have mainly considered the need for information that is processed

and generated from sources within the organisation. At senior level,

however, information from internal sources often has to be supported by

information derive from external sources to help managers ensure that the

resources and their control are used as efficiently as possible in

achieving business objectives. Decision making at senior management level

has a major influence on the success or failure of the organisation. Any

decisions concerned with controlling the organisation, assessing its

performance, planning its future and initiating action must be supported by

all relevant information.

Decision making at senior level in areas such as business strategy and

planning requires information about broad trends rather than detailed

information needed to make many routine decisions on day-to-day matters at

lower levels of the organisation. Senior management need information about:

. developments in initial costs and sale trends

. overall profitability, and the respective contribution of each part of

the business

. capital requirements, and availability of internal funds and the cost

and sources of external capital

. manpower and skills requirements

. forecast of demand of the organisation’s markets

. the impact on business of any changes in the economic, political,

social and legal environment.

Superior

Prep Line manager Prep

group

group

Staff Subordinates

Staff

relationships

relationships

Figure 1.9: Communication network

Communication channels and methods

The communication channel refers to the means by which information is

communicated. The actual choice of communication channel depends upon a

combination of:

. the need for an immediate feedback or response

. costs

. speed and urgency

. the number and location of the people who need the information

. the degree of confidentiality and security required

. the desired degree of formality

. convenience

. the complexity and amount of detail to be conveyed

. the type of information to be communicated

. the need to keep a record of the communication.

Business information can be communicated in many ways. Methods include:

. written reports

. instruction manuals

. letters, circulars and memoranda

. material posted on notice board

. in-house magazines and newspapers

. sheets of figures

. information on standard forms

. graphs, charts, drawings and photographed

. video, television and other audio-visual techniques

. meetings and interviews

. public address announcements

. electronic mail

. network messaging

. fax

. telephone and voice mail

. pager device

. video conferencing

Whatever communication method is used, the information sent should be

relevant and avoid superfluous comments and unnecessary detail. The

information communicated to a supervisor on a factory may have to include

an exact description of the operations to be carried out. In contrast, much

broader information is supplied to middle and senior management. Senior

managers may only require general indicators and a broad description of the

developments that need to be considered when assessing the organisation’s

performance, setting objectives and deciding upon strategies.

Exception reporting

To ensure tht the information provided to management is relevant, clear and

concise and makes effective use of managers’ time, some organisations

stipulate that managers are only provided with dada relating to exceptional

developments. Middle management, for example, may only receive information

connected with performance measurements that deviate by more than an agreed

percentage from their targets. The information dealing with exceptional

performance should also be supported by brief statements of the internal

and/or external factors that may have contributed to any exceptional

performance. Exception reporting makes more effective use of the time and

skills that middle management devotes to decision making and to initiating

and controlling actions.

Downward information flows

A downward information flow describes the provision of information by a

superior to an immediate subordinate. It is, therefore, concerned with

internal communications as part of a formal communications channels. A

downward information flow can cover:

. issuing instructions on the tasks that have to be carried out by a

subordinate and setting objectives, such as the target data for

completing the work

. requesting information concerning the area of work for which

subordinates are responsible

. communicating the organisation’s procedures, working methods and

practices and the rules and regulations

. given feedback on subordinate’s performance in relation to his or her

objectives and targets

. motivating people and encouraging attitudes that raise productivity

and improve quality.

Some information will not come from an employee’s immediate superior but

from other parts of the organisations. For example, when employees first

start work they receive general information about the structure and goals

of the organisation from the personnel department. However, for information

that relates to work undertaken by the subordinate, the communication

channel should be from superior to immediate subordinate.

Upward information flows

An upward information flow along a vertical information channel is from a

subordinate to a superior. This might be feedback from a downward flow or

the communication may originate directly from subordinates. An upward

information flow can cover:

. responding to a superior’s request for information on some aspect of

work for which the subordinate is responsible

. informing managers about the subordinate’s own performance, problems

or their personal ambitions in relation, for example, to promotion or

opportunities for developing new skills.

. passing on information about other employees in the subordinate’s

section and relations with sections with which there is a direct link

. submitting ideas on improving working methods and solving work

problems.

In the interests of effective working relations. Most organisations expect

subordinates to report formally through their immediate supervisor or

manager. However, they are likely to communicate in formally with managers

higher up the hierarchy and in some situations, such as grievance

procedure, may go directly to a more senior manager than their immediate

superior.

Horizontal information flow

In addition to upward and downward flows, there are also horizontal

information flows between people of the same status. Because many

operations within an organisation must work very closely together, there

must be formal arrangements for the exchange of information between

sections and departments. The production department, for example, must have

close contact with the purchasing department when it is considering changes

to materials and components or introducing advanced machinery and

equipment. Production staff also has to exchange information with employees

in requirement, training, marketing and transport.

The quality of information.

The essential characteristics of an efficient information system are that

the right people receive the right information at the right time. The

information communicated should be:

. internally relevant to the needs of the recipient

. accurate and concise

. comprehensive, avoiding a time-consuming request for extra

information

. clear – it must be presented and communicated without ambiguity or

possible misunderstanding.

The person receiving the information must have confidence in the ability of

the sender and, therefore have the confidence to take decisions based on

the contents of the communication. The person sending the information must

be confident that the receiver has the ability to understand, use and take

effective decisions based upon the information supplied.

This information system, the communication media and the kind of

information provided should be review on a regular basis. The information

system should be adjusted to take into account any developments within the

organisation such as changes in its organisational structure or management

style. This review should also take into account external factors such as

advances in information technology.

Informal communications

Vertical and horizontal information flows should be clearly defined. If

individual are not sure about from whom the y should receive information

and instructors, this can lead to the growth of information flows which are

not part of the formal system. If there are two information flows running

at the same time, there can be confusion and a fall in productivity. These

informal systems can generate alternative sources of information and create

a situation where the different levels of management receive inconsistent,

inaccurate or even conflicting information.

Many businesses, however, accept that some tasks would not get completed if

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