Supermarket

1. 0Introduction Convenience store (or known as mini-markets) according to Cambridge Business English Dictionary is a store that sell foods and sometime other goods but the size is typically below supermarket. 99 Speedmart is convenience store that based in Malaysia and they have over 300 outlets around Klang Valley. Three distribution centers have been set up to smooth their logistics and the latest distribution is located at Balakong Jaya. However, 99 Speedmart is not a solo-player in retailing market.

Connivance stores chains like 7-11 Malaysia, KK Mart and Hypermarket chains like Tesco, Aeon, Giant and Aeon BIG (formerly known as Carrefour). Carrefour has reported in March 2011 that its profit has been dropped by 14. 3 percent to 371 million euros ($463 million). Carrefour recently had quitted in some Asia country such as Thailand in the year of 2010, Singapore and Malaysia in the year of 2012. Action taken by Carrefour recently can be a sign that they does not do well in their operation in the market mention above. Out of the three, Carrefour Malaysia seems to be the worst.

This is a good example that 99 Speedmart has to take extreme careful steps before expanding their business nationwide. 1. 1Objectives * Expanding the Service around Peninsular Malaysia before the year of 2020 * Redesign the Organizational Structure to smooth the administration work * Ensure the Supply Chain is able to cope with the expansion while maintaining “Near ‘n Save” slogan 2. 099 Speedmart Current Operations Different with 7-11 Malaysia, 99 Speedmart has started to taken back all franchise license issue by phase as the franchisee do not getting the profit as they expected in the year of 2004.

Recently, they have started to issue limited franchise licences for selected entrepreneurs. 2. 0. 1Relationship with Suppliers In order to comply with the slogan “Near n Save”, a lot of effort has been made by Mr Lee Thiam Wah. The first step he has taken is to only carry limited product and only high turnover product will be sold in the store and they do not focus much on sales margin. Furthermore, Mr Lee has made the process of ordering and payment easy for suppliers and it will be done within 30 minutes.

The payment will be cleared every time if the next order has been place to supplier to get better discount. 2. 0. 2Distribution Centre 99 Speedmart has been setting up 3 distribution centre (figure 1) for smoothing their logistics process in short time frame from the year of 2002 to 2011. There are located at Jalan Meru, Jalan Kebun and Balakong Jaya. The first two is at Klang area while another one is at Seri Kembangan Area which is much more nearer to Kuala Lumpur City Center thus North South Highway. Figure 1 2. 0. 3Stock Replenish

The distribution centres will be taking batch order from manufacturers or distributors. The ordered stocks will be shipped to distribution centre for further allocation to all outlet based on the report generated. Based on the info getting from my local 99 Speedmart store located Kepong Area, they will replenish the stock 3 times a week for both Kepong Store and 4 times for Sri Sinar Store as their sales is higher. Normally Both Kepong store will be sharing one lorry to have their stock delivered on Tuesday, Thursday and Saturday morning directly from distribution center.

As for damage product and expired, the rules and regulation is being set to a store can only return a limited box to headquarters. Besides weekly replenish, some of their stock is replenish by third party or directly from supplier. These items are mostly refrigerated goods such as Ramly’s frozen product, Atlas ice cubes, Gardenia Bread and many more. They will take responsible to taking care of their product such as collecting expired and damage goods. The 99 Speedmart currently deploying computer assisted ordering system.

A computer assisted ordering system will normally using together with the point of sales system, whenever an item is sold, it will be updating the central server in headquarters for compiling into a sheet if the stock down to certain level for re-order. The same process applies to their distribution centres too. 3. 0Expansion of Service 99 Speedmart is a retail service that provides product from groceries to personal care products such as hand soap. It is very important to ensure the end consumer gets what they need when they enters the shop.

Currently, 99 Speedmart have around 3000 items (or Stock Keeping Unit) sold and it is not easy to manage it properly. 3. 1Logistics & Geographical Location 99 Speedmart recently have started back their franchise program to limited entrepreneurs and stated expanding beyond Klang Valley. The decision is not made in a hurry but slowly with plans. This can be seen from the newest distribution centre being set at Balakong Jaya which is near the North South highway. It takes about approximately 1 hour to reach Seremban, which is non Klang Valley shop located.

Currently there are 11 stores at that particular area as of 29 November 2012. It is recommended to take the expansion plan in phases instead of covering the service in whole Peninsular Malaysia at a time. The recommended expansion schedule can be as stated on table 1. The priority has been consider the geographical location and the also density of population as well. With proper planning of distribution centres, this will gradually reduce the lead time to supply enough stocks to the end outlet. Phase| Location| 1| Negeri Sembilan & Melaka| 2| Perak & Johor| 3 | Pulau Pinang| | Kedah & Perlis| 5| Pahang| 6| Kelantan| 7| Terengganu| Table [ 1 ] Negeri Sembilan and Melaka is suggested as their destination of expansion for reason that both the state have a close distance to Klang Valley’s distribution centres where even for Melaka , it will not take more than 2 hour to reach from Balakong Jaya distribution centre due to the infrastructure, the expressway is good for both the states (Figure 2). Figure [ 2 ] (Google, no date) Beside the distance of distribution centres, the density of the state’s population also is an added advantage.

According to data obtain from Department of Statistical Malaysia (figure 3), both the state have a high density of population compare to Pahang state thus the area fairly smaller compare to Perak. This will let them to set up only a few distribution centre but high in efficiency in terms of centralize item delivery. When the market is mature enough and enough distribution centres is being set near the near target market, they can start proceed to the next phase. Figure [ 3 ] 3. 2Customer Service A business organization main objective is to get profit and a good customer service will ensure customer stay loyal.

Based on both Laura and Johson’s (2003) research, the supply chain trend has been moving from supply focus to demand focus but currently 99 Speedmart still does not apply this yet. They will just distribute the stock without really over looking into what is the real demand of the particular’s shops demand. As a result, the store room is pack of stocks that does not really sells but some of the items are quickly sold off within few days without any more new stock coming in because of the lead time between the orders being placed.

The main reason lies to their computer assisted ordering system’s nature where minimum stock level system being use. Orders will only be place when it reaches certain limit without actually overlook how long it takes to make their stock reach that level. A same item might be taking just few days to reach minimum stock level in one outlet but a few weeks for another outlet as each of the area will have a different buying behaviour that affected by factors such as religion and cultures. 3. 2. 1Computer System Support

Instead of just using only the lowest stock level method, they should also take initiatives to do research on the data stipulated from time to time. They will have meeting every week on reviewing their sales done. Thus they should also implement a system where cashiers will key in the customer’s estimated age and gender before proceeding to payment flow and headquarters will study the data being sent. A SKU will be eliminate after a continuous weeks of low turnover (Lee, 2001). This is how and why 7-11 Japan is expanding fast and understands the customer demand well.

