Internal

Internal

1. Corporate objectives

   • Shareholders: Tesco is a PLC and therefore shares are available to be bought by the public and they can buy as many as are available. While Tesco may have it's own mission and targets, this doesn't mean that shareholders who buy into the company have mutual ideas of the focus of the company. Tesco may have to structure their objectives around keeping shareholders happy depending on the percentage of shares a single shareholder owns or depending on the mutual desire of a high percentage of shareholders.
     • Short-term shareholders will want high dividends and expect the value of their investment to increase over their investment period. They will want Tesco to focus on short-term profits rather than long-term goals. However, these short-term wants of shareholders are not always mad a priority. Tesco annual report and financial statements (2018) states: 'With our business growing again, we resumed the payment of dividends to our shareholders this year – after a three-year absence while we stabilized our business'. This is evidence that shareholders short-term desires are at times put on hold while the company focusses on other areas of the business, in this case, net debt.
     • Long-term shareholders will focus more on the long-term goals and mission of the company. Short-term dividends and profits may not be so important to these shareholders and may have a higher priority for the company's decisions that affect it's market share and value per share. Tesco's focus on reducing its net debt in recent years will satisfy those shareholders with a long-term interest in the company, while not necessarily pleasing shareholders who expected large dividends and also reducing the shareholders' trust in the company to make the shareholders an ROI.

2. Human Resources

   • Employee satisfaction: Employees as a whole are a major shareholder in the company. To keep them happy is a high priority as they are the face of the company to many customers. A happy workforce will yield higher levels of production and a greater quality in customer service. Tesco's hourly pay is 27p higher than the UK minimum wage for 25s and over at '£7.83/h', Galssdoor (2018). The benefit of a higher than minimum wage will attract potential employees and motivate current employees to be productive as the rate elsewhere may be lower.
   • Staff turnover: High levels of staff turnover can be a sign of something wrong within the company. If the company is seen to have a high level of staff turnover, it may have trouble employing new people. This will become a big issue with meeting the demand of customers in busy seasonal periods when big retailers typically hire high numbers of seasonal staff to meet the demand of customers. Alternatively, high levels of staff turnover can help Tesco keep their costs down and allow them to hire new employees when they are needed, such as during peak times as the year. They can then rely on their high employee turnover to remove unneeded employees and keep wages down. They can also do this by offering seasonal contracts or low hour contracts and give overtime when needed.
   • Staff training: Quality of employees skills and knowledge about the company will impact the company. Tesco' is mainly a physical location. The quality of employee knowledge will affect customer service and may be the difference in customers shopping with Tesco or with a competitor.

3. Research & Development

   • As a market leader, Tesco will want to be at the forefront of new innovative technologies that will give their customer a greater experience while shopping in their stores or online. New technology may open up a new market segment and late entrance into this market segment may mean they miss out on an opportunity that a competitor might take, giving their competitor time to establish a high market share and create boundaries for entering that market. This could attract customers away from Tesco and decreasing Tesco's market share.

4. Legal

   • New minimum wages set by the government will have a major impact on the company's financial plan for the year; decreasing profit margins by increasing their fixed and variable costs. This may lead to costs being pushed on to customers, which will cause an inward movement of demand and in reaction to this movement, an inward shift of supply to meet the new point of equilibrium.

5. Logistics

   • Food waste: Food wastage is a major cost to a company like Tesco, it means they are underutilizing the number of food products they provide by not selling product by they sell-by dates. According to WRAP in Food waste in England (2017): the retail sector accumulates around 2% of the UK's total food wastage. In 2015. Based on WRAP in Food waste in England (2017) '£13 billion of food was wasted in the UK in 2015, approximately 7.3 million tonnes.' this would mean a value of £260 million was wasted in England from retail. Tesco has targeted to halve global food waste, farm to fork, by 2030. They are also one of the only retailers to give full transparency on their food wastage data.
   • Capacity management: Tesco's forecasts for the year will help them determine what their capacity is. Poor forecasting of demand and spikes in demand, such as holidays, will restrict the amount of revenue they are able to produce. Knowing what to expect will enable Tesco to plan for spikes in demand so that they will always have room to generate maximum levels of revenue. However, overestimation of demand will create costs that will cancel out extra revenue being produced and potentially doing more harm than good.

6. Finance

   • The financial position of a company will affect any sort of investment from inside or outside the company. If the company has large amounts of debts then it will restrict its ability to improve and invest in many parts of the company, such as operations, marketing, human resources; and also deter potential investors from buying into the company until the net debt is decreased.

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