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Business Studies AVCE Unit 1: Business at Work

1.0 Introduction • Methodology 1.1 Brief History – Tesco PLC 1.2 The Objectives and Strategies of Tesco • Tesco’s main objectives • Tesco’s employee objectives • Tesco’s objectives towards their customers 1.3 Types of Businesses 1.4 Measuring Success 1.5 Organisational Functions 1.6 Organisational Structures 1.7 Communication 1.8 Production and Quality Assurance

Appendix Bibliography Business at Work 1.0 Introduction I am required to fulfil tasks to do with the business world, I have been asked to work on information provided by a business preferred by me and gather that information myself. My task also involves finding out objectives, structures and cultures and how they influence the way businesses work, and how they interrelate and operate to allow good services and products for the welfare of the economy. This coursework will also comprise information regarding the variety of processes by which products and services are created and the way businesses try to assure the quality of their products or services, and the motive for such a strategy.

NB: My comments are in italics

The above intro is somewhat disjointed and is not grammatically correct – look at it again – try asking someone else to read it through for you – I would put something like this: My task is to look at what influences there are on the way businesses operate. To be able to do this effectively I need to look at the businesses: objectives, structures, how they interrelate, the external and internal constraints on them etc, etc, - this is a flavour of how it should be written – REMEMBER that a first paragraph is VERY important as it sets the scene for the rest of the work

Methodology In order to fulfil my task, I will be carrying out both Primary Research and Secondary Research. Primary – you do not need capital letters here - research consists of research that I have done myself, like questionnaires, surveys, looking through leaflets etc- again this is rather clumsily put what you mean is: primary research is data that does not already exist it is sometimes called field research here are some examples:…….. Secondary research consists mostly of research that people have already done, e.g., the use of the internet, I will be using many websites on the internet to research for my work, it is a good source of information as it has a worldwide access, and I am sure that I will be able to find a lot of information to do with my chosen business on the internet. In secondary research, I will also be researching through books from libraries. My research would not be depending much on Primary Research.

Brief History 1.1 Tesco PLC Tesco was founded in 1924 by Sir Jack Cohen, who after leaving the army service in the First World War started selling groceries in London’s East End Markets in 1919. The name ‘Tesco’ was derived from the names of Sir Jack Cohen and T.E. Stockwell, a partner in the firm of tea suppliers, where the first three letters are from the initials of T.E. Stockwell and the last two from the name Cohen where the first two letters are adapted.

In 1947 Tesco Stores LTD was floated on the stock exchange, with a share price of 25p, and Tesco stores started breaching here and there and by the early 1960’s, Tesco had become a recognizable name. They started retailing fresh food, clothing, household goods as well as groceries. The Tesco store which opened in Leicester in 1961 had covered a space of 16,500 square metres and was entered in the Guinness book of World Records as the largest store in Europe.

Instead of opening its own new stores, Tesco bought existing chains of stores and in 1960, it had taken over a total of 212 stores in Northern England and added another 144 in 1964-1965.

Tesco introduced the concept of Superstores in 1967 when a 90,000 square feet store was opened in Wiltshire, the idea was to open a large unit on the outskirts of a town/city, and it was deliberated to provide ease for customers who drove there or used public transport. Although the superstore was made accessible in 1967, the term ‘superstore’ wasn’t utilised until Tesco opened its store in Crawley, West Sussex in 1968. Now Tesco has opened over 979 stores worldwide having over 307,000 employees. It was only in the 1990’s that Tesco decided to Expand outside of the UK and opened a Tesco in Hungary, followed by Slovakia, Poland, The Republic of Ireland and The Czech Republic. Presently, there are Tesco Stores in over 10 countries.

At the moment Tesco is doing very well considering its share price of 242.75p. Its LSE symbol is TSCO. Where did you get this information from? You need to acknowledge the source – this is good but in the context of this piece of work is irrelevant – the person who marks this piece of work will not be interested in the history of Tescos!

1.2 The Objectives and Strategies of TESCO PLC Tesco observes – change this word it is not used in the correct context - its potential through its business objectives; it reviews its contemporary – what exactly do you mean by this? position, by comparing it to the position set by its business objectives. Tesco has categorized – why are you using the American spelling? It should be ‘categorised’ its objectives according to its services, e.g. Objectives – you do not need a capital letter here for employees, objectives for its customers, objectives for the business as a whole. – you need to explain EXACTLY what an objective is – you MUST treat the person who marks this work as a complete idiot who knows nothing abut business at all!

Tesco’s main Business objectives:

• To be a Growth business: the more they grow the better their chances of being noticed by the market, resulting in an increase of market share. • To be the business people value more than others: the more Tesco is valued, the higher their turnout of customers – this does not make sense, which means an increase in sales, an increase in the market share. • To be a Global Retailer – explain exactly what this means : Increasing the retail globally, means capturing the market globally. • To be as strong in non-food, as it is in food: the more varied the products will be, the higher the chances of having better turnover, because you will be giving the customers a better choice. – try and use the correct business terminology – you should be referring to enlarging their product portfolio

Tesco’s Employee Objectives:

• All retailers, there’s one team ????……The Tesco Team: this means better relations and work environment for its employees; it also builds up self-esteem in the workers. – this does not make sense • To have loyal committed staff: having a committed staff means a better service for customers, and if the staff is loyal, this will result in Workers – why have you put a capital letter here? understanding each other better, this is also a good source of motivation. – this does not make sense • Trust and respect each other: Workers enjoy the company of others, helping workers to trust and respect each other will build up team work, and make them understand each other. – not necessarily • Strive to do our very best: working to your best means a better service for your customers, resulting in customers being loyal towards the business. • Give support to each other and praise more than criticise: this is a good way of building up self –esteem, if a worker is praised and encouraged, that worker will feel valued, and will strive to do better. • Ask more than tell and share knowledge so that it can be used: if a knowledge that could be helpful towards the business is known by one person, it can’t be utilised to the business very affectively, however, if it is known between a lots of people, then that knowledge will be very affective. • Enjoy work, celebrate success and learn from experience: this could help to build self-actualisation in workers, to achieve targets means more success.

Tesco’s objectives towards their customers:

• To understand customer better than anyone: understanding their customers will result in the customers being happy, they will become loyal to the business, and take better advantage of it. • Be energetic, be innovative and be first for customers: this will also result in better quality services, and happy customers. • Use our strength to deliver unbeatable values to our customers: by delivering unbeatable values, Tesco is providing a good service for less. • Look after our people, so they can look after our customers: if the staff is well motivated, that means a better service for the customers.

Tesco has made its business objectives very strategically – you need to explain what you mean by ‘strategically’, to keep all sectors of the business intact. Its objectives for employees can prove to be very motivating, and a lot of them would be fulfilling Maslow’s Hierarchy of Needs Motivation theory. This explains how Self Actualisation, Self-Esteem, Love and Belongings, Safety and Physical survival can be very useful when motivating a work force. – if you are going to use this theory here you need to go into MUCH more depth and explain exactly what you mean by this

1.3 Types of Business In the business environment you will find two sectors, the Public Sector and the Private Sector. The difference between these is that the Public Sector is everything that I ????? run by the government, e.g. NHS, The Army, Police and Fire Brigade. The Private Sector contains businesses that are run by private owners for their own fulfilment. Businesses like the Post Office are partially private and partially in the Public Sector, therefore, part of it is owned by the Government and part of it is owned by a Private owner. Within the Private Sector you will find different types of businesses to suit the kind of service it provides, the number of owners, or even the extent of the business. Here are a few examples of the types of businesses:

Sole Trader/Sole Proprietor: this type of ownership is very common in the private sector. A business which has an ownership of a sole trader is run and owned by just one person. Usually sole traders would work alone, but they might employ people just to give a hand in little things like, shelving etc. Sole traders are very easy to set up, the owner can work single minded towards the business, not having to worry about anyone else’s decision. Plus, as you are your own boss, you decide what happens with the profit. But, there are problems within this kind of ownership, the sole trader will not be able to get much time off, as the business won’t - this is slang terminology and should NEVER be used in any type of business document/work run without him/her. You NEVER begin a sentence with Plus or But – You need to explain other important factors of a sole trader eg: Unlimited liability No need to publish internal financial records No need for any legalities Control Etc

Partnership: a business which has an ownership of a partnership is run by partners. Partnerships can consist from 2 to 50 partners within a business. This is a good way of raising good capital for the business and with more than one people concentrating on the business, more ideas can be put into it. But more partners could also mean that decisions may conflict, plus, if one of the partners dies, then the business suffers as it would have to take care of all the debts etc. – but this business could still trade unlike a sole trader - You need to explain other important factors of a sole trader eg: Unlimited liability No need to publish internal financial records Legalities involved in starting up the business Control Etc

What is a PLC? PLC stands for Public Limited Company; all Public Limited Companies are liable to having PLC at the end of their names. These businesses sell shares to the public in order to get enough capital to be invested into the business, as a result, the shareholders get a dividend from the profit the business makes, to determine how much each shareholder gets, would depend on how many shares that shareholder owns. You need to explain other important factors of a sole trader eg: Limited liability Need to publish internal financial records Need for legalities Control Etc

PLC’s have their Advantages: • They can raise more capital than any other kind of business – this is a sweeping statement and although true you need to explain how • PLC’s have limited Liability, meaning that if the business faces financial difficulties; the owner would only have to pay off what he/she invested. • They are incorporated, which means that if one shareholder dies, the business can still continue as that shareholder would have a separate legal identity from the business, this also means that if someone decides to sue the business, the owner cannot be held personally responsible for whatever reason the business is being sued.

