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1.1 Introduction to operations management and its effectiveness in a Tesco-------------------------2 1.2 Effectiveness of the service package and services cape within the business --------------------3 1.3 Operation performance objectives and customer satisfaction--------------------------------------4 1.4 Evaluation of the relationship of operation and strategy in organization-------------------------5 1.5 Application of Operation management theories -----------------------------------------------------6 1.6 Recommendation for improvement -------------------------------------------------------------------8 1.7 Conclusion -----------------------------------------------------------------------------------------------8
Appendix ---------------------------------------------------------------------------------------------------------------------------9 References ------------------------------------------------------------------------------------------------------------------------10

An Essay on importance of Operation management in a Retail Business

A case of Tesco, Lakeside in UK

1.1 Introduction to operations management and its effectiveness in a Tesco An operation is a core function of business organization which is responsible for producing goods and delivering services. Goods are physical items produced by organization while services are the activities providing a distinct combination of location, form, time and psychological value. It is a process of efficiently transforming business inputs e.g. man, machines, money and materials in to final products in a way that earns great value to customers and lead an organization towards meeting its business objectives and goals. The operation function in business is crucial to reap competitive advantage over its commercial rivals and to ensure success and failure of any organization. It is also viewed from far reaching perspective that it has an impact not only on the ability of organization to compete with their competitive rivalries in on demand market rush but also of nations capacity of introducing itself as a leading nations in the world. Furthermore, ensuring an effective operation is meant to use resources effectively in order to fulfill long term strategic goals of organization (Slack, N etal., 2007). Thus Operations management is the management of processes or systems essential for creating goods and providing services in business organization, it requires an input and support from other premises of organization. Operation management encompasses system design and operating decisions regarding service, product design, process selection, capacity planning, supply management, quality assurance, production planning and project management (Greasley, A., 2006). Any business organizations irrespective of their types or size they do have three basic functions: finance, marketing and operation. Finance is a part of business responsible for managing

financial resources at competitive price and allocation of those resources along with budgeting, providing funds for operations, analyzing investment proposals. Marketing is a function responsible for assessing consumer needs and wants, and promoting and selling goods and services of organization. However operation is a key function responsible for creating and

