DELIVERING SUCCESS: HOW TESCO IS MANAGING, MEASURING

AND MAXIMISING ITS PERFORMANCE - CASE STUDY 05

STRATEGIC PLANNING (MGT 4800)
07/15/2021

GROUP MEMBERS
Safra Kamil (5138) , Jeevanthy Selvadas (5682) , Thushan Jayakody (6092) , Wenuri
Kasturiarachchi (6103) , Irushi Minipura (6150)
TABLE OF CONTENTS

FIVE PERSPECTIVE MEASUREMENT SYSTEM .............................................................. 2

FINANCIAL PERSPECTIVE ............................................................................................... 2
CUSTOMER PERSPECTIVE ............................................................................................... 3
COMMUNITY PERSPECTIVE ............................................................................................ 4
OPERATIONS PERSPECTIVE ............................................................................................ 4
PEOPLE PERSPECTIVE ...................................................................................................... 5
JUSTIFICATION ..................................................................................................................... 6
FINANCIAL PERSPECTIVE ............................................................................................... 6
FIVE PERSPECTIVE MEASUREMENT SYSTEM

FINANCIAL PERSPECTIVE

OBJECTIVES MEASURES TARGETS INITIATIVES

Grow Sales Increasement in Customers should be Increased prices of

market share increased in number. goods in 2009 in Irish
stores to meet its
Foreign sales Conceive of and target profits
create new goods or
Track the financial services Also lowered prices
success of the in border stores in
company Reduce the amount of order to face a price
money spent war

Identify how the

wealth of the
company is created.

Maximise Profit Operating profit Reduce start-up Group operating

margin, losses in the US and profit before
earning per share make US operations extraordinary and
other factors is
(EPS),
expected to reach
£1,815 million in
return on capital 2021.
employed (ROCE)

Reducing costs to Profit before tax of

increase profits £3.5 billion

Tesco's ROCE is
7.4%.

Putting pressure on
suppliers to reduce
the costs.

Manage our Dividend Per Share Tesco appealed to 9.15p

investment (DPS): their shareholders Ordinary dividend per
with a decent share in 2021
Dividend per share dividend and a ROI
(DPS) is the total of of 7 percent. Having a policy of
a company's not paying trade
declared dividends creditors for 54 days.
per outstanding
ordinary share. The
 figure is derived by ROI:
dividing the total There are about 48.8
dividends paid out billion pounds in the
by a company United Kingdom
during a year by the
number of
outstanding
ordinary shares.

ROI: The return on

investment, often
known as the return
on costs, is the ratio
of net income to the
amount invested.

CUSTOMER PERSPECTIVE

The staff are great The staff have a Make the staff Making sure
chance to ask friendly and efficient. everyone in the
questions in an company is actively
interactive way. Motivated and engaged in trying to
managed staff improve company
Tesco also produced performance – all the
little notes called time.
“shopping lists‟ to
employees in order
to highlight the key
strategic objectives
for each
perspective.

I don't queue Fully trained staff Reduce the Tesco to take new
congestion in cashiers ideas and offers to
Sifting of staff smaller groups of
members operates customers while
smoothly using the remaining
customers as control
groups.

The prices are Cater for all Provide reasonable Providing discounts.
good incomes prices for products
Prices are affordable
for any income level.

I can get what I They can Provide customers Introducing clubcard

want understand what they want to gain intels from
customers by the customers.
 Clubcard

The aisles are clear Categorise the Reduce congestion in Make the staff aware
products for quick the store about the store aisles
access

Earn lifetime Implementing To make more Introducing the

loyalty loyalty card customers loyalty programme
programme called Tesco
Clubcard.

COMMUNITY PERSPECTIVE

Be responsible, Taking a more Reduced carbon Carrier bags have

fair and honest holistic view of the footprint been reduced by 50%,
community has and more locally
resulted in measures produced goods have
such as decreasing been added.
the usage of carrier
bags.

Be a good Ensuring that Get involved with In order to provide

neighbor everyone in the everyone for the unmatched value and
organization is decision making service, Tesco strives
actively involved in process not only the to understand
efforts to enhance managers and consumers better than
the company's specified sectors. anybody else in the
performance industry. (Use this as
their slogan)

All employees benefit

from the Steering
Wheel since it
encapsulates the
company's main
strategic goals in one
easy-to-understand
image.

OPERATIONS PERSPECTIVE

We try to get it Measure Target Initiative

right first time Apply strategy on a Implement successful Create a framework
small scale before strategies. to operate strategies
implementing
 worldwide.

