Tesco Information Systems

Executive Summary

This report is about the application of information systems to collaborate with different stakeholders. Tesco is used as a case study to visualize how retailers apply information systems to enhance performance. A detailed profile of Tesco is given to present a clear picture of the company’s position in the global retail sector. Facts and figures about the retail sector are given to foster comprehension. Value of using information systems to collaborate with various stakeholders is examined citing specific benefits that stem from their utilization.

Introduction

Tesco is the world’s second most profitable retail company and the UK’s largest retailer. The company was established in 1919 by Jack Cohen as a small grocery store and has since then registered immense growth (Munusamy & Wong 2008). Currently, Tesco operates in 12 countries in Europe and Asia with over 6500 stores. The company’s employs over 476000 people and the workforce continue to grow in line with the company’s expansion strategy.   Tesco’s revenue for the financial period 2016/2017 amounted to £55,917 million while operating income amounted to £1,280 million (Tesco 2017). The company’s main products are supermarket, hypermarket, and superstore.  Tesco’s many branches and outstanding services have enabled it to capture the largest market share in the UK retail market that currently stands at 28.2% (Tesco 2017). Just like other retailers, Tesco uses technological capacities to enhance operations. The retail sector applies information systems in its processes to support collaboration. The sector is of great importance in the global economy due to its specific roles.  It has some distinctive characteristics that influence the application of technology.

The retail sector is the leading employer in the United Kingdom, and this makes the government and other stakeholders focus on it when fighting unemployment.  An economic trend that disrupts the retail sector affects the country’s unemployment level.  The total revenue generated from the retail sector in the year 2016 amounted to £358billion. This high revenue is a clear indication that the sector has a great contribution to the country’s GDP. In other countries, the sector still makes a substantial contribution to the GDP.  The retail sector is a critical source of revenue to the national and local governments.  Retail companies have dispersed outlets implying that they interact with different local and national governments. For instance, Tesco operates in 12 different countries, and this implies that it pays taxes and revenues to the 12 countries.   Government’s earnings from retail outlets can be classified into taxes rates and licenses.   The retail sector is a major contributor to the government’s tax revenue. A large portion of this tax is paid by a large number of employees. Employees are subjected to income tax that is paid monthly and this crucial revenue stream to the government due to consistency.  Retail outlets also pay income tax that is based on profitability. The profitability of retail outlets is influenced by economic conditions where the tax increases during a boom and subsides during a recession.   In addition to tax, the retail sector earns the government revenue in terms of property rates. Retailers use large spaces and rates are paid for these spaces. Retailers also pay licenses to the government thus increasing their contribution to the government revenue.  Another distinctive feature of the retail sector is the existence of many suppliers. One retailer transacts with many suppliers due to the nature of the business. It is technically impossible for one supplier to meet the needs of a single retailer and this makes it necessary to collaborate with many suppliers.  The performance of the retail sector has direct impacts on the suppliers.  Suppliers sell more when the retail sector is booming, and their sales decline when retailers are performing poorly.  Retailers have many critical stakeholders whose collaboration is given priority. The success of a retailer is dependent on the effectiveness of collaboration with the key stakeholders.    Information communication technology is the main collaboration tool used by retailers.  Tesco has over the years used technology to streamline operations. Failure to fully exploit technological capacities in collaboration makes a firm to lose a competitive edge.

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