Disadvantages: • Each shareholder would have very little right to direct the company, unless he/she owns a large amount of shares. You would usually need to own 51% of the shares to claim responsibility of ownership and to direct the business. This also means that it is very easy to take over a business by buying enough shares. • There is also a lot of bureaucracy in a PLC, you have to make and publish an annual report each year, including accounts, and financial information, a red tape of accounts, which includes paperwork and forms to complete, which can prove to be a lot of work. • The annual reports are available to see for anyone once published, which means that it is very easy for competitors to see how your business is doing, making competition tough.

1.4 Measuring Success

Have Objectives been met?

At present Tesco has expanded itself as the largest supermarket chain in Britain, and has left rivals running behind. Tesco’s market share increased by 0.3% in the past year to reach a total of 22.8%. Last year Tesco sold over 57,855 tonnes of its own brand bread, 14 million toothbrushes and enough liquid soap to wash 26 million people. But, these figures are only considered in the UK; Tesco has expanded itself into 10 other countries and at present the Chief Executive of Tesco is planning to make a visit to China to open another Tesco chain there. It has more than 307,000 employees worldwide of which 227,000 of those are in the UK, one of the reasons why Tesco is considered one of the biggest Employers in the Private Sector in the UK.

Lately the Chief Executive revealed half year results of last year which soared above the city’s forecast, but still, according to Tesco that was not good enough. Tesco wants to position itself in the wider General retail market. Even though Tesco has around 20% of the grocery market, it still lacks in the non-food market with only 3%. In accordance with these facts, Tesco is failing to meet one of its objectives: To be as successful in non-food as it is in foods. This maybe because, Tesco started of – this does not make sense originally in the grocery market, they have acquired the market quite well, only recently have they decided to go into non-food products, so it will take some time for them to be a bit more successful in the non-food market. Their plan to overcome this situation which has already been launched with results; is to target local high street businesses, and challenge their prices; this is usually referred to as competitive pricing, this is when a business sets its price in accordance with its competitors. So now they will be targeting a much broader market, and increasing the number of competitors. Since Tesco launched this plan, it has taken control of only some of the non-food products in the market, such as Music, Tesco sell more top 100 charts CD’s than anybody else in the UK, capturing just over 16% of the market.

This year the sales of Tesco’s Core UK Market have increased by 7.9%. Tesco has 4 different format stores, to fit the suitability of the customers, these are known as, the normal Superstores, Extras, Metro and Express, Tesco has also lately acquired 1,202 T&S Stores, known as one of the number one convenience retailer stores in the UK, these have been bought in a deal which will see around 450 stores turned into Tesco Express.

Tesco has also had a lot of success in the share market, as shown below, over the past year; it has increased its share market from around 200p to just over 240p and is still increasing. this is good, relevant information BUT you MUST acknowledge where it came from and if it is up to date information

Different ways used to Measure Tesco’s Success. The way we measured Tesco’s success was varied, you can’t - do not use slang terminology just depend on one statistic, measuring success may include the following:

• Growth of Market Share: the more the market is captured, the more influence you have on the product, and the customers. Tesco’s market share is currently 22.8% in the food market. They would now only need around 3% to fulfil a monopoly as a monopoly usually occurs when a company has more than 25% of the market share captured. • Share Prices: the higher the share price, the more valuable that company is, Tesco’s share price is currently around 240p in the London Stock Exchange, which makes it quite valuable. Usually quoted with two prices, the shares can be bought and sold in the London Stock Exchange, a companies Share price can be found from the internet, financial magazines and newspapers, and the General financial News that can be viewed on Television. • Annual Reports: these contain all the red tape of accounts, you may find in here the Profit & Loss accounts, Balance Sheets, Share Prices etc. every company has to produce it’s own Annual Report suggesting it’s progress throughout the year • Buying other Companies: lately there have also been some issues concerning Safeway. Safeway is another superstore like Tesco, but lately its fate was depending on other large superstore chain companies, if Tesco does buy Safeway, it would mean that it expands very quickly around the UK, but it would also mean that the costs and expenses increase to run the firm, but mostly to start it off.

Other Quality Control Methods Tesco could utilise

Tesco already has control of loyalty cards by the name of Tesco Clubcard; this is a rewarding scheme to its customers, where the customers earn points in accordance with the amount of shopping they do from Tesco, the more points they have, the more they are rewarded with vouchers and money-off coupons. Tesco could utilise the use of the Tesco Clubcard in reviewing the customer loyalty, the more this Clubcard will be used by a customer, the better insight Tesco gets into returning customers, and can reward them accordingly, as for the customers that don’t return as often, they could investigate further into why they do not return as much, and accordingly improve their service. They could also do more market surveys and get their customers opinions and suggestions on how to improve the service. They could differentiate their service more, to make it seem more different to the customer than other grocery stores.

1.5 Organisational Functions

Departments that help the business to run

Production: this department takes care of the production of goods; these usually involve factories and workers, and would require some labour work. The Production Dept at then end of the day has to fulfil production targets; it has to complete the work to a standard set by quality control and controls the supply of raw materials and finished goods. The work may be directed by a manager, who tells workers the way the product should be produced. This department would be considered quite relevant to Tesco as Tesco does produce some of its own products, known as Value Products. These would be produced at factories owned by Tesco. But usually Tesco buys its stock from other companies, to sell in its own stores. – you have not got much business theory in here so far this is an ideal opportunity – you could discuss the merits of distribution methods

Finance: This organisational function can sometimes be referred to as the Accounting Function. Finance departments would usually handle all the red tape of accounts, which would include a lot of forms and bureaucratic work. Their responsibilities would involve: Controlling, Recording, Obtaining and analysing the funds of the firm. The proper operation of this department is vital to a firm, as it handles all the accounts which without it, would be almost impossible to run a business. Finance would be quite important to Tesco, as it has to produce annual reports which would include a lot of red tape accounts, such as profit and loss, balance sheets etc. The key elements of finance would be handled by the Head Office, but things such as payrolls and wages etc, would be handled by stores, as this would be more relevant.

Financial Snapshot 22 February 2003 23 February 2002 24 February 2001 Turnover or Gross Income 26,337m GBP 23,653m GBP 20,988m GBP Net Income 946m GBP 830m GBP 722 m GBP Total Assets 16,501m GBP 13,556m GBP 11,732m GBP Shareholder Funds 6,516m GBP 5,530m GBP 4,978m GBP Adjusted EPS 0.1405 GBP 0.1236 GBP 0.1087 GBP Number of Employees 270800 247374 225388


Fig1 is an example of a brief financial outcome; these are the kind of things that the Finance Department would handle.

Human Resources: The human resources dept handles employment services for the public, these would include, Recruitment, Training, Dismissals, and other things in accordance with the business. Tesco would depend on this department a lot, as it is the biggest employer in the private sector in the UK. It has over 227,000 employees in the UK. The Human Resources Dept would usually be dealt with by the Head Office when providing Guidelines to the Managers, these guidelines would provide the skills needed for the job, and the job description, and from there it would be the manager’s job to find the suitable person for the job. Again an ideal way of getting in more business theory here – discuss the merits of motivational theory in improving workers output; how exactly recruitment take place; the need for training and how this is done eg on/off the job etc

Marketing: The Market Department takes care of the safe sales of stock, it includes things such as Market Research, these would include things such as surveys, questionnaires, comments etc, their general purpose is to find out the latest rends, and in accordance with that, they would release a new product. The Market Dept also handles advertising, it finds ways of selling there products more efficiently, by letting the general public know more about their product. It would also handle the promotion of new products, to get the public to experience the product easily, and finally the branding and packaging of the product, where the design of the final packaging is decided. This Dept would be found to be very relevant to Tesco, as Tesco uses such means as Advertisements through televisions etc, to sell its products, it might even use market research when opening new stores, to find out how the people around will be affected, when releasing a new product, it might do market research to see if t fits in with the latest trends in the Market. – again business theory relating it this could be used eg: 4P’s, above/below promotion, boston matrix, product portfolio etc

Customer Services: The Purpose of the Customer Services Dept is to get the views of the customers; they would usually handle the complaints, the comments, faulty products, receipts, returns and replacements etc. In general, they work on the satisfaction of the customers. Tesco does have a Customer Services Dept, it relies on it quite a bit as it operates with so many different products, customer satisfaction is needed when handling stock like that, complaints help to locate the fault, comments help to improve the service, and returns and replacements insures customer satisfaction. Customer services would be found in all branches of Tesco stores, to make the service more accessible as it can prove very useful for the customers and can assure customer satisfaction very well.

Research & Development: This department mostly handles the Development of new products, this includes research on the product, e.g. will the public be happy with it, how will it help the public etc, then they get into the process of designing and developing, and then finally the production, then the sales would be handed over to the marketing dept. The Research and Development department would be run by the Head Office, they would employ people into researching for the product being released, then for the production they would hand over to the production managers, who would give orders to their workers on how the product should be made according to the guidelines from the head office.