We deliver Making the Tesco identified They initiated the

constantly every transportation better issues with trucks and ‘managing transport
day fleet and responded better’ project and
accordingly. reduced the cost of
transport.

We make our jobs Created a local Training and Tesco created a local
easier to do steering wheel education is essential Steering Wheel
template to increase
to ensure people template for stores to
performance.
understand how they engage staff, facilitate
can contribute. a local discussion and
capture local
challenges.

We know how Making sure Make everyone aware Conducted a number

vital our jobs are everyone in the of the performance of ‘town hall’
company is actively meetings to explain
engaged in trying to the strategy.
improve company
performance.

We always save Having the data and Be efficient and Implemented a

time and money analytical skills to reduce wastage of loyalty programme to
test ideas and turn resources. get insights from
insight into customers.
customer and
business relevant
actions

PEOPLE PERSPECTIVE

An opportunity to Offering graduate Graduates are Provide training in

get on programmes where prepared for work specialized areas like
the training depends with knowledge to CIMA and pay for it.
on this program complete their job
role.

An interesting job Includes shadowing, The employee Initiating the

coaching, realizing the job role programme ‘options’
monitoring, and job where the trainee
rotation employee is
overshadowed by an
experienced
 employee

A manager who Employee training Learning and growth Employees are able to
helps me and employee matrices could be put apply for training
learning into place by throughout the year to
managers to help learn skills.
employees in training
programmes.

To be treated with they treat employees Developing broad Training employees is

respect as their customers skills of employees tailored and is done
such as mutual according to their
respect, customer requirement.
service and
leadership.

JUSTIFICATION

Financial Perspective

Among the metrics Tesco may use to determine its profitability are operating profit
margin, earnings per share (EPS), dividend per share (DPS), and return on capital used
(ROCE). In business, operating profit margin is a profitability or performance ratio that
measures the proportion of profit generated by a company's activities before deducting taxes
and interest costs from that profit. Calculated by dividing operating profit by total revenue and
expressing the result as a percentage of the total revenue; Earnings per share, often known as
EPS, is computed by dividing a company's earnings by the number of shares of common stock
that are currently outstanding. The resultant figure may be used to determine the profitability
of a company's operations. It is customary for a business to publish earnings per share (EPS)
that has been adjusted for unusual items and possible share dilution. The greater a business's
earnings per share (EPS) is, the more lucrative the company is regarded to be. Dividends per
share, also known as dividend per share (DPS), are the total of declared dividends paid by a
business for each ordinary share in issue. Dividend payout ratio is determined by dividing the
entire dividends paid out by a company, including interim payments, during a period of time,
often a year, by the total number of outstanding ordinary shares issued. Return on capital
employed (also known as ROCE) is a financial statistic that is used to evaluate the profitability
and capital efficiency of a business. For want of a better phrase, this ratio may aid in
understanding how well a business generates profits from its capital when it is put to use.
In the financial perspective, one of the objectives is to maximize profits at any costs.
The rise in sales will inevitably result in an increase in earnings for Tesco. They may also
improve the number of sales they generate by lowering their pricing, increasing their inventory,
and offering more shop promotions. Tesco may standardize the production process in order to
better understand the real unit margins for each product, allowing them to more precisely
predict true costs and prevent significant differences in the final product. Tesco's strategy to
increase sales and profits included keeping their existing customers satisfied. To do so, they
identified their customers' needs and delivered consistently excellent experiences in the most
cost-effective way possible in order to increase loyalty and acquire new customers through
referrals from existing customers. It is also advisable to offer new goods to existing customers
first, whether via upselling, cross-selling, or reselling. Additionally, they may grow their
company by expanding the number of additional shops they open in order to attract more
consumers.
Here are a few examples of how Tesco manages the financial viewpoint in order to
maximize earnings in the year 2009: Tesco achieved its profit targets by charging higher prices
in its Irish shops at the beginning of the year and then lowering their pricing on 11 Border
locations from March onwards in preparation for a price war against rivals, which enabled the
company to meet its targets. It is estimated that Tesco would have to lay off up to 100 workers
at its Irish headquarters in order to meet its earnings goals for 2009. According to Tesco, their
profit margin in Ireland was 9.3 percent in 2008, and the company made €248 million in
earnings, with profits expected to increase to €255 million in 2009. Tesco has lowered their
expenses in order to boost their sales income, as previously stated. In times of economic
depression, these numbers may seem impressive to shareholders, but in order for Tesco to
lower their pricing, they will almost certainly put pressure on their suppliers to lower their
prices as well. Some suppliers may be forced out of business as a result of this. Their direct
costs have also been lowered via the reduction of staff hours and the introduction of self-service
scan tills in the majority of their shops.