The benefits they can obtain thru this are minimize their space to store stock and also provide the right product to the community. Furthermore the data being collected also useful to do future prediction especially festive seasons on providing enough stocks to full fill demand. This will also gradually minimize the effect of lead time and bullwhip that impacts their operation. 3. 3Warehousing Warehousing is always an important part of supply chain management and a poor warehousing efficiency will cause delay on delivery, damage goods and many unexpected issues. 9 Speedmart is using a paper based checklist when trying to assign all the stocks to destination outlet. This actually is a big issues as 99 Speedmart is currently is expanding fast in Klang Valley and also some experimental outlet outside of Klang Valley. In order to speeding up the process, voice directed picking system is suggested to be apply. A voice directed picking system where computer will give instruction thru headset and workers can make voice command to retrieve the next information.

The main benefit is that the workers will have both hands to do their work and maximize the efficiency of distributing the stocks. According to the speaker from Lein Hing Group, currently 7-11 Malaysia has been adopted this technology thus increase the efficiency up to 30% for their speed of assigning goods to designated outlet thus lower down the lead time. 3. 4Supply Chain Figure [ 4 ] : Current Supply Chain Model As stated as section 2. 0, 99 Speedmart outlets are getting stock supplies from distribution centres and some is directly from manufacturer (figure 4).

When the operation is expanding, the need to reconsider on how to optimize the supply chain structure as each state it might be having different supplier for same product brand. Figure [ 5 ] : Suggested Supply Chain Model Since some of the item is low in turnover, they have buy in a large batch order to get better discounts from manufacturer or suppliers. So I suggest that they should set a central distribution centres or such items where the item will be delivered in a milk run method from area distribution centre to another area distribution centre.

They can either outsource the delivery to third party logistics companies such as Tiong Nam or set up a special team for this if the scale is big as the concern is how to use minimum cost to send the end goods to the outlet. When the service is expanding nationwide, they have to coordinate with suppliers in order to get the nearest source on getting their good supplies. Big consumer brand normally will have an area distributor for each area so 99 Speedmart can make full use on nearer source to obtain least cost of transporting goods. Furthermore, they can take 7-11 Japan operation model for reference on building a new logistics systems.

This is a very success model where 7-11’s competitors such as Lawson, Family Mart are also emulated their way of operation. Both suppliers and 99 Speedmart can set up a joint service whether items that can be delivering together will be cross docked in same warehouse. The driver is expected to do a milk run to area assigned to them to do daily replenish stocks. 3. 5Organizational Structures When an organization is growing bigger, a good management team must be there to coordinate the business well. Without a good management, they will be facing issues such as delay in order, late payment and others.

As referring to figure 6, we can notice that 99 Speedmart is having a flat structure to speeding up the decision process. Generally is the current structure is already good enough but some position must be added to meet their objectives of expanding their business as showed on figure 7. Malaysia is a multi cultures society and each part of the area will have different demand for the product they need. In order to understand what they need for each part of the area, the branch operation can further divide their department based as stated on figure 7.

Section| State| North Malaysia| Perlis, Kedah, Pulau Pinang & Perak| Central Malaysia| Selangor, Kuala Lumpur & Negeri Sembilan| South Malaysia| Melaka & Johor| East Coast| Kelantan, Terengganu & Pahang| Table [ 2 ] Figure [ 6 ] : Current Organization Chart Figure [ 7 ] : Changes for Cope with Service Expansion 4. 0Conclusion The area of caution has been stated in section 3 start from geographical location to organizational chart and some suggestion has been given to how to overcome the possible issues they might face throughout the expanding rocess. I am quite sure 99 Speedmart will be very successful and to cover up the Peninsular Malaysia before the year of 2020 if they are able to implement the all the suggestion above. Thus the bad economy that happens recently also will impact how they use their money. People to tends to compare the item price between retailers to save their money and in this case 99 Speedmart is very competitive as they are offering their product low in price thus near to residential area. I am expecting they will set up 25~50 new stores in the year of 2013.

U. K. is one of the world’s largest tea consumers. In spite of the fact that this beverage has become almost a national emblem, the English tea market is undergoing major changes.

Consequently, in order to survive, specialized companies are compelled to adapt to new trends. One of the most famous firms operating within this domain is PG Tips, a company which will organize a promotional campaign mainly aimed at encouraging black-tea consumption.

Before starting to delve into campaign details, a snapshot of the U.K. tea market could prove extremely useful.

According to BBC (http://news.bbc.co.uk/1/hi/uk/4556103.stm), the traditional tea market underwent a severe decline between 2002 and 2004 when the sales for tea bags and loose tea decreased by 16% and, respectively, 9%. However, the sales volume of other varieties received a major boost over the same period. The items subscribing to this optimistic tendency were the herbal and fruit tea which increased by 30% and the “specialty” varieties (green tea, black tea, white tea, oolong tea) which boosted sales by 50%.

The upward trend for the latter category is explained by the young generation’s preferences and concerns. Researches have emphasized that youngsters consider tea to be a fashionable drink which succeeds in ensuring a long-term health, at the same time.

Thus, the new trend is the natural result of healthier life-styles and higher social needs. A survey that was carried out between 2002 and 2004 on a sample of 25,000 individuals showed that 80% of Britons drank tea, 70% of the persons aged over 65 drank tea at least twice a day while the percentage of youngsters (aged between 15 and 24) having the same behaviour was 38. Standard tea continues to have the highest share in terms of retail sales (63%) compared with herbal and fruit teas which account for only 27%. Moreover, the English breakfast tea is the first choice when it comes to the Britons’ preferences.

In conclusion, tea companies have lost market share because they have failed to meet the new generation’s requirements and needs. This is not as preoccupied with maintaining tradition as it is with being healthy and in fashion, at the same time.

Consequently, if PG Tips wants to boost its sales, it should focus on this market segment which seems to gain more and more adherents every day. Additionally, one could say that the new trend works in favor of PG’s main objective (promoting black tea) as “specialty” varieties are those who have had the most significant increase over the last few years.

Therefore, the company will reposition tea brands by focusing on health benefits and special moments shared with friends or family when chatting over a cup of tea creates a warm, relaxing atmosphere. Thus, tea will be promoted as both natural medicine and social anthem, acting as a liaison among individuals belonging to the same group.

The target audience will encompass persons aged between 15 and 45, situated within the medium and superior social strata and having an average or superior level of education (or belonging to families which have an average/superior level of education, in the case of the youngest). The audience will include consumers and non-consumers, at the same time.

The sales promotion will be an event capable of revealing tea benefits, and implicitly, achieving the campaign’s objectives. In time, tea has become a habit within the framework of the quotidian landscape. Buying and drinking such beverage has turned into a routine which has lost its attractiveness to marketers.