Administration/Clerical: this department insures – ensures! the smooth running of the business and its functions; it tries to make sure that the organisation runs as efficiently as possible by supporting the business on the administrative side promptly and effectively. It makes use of day-to-day timetables and insures the schedule of the organisations routines.

The work involved in this department would mostly be to do with administrative work such as, filing, mailing, answering phone calls, preparing letters etc.

This dept would be more appropriate for smaller offices, instead of depending on the Head Office, as the work of this department concerns minor tasks.

1.6 Organisational Structures There are three types of organisational charts which can be used to define an organisational Structure:

• The Matrix Structure • The Flat Hierarchy Structure • The Tall Hierarchy Structure

These structures are used in accordance with the size, the situation, and on the basis of authority and power.

Organisational Charts These can be helpful in finding the location of certain people, Job – you keep on putting in spurious capital letters! You only need a capital letter after a full stop or for a name or place - or department within the business; they also show the line of communication, e.g. which department or person will answer to whom etc. But they can’t be used on a long-term basis if an organisation is constantly changing.

Chain of Command This is the line of authority that runs from the top of the chart, to the bottom, it shows the links of communication between each sector in the chart. You will find that better educated or/and trained managers have more tiers of chain of commands running to different sectors, showing the sectors that the manager has authority over. The length of the chain will also depend on the size of the organisation, the extent to which the business diversifies, how complex the controls are, how complex the products are and the type of people employed.

Some businesses may reduce the tiers of chain of command for various reasons e.g. reduce wages, improve communications between each sector, which would result in more effective decisions being made with less time used.

Span of control This is the number of sectors within an organisational chart which must report directly to a particular manager. This is where the Flat Hierarchy Structure and the Tall Hierarchy Structure come in.

A flat structure would usually mean less authority to the main Chair person, who would be found at the top of the Structure, and more power to the managers. It would have fewer tiers and managers will have control of a large span of subsidiaries.


(Fig2) A flat organisational Structure

as you can see in Fig2, the flat structure is quite simple, it has a limited amount of chain of commands, and a lot more power over authority, the workers underneath the managers cannot answer to the chairperson, the chains of command between them and the managers suggests, that they only have the managers to communicate with, the managers, would answer back to the chairperson, he/she would usually report back on the work being done by the workers. This structure would usually be considered by small firms.

A tall Hierarchy structure would usually give more authority to the Chairperson (or whoever that is considered at the top of the structure), and less power to the managers. It would have more tiers of chain of command, and managers will have less control over the amount of subsidiaries.

The Matrix Structure Some organisations run according to projects that they have been given, e.g. a clothing shop is given a project to make a school uniform. Usually when a firm faces these situations, all the people work together, usually when a person works on a project, that person would have two bosses, The head of the department, and the leader of the project. The matrix structure is a short-term structure, constructed to suit a project that an organisation is working on. Once the project has been finished, the structure will no longer be necessary.

(Fig4) The Matrix Organisational Structure

The Matrix Structure ensures better co-ordination of the projects that the organisation is working on, using the matrix structure also means that if many project teams different to each other are organised, it gives people a chance to use their abilities to the full.

Tesco’s Organisational Structure


As Tesco is considered a large firm, a suitable Organisational Structure is made to show communication between each sector. As you can see, there is a large amount of tiers of chains of command, showing the amount of communication between each sector. Tesco uses a Tall Hierarchy Structure; this can be used as a long-term chart, to show an internal map of Tesco.

An organisational structure is basically a technique compiled to make a large business more organised. It gives an insight as to who does what, and who has what responsibility and allows multiple functions of the day-to-day business to take place. Tesco’s organisational structure allows vast operations to take place; it specifies each dept’s sector of work, and like all organisational structures, defines the relationship between each of the Dept’s. This sets the culture of the business, it can be happy, sad, strict etc., dependable on the position of each department, and the relationship between them, but to get a good viewpoint of the culture, you have to include many other analytical things as well such as, Tesco’s Policies – no need for policies to have a capital letter for its employees which can be derived from Tesco’s Objectives for its employees, if the employees benefit enough from the objectives, then the employees would be happy, they would be motivated, in return, the management would be happy with the type of work that is being done. You would also have to decide upon the culture by analysing the type of skills that the management is providing. For example, if we follow McGregor’s motivational theory, you will see that he set out two types of managers, who motivate workers in different ways. Theory X Managers believe that workers can only be enthused by money, they are indolent, selfish, and disregard work. They believe that workers need to be forced by Managers. This is more of a strict way of thinking, and would form a strict culture within the business; this could result in employees being unhappy with their managers. But it would also mean that the work taking place is in a disciplined environment, and would insure that work is done to the standard. Theory Y Managers believe that workers needs should be considered as that is a motivational factor. Workers can if motivated, take accountability of doing a job properly, it should be the management’s job to trust workers and encourage them to do their best. This gives employees more rights as management trusts them more, this could prove very motivational because employees will be happy with the management, and will do good work in return, it sets a happy culture, because the relationship between managers and workers is good. It can also be a drawback, because the environment is less disciplined, and as workers are given more rights, work might not be done by them to the standard.

Tesco’s objectives seem to be lenient – this is not the correct word to use in this context to its employees; they enforce encouragement rather than criticism of the work that an employee does. I would classify the managers of Tesco as Theory Y managers.

1.7 Communication

Communication in a business environment can be understood as the exchange of messages from one person to another, as a result of communication, the message has to be understood and result in the action desired. There would usually be feedback, to assure the sender that the message has been understood.

In businesses, you will find that the point of communication is to influence something in the business. The message is often an instruction and the response should be that the job is done. Communication can take place internally (through bosses and employees, subordinates, colleagues) or it can take place externally (Customers, Suppliers, Media, Shareholders)

Communication involves four elements:

• A Sender • A Message • A Medium • A Receiver

These four elements are the principals to getting a message across in a business, resulting in effective communication; you will also find that communication goes in all directions:

Vertical Downward & Upward Communication The Vertical Downward Communication - again no need for capital letters here can be seen as, when a manager or boss gives instructions or words for motivation to an employee, e.g. when someone at the top of the hierarchy communicates with someone below them in the hierarchy.

When we refer to the vertical upward communication, this is when you will find the employees communicating with their managers or bosses, e.g. the employee giving feedback on the instructions that has been given him/her.

Horizontal & Diagonal Communication In the same principal, you will also find a form of communication called the horizontal communication, this is when colleagues on the same level communicate with each other, usually to discuss the work, how it will be done, what they have achieved. Compared to vertical communication, it is far more informal and proves to be very social. It is usually voluntary as well.

There is also horizontal communication, this form of communication describes the discussions between different departments, e.g. a manager from the sales department, discusses the process of a new product with the purchases department.

Formal & Informal Communication Formal communication is when employees communicate through the official channels that have been set by the business, e.g. weekly staff meetings, reports, forms, memos. Tesco would definitely resort to this type f communication a lot, as Tesco is a big company, there would usually be board meetings for the board of directors etc. Formal communication is much more associated with vertical communication; it usually involves a good organised system, which has to work efficiently and quickly.

Informal communication is when people within an organisation communicate but not by using the chain of command or the official channels. You will find this type of communication between employees of the same level, and is very much associated with horizontal and diagonal communication. This type of communication is usually voluntary, and helps to build cooperation between staff. This communication would take place a lot between employees in Tesco.

Centralised & De-centralised Group Network This is where all the communication takes place through the leader. You will find that in the meetings held, the boss would make all the decisions and solve problems, the managers and subordinates would not speak to each other, but speak to the boss. This is more of an autocratic way of communicating, and would prove to be fast in making decisions, but it would also run down the group morale.

In a decentralised group network, you will find that all members of the group participate in giving and receiving information, and take part in the decision making, this type of meeting would usually be held by a democratic leader, and would prove a slow in getting the right decision, but the morale of employees would be high as they are constantly taking part. In Board meetings, Tesco would use this type of communication to get all the directors views.

Open & Restricted Communication This type of communication is when the employees are allowed to communicate with each other frankly, about any kind of problem regardless of their position within the business. The purpose of this type of communication is to boost employee morale, and make them feel that they have a voice within the firm; however, this could cause a problem for the leader, as employees can be as frank as they want to him, and this could make complications for him to make efficient decisions. This type of communication would be used by Tesco in their stores, where the managers speak freely with their employees and get their views and opinions on how the business should be running.

Restricted communication restricts communication about problems if the positions of the employees differ; it gives less say to the employees and gives them less chances of suggesting things.

Verbal Communication Verbal communication is one of the most flexible ways to communicate. It can take place at meetings face-to-face, or over the telephone, they can be formal or informal. In meetings, someone would be required to take minutes to record what had happened in the meeting, this is useful when there are problems such as, someone not hearing anything, or if they received a message that is different to what had originally been said. Another example of verbal communication is interviews, both externally or internally, it would give you feedback immediately but is often false. Nearly every business would need this type of communication; otherwise you can’t expect the business to be operational. Tesco would definitely employ someone to take minutes of their meetings, but would also definitely keep it safe as so no-one finds out what was said in the meeting.

