Business at work

Business at work

and tested for their quality and customer acceptability; this is product evaluation. Tesco staff and management procedures are also monitored to ensure that they maintain the highest standards; this is quality assurance.

Why does Tesco carry out product evaluation?
Product evaluation is carried out for a variety of reasons. These include: testing new products under development testing existing products when a change of supplier is being considered testing Tesco products against those of competitors to update information on the packaging to monitor quality and safety standards.

Changing of packaging information
Even when a product remains the same, packaging information may have to be altered because of a change in legal requirements, changes in nutritional concepts, or advances in food preservation and cooking. For example, a product might have its packaging altered to indicate that it could be suitable for microwave cooking. It will therefore be necessary to test the product in company's laboratory. Here Tesco inserts fibre optic probes into the product. This allows us to monitor the temperature of the product whilst it is cooking, in order to ensure that it reaches a high enough temperature for it to be consumed with safety.

Tests on existing products
Quality control tests are conducted regularly on all existing own-brand products at Head Office, in Consumer Advice Centres, and in specialist laboratories. These include tests on food safety.

Consumer Advice Centre
The purpose of five Consumer Advice Centres in Sandhurst, Shoreham,
Southport, Cheshunt and Perth is to carry out practical research with customers into new and existing products. Each centre is staffed by two consumer service officers who are qualified home economists. Their most important role is to conduct consumer acceptability tests and sensory analysis. Over a four-day period, six to eight products will be tested.
Their role also includes being available to the customer for any queries concerning diet, health and nutrition, PR work at a local and national level, quality control, and giving talks and demonstrations to local community groups.

Organising a taste panel
Market researchers will recruit customers who are shopping in the store.
These customers take part in the test only if they fulfil the recruitment criteria that have been established for the product being tested. For example, Tesco might ensure that all participants are heavy users of the product, or a product aimed at children will be tested on children only.
As far as possible, consumers test Tesco products against a benchmark. This other product is normally the market leader; testing against it allows us to ensure that product matches or exceeds this quality standard. Products are tested "blind" and identified by codes so that consumers do not know which one is the Tesco product and which one is the benchmark.
The questionnaire is designed so that consumers give scores for various questions, such as their opinion as to the appearance of the product; they are also asked to tell us what they liked and disliked about the product.

Sensory analysis
Sensory analysis is a more technical evaluation of a product which is carried out by consumer service officers who have been specially trained to analyse the product using uniform objectives and technical descriptions.
They will evaluate the product and forward a description of it to Head
Office for use in the final report.

What is done with the data?
Data from sensory analysis, questionnaires and customer comments are collated and subjected to statistical analysis at Head Office which will lead to a product either passing or failing the tests. If it is failed, the product is reformulated according to the comments made by customers in response to the questionnaire. Products are then re-tested and will be launched only when they achieve a pass result.

Implementing of quality assurance
Quality assurance is implemented at all levels in Tesco. Everyone is
"focused" on giving the customer the best possible shopping experience in terms of service, quality, availability, price, car parking facilities and store design. This "focus" is set in Annual Trading Plan and is implemented through various departmental objectives and through specific training programmes. Tesco invests large amounts of money in training, so that Tesco can achieve specific objectives, for example First Class Service initiative.
Usually each initiative has a sponsor, normally a Main Board member. It is the directors and managers who brief the teams, and then it is up to individuals to "buy in" to an idea. Tesco has found that this process works well as it is not prescriptive and it allows people to implement new ideas in their own way.

Setting standards for quality
A common tool for creating "benchmarking" standards is called SWOT analysis. This stands for "strengths, weaknesses, opportunities and threats" and it provides a useful way of evaluating quality standards.
Standards cannot exist in isolation, and SWOT allows comparison with competitors to be taken into account. Tesco therefore uses SWOT a good deal for specific products, for example in evaluating a new range of merchandising or evaluating a new process provided by a supplier.

Tesco Packaging design.
Tesco has many "Own Brand" products, and in order to promote its own brand correctly Tesco has its own Packaging Design Department. Products sell for a variety of reasons; in the first instance, the visual appeal of a product is important to attract customers to the product initially, as it is only after the first purchase that the customer is attracted because of the quality of the product and its value for money.

How does Tesco add value to its product?
Usually value for product depends on one very important key - quality of the product, better quality - more tests are done - bigger value, but Tesco tries to keep prices lower than all other national supermarkets. Tesco adds value to its products by means of buying it from contractor for lower price, testing it, and selling it for higher price.

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Success of the business in meeting its objectives.

Tesco is one of Britain's leading food retailers and has 586 stores throughout Great Britain. In Europe Tesco has 41 stores in Hungary, 32 in
Poland, 13 in the Czech Republic and Slovakia, 33 in Northern Ireland, 76 in the Republic of Ireland and 1 in France, to prove that business meets its objectives successfully I'll present some diagrams and company's financial records.

Turnover and profits of Tesco in 1997-1998
The turnover and profits for the year ending 28th February 1998 were as follows:

1. Group Turnover (incl VAT) - 17.8 billion (17, 800 million), an increase of 18.7% on the previous twelve months. This figure is for 53 weeks compared to 52 weeks for the previous year and includes the newly acquired businesses in Northern Ireland and the Republic of

Ireland. On a comparable basis with the previous year, excluding the

Irish acquisitions, turnover was 16.4 billion, and increase of 9.2%

2. Profits on ordinary activities before tax, integration costs and disposal loss - 832 million, an increase of 10.9% on the previous twelve months.

Changing of company's financial fortunes 1992-98
The changes in the company's financial fortunes are shown in graphs 1 and 2

Graph 1,2: Group turnover and operating profit 1992-8

Graph 3: Share earnings and dividends 1992-8

Profits share
In 1998 the profits from Tesco after tax were 505 million. About 50% of the profits were distributed to shareholders as dividends. Subsequently approximately 250 million was retained by the company for investment in new stores and improving their service to customers.

Changing of share price in recent years
Between February 1997 and February 1998, the Tesco share price rose from
349p per share to 517p. It reached a peak in the period of 539p. In the year 1998-9, the price continued to rise, being 586p on 21st April 1998, and having peaked at 603p at the previous stock market high.

Market share of Tesco
In February 1998,