These have preferred to focus on new brands of automobiles, perfumes, sweets and so forth which are considered to be more enticing in terms of advertising. Consequently, tea has been neglected and has begun to lose market share as any fire ceases to burn when not appropriately fuelled. Thus, PG Tips will try to remind the advantages of drinking tea (and especially, black tea) to Britons.

By highlighting the impact on health, the campaign will make non-consumers switch from other hot beverages to the PG’s black tea. Moreover, those who already are consumers of this product will feel as some sort of veterans who have made the right choice before their less expert counterparts who have discovered the nature’s miracle later. This conclusion will feed their ego and strengthen their loyalty to the PG’s products.

To sum up, I’d say that the sales promotion will strongly impact on both consumers and non-consumers, thus managing to increase the total share that PG Tips holds in the home tea market.

The sales promotion will consist of a three-tool mix: free samples, point-of-sale displays and a contest.

 Free samples of black-tea bags will be given to customers in supermarkets and hypermarkets. These will be accompanied by attractive leaflets that will emphasize the major health benefits comprising reduced risk of stroke and heart attacks, stronger immune response and faster recovery after a stressful event.

In order to achieve higher credibility, fliers should name the research institutes which have carried out the respective studies – e.g. The Netherlands National Institute of Public Health and the Environment, the Brigham and Women’s Hospital etc. (http://en.wikipedia.org/wiki/Health_benefits_of_tea).

Secondly, in-store merchandising will play a major role through posters situated at the store entrance or at the tea shelves. These displays will attract viewers by statements like:” PG Tips cares about your health and takes you on a Tea Tour” which will surely determine customers to read more.

An understanding of the business market structure and the ability to analyse the business environment are essential tools for any organisation. Given that firms rarely operate in a stable environment it is vital that the owners and managers continually monitor and assess the performance of competition in the external environment but most importantly their own organisation. The firm should aim to develop their mission and objectives to aid in the process of an environmental analysis to achieve the formulation of strategy, planning and operations.

The purpose of this report is to identify the principle and influential elements when conducting an environmental analysis; the scenario involves being employed as a business analyst who advises clients on emerging business opportunities and threats. The analysis will be conveyed on the supermarket retailing industry and will comment on the attractiveness of business expansion in that sector. 2. Operational Environment: The status of the supermarkets is that of a dynamic one as it requires consideration of the future, not just the past.

The retailers will have to adjust and adapt to the changes in the market, not only to ensure survival but to take hold of any rising challenges or opportunities within the sector. The majority of the supermarkets will face a simple situation. The criteria which supports this derives from the financial position and market position. The top supermarkets in the economy possess a financial clout that enables them to drive their purchasing costs down and when buying products in mass. The greater proportion of firms exhibit diversified products which enables them to achieve a more reformed future than a complex one.

Tesco, for example, along with many other leading supermarkets offer an extensive scope of diversified services ranging from loans, insurance and mobile phone tariffs.

PESTEL (PEST) Analysis

The structure and functioning of an organisation is not only determined by internal factors but is also strongly influenced by a range of external environmental factors. In order for any supermarket to maintain survival and growth within the market they must respond to any opportunities, challenges or risks.

The most common method of analyzing the environment is to identify and explain the key external factors that are likely to affect the performance of a business. This is known as a PESTEL Analysis. It stands for Political, Economic, Socio-Cultural, Technological, Environmental and Legal influences. In 2005, Mullins dictated that, “it is necessary to consider how a firm can achieve an internal and external balance and how they are able to adapt to changes in their environment and the demands place upon them (pg 126).

“Establishing the ‘balance’ between the factors will help any supermarket in the long run, hence the analysis being so significant. Appendix 1 presents the main issues that might be considered when undertaking a PESTEL analysis.

Political Factors

Any environmental or government issues need to be addressed. Factors including monopolies legislation or environmental protection laws are important. The legislation stands that any of the supermarkets are not allowed to build on ‘brown belt’ land, as this is prohibited to protect the environment.

Regarding this, thought also has to be given to where to new buildings are situated as noise, pollution, residential areas etc have to be considered. Foreign trade laws could affect the retailers in the near future as import and export laws could produce problems regarding purchasing stock and services internationally. Consideration given to employment laws enforces codes of practice within the industry. If the legislation is to change the firms will need to cohere to the modifications.

Economic Factors

Rates of interests, tax and inflation are all vital influences. The amount of tax the company has to pay may restrict on other things and have a knock down effect on other areas of the company e. g. employment increases and pay rises. If the rate of inflation changes this could also affect the company. It could mean that suppliers increase their prices which in turn lead to increased buying costs. Unemployment rates and consumers disposable income have an existing role as the lower amount people have to spend will end in cheaper branded (no-frills) products being purchased leaving less profits for the company.

Socio-Cultural Factors

Social factors influence people’s choices and include the beliefs, values and attitudes of society. Such changes can impact purchasing behaviour. Consumer attitudes and beliefs lead to brand loyalty to a supermarket. Realising the change in consumers’ opinions will allow the company to make any needed changes. If the changes aren’t acknowledged the customers experiences could have a knock on effect for the company from their word of mouth.

Added complications when looking at social and cultural factors are differences in ethnic and social groups. Not all groups have the same attitudes – and this impacts how they view products and services. Demographic changes also have a major role as these can affect the number of customers a supermarket receives each day. New builds need to consider where people are living regarding motorway links, local residential areas and how accessible the store is.

Technological Factors

Advances in technology can have a major impact on business success.

As well as advances in the supermarket industry, the likely impact of new technologies – the Internet, mobile phones, and the increasing advances in computing and computers will affect how businesses are run in the future. Taking advantage of any technology that could make producing their products easier and that could make the firms products obsolete will benefit any supermarket. Government spending on research could lead to a change as a result of study in fast-food, obesity, additives etc. This already has lead to change within businesses including new labeling policies.

Porter’s Five Forces Model

The PESTEL analysis is of limited value unless accompanied by a detailed understanding and analysis of the factors involved and the interactions between these factors. This is where Porter’s Five Forces Model is applied. Worthington, Britton and Rees (2001) define the analysis to be the structure of an industry and the ability of firms to act strategically depend on the strengths of five forces: 4. 1 Bargaining Power of Suppliers: The structure of the industry can relate to the business if the firm can get the same supplies from elsewhere.

This depends on how many suppliers there are to choose from. The suppliers in supermarket retailing are not monopolistic. As a result they may not be able to extract a high price from the retailers as they have the choice to go elsewhere. They may still hold their power if they are able to integrate forwards in order to obtain higher prices and margins. Also they are able to hold their position if it is difficult or costly for the supermarket to change.