delivering goods and services provided by organization. Hence it is the core of what the organizations do for business output. In this study, Tesco PLC is chosen as case to examine the effectiveness of operation management in terms of business success. During study, structured interview was also conducted as a technique of gathering information related to the topic. Tesco PLC is a second largest retailer after Wal-Mart in the world and the premium retail company in United Kingdom. It was founded in 1924 and today it has been the market leader both in the region and globe. Tesco PLC operates 5,380 stores, employs 492,714 people all over world. It is recorded that Tesco made six billion profit and revenues of $94, 193.2 at the end of year 2011. Tesco alone covers the 30.5% market share of retail sector in UK (Tesco, 2010). The mysterious success of Tesco is not so far hidden, only the reason behind to be a leader for Tesco is a practice of efficient operations management in a company. Because Operation management is responsible to ensure efficient business operation using as few resources and effective in terms of satisfying customer needs. Operation management thus has played pivotal role to establish TESCO Company as a giant retailer and the most profitable organization in the UK. Tesco is ever found to have more focused on efficient management of business operations by well arming its people with knowledge, skill and ability to perform a task efficiently which resulted in premium service delivery of the company (Survey, 2012). That has led company to satisfy entire customers needs and wants, and earned the great value from customers. As a result, Tesco has been successful to meet employee motivation the customer satisfaction which finally led Tesco towards meeting both market and business growth even in todays an exclusive market rush. 1.2 Effectiveness of the service package and services cape within the business of Tesco The term services include varieties of such activities which are not homogeneous however often consumed at the time of purchase or production that basically takes place at working place. Services is the term referring to series of activities encompassing normally somehow intangible in nature, but not necessarily taking place in interaction between service employees and customer that are offered as a solution to problems of customers (Gronoss, 1990). However the service package is a bundle of service and goods rendered in the same environment. It encompasses supporting facility, facilitating goods, Explicit services, Implicit services (Fitzsimons and
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Fitzsimmons, 2001). One of the unique features of business services is the extent in which the output of services works as an input to other business sector. It is one of the key things in the business like Tesco PLC which could play decisive role to shape customers shopping mind and earn great value to organization. People what they expect from retail company is mainly of two things: quality products and services those are the core factors responsible for meeting the aim of consumer satisfaction in business. Meanwhile once consumer satisfaction is met, it leads a company towards business growth. Hence the services offered is highly interactive engagement between customer and producer or service provider which is important and essential to build customer loyalty towards a company (Salter and Tether, 2006). Service package for Tesco center includes provision of club card that provides discount in purchase of customers, self payment machines, online shopping, 24 hours on, punctuality, cash machines, less queue, service of return, cooperative people etc. On the other side, pension, high payment, 10% discount in each purchase, diversity, holidays etc are vital for employee retention. All of those in one are playing significant role to boost companys brand and growth. According to the responses achieved in the interview which was conducted in the process of study in order to know whether the services offered by Tesco are effective or not, shows that the Tesco Centers services are efficient. Services capes is termed as physical environment of business organization plays remarkable role both positive and negative, in formation of consumers impression towards company. It encompasses physical facility- interior & exterior, Ambient conditions- temperature, colors, noises, smells, other tangibles. Customers evaluate services or intangible products depending on both external impression and appearance. They basically interact with the services capes prior to realizing the tangible products with service provider. Service scapes thus, is a landmark to sketch the first customers impression. Hence it is variety of physical components, environmental cues around business organization that assist people or consumers in a case of Tesco to form a blanket picture of the overall servicesacpe. The reason why it is the most important thing in the organization like Tesco PLC in the way that service scapes provide customers first impression before they will have a chance to interact with employees or service agents. Therefore these are important elements that guide customers beliefs, expectations and attitude of a service provider (Bitner, 1992). The environment of organization ideally supports the preferences and needs of both customers and employees simultaneously. The physical setting of business may have a serious impact on perception of customers about service experience. Consumers even before
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their purchase, commonly look for Cues about quality and capabilities of organization. The more the firm is rich in such a cues of physical environment, the far influential in communicating the purpose and image of firm to its customers (Rapoport, 1982). This study shows Tesco as a market leader in UK, is rich in providing attractive services capes to its customers. Tesco has managed fascinating exterior facilities such as; parking, landscape, surrounding environment, exterior design, signage, interior facilities such as; temperature, signage, layout, equipment, interior design and other tangibles as billing statements, reports, employee dress, uniforms, brochures, internet, business cards etc. It is found from the respondents or customers of Tesco during interview that free parking, its surrounding are also the reasons why they would like to shop in Tesco. It is thus we conclude that service environment plays vital role in customers to evaluate service quality, meet their needs, expectation and satisfaction, and make purchase decision as well. In the same way, managerial levels of employees have also agreed those customer friendly services and the services capes are the factors that have played vital role in meeting customer satisfaction, employee motivation in a company. And those eventually have to a great extent, contributed to increase sale, profit and led organization towards the path of success along with increasing companys efficiency. 1.3 Operation performance objectives and customer satisfaction Performance objectives are the one set by organization with a view to achieve in course of business growth and promotion through efficient operation. Operation performance objectives include quality, dependability, speed, flexibility and cost. Meeting those objectives brings about both internal and external benefits to organization. As internal benefits to organization, it ensures error free process, high productivity from low cost, minimizes disruption, maximizes throughput, and becomes able to react to change. On the other hand, organization becomes able to satisfy customer needs, meet delivery commitments, get products and services to customers on time, get new products and services and cope with changing customers wants and needs, and to achieve higher margin and market share (Ruffian, A., etal, 2000). Therefore, performance objectives are important for retail organization which takes company through the processes to achieve the business end in a long run.