Written Communication Written communication is slower than verbal communication, and you cannot always expect a feedback, but you always have proof that you message has been sent. Within a firm, you will see that a lot of communication takes place through documents called Memorandums or Memo’s. These are short letters which have a set format and are considered very important. Letters are a very popular choice when it comes to written communication. Internally, these letters can give information to employees, e.g. letter of promotion, letter of warning, letter of dismissal etc. they are very popular externally as well (Letters, newsletters, brochures, contracts) Reports are used internally to give feedback on a task that had been given to an employee; the format is like the memo but is more detailed. Tesco always uses this type of communication to insure that customers get the latest news and that employees are aware of the day-to-day operations of the company, so Tesco is very dependant on this communication as well.

Technological Communication Technological communication is quick, recordable, and accurate, but it is expensive. It has revolutionised the way businesses operate and communicate internally and externally. The use of computer means that the receiving and sending of documents can be made quick and accurate. Email is used vastly internally and externally, it is quick and reliable, but also cheaper than sending through paper.

Another example of technological communication is Video Conferencing, where meeting can be held through video phones, this can be very useful when someone is not in the same country or place. Although expensive, it saves the business a lot of money when it comes to air tickets, hotel accommodation etc.

Fax machines are also in wide use, nearly every business you will find will communicate using a Fax machine, it is a useful way of sending letters and documents quickly and accurately, and as it works through the telephone line, it is cheap.

Mobile phones are coming into wide use as well, and make communication very flexible. Making an employee reachable nearly anywhere, and now with internet connections coming into mobile phones, users can access the internet, check their e-mails etc.

Communication is still considered as a two way process, even with all this technology, the sender has to use the correct tone of voice and language, a positive attitude, and the messages must be clear, quick, accurate and relevant.

The use of ICT in Tesco. Tesco has developed into a technological business, the use if ICT within it is vast, the technological forms of communication made available to its customers, can only suggest its improvements in the use if ICT. Here are a few examples of some of the technological processes of Tesco:

• Tesco Club card: Tesco issues a club card to its customers, the card works on level of points, the more points a customer gets, the more special offers that customer receives. Technically this is an excellent way to make a customer come back to shop with Tesco, customers would be wanting to take full advantage of the card, and therefore shop more to get more points. Moving away from a customer’s point of view, Tesco has now got information on its customers. The use of the club card means that Tesco can work out things like, how many customers prefer to shop in Tesco how often do they shop in Tesco, and how much they spend in Tesco. It also gains information such as, customer address, occupation etc, and can fulfil that customers needs accordingly ( see Leaflet in Appendix ) • The Tesco Website: The main source of technological communication that has been made available to its customers is its website. Tesco’s website offers a service as good as its stores, it has made available home deliveries, which make things useful for both the customer and the business, ensuring customer satisfaction, it also provides all the services that can be found on leaflets that you find in stores, such as Tesco Finance, Loans etc (See leaflets in Appendix). The website also gives detailed reports on the company’s progress, and plans, it has made available things like share prices, company history, annual reports online. It has also made it easier for itself and the public when it comes to employment, with information on vacancies, job descriptions, departments etc. • Tesco Internet Service Provider: Recently Tesco has become an ISP, spreading its market over vast areas even more, and making Tesco as a whole more accessible, it supplies CD’s in stores which signup customers to an internet service provided by Tesco, again this is very useful in gaining valuable knowledge about its customers, and ensuring their satisfaction. – you could refer to expanding its product portfolio here

The use of ICT has helped Tesco meet it’s objectives in a lot of ways, the business is growing in all direction, from the involvement in new markets, to gaining information on their customers. The business is valued more, with the use of club cards and their availability to customers, and the offering of special offers. It is becoming stronger in the non-food market, by involving itself in new markets, such as the internet.

Advantages of the use of ICT in Tesco • Business dealings are made more effective, fast and reliable • Information on customers provides information on customer satisfaction • Tesco is made more accessible to customers, with better quality services, and better communication between the customers and Tesco. • Communication internally and externally is made more effective

Disadvantages of the use of ICT in Tesco • The main disadvantage of the use of ICT is that it is expensive, and can take time to set up, while that is being done, a lot of work can be slowed down. • The use of ICT means that the staff will require training, and training again will require expenses • Constant maintenance of the system can sometimes slows things down and proves to be expensive.

1.8 Production and Quality Assurance Production is an integral part of the business environment. Production is a process where raw material is made into goods that will satisfy the customers wants by means of labour. To satisfy the needs of the customers, you would need the country’s resources which can be identified as:

• Land, where all the raw material can be extracted from. • Labour is the workers and their skills needed in the production of the goods. • Capital will include all the things needed for producing the goods, e.g. machinery, tools and equipment. • Enterprise, the business that will provide the final product to the customers.

In Tesco’s case, Tesco would fall mainly into the enterprise section, as Tesco mainly buys its stock from manufacturers, and provides the goods to the customers, but, you would also have to consider Tesco in the other categories as well, as Tesco does produce some of its own products, mostly known as the Value products.

There are three main stages within the process of production:

• Primary: where all the raw materials are collected • Secondary: where all the raw materials are processed into goods • Tertiary: where all the goods are provided to the customer

E.g. Tesco gets its products from a manufacturer, and the manufacturer gets it from the raw material provider:

Primary Secondary Tertiary

To decide on production, the owner or production manager will have to consider a lot of market research, this would include things like the latest trends, likes and dislikes etc. the decision at the end of the day will influence the long-term running of the business, and the day-to-day running of the business.

Other things such as services are planned and constructed within the business. E.g. – you NEVER begin a sentence with eg Tesco Finance was probably an idea to increase the companies market share, so first, a plan would have been made, which showed how the service would work, what it would provide, but before that, the construction of the plan would have gone through a variety of things, such as market research, benefits and drawbacks to the company, its cost etc. then when the plan is approved, it would be constructed, staff would be trained, departments would be opened, to insure the best quality can be provided.

Costs in Production

Costs can be divided into four main categories:

1) Fixed Costs: These are costs that do not change during production even if the level of production is high or low, e.g. Wages and Salaries, Rent, Insurance.

2) Variable Costs: these are changes that occur in accordance with the level of production, e.g. if production is high, the use of raw materials will increase, employment of more workers would mean higher level of wages.

3) Direct Costs: these are costs that can be directly associated with the product that is being produced, for example, the raw material that is used for making the product is a direct cost.

4) Indirect Costs: these costs are not linked directly with the product being produced, e.g. rent, bills, wages, administration of the business. This type of cost would mostly be found in the variable costs category.

Types of Production In the production environment, there are four Basic types of production:

• Job Production: This is when one item is made at a time, in accordance with a customers want, e.g. a tailor suit business, a customer would give measurements, and specifications to how he/she wants their suit made, and the tailor would make it. This would not suit Tesco as it sells ready made products. • Batch Production: where a product is made in batches, a good example is school uniforms, a school orders a sum of school uniforms for students, the manufacturer would then make the school uniforms to that number, and supply it to the school. The work in batch production doesn’t need many skilled workers, so employing people for low wages is easy, although the work is repetitive and workers can become less motivated. Tesco would probably use this type of production, but only in the ordering method, when it would need a certain product, it would ask its supplier to supply it with the amount of products that are needed. • Flow Production: Flow production involves production of the same product in large amounts, at high speeds and in a way to reduce costs. For example, a computer company makes multimedia speakers for computers, or an electronics manufacturing company produces Television sets. In flow production you will find that the unit cost of each product is low, as the quantity of the product being produced is quite large, it needs less skilled workers, and its standard of quality can be maintained. But its repetitiveness can lead to unmotivated workers and can prove costly, when it comes to buying machinery for making the products, plus if machinery breaks down in one sector, then the whole production process has to suffer. Tesco would use this method, as it does make some of its own goods, like its VALUE products. • Just in time Production (JIT): Just in time production is used when stocks of raw materials are kept in low supply, the process’s aim is to get the raw material just in time when the need for them increases in a production. This means that the stock of raw materials is kept low, therefore saving costs until needed. But it also means that because of the tight schedule caused in this, production may not be complete on time if the raw material is not available.

Quality Assurance Quality in business is a way to ensure the condition of a product, and that if it is fit for its purpose; it is a way of making sure that it meets the customer’s requirements. A company which does this would look over to see if those customer requirements are being met with through its quality assurance. Quality Assurance is one aspect of quality control; it should be carried out by all staff to assure the best quality.

A few examples of ensuring that the customers are being provided with the best quality service can be:

• Surveys: to see what the customers expect from the company, and have more opinions from the customer, so that that information can be applied accordingly. • Quality Control: ensuring that all products that are made have no defection of any sort, and have been made to its standard. • Complaint & Comments:

Tesco has many ways of insuring the quality of its services and products.

The training of staff is one of the foundations of quality assurance, a well mannered, and acknowledging staff would definitely give a good reputation to the company. A good way that Tesco trains its staff is that it records any calls that might be made to one of its service; it can then use them for training purposes, and use it as an example. It also sees if any mistakes are made, or if any improvements need to be made to insure the best service.

You will also find that in each branch, Tesco has a quality control inspector, who would go around checking all aspects f goods and services, and see what is on track, what needs to improve, and maybe decide on what is the cause for it. Then he would comment on his findings in meetings that would be held, and make sure that all employees know what the problem is, and what needs sorting. They also run a self-inspection scheme, where employees go around checking for any problems, e.g. trolleys, they would check if all trolleys are perfectly fine, if any defects are found, then the problem would be sorted accordingly.