For example, it would not be ideal for a smaller supermarket such as Somerfield to negotiate suppliers, as they do not hold the buying power as that of e. g. Tesco, therefore they would not be able to demand a lower selling price. In turn the suppliers would be able to hold their bargaining power over the smaller chains.

Threat of Substitutes:

A threat from substitutes exists if there are alternative products with lower prices of better performance parameters for the same purpose. Competition from substitutes limits the price that can be asked. Regarding supermarkets this applies to several goods they sell as there is more than likely to be more than one brand.

For the likes of Asda, Sainsbury’s and Tesco, petrol is an exception as there is no substitute meaning demand is inelastic respective to price. Clark (2000) argues that the substitutability of a firms products’ are important insofar as having many substitutes increases elasticity of demand and thereby reduces the products profit potential.

Bargaining Power of Buyers

This refers to the ability of buyers to negotiate and bargain over purchase prices. Adapted from Perman; Scouller (2004). In respect to supermarkets purchasing from suppliers, a large chain such as Tesco are in a healthy financial position and are able to use their buying power to drive the suppliers costs down and in turn retain money to utilize in other ways.

Threat of New Entrants

The competition in the supermarket industry will be higher, the easier it is for other businesses to enter the market. There is always a latent pressure for reaction and adjustment for existing players in this industry. The threat of new entries will depend on the extent to which there are barriers to entry.

Introduction

Choose a Fortune 500 organisation operating in the UK which you will use as a basis for all your answers for this assignment. It may be a company which you work for or one you would like to work for or an organisation you are familiar with.Name your chosen organisation.Briefly describe the organisation.

You should choose an organisation for which you can easily find out information either on the internet or by some other means. It must be a different organisation from the one you choose for Business Environment.

Name of corporation – Tesco PLC

Description of corporation – Tesco is a UK based supermarket engaged in retailing of food and non-food products. Tesco is a global company operating in 12 markets. Jack Cohen founded the company in 1919 and since then it has expanded to a supermarket from a market stall in London’s East End (Tesco.com, 2014). In the UK, Tesco operates via 3300 stores, having a team of 31,000 employees (Tesco.com, Tesco UK, 2014). The store formats include express, extra, metro and hypermarkets. The company is also famous for its online grocery shopping, serving millions of customers every week. Tesco recorded revenue of ?43.6 bn and trading profit of ?2,191m in the UK in 2013 (Tesco annual report, 2014).

LO1: PROCESS OF STRATEGIC PLANNING

Q 1.1

Define the terms and state the mission, vision, objectives, goals and core competencies of your chosen organisation.

Guidelines: (Approx. 200 words) Recommended Interim Deadline: 3rd February 2014

In your answer, you should :

• Define each of the terms , mission, vision, objectives, goals and core competences;
• Provide evidence of your chosen corporation’s mission, vision, objectives, goals and core competencies.

Mission

The mission statement defines the main purpose of the company or what it aims to do.“We make what matters, better together”.

Tesco believes in earning trust from stakeholders and not just focuses on profit. They treat different stakeholders the way they like to be treated, and encourage teamwork (Tesco.com).

Vision

Vision is defined as the expression of what a firm wishes to achieve or accomplish.‘To be the most highly valued business by: the customers we serve, the communities in which we operate, our loyal and committed colleagues and of course, our shareholders’ (The Times 100, 2014).

Tesco provides training to its staff to serve customers better; investing in opening small store formats due to customer preference; believes in ethical sourcing of raw materials
(Tesco Annual report, 2014).

Objectives

Objectives state what an organisation wishes to achieve.A growing business full of opportunities; modern, innovative business; inspiring, earning trust from different stakeholders (Tesco.com, 2014).

Goals

Goals are specific and measurable end results a company attempts to fulfill.Tesco strategic plan 2020 to reduce carbon emissions (Tesco Annual report, 2014). The company is investing to reduce carbon emission by 2020 throughout its supply chain.

Core competencies

Core competencies are the tangible or intangible assets, unique to a firm that provides competitive advantage.Core competency of Tesco is in technology and innovation such as designing efficient supply systems that enables it to become a leader in online grocery shopping and provide benefits to customers..

Q.1.2

For your chosen organisation, describe the key issues encountered in strategic planning.

Guidelines: (Approx 250 words) Recommended Interim Deadline:10th February 2014

In your answer, you should :

• Define strategic planning
• Describe at least three strategic planning problems
• Provide examples of problems within internal analysis, external analysis or business level strategy.

In answering this question, you will have covered the following assessment criterion:

u1.2 Review the issues involved in strategic planning

Strategic planning is based on setting a firm’s objectives, including developing and implementing plans designed to fulfill the objectives (Campbell et al., 2000).

The strategic planning problems faced by Tesco are as follows:

• Social Factors: Customers are switching to shop at smaller store formats near to their homes rather than big supermarket (Barford, 2014). The availability of small stores at city centre locations or near to homes is attractive for customers. Many retailers are now focusing on small store formats, however they are costly to operate (Barford, 2014). Due to changing customer trends, Tesco is facing problem as the company mainly operates via big supermarket stores in the UK. Moreover, the stores are located far from the city centre location.
• Government regulation: Tesco is facing problems in the Asian market such as restrictions faced in the opening hours in South Korea (Tesco annual report, 2014). This regulation is affecting company’s trading hours and hence profitability.
• Neglecting the UK business:Due to rise of opportunities in the emerging markets, Tesco has been focusing on markets such as China and India, however, the company is losing its market in the UK, on which Tesco depends for major portion of its revenue. Tesco invested in acquisition and diversification, but at the same time underinvested in its UK stores (Gray cited in Barford, 2012)

Q.1.3

Compare and contrast two different planning techniques which you could apply to your chosen organisation.

Guidelines:(Approx. 200 words) Recommended Interim Deadline: 14th February 2014

In your answer, you should :

• Define and describe two different planning techniques, for example, the BCG matrix, SPACE, PIMS or stakeholder mapping.

In answering this question, you will have covered the following assessment criterion:

u 1.3 Explain different planning techniques

BCG (Boston consulting group) and Stakeholder mapping

The BCG is a tool used by firms to allocate resources. The business is organised on the basis of two dimensions such as business growth rate and market share (Figure 1). Business growth rate indicates how rapidly the industry is increasing while market share signifies whether a firm has a larger or smaller market share as compared to its competitors. In terms of Tesco, the Stars, which have greater growth potential, is the company’s online grocery business. More investment should be done in this sector. The Cash Cows are the Tesco stores, having a big market share. The Question mark would be Tesco Blinkbox, a digital download service that streams movies and TV series to computers, tablets, playstation 3 (Shayon, 2013). There are big competitors present such as Netflix and Amazon. Dogs which is a poor performer would be Tesco’s operation in the US with ‘Fresh and easy’ business which was pulled out due to low profit (Butler, 2013).