Customer satisfaction is the remarkable factor of business organization which determines business success in the market ensuring increased sales and profit. Meeting customer satisfaction is reaping the business objectives and goals for retail firms. Satisfaction is basically a judgment of consumers following an experience of consumption of a product or services that renders a pleasurable level of consumption or related fulfillment (Oliver, 1997). Many studies show that confirmation of pre consumption expectation is inevitable determinant of satisfaction. It means customers usually do have a specific predicted performance of product in their mind prior to consumption. Customers thus experience the product and service performance and use to do compare those with their own expected performance level of products. Then on the basis of the comparison, satisfaction is formed in the mind of customers (Leonard, etal., 1988). This work is more focused on finding out the impact of operation management, service package and Services capes on customers satisfaction. It is found that these are important components to meet customer satisfaction and the services offered by Tesco are able to cope with changing needs and wants of the organization. However, because of the growing intensive competition in retail sector in UK, Tesco needs to come up with some changes so that it could ever create great value to customers and earn lifetime customers loyalty and consequently it can keep its business position always ahead in the market. So based on research, the following recommendation can be made for Tesco PlC. 1.4 Evaluation of the relationship of operation and strategy in organization. Operation is the part of organization responsible in transforming range of inputs into the desired services or outputs maintaining requisite level of quality. Thus operations are the resources responsible for creating product and services in a business while operation strategy is the set of decisions that shape operations long-term capabilities and contribution of operation to the overall strategy by reconciliating operation requirements with market requirements. It is thus operation strategy is the actions and decisions that set the role of operations in organization (Slack and Lewis,. The relationship between operation and strategy is inseparable and complementary to each other and the efficient relationship between them is essential to meet organizational objectives and goals. Strategy provides the systematic guidance to the operations and operations takes place through the path set by strategy in a business (Joseph and Monks, 2004). This is ultimately an organizational effort of being a winner in the on demand environment by
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motivating employees and meeting customer satisfaction in a long term. It is thus one becomes incomplete without the presence of another in a business and without proper combination of operation and strategy, any business may not encounter its rivals and meet its business ends in the market. Therefore there should be strong relationship between two in order to lead an organization towards shining star. There are mainly two popular approaches to the operation strategy extant in the business sector: market based approach and resource based approach. Market-based approach assumes that performance plays an important role to attract competitors to services and products better than rivals that helps to secure leading market position (Mishra, D.K, 2009). Next it assumes that fast delivery, low price, range of services and location are the competitive factors inevitable to be a winner in the business rush. Meanwhile resource based approach assumes operations take pivotal role in offering competitive advantage to organization. It focus on the process of inside out rather than outside in and views intangibles can only be valued or recognized through learning and experience. In the mean time, Tesco is found to have focused on build and protect or market penetration strategy which is very important to cope with the increasing market changes in order to retain existing market and gain new market share by increasing ability of resources in retail sector. Operation of Tesco centre is efficient and the role of operation to support functions such as finance and marketing is quite remarkable. Those functions are meant to be input in the business process and the operation is the function or the core process which converts the inputs to the business outputs. The reason why the role of operation is indispensable to support the other functions at least in order to complete the business processes or product or service performance in the organization. 1.5 Application of Operation management theories There are numbers of broad based theories of operation management such as Total Quality Management (TQM), Just in time (JIT), Lean manufacturing (LM), Theory of constraints (TOC) and the latest one six sigma (SS) and supply chain management (SCM). Of them, Six sigma theory is found to be more applicable in the Tesco centre that this theory suggests that organization has to be more focused on maximizing customer satisfaction by improving quality
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and reducing the costs of product and services (Scheinkopf, 1999). This is what Tesco PLc is supposed to do to win the running price war in the retail sector and to protect and continuously build furthermore its market share. 1.6 Recommendation for improvement Tesco PlC should focus on consistency on its products and services equally emphasizing on providing high variety and volume output considerably at low price. It has to focus on interior design and facilities so that customer may have breakfast, lunch and rest within the center It should better focus on availability of services in the small centers as well. It has to speed up and intensify its diversity services as ranging from food to banking services. 1.7 Conclusion Operation is a core function in the process of product and service performance in the business organization. It plays central role to transform all the inputs in to desirable outputs so that it could meet the changing expectations of customers and thus ensures organizational efficiency. So the effective management of operation exclusively contributes in realizing overriding business growth by creating great value and earning customer loyalty for the organization. Therefore operation management is an important area of any business organization which plays decisive role in achieving key goal of business organization such as to achieve economic matching of demand and supply. However business organization has to equally take account of service, servicescapes, operation strategy because they also play important role in determining customer satisfaction and through which to achieve business end.