External Inspection also takes place within the Tesco Branches, e.g. Health & Safety Officers, who would check for any hazards, and see if there are any health hazards that could be posing any sort of danger to customers, if branches pass all test, then a certificate is given to them. Usually it’s a certificate by the name of ISO900, which shows that the place had been inspected, and had passed all aspects of Health & Safety.

Benchmarking is also a good way of making sure that your services meet the standard that is expected at present, Benchmarking involves comparing your goods and services to your competitors, this is a good way of making your services better than your competitors, this would result in customers choosing your business, because of its quality of services.

Conclusion Tesco PLC has managed and developed itself very well, from a little grocery store to one of the biggest superstore chains in the world, its share prices at present show that is still a growing factor in its market, with steps into other markets as well. It has fixed objectives which fit in very well with all aspects of its services, and manages them to its full potential. Like all big companies, Tesco relies on different departments to help it run, which need communication between them all the time, meaning that if one didn’t exist, Tesco would not do so well. Tesco has a tall organisational Structure, due to the number of departments within the business. In order to make sure that these departments work perfectly with each other, Tesco relies heavily on Communication as well, from Written to Verbal, Horizontal to Diagonal, and Formal to Informal. ICT is also used in Mass, and Tesco are regularly looking to employ people who are highly qualified in ICT, as well as in other sectors, making them one of the biggest employers in the Private Sector in the UK. Tesco, as well as producing its own goods, is one of the biggest enterprise businesses in the UK, it buys it stock from many manufacturers who produce the products and supply it to Tesco.

Appendix A spell check was done which showed that no spelling mistakes were detected. A Grammar check was done which showed that no grammatical errors were found. The readability of this document is 12.0 – I do not doubt that you used a grammar check but they are not always true and your work is not grammatically correct – you really need to read your work through before you hand it in – or you could try asking someone else to read it for you

The following resources were used as a means of completing research and basing it on information associated with the coursework.

Overall this is not a bad piece of work – however your grammar and use of capital letters does let it down somewhat – the second half of the work is far better than the first half – make sure you read my comments and abide by them

Bibliography Some resources were collected from Tesco Stores, as in Appendix. The following sites were used on the internet: The following books were used:

Mastering the Business Environment – Roger Cartwright Scoring Points: How Tesco is winning customer loyalty – Clive Humbly, Terry Hunt, Tim Philips.

Leaflets used for Research can be found in the Appendix.

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Subway-sandwich chain FRANCHISE

Table of Contents

1 Introduction 2 1.1 Business My Idea 2 1.2 My Skills 2 1.3 Projects Aims & Objectives 2 1.4 Business Aims & Objectives 3 1.5 Methodology 4 1.6 Mission Statement 5 1.7 SWOT 6 1.8 PEST-G Analysis 8 1.9 Target Audience 11 1.10 Business Structure 12 Marketing Mix: 13 1.11 Product 13 1.12 Place 13 1.13 Promotion 13 1.14 Product for my business 13 1.15 Place for my business 13 1.16 Promotion for my business 13 Market Research: 13 1.17 Primary Research 13 1.18 Secondary Research 17 1.19 Sampling 17 1.20 Questionnaire graph 17 1.21 Results 17 1.22 Location 17 1.23 Target audience 17 1.24 Materials 17 1.25 Transportation 17 1.26 Communication 17 1.27 Labour 17 1.28 Image of location 17 1.29 Qualitative decisions 17 Finance: 17 1.30 Cost of the site 17 1.31 Breakeven Graph 17 1.32 Cash Flow Forecast 17 1.33 Profit and Loss 17 1.34 Discussion of Finance 17 1.35 Bibliography 17 2 Evaluation 17 3 Appendices A-J 17

1 Introduction 1.1 Business My Idea

My idea is to set up an established franchise. Thus a Subway Franchise THIS SENTENCE IS NOT GRAMMATICALLY CORRECT AND YOU WANT YOUR FIRST PARAGRAPH TO BE PERFECT!. My decision was based on the idea that there is a gap in the market for this particular business especially in the South Norwood area. The only well known sandwich outlet is Subway and although it is already a well-established brand name, I believe that in the correct location my own store will have the potential to make a lot of profit and survive. My businesses unique selling point GOOD YOU ARE USING THE CORRECT BUSINESS TERMINOLOGY HOWEVER YOU SHOULD TREAT THE PERSON WHO WILL BE MARKING THIS ESSAY AS A COMPLETE IDIOT WHO KNOWS NOTHING ABOUT BUSINESS SO EXPLAIN EXACLTY WHAT THIS MEANS will be giving my customers the choice to choose which fillings or types of breads they wish to eat for their sub USE THE FULL WORD OR EXPLAIN. There are nearly two million different sandwich combinations available on the SUBWAY menu. This flexibility will give the customer their needs and we will gain the loyalty NEVER MAKE A STATEMENT LIKE THIS UNLESS YOU HAVE HARD EVIDENCE TO BACK IT UP – YOU BELIEVE THIS WILL GAIN THEIR LOYALTY YOU DO NOT KNOW IT WILL!. I believe that in the correct location my own Subway franchise will have the potential to make profit and survive. I will be answering the question: ‘Is it feasible for Subway to expand by establishing a second sandwich outlet in Central Croydon’. It is a well-known brand but in the UK not many customers are familiar with this established name. I will make sure these potential consumers know it. I plan to do this by identifying an opportunity in the market and if there is a gap. I plan to use forecasts to see whether my business will be successful such as cash flow and break-even. Using finance available it will help me to launch an excellent franchise opportunity. I have found out Subway is one of the best franchises to set up and a number one entrepreneurial opportunity. Despite this, as there is a highly competitive market that my business would have to enter, having a brand that consumers trust and identify will lead the sandwich bar gaining a stable market share, and loyal customers in a short space of time, and also some of the risk will be reduced. Overall, buying into a franchise enables entrepreneurs like me to have an opportunity to provide a known product from an established brand with a proven operating system already in place. I THINK YOU SHUOLD EXPLAIN WHAT A FRANCHISE IS – WHAT AN ENTREPRENEUR IS AND WHY YOU THINK A FRANCHISE IS YOUR BEST ‘BET’ RATHER THAN STARTING A BUSINESS FROM SCRATCH’ 1.2 My Skills -e-tutor what could I write for this section-any ideas please add here: 1.3 Projects Aims & Objectives

Aims are the long-term intentions of a business while the objectives are needed to fulfil these overall aims of a business. The main aim of this project is to conduct a sufficient feasibility study in order to evaluate whether or not my business will be successful or not. If my business is likely to fail I would like to assess what factors resulted in this failure and in turn what factors resulted in its success. If it is not feasible then at the end of my project I would like to draw some sort of conclusion about what could have been done to make my business much more successful especially in the case that my business fails. Despite being a franchise and a well-known brand in sight of my potential customers, this feasibility study could endeavour failure ‘ENDEAVOUR FAILURE’ THIS DOES NOT MAKE SENSE and from there I could see what actually could have been enhanced. If it does prove to strive to success ‘PROVE TO STRIVE TO SUCCESS’ AGAIN THIS DOES NOT MAKE SENSE – YOU MUST READ THROUGH YOUR WORK CAREFULLY BEFORE YOU HAND IT IN – FOR THE REST OF THIS ESSAY IF I FIND ANYTHING THAT DOES NOT MAKE SENSE I WILL JUST EMBOLDEN IT I will be able to identify the best place to set it up, what products to market consumers’ want/need and at what price. Moreover, I would like to assess what factors resulted in the failure of my business, and what factors contributed to the success of my business, and at the end of the project evaluate what could have been done to improve the business being a success. By doing this I will look into what makes a business strive into success, such as location, the competitors, products to be aimed at potential customers and whether there is actually a demand in the market for a well-known franchise as this. Information will be retrieved through primary and secondary sources and research. I intend to use primary research in order to identify, suitable locations, current prices of my local competitors, products that are needed and wanted by consumers in the market, the right promotional methods in order to attract potential consumers and to establish the target market YOU NEED TO EXPLAIN EXACTLY WHAT PRIMARY RESEARCH IS (EG THE COLLECTION OF ORIGINAL DATA). In addition I shall use secondary research to find out statistics on most products sold/brought, the period of time in which consumer spending is at its highest, and where and any information retrieved by competitors on consumer spending patterns within the market, or successful marketing strategies AGAIN EXPLAIN EXACTLY WHAT SECONDARY RESEARCH IS (EG THE COLLECTION OF DATA THAT ALREADY EXISTS). All project results will be used to determine and evaluate my project and backup final decisions. I will need to remember that I will need long-term profit in order to survive. 1.4 Business Aims & Objectives

Aims should be an expression of all parties of the business, i.e. employees, shareholders. The set aims should be long-term and everyone within the firm should work to achieve them. Aims can encourage commitment within a firm, i.e. giving employees a long-term job within the firm. Most firms do not spend quantities of time on trying to define their aims, particularly true of small firms where communication levels are quick and easy to transfer information such as my firm YOU NEED TO EXPLAIN WHAT RELEVANCE THIS HAS TO DEFINING AIMS Subway. Aims are a basis in which I will set my objectives. These can be influenced by the business culture and the workforce culture. Delegation can take place, in order to allow different departments to focus on different aims. This allows analysis of the success of the objective easier. My aims are: • Produce quality products at a competitive price. • Bridge the gap between social classes by giving everyone high classed products. • In co-operate consumer’s needs and wants in products. • Increase consumer’s value of living. • Turn luxury products into necessity products due to high quality and the purpose/function to the consumers. • Produce a profit making business. • Design a company whereby customer’s satisfaction is achieved and a friendly service is offered.