Another tool used by companies in planning is the stakeholder mapping to understand the important stakeholders and their needs. There are four steps in mapping: (identifying) stakeholders such as organisations, people and other groups; (analysing) understanding stakeholder perspectives and interests; (Mapping) determining the stakeholders that are most useful to engage with; (Prioritising) ranking stakeholder relevance and identifying issues (BSR, 2011).

Lo2: Be Able To Formulate A New Strategy

Q 2.1

Conduct an organisational audit on your chosen organisation by carrying out a SWOT analysis.

Guidelines: (Approx. 250 words) Recommended Interim Deadline: 21st February 2014

In your answer, you should :

• Identify the strengths, weaknesses, opportunities and threats for your chosen organisation
• Complete the table below.
  In answering this question, you will have covered the following assessment criterion:

u2.1 Produce an organisational audit for a given organisation
Write your answers here

Name Of Company –

Strengths

• Strong brand name
• Strong market position in the UK
• Expansion in international markets
• Clubcard, Dunhumby (world leader in customer insight)
• Diversification into other sectors

Opportunities

• Increase in online shopping
• Emerging economies – India and China

Weaknesses

• Hypermarket store format
• Management change

Threats

• Competitive UK market
• Government regulations

Tesco is perceived as a strong brand in retailing. It is the leading online grocery supermarket. Tesco has number of stores in the UK. In addition, Tesco operates in other regions such as China, Europe and South Korea and this shows its strong financial resources. The company benefits from loyalty scheme, Clubcard and owns Dunhumby, a world leader in customer insight. The company also has diversified operations in banking and insurance sector.

Customers like to shop at smaller convenience stores, however, Tesco operates mainly through big stores (Tesco Annual report, 2014). Thus, Tesco has stopped its plan of opening new superstores and is investing on convenience stores (Tesco annual report, 2014). Tesco is facing uncertainty in its management structure that could have an impact on its profitability. The CEO of Tesco fired 50 experienced managers from its head office location, with reasons unknown (Butler, 2013).

The UK retail market is highly competitive due to presence of number of well-established competitors such as ASDA, Morrison and Sainsbury, and discount stores like Aldi and Lidl. ASDA and Sainsbury are also competing with Tesco in banking and insurance sector. Tesco also faces government restrictions where it operates like store opening times restrictions in South Korea. Customers are switching to online shopping, which can be done at the comfort of their homes or while commuting (Rigby, 2014).

Q 2.2

Evaluate the business environment for your chosen organisation by doing a PESTEL analysis.

Guidelines: (Approx. 300 words) Recommended Interim Deadline: 24th February 2014

In your answer, you should :

• Describe the factors of PESTEL – Political, Economic, Social, Technological, Environmental and Legal
• Provide an example of each for your chosen organisation
• Present the answers in a table as below

In answering this question, you will have covered the following assessment criterion:

u2.2 Carry out an environmental audit for a given organisation
Write your answers here

Pestel Analysis For Tesco Plc

Factors

Description Company example i.e. how your organisation is affected by this factor

Political

Political factors include government regulations, political instability and corruption, crime, etc.Tesco faces restricted operations in South Korea due to government regulations in South Korea on opening times and hence affecting company’s profitability (Tesco Annual report, 2014).

Economic

It includes unemployment rate, GDP, and income spending.Due to economic recession and low income spending, people like to opt for low discount stores such as Aldi and Lidl. Tesco is facing tough competition from these discounters.

Social

Social factors include demographics, social attitude, cultural factors and behaviour of people that can affect a business.Shoppers are becoming more health conscious and they are more concerned about the quality of food (Doward, 2014). Thus, Tesco is investing in sourcing of organic foods to serve customers better.

Technological

Technological factors include transport development, infrastructure and new technologyMany customers use smartphones for online shopping, comparing prices with competitors and reading reviews (Tesco Annual report, 2014). Tesco is increasing its investment in digital technologies to provide better customer service.

Environmental

Environmental factors include climate change, weather and regulations that can affect and industry’s performance.Many environmental organisations encourage companies to reduce carbon emission in different stages of their supply chain. Tesco is working to achieve its 2020 target to reduce carbon emission throughout its supply chain. For example: Using sea transport instead of road transport which causes pollution.

Legal

It includes taxation, employment laws, consumer laws and health and safety laws.Due to the diverse nature of UK retail sector, there are wide range of regulations including consumer protection, employment laws, health & safety, age restricted sales, tobacco display and alcohol licensing (Department for Business, Innovation and Skills, 2013). Tesco adheres to all these legal laws.

Q2.3

Define and explain the significance of stakeholder analysis.
Guidelines:(Approx. 250 words) Recommended Interim Deadline: 28th February 2014

In your answer, you should :

• Define the term stakeholder
• Explain stakeholder analysis
• Describe the importance of stakeholder analysis

In answering this question, you will have covered the following assessment criterion:

u2.3 Explain the significance of stakeholder analysis
Write your answers here

“Stakeholders are the groups or individuals with which business interacts who have a ‘stake’ or vested interest, in the firm” (Carroll and Buchholtz, 2012, p22). It includes different individuals or organisations with whom a company interacts such as customers, employees, investors, governmental organisations and environmental institutions.

Stakeholder analysis helps in understanding the relationships between an organisation and the individuals with which it must interact (Weiss, 2014). It is important for a business as by engaging right people, one can make a big difference to a project. There are various stages involved in stakeholder analysis (Smith, 2014). Firstly, stakeholders are identified; finding the people who could get affected by a firm’s operation. Secondly, it involves prioritising stakeholders and mapping them on the basis of high power (interested people with whom a business should fully cooperate), high power (less interested people), low power interested people and low power less interested people (Smith, 2014). Third step involves understanding stakeholders like what motivates them and their opinion, and their financial interest.

Stakeholder analysis provides an ethical way of doing a business by fulfilling the needs of different individuals. This is important for a firm’s reputation. As a company becomes more successful, the actions and the business project a company runs affects more individuals who could greatly support or fail a business project (Smith, 2014). Stakeholder analysis is important in many ways. A company can get support from a strong stakeholder such as an environmental organisation in the early stages of a project. A company can identify what would be the reaction of a community towards a future project and thus can plan well in advance.

Cargills at a Glance Cargills (Ceylon) PLC is a Sri Lankan corporate established in 1844 and built on a strong foundation of values and ethics. Guided by trusted leadership it spearheads the sustainable development of the food industry in Sri Lanka. Its continuous investment in retail has made the Cargills retail arm Cargills Food City the largest retailer in the island in all categories. Pursuing innovation and food safety its manufacturing brands Cargills Supremo and Cargills Finest (processed meats) Cargills Kist (processed fruits and vegetables) and Cargills Magic (ice cream and dairy products) lead sectoral growth.

