Tesco

In the world of large distribution and tough price competition topped with quality, freshness and availability, Tesco today is among the best chains in the world. A supermarket success depends on one major factor: The customers. The customers are satisfied by prices and quality. From another angle, a supermarket's survival is also crucial, hence his margins.

Pressure on price is high; also on quality and availability. Therefore the most a highly developed information system should be in place.

Tesco competes with giants like Wall Mart, therefore he has to squeeze his prices. It’s no secret to anyone that Supermarkets drain their margins on some products to reach 5% and even less, depending on the importance of these goods in the eyes of the consumers. Some products such as blades, razors, shampoos and soaps become a benchmark in terms of pricing. Consumers compare prices from the same brand between a supermarket and another and judge how prices fluctuate from one to another and accordingly adopt the cheapest retailer. Hence a cost management from the supermarket should be highly efficient. They also have to remain profitable, so they turn to the suppliers.

The suppliers need to generate as much as possible profit to Tesco. Hence he calculates his profits by linear meter (metre lineaire in French). The supermarket needs to maximize the use of each meter of his display area. He therefore calculates margin from the absolute dollar value generated by a given product versus the space it occupies. An additional charge is also added as a shelf rent. Through this procedure, Tesco, tends to remain competitive in pricing, uses the space in the most efficient way possible and satisfies the customers.

That full procedure is almost 100% automated and calculates margins from sales and the other from rent and finally the total average, helping Tesco in his negotiation with his suppliers.

A way of maximizing profits and customer satisfaction is stock management. Availablity of products on the shelves is crucial. The supermarket should also optimize the total use of space without losing storage or warehousing space. He therefore needs to monitor very efficiently his stocks by keeping ordering very smooth, smart and fast. His sophisticated system generates on a semi daily basis a series of purchases to be sent out to suppliers to replenish the inventory and to assure no out of stocks are there.

One more advantage Tesco has is client servicing. Hence, they created the membership cards or loyalty cards on which customers collect points according to purchases and allow the supermarket a high level of information to segment and study the consumers habits and behavior. By returning visits of the customers, the supermarket collects data to classify them through age, gender, phone number, geographic area, income, amount spent, type of purchasing, high interest products etc… and hits them on their sensitive points by special promotions, gifts and dedicated offers that make each customer feel he’s a very special one and the “only one” they care about. Again, the most difficult job in the world, customer relationship and management, is operated with the help of another highly developed information system.

Tesco, to maintain his margins of sales, rent of space, volume of sales and rush of customers must by all means satisfy a very difficult task: please the customers. He therefore uses a sophisticated information system in each area of operation to maximize its use and input and to keep the customer as “The king”. Without a smart and highly efficient information system, handling almost in full the operations, Tesco would have been obliged to work in a different way and would definitely not be as efficient.

Casa del Libro

1. What would be your decision? Would you stick to the previously developed UNIX platform, or switch to the new Microsoft one? Please feel free to make any rational assumptions you might need in order to reach a decision.
2. Which are the most relevant criteria for you to make the decision? Just name each criterion, and explain it very briefly.


The new Millennium has been recognized as the internet boom. Hence the wave on which Planeta is surfing to acquire an online shopping facility is the right wave. From a competitive angle, the consumers were adopting more the trend of shopping in “one place” such as El Corte Ingles. For a fact, “El Corte Ingles” had almost all consumer needs in one store and had larger sales in the specific category of books. Redesigning the market, the sales trends and the location in the book category was vital for Planeta. It had more the face of a need than a normal expansion.

Out of experience, fears behind wars, terrorist attacks and natural disasters do not hang around for a long period, but they rather fade away after a short while, regardless if the conflicting situation is back to normal or continued. Consumers tend to forget and go back to their previous life activities.

Concerning the book category, fear from terrorism, wars and attacks could be an opportunity for book sellers, given that people will stay more at home, hence their need to read and have an indoor “safe” activity will increase. Therefore easing the sales, through online services would be the optimal solution. And once they get used to it, it would be hard to bring them back to the old trend.

An online sale is the best solutions. But how? Would it be through acquiring a rigid expensive system to secure large sales as of day one with a high maintenance cost or with a more flexible one, whose development and maintenance will be cheaper and the system itself is cheaper?