Objectives can be an effective source of motivation to employees. It can give them a valuable purpose in the role of the business, helping them to work harder, and fulfilling the best within the business. Objectives are also helpful because it OBJECTIVES ARE PLURAL IT IS SINGULAR YOU CANNOT HAVE BOTH IN HE SAME SENTENCE IT SHOULD READ ‘OBJECTIVES ARE ALSO HELPFUL BECAUSE ‘THEY’ GIVE…….gives the firm a direction, helping them to co-ordinate activities in order to achieve the final mission statement. It gives them stepping-stones, breaking the mission statement into smaller segments.

Primary Objectives:

1. Will the new Croydon store prove to be adequate in all areas, but most importantly will it be profitable, to a sufficient level of return?

Secondary Objectives:

1. Collect the previous year’s accounts and financial reports for Subway, and evaluate the present situation. 2. Investigate whether there is land available to expand its property. 3. To obtain marketing data. 4. Find out the start-up costs and initial investment for the outlet for expansion. 5. To diversify the business. 6. Using the retrieved raw data, produce forecasted accounts and evaluate the firm’s financial position in the future. 7. Decide whether a change in price is needed or adding or removing of items is needed to the existing menu. 8. Assess the time scale of the expansion. 1.5 Methodology

1. Examine existing accounts of the business to whether the firm has enough capital for expansion. I am going to do this by finding out the profitability, liquidity and the efficiency of the firm using ratio analysis from the Trading Profit and Loss account and the Balance Sheet. 2. I will find out using an appropriate website, where I want to open the outlet. This will highlight all the surrounding stores and vacant properties. I will use this as a basis to find a vacant suitable site for the new Subway Restaurant. Once an appropriate site is chosen, I will choose whether to lease or buy a free hold property. 3. I am going to prepare a questionnaire for the customers visiting the restaurant and do a survey of the people in the area to find out their views about the recognised brand name Subway and whether the target market for the product is aimed confidently to the correct consumer market. 4. Retrieve information from the Subway website on costs that will be needed to be incurred, such as the start-up costs and initial investment. 5. Investigate the ways in which the business can diversify, for example introducing other types of catering services such as catering for special occasions. 6. To forecast the firms Trading Profits and loss account. Balance sheet and cash flow forecast if the restaurant was to expand. By using Ratio analysis, I intend to analyse the firm’s financial position in the future. 7. Upon my findings in my questionnaire I will decide whether extra items should be added to the present menu. 8. Using Decision-Making Techniques such as decision trees and critical path analysis to help reach a decision and estimate the minimum time that could be taken to complete a possibly problematic process.

Smart Objectives:

By using SMART I will be able to show my objectives in a clear way, this will make it easier for me to analyse whether these objectives are achievable or not. SMART stand for: Specific, Measurable, Agreed or Achievable, Realistic and Time RELATED I will also organize my objectives in the number of priority.

1. SPECFIC: To survive MEASURABLE: to break even within 2 years of starting up AGREED/ACHIEVEABLE: As I mentioned in my business ideas I believe that in the correct location my business can generate a lot of profit. REALISTIC: Yes, 2 years is a realistic time for a business to start making profit. TIME: 2 years.

2. SPECFIC: To differentiate myself from other sandwich stores within 1-2 years. MEASURABLE: Produce a survey asking people if they know this well-known brand. AGREED/ACHIEVEABLE: Yes, with only one real main competitor, it will be fairly simple to differentiate myself especially since I have a unique selling point REALISTIC: Yes: I already have a unique selling point TIME: 2-3 years

3. SPECFIC: To establish a loyal customer base within 1yr MEASURABLE: look at financial records over the past 12 months AGREED/ACHIEVEABLE: Yes with hardly any competition this objective is achievable REALISTIC: Yes TIME: 1 year

4. SPECFIC: To expand into a different range of products within 7 years MEASURABLE: look at financial records AGREED/ACHIEVEABLE: Yes REALISTIC: maybe, but with an objective like this one, it is hard to predict whether it is realistic or not, until your business has started up and is making a profit. 1.6 Mission Statement

The main objective of a mission statement aims to set and/or tell, stakeholders EXPLAIN HERE WHAT A ‘STAKEHOLDER’ IS and shareholder of what the overall purpose of the business is. This involves stating what the business intends to achieve and sets the theme for setting objectives and strategic methods. It shows the businesses reason for existing; why it has been set-up in the first place its intentions. However, in the likeliness of setting a positive and achievable mission statement, a criterion has been set for business to follow. SMART (smart, measurable, agreed, realistic, time specific), allow businesses o analyse the mission statement and to see how success full it would be. As a general not the companies overall mission statement would be to become the biggest and best-value store in the market. Mission statements shows the businesses reason for existing, why it has been set-up in the first place (intentions). Existing Subway missionary statement: "To provide the tools and knowledge to allow entrepreneurs to successfully compete in the Quick Service Restaurant industry worldwide, by consistently offering value to consumers through providing great tasting food that is good for them and made the way they like it." I am confident that in order to get any chance of success within the market we need to get of to the best start as possible, letting consumers know of our existence. Within this thriving market, that already exists around the UK WRITE IN FULLand is already a well-known number 1 WRITE ANY NUMBER UNDER 100 IN FULL franchise in the US WRITE IN FULL. I can ensure success at every point to a brand already renowned. It is achievable that with the correction promotion and marketing strategies there is no reason that the firm cannot generate enough sales revenue to cover up the start-up costs and begin making a profit. With the help of objectives, HRM WRITE IN FULL, good use of delegation and the right strategies, I am sure employees would be motivated enough to reach the mission statement. 1.7 SWOT

This is a tool, which is used to review internal and external business environments. The benefit of doing this is to assess the businesses current activities and base decisions on them. It is an effective way of identifying my Strengths and Weaknesses, and of examining the potential Opportunities and Threats my business might face YOU NEED TO EXPLAIN WHICH ARE INTERNAL/EXTERNAL. By carrying out an SWOT analysis and using the SWOT framework it will help me to focus into areas where my business will show strengths and where the greatest opportunities lie.

My strengths are any resources and capabilities that can be used as a basic for developing a competitive advantage over other sandwich outlets.

Strengths: • Being a small sole trader franchise means that I will have a closer relationship with the customers, thus receive ideas and build a personal relationship with them. Then begin to build a loyal customer base. Eventually I can promote and adapt my products to the needs of the consumers. • I have a good location for my business that is easy to access and is viewable by consumers. Thus creating awareness for consumers to come in and purchase a product. • Establish competitors, which have identified consumers spending habits. Makes it easier to establish a business whereby, their needs and wants are already aware. • A market-led business that is dedicating to consumers means that you will be giving the consumers what they need, which would make them, happier-‘delighted’. Ultimately, returning back for more purchases. • An excellent worldwide reputation in place means a long trading period could be portrayed. Finding a trustworthy supplier is guaranteed, someone who is willing to take a chance on a new established franchise. My Weaknesses are anything, which cannot be included as strength, are things that the business would do badly, that it is ineffective at or that it has a poor reputation for. It also includes the factors that cause losses, hardships, disputes, grievances and complaints for a business, for example:

Weaknesses: • Low start-up capital- without capital, the business will find it hard to start-up and get loans to fund its strategies. • No credit from suppliers- without credit, it may be hard to pay back debts and have money left over for re-investment into the business. • I will have a small amount of staff, as I will not be able to pay for more than I need, so when my staff are absent I will not have any form of backup for them. • I have no experience in Marketing which means that I may not market Subway’s initial products effectively thus losing out on valuable profit, but also on customer loyalty if I market it imperfectly. • My cash flow will be unreliable in the early stages of business, thus I will not have any chances to buy things if I see an opportunity for it.

Opportunities are anything, which present an opportunity for profit and growth because of its strengths or because of the elimination of its weaknesses. This involves the consideration of the business environment from the widest and most creative possible standpoints.


• New technology may cut down the time and improve the quality of my products. • Company expansion, i.e. increasing capacity inside for eat in. • To gain Market share by diversifying myself from other companies: innovation of products and new product range. • Increase demand for quality general-purpose products. • Competition may be engrossed with rivalry between each other that they don’t take much notice in own growth. • The introduction of speciality breads and more exotic fillings will extend the possibilities of the sandwich from a simple snack into a meal.

Threats of a business arise from activities of competitors and from failing to take opportunities or to build on successes. Threats also come from complacency, a lack of rigour, and from falling profits, perhaps due to rising costs.