Its KFC franchise is the largest international restaurant chain in Sri Lanka. Through its marketing and distribution arm spread across the island Cargills distributes its manufactured brands as well as internationally renowned food and non-food brands. The Cargills agribusiness model has gained global recognition for linking farmers and entrepreneurs to the market through a sustainable and inclusive value creation process.

Key business

1. Modern retailing
2. Manufacturing
3. Agri Business
4. Restaurants
5. Distribution Subsidiary

Companies

• Cargills Quality Foods (Pvt) Ltd
• Cargills Distributors (Pvt) Ltd Cargills Quality Dairies (Pvt) Ltd
• Cargills Food Processors (Pvt) Ltd
• Cargills Food Services (Pvt) Ltd
• CPC Agrifoods Ltd •CPC Lanka Ltd
• Cargills Retail (Pvt) Ltd •Millers Distributors Ltd

Cargills (Ceylon) Plc (Cargills) operates in the retail chain of food outlets. The company also engaged in food manufacturing and restaurant chain sectors. Cargills operates through its ten subsidiaries. Cargills is the official franchisee for Kentucky Fried Chicken (KFC) in Sri Lanka. It also provides distribution and FMCG manufacturing services. The company also offers discount sales to its products.

Cargills operates through its 116 outlets across 19 districts in Sri Lanka. Cargills is headquartered at Colombo, Sri Lanka

Pricing and availability are what drives the economy of the fast food industry. They effectively penetrate markets with advertising campaigns that cater to a whole range of demographics that make them a need in high demand in almost all US geographic locations. With specialized and highly focused franchise management and vast distribution channel they can be established themselves in a new community almost overnight creating instant revenue and jobs wherever demand is present.

Economic characteristics of the food and drugs retail industry

It is extremely important to understand what the dominant economic factors are in an industry in which you are participating. These factors have a very strong influence in determining the corporate strategies that a company will decide to implement. How can a corporation define and implement their corporate strategy without understanding the environment of the market they are in? They simply can not!

The economic factors to be considered are as follows: market size, scope of competitive rivalry, market growth rate, number of rivals, number of customers, degree of vertical integration, economies of scales, resource requirements for market entry, and profitability of the industry. Each one of these factors will be defined in the following paragraphs. The supermarket retail market is a $363 billion industry(sales 2000). Approximately $272 billion in sales, or 75%, is achieved by 25 companies with 16,000 stores. The total number of retail grocery stores total 127,000.

It is obvious that the market share is dominated by a select few corporations. The largest company is Kroger (11% market share), followed closely by Albertson’s(9%), Safeway(6%), and Win The number of rivals in this industry is becoming more important to recognize. According to Progressive Grocer, supermarket sales have increased 5. Gross margins are approximately 2% greater for a supermarket when they have access to a distribution center. In closing, the supermarket industry is profitable. All indications in the research that I have done leads me to believe that sales have increased at the same pace in 2000 that it did in 1999.

These companies manufacture some of their products in inventory. Because of the single-person and one-parent households, less people are frequenting the grocery stores and more people are eating out at restaurants. Kroger brand(private label) products account for approximately 25% of their grocery sales and almost 9% of drugs and general merchandise. Albertson”tms has acquired American Food to increase their market share in the West region. Kroger is the only major supermarket operator to implement a three-tier distribution system. As stated above, the top 25 companies capture 75% of the market.

Safeway, SuperValu, and Kroger are the only companies that go even further upstream concerning vertical integration. They use these facilities to produce private label products. The growth has been driven by increasing affluence and the rise of a middle class; the entry of women into the workforce; with a consequent incentive to seek out easy-to-prepare foods; the growth in the use of refrigerators, making it possible to shop weekly instead of daily; and the growth in car ownership, facilitating journeys to distant stores and purchases of large quantities of goods.

The opportunities presented by this potential have encouraged several European companies to invest in these markets (mainly in Asia) and American companies to invest in Latin America and China. Local companies also entered the market. Initial development of supermarkets has now been followed by hypermarket growth. In addition there were investments by companies such as Makro and Metro in large-scale Cash-and-Carry operations.

While the growth in sales of processed foods in these countries has been much more rapid than the growth in fresh food sales, the imperative nature of supermarkets to achieve economies of scale in purchasing, means that the expansion of supermarkets in these countries has important repercussions for small farmers, particularly those growing perishable crops. New supply chains have developed involving cluster formation; development of specialized wholesalers; leading farmers organizing supply; and farmer associations or cooperatives.

Cargills (Ceylon) entered the Business Today TOP 10 list a year ago at the tenth place and this year notched one place up to number nine. Having evolved from its original four department stores, Cargills (Ceylon) is today the fastest growing and largest retail chain in Sri Lanka. The company continues to invest in food and agriculture, and with the expansion of the retail outlets to 136 during the year, new opportunities were reportedly presented to more rural famers and entrepreneurs. The company is also actively participating in the revival of the Eastern Province with the opening of outlets in Batticaloa, Ampara and Trincomalee.

At present Cargills has established its presence in 23 districts of the country. Cargills (Ceylon) owns and operates its own manufacturing and distribution arm. The company also owns the KFC franchise in Sri Lanka, and it introduced the first KFC drive-thru in the South Asia region. During the year a full year of operation of Millers Distribution was brought under the fold of Cargills. An Island-wide reach and distribution capability of Millers is expected to help Cagills (Ceylon) further penetrate the market. Turnover of the company during the year was Rs 16 billion and profit after tax was Rs 499 million.

A comparison of the performance of Tesco Plc and Sainsbury Plc, both listed on the London Stock Exchange

Introduction:

This report will compare Tesco Plc and Sainsbury Plc, paying close attention to selected ratios for comparison. The ratios have been chosen to show profitability, efficiency and liquidity of both companies over a three-year period. Both companies operate in the UK grocery sector, with both classed in the big-4 supermarkets. According to the latest Kantar Worldpanel (2014) report, Tesco held 29.6% of the UK grocery market in top place, while Sainsbury held 17% of the market, holding third place after ASDA.

In addition to their main grocery business, both companies have business in other services, including clothing, non-food items, banking and insurance services, as well as international operations for Tesco. Of the two, Tesco has more of a focus on its non-food and non-UK business. According to Tesco’s latest Annual Report (2013), sales from non-UK markets represent ?20.8Billion of revenue, with revenue from Asia growing 6% over 2013; while revenue from the UK banking operation is ?1Billion. In comparison, Sainsbury’s total revenue (all-UK) only amounts to ?23.03Billion, with non-food and banking making up a much smaller proportion of sales, Sainsbury’s (2013).