Appendix (Sample Script of interview) In this study as a part of gathering information regarding to search, Interview was applied as a primary data collection technique and conducted by researcher myself in the Tesco Center. Herein, out of 10 structured questionnaires only 3 were accepted as usable for the study. Respondents were managing director (MD), HR manager, Ques:1 . Would you think that Tesco Staffs are competent enough for efficient operation? Respondent (HR manager): Yes I would, because Tesco ever focuses on well arming its people with knowledge, skills and ability required to perform their assigned task efficiently in the organization. Tesco provides types of training however more focus on on the job training to its staffs which is a way of learning by doing one to one, face to face so that it makes one perfect to perform his task in organization. It is the learning process that increases self confidence, offers knowledge and skills related to the job therefore one ensures his efficiency. This is why I would say Tesco staffs are enough competent to satisfy their customers. Quest:2. Would you think the services and services capes provided by Tesco are enough to earn long term customer loyalty? Respondent (Managing director): Exactly not, because the retail sector business is ever growing, more competitive and fast changing business. So as the market changes, the needs, wants and expectations of customers and employees keep changing and increasing. As a result organization should be able to cope with the changes means be able to provide new services and servicescapes in order to meet our customer satisfaction. Because, the services and servicescapes are also the factors of determining customer satisfaction. Quest. 3. Would you feel that the good relationship between operation and strategy is an important to meet business objectives? Respondent (Managing Director): Yes, the stronger the combination between operation and strategy the higher the efficiency of organization is ensured. And as the organizational efficiency is ensured, the business ends of organization can be met. Therefore, organization should keep efficient tie between operation and strategy which plays crucial role to realize objectives and goals of organization.
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References Bitner, M.J., (1992) Services capes: the impact of physical surroundings on customers and employees, Journal of Marketing, Vol. 56, PP. 5771. Greasly, A. (2006) Operations Management. United Kingdom: John Wiley & Sons press. Joseph, G. & Monks, (2004) Theory and Problems of Operation Management (2nd ed.). New York,: McGrawl Hill publishing Ltd. Leonard, L. etal, (1988), "The Marketing Impact of Branch Facility Design, Journal of Retail Banking, vol. 11 (2), PP. 34-36. Mishra, D.K., (2009) Operations management: Critical Perspectives on Business. New Delhi; Global India Publication. Oliver, R. L., (1997), Satisfaction: A Behavioral Perspective on the Consumer. New York: McGraw Hill. Rapoport, Amos, (1982), The mapping of the Built Environment. Beverly Hills, CA: Sage Publications, Inc. Ruffian, F., etal (2000), Organization Design in Operations Management, International journal of Operations and production management, vol. 12. NO. 1, PP. 58-61. Slack, N etal., (2007) Operations Management, (5th ed.). New York: Financial times press. Salter, A, and Tether, B., (2006), Innovation in Services Through the looking glass of innovation Studies, Background paper for Advanced institute of management. United Kingdom: Oxford Press. Scheinkopf, L.J. (1999), On theory in operations management, Journal of Operations Mnagement, Vol. 16. No. 2, PP. 96-98.

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