• Established, wealthy competitors. All fast food chains, including McDonald’s, Burger King, KFC, Pret A Manger, O’Brien’s, and Benjy’s. • Competitors enforcing new tactics to ‘destroy’ new competition in which we couldn’t battle against due to low capital. For example lowering of prices, advertisement campaigns etc. • A possibility of competitors using ‘destroyer’ pricing. In which we would not be able to operate if we lowered costs any more. • If my competitor starts a Price war I will not be able to compete, thus risk of losing customers or falling into bankruptcy. • Lack of trained, specialised employees. • Shift in consumer tastes will mean that I will need to alter my product selling to fit there needs. • There is always a chance of new competitors trying to take some market share. • New Laws may pose a threat to my company especially as Subway is mainly an U.S established franchise, with headquarters located in the US.

Weighing up both my strengths and weaknesses, I have come to the conclusion that, despite having equal strengths than weaknesses, my strengths are run by my weaknesses. In other words, I need capital, and market share to carry out my innovative ideas, but my weakness is that I do not have enough capital or market share. In addition, due to my lack of experience it seems that my business doesn’t THIS IS A SLANG WORD AND YOU SHOULD NEVER USE THIS TYPE OF TERMINOLOGY IN ANY TYPE OF BUSINESS WORK IT SHOULD READ ‘DO NOT’ stand a chance of being successful. So it is crucial that I find a way to minimize my weaknesses by focusing on my opportunities and strengths. It looks as if by gaining more funding that I can reduce some of my weakness thus turning those weaknesses into strength. E.g WHY A CAPITAL LETTER HERE?. More money to hire staff = more staff + better service NOT NECESSARILY WHAT YOU NEED IS COMPETENT STAFF (THEREFORE TRAINING IS ESSENTIAL) IT IS NO GOOD HIRING MORE STAFF IF THEY ARE INCOMPETENT! – YOU ARE LACKING IN ANY TYPE OF BUSINESS THEORY SO HERE IS AN IDEAL OPPORTUNITY TO GET SOME IN YOU COULD LINK TRAINING WITH THE RELEVANT MOTIVATIONAL THEORISTS. Solely on this I can already begin to see that, making a success of my business is going to be hard. It is due to the initial fault of low capital, which means that in order to make my business successful I need to find a way to raise funding. Furthermore, I realise that by having so many opportunities and no experience I can easily make the wrong choice, which could lead to huge opportunity costs. Moreover, most of the opportunities identified to me, are also identified to my competitors, and because they have more capital, and even greater customer loyalty, being able to take advantage of these opportunities will prove difficult. Lastly the weakness of not having any experience means that making decisions will be hard, and being able to react to competition actions would be difficult or even futile. As a result of my SWOT analysis I come to the conclusion that continuing with the business idea would be unpractical, but with a lot of hard work and luck, the firm may be successful, however not enough to compete with competition such as Pret A Manger or Burger King but surviving to some extent. Carrying out this analysis has updated me, both in terms of pointing out what needs to be done, and in putting problems into position. It has helped me to focus on my strengths, minimizing weaknesses, and taking the greatest possible advantage of opportunities available. 1.8 PEST-G Analysis

This examines the external environment and the global factors that may affect a business. It can provide a quick and visual representation of the external pressures facing a business, and their possible constraints on strategy. It is usually divided into five external influences EXPLAIN WHAT AN EXTERNAL INFLUENCE IS on a business- political, economic, socio-cultural, technological and green. The analysis examines the impact of each of these factors and how they interplay with each other in the business. The results can then be used to take advantage of opportunities and to make emergency plans for threats.


It might include a consideration of legislation, such as consumer laws, regulation, such as control of certain companies, political pressures and the government view of certain activities. Factors that could affect are Government legislation such as taxes on products and interest rates. This will affect the business when determining the selling price of the products. In order to make a profit after taxation, the price will have to be increased; however the price must also be appealing to the customer and rival that of your competitor. Healthy and safety legislations will have to be taken into account especially since my business deals with food. Improving the health and safety rules according to the regulations set by the franchise would do this.


This might involve the analysis of a variety of economic factors and their effects on business. They might include: consumer activity such as spending patterns, economic variables such as inflation, and government policy such as exchange rates. Fixed and variable costs of the business and the effect of changes in product and labour markets. Other economic factors include income growth, debt & saving levels (which impact available money) and consumer & business confidence. These areas are global, but it is also important to look at factors affecting my own industry. Economic issues are the focus of future potential of profit making. This can involve the level of demand and the price in which the product will be sold for. This needs to be compared with other organisations prices in order to lure consumers. Despite the fact that this is a franchise and costs are already set up, if however the cost of floor rises, then for my firm or other food retailers the price of floor is a crucial economic measure as without it we cannot make our product and sell them at a cheap price. Interest rates can affect consumer-spending patterns. The current interest rate is has increased to 2%. At this level it encourages consumers to save rather than spend their money. This will affect my production levels. Reduced amount of stock will need to be ordered until the interest rate decreases or people are willing to spend more. In addition to this, interest on my debts will increase, and having an increase in debts will inevitable mean that it will be harder for me to pay back my loans. The current employment rates have increased in the past few years due to economic factors. Not only does this suggest that I have a wider selection for recruitment, being able to choose the most multitasked workforce. I also have the negative effect that money consumers are without money and are unable to spend. This can be a decrease in sales of the whole market, and competition will become fierce in attempt to get loyalty from remaining consumers. In addition exchange rates can affect my business if deciding to import goods form abroad, or basing the factory in overseas. This can easily increase cost and promote a move back to the United Kingdom. Laws on competitive pricing, patterned ideas and quality standards can all affect the way in which my business is run. These laws can limit the company’s expansion and take longer than expected.


Social factors influence people's choices and include the beliefs, values and attitudes of society. So understanding changes in this area can be vital. Such changes can impact purchasing behaviour. If the majority of society become less healthily aware about what they eat and I only sell healthy, nutritious food, my business will not make much profit over those who cater for both healthy and non-healthy. Social factors are concerned with health and environmental issues. Packages that can be recycle to help improve the environment, will increase customer satisfaction and loyalty. In addition improving the health and safety within the companies working areas will motivate consumers and encourage people to want to work for the business. Other social factors I must examine are consumer attitudes to my product & industry, environmental issues (e.g. organic food versus food made in a lab), attitudes to health, wealth and age (the elderly don’t want to be treated different from others). 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. E.g. Muslims eating pork. Also the fact that Muslims eat Halal would affect my business because meat that is sold at Subway is prepared normally and not using the traditional Halal method. Thus, I will lose sells on these major ethical and cultural groups. However, another factor to consider is that location is dependent on the amount of customers I lose, if there are many Muslims in the area then sells will decline, if not many I will benefit on other ethical groups buying my products. Therefore location can still play a part with profit, especially to my target audience. More consumers are becoming middle class, which means that a lot of the products wanted by the audience are luxury products. This can increase my product range allowing me to meet more consumers’ wants. However this can also increase my costs, and if it is not successful, put my business into debt. The business must notice any changes in spending habits, or characteristics of consumers.


Technological advances can both affect the products and/or the production methods. Advances in technology can have a major impact on business success and my business may suffer because there is not enough capital to keep up with other competitors. This will be more evident as the firm already produces its own brand foods. Furthermore mobile tills and electric pay points within the store are new general store aesthetics. Although expensive in the short-term, in the long run, it will increase customer satisfaction and customer loyalty. Increased security methods may include real-time CCTV cameras and hidden cameras around the store to reduce pilferage; this can be mainly located by the cashier tills, as it is highly likely consumers could cause nuisance around these areas. Production methods may introduce, faster production, meaning products are out in the market much quicker and a cheaper price. In addition quality is not sacrificed. Production methods will make producing quicker and possible with a higher quality level. Giving way to the innovation of products. Although with this new advancement I will need staff that can use it e.g. - EPOS till ware and also the capital to by and or train people to use it. Although a new production technique may be so expensive that the business may not be able to remain profitable. Despite being a franchise, costs will be increased as new production techniques have already been sought for a quicker, quality service to the consumer. Thus increasing the profits and reputation it already has worldwide. Global recognition of this company has already improved its status, if improved technologies such as EPOS systems are used when I set up my firm, it will increase motivation amongst staff and thus customer satisfaction.

Green issues involve the interest of the organisations and its interaction with the environment. We need to monitor how we treat the environment with production methods especially, in order to comply with the current laws.