Performance analysis of your chosen companies:

This section will consider a number of ratios to determine company performance, splitting the ratios up into profitability, efficiency and liquidity. This report will then use the Annual Reports as well as supporting analysis to determine the reasoning behind the results.

Liquidity Ratio

Liquidity ratios are a sign whether a company has the ability to pay off short-term obligations (debts due to be paid within one year). Generally, a higher value is desired as this indicates greater capacity to meet debt obligations, for example, shareholders may prefer a company to have current assets that are greater than current liabilities, indicating that the company can repay all debts at short-notice if required, (Koller, 2011)

The Current ratio measures a businesses ability to repay short-term liabilities such as accounts payable and short-term debt using short-term assets such as cash, inventory and receivables. This would be the value of a company’s current assets that could be converted to cash over the next twelve months compared to the value of liabilities that may mature over the same period, (Peterson, 2012).

The Current ratio is useful as it shows whether a company has adequate resources to repay short-term debt or if it will experience cash flow problems in the near term. A ratio of 2:1 is usually considered a benchmark, however, this may vary across industries depending on cash-flow. A ratio of less than one suggests that the company may not have sufficient resources to settle its short-term debt obligations.

For a more conservative alternative, Current Assets may be adjusted to remove inventory, as inventory may be viewed as not very readily convertible to cash; for example, to shift inventory fast, the business may have to discount products. With this the value of inventories will be lower than the value recorded on financial statements. This is known as the Quick ratio, (Moyer et al, 2011)

The calculations can be seen in Appendix 1. The results are shown below:

The results above show that both retailers have low ratios compared with the benchmark mentioned above; however this may be the case due to:

There are very few trade receivables on the books, while trade payables are higher suggesting that the business could effectively operate without any cash. Discussed more in Efficiency.
Both businesses have a high level of turnover and high level of cash-generation which could be used to meet short-term obligations.
Investor confidence in both businesses would allow the ratios to be lower. Investor’s may demand higher ratios from start-up or ‘riskier’ companies.

Comparing the two, Tesco plc, has the higher ratio, which may be down to the business having much higher receivables then Sainsbury’s. For example, in 2013, receivables made up 41.7% of total current assets at Tesco, compared with just 15.9% at Sainsbury’s. This may be down to Tesco having a greater focus on higher-value non-food items through its catalogue business. Higher receivables present higher risks, given some consumers may have an in-ability to pay.

Profitability Ratio

Profitability ratios measure a company’s profitability. As profits are used to fund capital expenditure and pay dividends, these measures will be important to analysts and closely watched in terms of industry comparisons.

Earnings per Share (EPS) measures the earnings available of each share, a shareholder may use this calculation to determine the level of earnings available for each share owned; this could then be compared with the actual dividend to determine the payout ratio. Again, this would be important to a shareholder as a company would use income for either dividends or capital expenditure; so, if dividends are low, investors would expect higher capital expenditure in the hope of increasing the future value of the business, increasing share-price, leading to capital gains.

Other ratios to be considered are Gross Profit Margin and Net Profit Margin. Gross profit margin considers revenue minus the cost of goods sold. A company’s gross profit margin may also be viewed as a measurement of production efficiency. A company with a gross profit margin higher than that of its competitors, or the industry average, is deemed to be more efficient and is therefore, all things being equal, preferred, (Paramasivan, 2009). Net profit margin considers the net income once all costs are removed. With this, the margin could be seen as determined by a range of factors including competition or rising costs.

Given the results above, Tesco appears to be in a better position given its margin; however this may be down to Tesco’s exposure to a greater non-food business through its catalogue, where it can achieve greater margins, (Head, 2013) [Online]. To add, a greater online presence may have also benefitted Tesco’s margin, giving the lower overheads involved. However in its latest results, Tesco took a charge of ?1.26Billion for exiting its U.S business, which impacted on net profit margin and EPS, (Tesco, 2013). The figures are surprising given Sainsbury’s perception as a more expensive grocer compared to rivals Tesco Plc. The figures also show a falling margin for both grocers in 2013, which could be down to the intense competition in the sector, and supermarket ‘price war’.

Efficiency Ratio

Efficiency ratios determine how efficient a company is using liabilities/ assets to generate revenue for the business. Ratios such Sales to Inventory could be used to determine the efficiency of the business compared with peers.

From the results above, it appears that Sainsbury’s has a greater control over its stock levels, as the company is able to turn over its inventory at a faster pace, which will be important in the grocery industry to reduce waste. However, it must again be noted that Tesco Plc, has greater exposure to the non-food business, which will then impact on stock levels, in particular for its catalogue business, which sells higher-value items such as electrical’s.

Another efficiency to mention could be the difference seen between average receivables and average payables. For example take Tesco in 2011; receivables turnover (sales / average receivables) was 60,455/ 4,457 = 13.56, which translated into 27 Days (365 / 13.56). Payables turnover was 55,330 / 5,786 = 9.56, which translates into 38 Days (365/ 9.56). With this, Tesco receives the all the money from sales in 27 Days on average, whereas it doesn’t have to pay suppliers for the goods sold for 38 Days on average. Effectively, the business could survive without cash. Given less focus on non-food items, Sainsbury’s position is favorable to Tesco. Receivables turnover comes in at just 5 Days, while payables turnover comes in at 34 Days on average.

Conclusion:

Based on the ratios above it appears that Tesco would be the favoured choice, given higher margins stemming from operations in non-food items and a greater online presence. To add, Tesco has a greater presence on the high-street, and so an ability to take advantage of the UK economic recovery. Tesco’s exposure outside of the grocery market could also be seen as a benefit when rivals from Aldi, Lidl and Waitrose continue to take grocery market share. According to Kantar Worldpanel (2014), over the past 3 years, the 3 grocers above have taken a combined 3.5 share points from competitors, equating to around ?4.4Billion in sales. Momentum continues with Y-O-Y growth at Aldi accelerating to 33.5%, compared with Tesco, who over the six-weeks to February 2nd 2014, experienced a 2.4% drop in sales, (Webb, 2014) [Online]. Increasing competition in the industry has led to another supermarket ‘price-war’, which is expected to knock margins again as retailers vie for market share. Again, Tesco Plc will be the favoured choice due to its exposure to non-food business as well as international operations, which have potential to drive future sales. Recently, Tesco has announced it will enter the Indian market, under a 50:50 joint venture with Tata, making it the first foreign supermarket to enter India’s ?330Billion retail sector. Given this, Tesco Plc, could be seen as less risky than Sainsbury Plc, given the greater scope of income streams.

