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Section’s Objective: To identify the benefits and opportunities of the dot com systems and how it helps in solving the problems identified in the previous section. Problems and Threats Identification Diagram 1.0 – Problems Facing Tesco Corporation (This graphical depiction is based on the Cause and Effect Diagram in Appendix 1) As depicted in Diagram 1.0, the problems faced by Tesco are quite a number and can have an impact on the organization if not dealt with properly. Certain threats are out of this paper’s scope and therefore not mentioned above. The following table further describes these problems and how it impacts the organization. Problems Faced Description Impact on Tesco Rivals are also diversified Tesco’s competitors such as Asda and Sainsbury (Tomlinson, 2000) also offer a wide range of products for sale and are not restricted only to food items. Stiffer competition as all the competitors offers almost the same type of services. Rivals offer cheaper prices Due to the economic structure of the market, competitors such as Asda are constantly monitoring Tesco’s pricing on products and readjusting theirs so that it is matches Tesco’s. (Competition Commission, 2000) 1. Stiffer competition as all the competitors are trying to offer the lowest price. 2. Tesco has to constantly monitor their competitors for changes and react to their actions. Rivals have an online presence as well All of Tesco’s competitors identified under the environmental analysis have their own website which offers online transactions. The competitive advantage of going online is obsolete and Tesco has to think of new strategies to attract customers to shop at their website. Hard to retain loyalty As the market is oligopolistic (Competition Commission, 2000), customers are price sensitive and therefore if a competitor offers lower prices, they would switch to them. Tesco has to constantly re-adjust their marketing and lock-in strategies to match the market situation at that time. Unable to effectively understand customer’s needs Tesco was unable to effectively identify the purchasing trends of each customer and provide customized experiences for them. Besides that failure to capture customer’s orders further led to an increase in frustrated customers (Maddali, 2003). Tesco can easily lose customers to their competitors as their lock-in strategy still has loopholes. Communication with supplier Suppliers are pressured into lowering all their prices as Tesco has to also reduce their prices to effectively compete. Because of this, Tesco has received much bad publicity regarding how they treat their suppliers. (Poulter, 2004) 1. Tesco will lose their suppliers because of the low profit margins. 2. Tesco might have to spend more to purchase suppliers to create a backward integrated environment. Problems with management of branches Tesco’s main headquarters are unable to manage the branches effectively as the branches lack integration and this affects management decisions. 1. Lack of moderation could result in decrease in quality and sales for certain branches. 2. Tesco will be unable to counter any serious threats immediately as timely decisions are not able to be made. Website illiterate customers Many of Tesco’s patrons are computer illiterate (Enders, 2002) and therefore are not able to fully exploit the website’s features. Tesco will not be able to reproduce the same profit margins online as compared to offline sales as the number of customers online would be lower. Dot Com Systems Benefits, Opportunities and Categorization Diagram 2.0 – Business Benefits and Opportunities Categorization for Tesco To counter these problems and create new opportunities, the dot com systems were introduced by Tesco. The benefits and opportunities received from this installation have been categorized into five main areas as shown in Diagram 2.0. These areas are further elaborated on below: System Benefits Benefit Benefit Description Example Integrated systems By integrating each branch’s purchasing, inventory and reporting system together, Tesco’s central management is able to get a bird’s eye view of the whole operations and is able to better plan for the future. They would be able to foresee problems easier as compared to conventional methods. E.g. Each branch submitting reports. Tesco’s management would be able to track the sales of each branch and identify which branch is slacking off. Flexible framework The dot com systems that were installed were designed in such a way that it is highly flexible (Enders, 2002) when it comes to maintaining, upgrading and expanding the scalability of it. Therefore future enhancements would be significantly cheaper as the systems can be easily customized many times over. Tesco is able to easily update the website. This will reduce the chances of outdated information on the website. Business Process Benefits Benefit Benefit Description Example Increased effectiveness With the introduction of the dot com systems, the effectiveness of transactions and business processes has increased as human errors were significantly lowered by automating many tasks that were previously carried out by employees. Earlier practices often lead to redundant and inaccurate data as orders were manually written down. This eventually led to frustrated customers (Maddali, 2003). Customers can now use the online purchasing feature to buy any products without the need of a middle man. Increased efficiency Store pickers are the direct recipients of this benefit as the systems help chart the most suitable path in which they must take to gather all the items on their list. By doing so, pickers can plan their route and not waste time going in circles. Pickers can reduce their turnaround time during the picking process. Flexible workflow With the systems in place, managers are able to easily delegate tasks, control and manage the distribution of information to their customer channels (Enders, 2002).
Approximate Word count = 3585
Approximate Pages = 14.3
(250 words per page double spaced)
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