These external factors that affect my business can have a positive effect, however, I believe in the short-term will have a negative effect. For example, in light of technological improvements, my business will need to have money, to take advantage of them. Unwilling bank societies maybe likely to refuse more loans, and therefore, consumers will always be one step ahead of me, producing more quality products much quicker. This will in turn reduce my customer base, and rapidly reduce my sales. Increase in interest rates, will encourage consumer saving, and having an overall decrease in spending will mean that business will need to run on a low income revenue, this is negative for my business as I am relying on impulse buying and for a necessity food to buy when at lunch during a break at work 9for those fast-food lovers) and if consumers don’t have any spare money a majority of my sales will fall into liquidation. 1.9 Target Audience

The SUBWAY chain's target market is adults between the ages of 18 and 49 who eat quick meals and are looking for good-tasting options. Also, the SUBWAY chain wants to increase its "consideration set" among frequent fast-food consumers who lead an active lifestyle and are seeking a balance of nutrition, taste, and value. The target audience is an important factor when setting up my business, as I will be relying on this to make my business a success. My business is a sandwich store that sells food, food is one of the five basic needs and this means that everyone needs food in order to survive. Although this is the case it doesn’t mean everyone will eat the food that I will provide. For example young children will not come to my shop to eat large subs so therefore I will need to attract them by selling them a specially tailored kids meal containing simple food with everything inside. In this way I am maximizing my target range. Here is a plan about how I hope to attract other age groups: Young Children: I will be selling them the KidsPak consisting of simple food with a small sub sandwich with different choices of fillings called Deli-Style Sandwiches and a drink. Teens: I hope to encourage teens to my shop by selling a delicious variety of sub sandwich fillings of their choice, promoting certain menus such as 7 under 6 with less than 6 grams of fat. Also selling sweet desserts such as cookies. Adult: I plan on encouraging adults who are fast-food consumers, who lead an active lifestyle and are seeking a balance of nutrition, taste, and value. For example a great choice of salads for those who are watching their calories. Healthy, nutritious meals for those who are health conscious will be available rather then going to stores where fast-food is full of fat such as McDonalds. If they want to eat something during their break at work, a quick meal is available at Subway. 1.10 Business Structure

I choose to do a privately held franchise as all Subway® outlets are franchised and there are no company-owned units. I feel my business will face less risk if I open a franchise. I can benefit from a ‘Subway’ experience and enjoy it. I feel my enthusiasm will reflect upon my customers. Another reason why I have chosen to open a franchise into Subway is that in the US it has been voted franchiser of the year by Entrepreneur magazine in all categories, in the past 11 years out of 15 years. Despite that it is the fastest growing franchise in the world (see appendix) with an estimated 25,000 stores worldwide in 2005, bearing in mind that in year 2000 there was only 14,662 stores. Now Subway has beaten the number McDonalds outlets in the US, which is astonishing and the main headlines. With people like Jared who has made Subway even more successful by eating a diet only based on Subway, he has gained his desired weight and distributed what his diet consisted to the public, making Subway even more profitable. From this enormous approval, hundreds of children have decided to improve their quality of life by adopting healthy habits. I have chosen to become a sole trader, because I think it is the best option in my position. I feel I haven’t SLANG TERMINOLOGY enough capital and experience to become a private limited company, and this option is not really open to me if I were go into a franchise. I like to run the business to my satisfaction, and this reflects my decision to open as a sole trader. I feel I can personalize WHY USE THE AMERICAN SPELLING? the business rather than have control on how I sell my products and what products I sell. *Ownership -what you could choose -what you choose -why (justify)=adv =disadv =compare =evaluation

Marketing Mix: 1.11 Product 1.12 Place 1.13 Promotion 1.14 Product for my business 1.15 Place for my business 1.16 Promotion for my business Market Research: 1.17 Primary Research Questionnaire as primary research is a lot cheaper, as I am only starting up a business and will not have a lot of capital THIS IS INCORRECT TO COMPLETE PRIMARY RESEARCH YOU WILL NEED MORE MONEY THAN IF YOU COMPLETE SECONDARY RESEARCH – YOU MUST LOOK INTO THE TIME FACTOR AND SKILL LEVEL REQUIRED TO GAIN AND ANALYSES PRIMARY DATA. Hard to justify bank loan for primary research and can be a waste of money. I will not send any questionnaires out to people as may not receive them back. I will actually approach people in certain areas and ask them questions myself. Means I will get a straight answer rather than bias and have full concentration of interviewee. IF YOU SELECT THE CORRECT QUESTIONS AND SAMPLE SIZE THEN YOU CAN ELIMINATE MOST OF THE BIAS

Analysis of Questionnaire:

Question 1- What gender are you?

It is essential to know the gender of the person to recognize which one visits the restaurant the most. It will allow me to establish the target market or audience. I can find out trends such as whether more males or females enjoy eating sandwiches. From this I can concentrate more on that particular target market determined.

Question 2- In what age range are you?

Age would be essential to see whether children would purchase a kids meal that is available at Subway. If I know this, I can effectively cater my advertising to them. From this it will give me a clearer picture of the answer instead of a biased or narrow one. Asking this question will allow me to find out what the target market is. From the established franchise Subway, it mentions how the target market is adults between the ages of 18 and 39- specifically students and families with young children.

Question 3- Which borough do you live in?

I need to know which borough the potential customer is living to find out if the Subway franchise would best be located in a borough where people know what a Subway Restaurant is. This will increase sales to those potential customers who are loyal to this well-known brand. This will enable me to find out how far they live from chosen location and if their answer will have valid information. There is no point locating my Subway in an area where most cannot reach or locating it where customers have never heard of a Subway brand.

Question 4- Have you ever heard of a Subway Sandwich Restaurant?

Obviously, in this question I will be able to find out if the customer actually knows what a Subway is and whether they really need to carry out the other questions relevant to the franchise. If they have ever heard of this franchise then they can refer to question 12 and to answer questions only on a basis of sandwiches and not to the franchise itself.

Question 5- Have you ever visited one?

This will ask whether they have visited a subway, as I need to know whether they are actually familiar with the franchises prices, meals available and food. This will give me an answer that is genuine and not made of assumptions and predictions. If the customer has visited a Subway then this question can be linked to answers requiring their knowledge of a Subway for example their favourite fillings that follows on from this question.

Question 6- How often do you eat in sandwich bars?

I would need to know how often the customer eats in sandwich bars to meet demand. This will also help me decide how many times I can change special offers available in store depending on how much they visit the store. This along with the question about your age will help me to find out what type of person is able to travel to sandwich bars or my franchise on a daily basis. These people will be my main focus, who I will be promoting to, as these are the people who will be going to my shop a lot.

Question 7- What opening hours should a new sandwich bar have?

I would like to see which hours are preferable for the potential customer so they can visit it at their chosen time.

Question 8 - How much would you spend on a meal in a sandwich bar?

This will allow me to allocate a price for a typical average meal in Subway. I would also be able to see if consumers are willing to purchase high-priced goods. Or if they choose the option where they want to pay a low price. I will judge my prices based on this.

Question 9 - Which fillings do you prefer the most in your sub sandwich?

Allow me to determine what is the most popular filling to the customer’s choice and for me to determine which filling will be most in demand. Therefore I can stock up on the most popular fillings ready for the huge demand. I can make sure there is enough supply, during the first few months. From my answers I can then use the fillings as a focal point when advertising to consumer. It will also help me find out which filling I will need to buy the most of.

Question 10 – Would you like it to be a takeaway or eat in Restaurant?

I would like to see whether accommodation for sitting in store needs to be provided or not depending on the results from the survey. From then suitable costs will be established on refurbishment of accommodation sitting.

Question 11 - Where do you find out special deals about Subway?

If the potential customer has many responses to this question, I will then be able to promote deals in the first few months to attract customers to my franchise. Those special deals will be promoted in different ways in the advertising sector e.g.- leaflet drop-ins and newspaper. This question is to help me find out the best way of advertising. By finding out which of the existing methods used by Subway is the most effective. By doing this I will be able to use this method when advertising my business.

Question 12- When buying a sandwich what places do you prefer to visit?

This will help me identify my local competitors. Those are stores that actually sell sandwich products e.g.- Gregg’s. I need to know the main reason why customers go to Subway to see whether they have actually heard of a Subway and have given a genuine reason not based on assumptions. By identifying the sandwich stores they visit, I can begin a list of my local competitors.

Question 13- Why do you go to Subway, or any other sandwich store?

I asked this question to give me a prediction of why people choose Subway over other competitors. Also whether the majority of my sales are based on impulse buying, something that businesses cannot rely on heavily to cover costs, or treats or groceries. Rather it will give me an angle to push my sale at e.g. if for impulse buying I will advertise snacks instead of heavy food.

Question 14- Do you enjoy sandwiches as a healthy alternative from other junk foods?

This will allow me to reckon whether they really find sandwiches a healthy alternative to junk foods and if they prefer eating this nutritious meal from burgers or pizzas. I would be able to see if sandwiches are a popular good to buy.

Question 15- Are you vegetarian, or don’t eat certain meats?

My market is low fat in nature. If a lot of my customers are vegetarian, I can introduce no meat sandwiches. This goes the same for Halal meats. If I experience a low number of people eating meats, than instead of buying Halal meats, which are expensive, I can introduce more vegetarian meals to cater for there needs.

16. Are you conscience about the amount of calories or amount of fat you eat?

Although all my products are low in fat, this answer can help me to gain awareness. My pronouncing that my products are all low in fat, people who have answered this question yes, will seek out my product, because of its low in fat nature. You need to explain: • if your questions are open or closed • the dis/advantages of using open/closed • the data obtained by using open (this is qualitative), closed (which is quantative) • the most appropriate to use in certain circumstances eg if you are asking someone questions whilst they are waiting in a queue then closed questions would be the best etc THIS IS WHAT I PUT BEFORE AND YOU HAVE NOT DONE IT – WHY?

1.18 Secondary Research 1.19 Sampling 1.20 Questionnaire graph 1.21 Results 1.22 Location 1.23 Target audience 1.24 Materials 1.25 Transportation 1.26 Communication 1.27 Labour 1.28 Image of location 1.29 Qualitative decisions Finance: 1.30 Cost of the site 1.31 Breakeven Graph 1.32 Cash Flow Forecast 1.33 Profit and Loss 1.34 Discussion of Finance 1.35 Bibliography 2 Evaluation 3 Appendices A-J


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