When considering an investment, other figures may be considered to do with investor returns. First is dividend pay-outs; dividend growth has been stagnant for both companies over a three-year period, while Graph 1 below shows the share price performance, showing that over a three-year period, shares in Tesco and Sainsbury are down by 32.41% and 19.48% respectively.

Tesco Plc. is favoured given its extensive offering of businesses, both UK and international, which are expected to benefit as the global recovery strengthens. The main benefit is the business scope, with potential risk in the UK grocery market mitigated by improved performance from other operations and international sales. Sainsbury’s is more exposed to the growing competition on the UK market given the UK market represents the lions-share of its revenue. Tesco is well-placed to take advantage of improving sediment through its multi-channel business. In its latest Interim Report (2013)1, Tesco mentioned sales were supported by strong growth in online retailing (+13% in UK and +54% Overseas), and strong clothing sales up 8.4%. To add, the report also mentioned that UK margins had been hit since FY2013 results, falling to 5.2% (possible downside for Sainsbury’s too), however reported a 6% margin from Asian operations and 17.7% margin from its banking operations, showing that expansion is paying off for the company, (Tesco, 2013)1.

References:

Bloomberg (2014) [Online]: Company Share Prices, Available at http://www.bloomberg.com/markets/stocks/, Accessed 25/03/2014.

Financial Times (2014) [Online]: Tesco Plc, Available at http://markets.ft.com/research/Markets/Tearsheets/Financials?s=TSCO:LSE, Accessed 25/03/2014.

Financial Times (2014)1 [Online]: J Sainsbury Plc, Available at http://markets.ft.com/research/Markets/Tearsheets/Financials?s=SBRY:LSE&subview=IncomeStatement, Accessed 25/03/2014.

Head, R (2013) [Online]: This is why I’m considering buying J Sainsbury, Available at http://www.fool.co.uk/investing/2013/10/07/this-is-why-im-considering-buying-j-sainsbury-plc-today/, Accessed 25/03/2014.

Kantar Worldpanel (2014): Unprecedented changes in grocery retailing in the UK, UK, Kantar Worldpanel.

Koller, T, Goedhart, M and Wessels, D (2011): Valuation; Measuring and managing the value of companies, US, McKinsey & Company.

Moyer, C, McGuigan, J and Rao, R (2011): Contemporary Financial Management, USA, South-Western Cengage Learning.

Paramasivan, P (2009): Financial Management, USA, New Age International.

Peterson, P and Fabozzi, F (2012): Analysis of Financial Statements, USA, Wiley Finance.

Sainsbury’s (2013): Annual Report 2013, London, J Sainsbury Plc.

Tesco (2013): Annual Report 2013, London, Tesco Plc.

Tesco (2013)1: Interim Report 2013-2014, London, Tesco Plc.

Webb, S (2014) [Online]: Supermarket price war looms, Available at http://www.dailymail.co.uk/news/article-2566542/Every-little-helps-Tesco-slash-prices-attempt-boost-sales-losing-ground-rivals.html, Accessed 25/03/2014.

Appendices:

Appendix 1

The following tables provide calculations for the chosen ratios.

Figures obtained from Financial Times (2014) [Online] and Financial Times (2014)1 [Online].

The Business structure of Haringey is characterised by small medium enterprises. Haringey has a total of 5,645 VAT registered businesses 4,615 of these businesses only employ between 0 and people only 180 of these businesses employ 20 or more people. Muswell Hill has a total of 475 VAT registered businesses 425 of these businesses only employ between 0 and 4 people only 5 of these businesses employ between 0 and 4 people. The impact of external influences on Sainsbury’s The fact that there are many different businesses and outlets around Sainsbury’s mean that there is lot of competition with other stores such as Mark and Spencer’s

As there are many middle class people around the Muswell hill area, it means that there is good chance that a huge amount of money is spent in Sainsbury’s. The transport around Muswell hill includes a very good bus services that go to a range of places such as wood Green, Edmonton, Tottenham, Finchley etc. this means that more people will be able to go to Sainsbury’s to buy their goods. There are many schools around the Muswell hill area which means that a lot of students may go there to buy lunch which would also benefit Sainsbury’s. There are no tube stations around the Muswell hill area which is downfall, as it means less people are likely to use Sainsbury’s.

In June 2005, 8,410(7.9%) of Haringey residents were registered unemployed during the period November 2005 and June 2005 unemployment across the borough stayed the same at 7.9%. In June 2006, 160 (2.9%) of Muswell Hill residents were registered unemployed During the period November 2005 and June 2006 unemployment across Muswell Hill stayed the same 2.9% out of the 625 London wards, Muswell Hill has the416th highest unemployment rate International economy Social and ethical factors Fair Trade Fair trade is an organized social movement and market-based model of international trade which promotes the payment of a fair price as well as social and environmental standards in areas related to the production of a wide variety of goods.

Value isn’t just about price; it’s about the well being of the poorer countries. Every banana we sell in Sainsbury’s is a Fair-trade banana and they have a long-term relationship with the farmers that grow them. Their commitment to continue sourcing Fair-trade bananas has helped give them the confidence they need to replant their banana farms and rebuild their communities. This will gradually lead to economic growth. There are many laws and regulations when labelling products. Food products need to carry the name and address of the manufacturer, packer or retailer. However, these details might be misunderstood because if the main ingredients are imported from another country, a manufacturer doesn’t have to say where these have been bought from. They can get around this by saying the product was ‘produced in the UK’.

A stout’s pie, steak or a chicken tika might have been made in the UK, but the meat might be sourced from Brazil or India. Around half of the chicken eaten in the UK is imported but it is usually covered in spices or used in a ready meal so the consumer doesn’t know it has come from another country. According to laws, the labels or packaging used on ready meals only need to state the origin of the ingredients. Sainsbury’s and the co-op have a policy that they have to state the country of origin of the meat used in their ready meals on the label, but there are other supermarkets that reveal this in formation.

These laws mean that Sainsbury’s need to be careful, as customers are becoming more anxious of what they purchase and eat, and therefore they might shop in other supermarkets like Morrison’s, Tesco or Marks and Spencer. (Source from wikipedia.com) Employee Regulations There are many different regulations and laws that can affect Sainsbury’s; one of them includes the working time regulation, which states that a worker is entitled to at least a rest period of 11 uninterrupted hours between each working day. An employee is also entitled to one whole day off a week. Buts days off can be taken over a two week period, meaning workers can take two days off a fortnight

Managers need to make sure that their workers can take their rest, but aren’t required to make sure they do take their rest. These rules mean Sainsbury’s have to employ enough people so that when some workers are taking time off, others can take their place. This also means more money will be spent on wages, and Sainsbury’s could lose out on profits and money. This usually motivates the workers because they don’t want to be blamed on for losing profits.