Taking a look at what have been already spent, it would be tough to acquire a new one. An expensive yet faulty and inadaptable system was already purchased including some mistakes in design. Therefore bold decisions should be made. CEO’s are not here to take easy decisions or to present a rosy figure. Therefore opting for the acquisition of a new system, cheaper in absolute terms, but most importantly cheaper to maintain and less rigid to develop, will be the right decision.

The market will not shift overnight to online sales. Educating the consumer about it will take time and creating a substantial market will take a bit more especially that Casadellibro.com is hitting at the beginning. However, continuous adaptation and development of a system will make it easier for the company to move along with the consumer and embrace his behavior and “movements” in order to ease the process rather than to make it rigid. A flexible and a low cost system are required. Demand and sales will increase at a later stage; ability to follow the consumer is a must and not the other way around.

Therefore, on the long term, it is definitely cheaper, taking into consideration criteria such as development, adaptation, low cost and easiness of the service.
Letting down the first option and moving to Microsoft; although will incur a new cost; is the most appropriate solution given the context. It is good money for bad money. Investments are not necessarily always done right, and can’t always be winning. The purchase of the first model is an example. It should be taken as an investment in learning rather than an investment in information system.

ERP's adaptation

Technology, starting from the basic first computer that came out, arriving to the latest one, passing by all kinds of software and programs that evolved alongside, have definitely changed the face of business and how companies are dealing today with their clients, suppliers, and definitely internally. Regardless of the type of business and industry, technology plays a major role. It’s the wave that all businesses should be surfing on. But what’s the limit? Should companies adapt to ERP’s or the other way around?

Enterprise resource planning (ERP) is an integrated computer-based system used to manage internal and external resource including tangible assets, financial resources, materials, and human resources. It is a software architecture whose purpose is to facilitate the flow of information between all business functions inside the boundaries of the organization and manage the connections to outside stakeholders. Built on a centralized database and normally utilizing a common computing platform, ERP systems consolidate all business operations into a uniform and enterprise wide system environment. (http://en.wikipedia.org/wiki/Enterprise_resource_planning)

From its definition, we can notice that ERP is a very helpful system to organize, develop and manage a given business. It’s a tool made to assist the company in several departments, allowing them to run their tasks smoother. It comprises, finance, accounting, inventory management, distribution, manufacturing etc… In simple terms: it makes a given business run easier and smoother.
However, like any other thing on earth; be it a technological “thing” or not; it is not perfect. It has necessarily some drawbacks. ERP's are often seen as too rigid and too difficult to adapt, hence, an ERP can make a business run slower, especially if the decision to buy and install such a system was not thoroughly evaluated. It also eliminates all kinds of secrecy and allows almost all employees to access to classified information. Such practices, could lead to major felonies and harm the company.

The list of advantages and disadvantages is too long and could take years of debates, and most of times fact based. However, most businesses used to be run tablets, since the Roman Empire and way before as well. Uncountable numbers of systems and codes have been created since then to be used as tools to ease it. Technology and communication are the most recent ones. However, they are tools to help and ease decision taking and make it more efficient. And so are the ERP’s. They are highly performing systems, but, they definitely should adapt to companies and not the other way around.

Facebook

When Facebook was first launch in 2004, it was the trendy and “cool” place or platform. Almost everyone had an account and started socializing with people they know. As the trend evolved, “Facebookers” started adding people they may know or even only had with them a onetime chat. From a networking point of view, Facebook boosted the connections between societies, reconnected old friends to each others, and even pushed people to get in touch with each other by only knowing their names. It was a complete and total success.

The more Facebook evolved, the more its users were facing privacy issues. Their profiles, including their pictures and their whereabouts were public and exposed not only to their closed circle of friends, but also to web surfers, intruders and anyone who types their named, may it be on purpose or by simple mistake. The platform became like a tabloid exposing people’s life. Given its newness, it was widely accepted. However, the users matured and started complaining. Facebook was being used by employers to have some “extra” information about job applicants and it reached an extent where experts in job search such as Daniel Porot, qualified the website as “a professional suicide tool”.

Facebook’s retaliation was a bit late, yet useful, by allowing users to control their information and its flow, by allowing specific people to check about specific data.

At the moment, applications and games launched are adding value to Facebookers, and increasing their level of “addiction” as well as their time spent on the web itself from one side, but also from another side, they are securing a mega number of viewers for advertisers, hence enabling them to control and generate more profits.
The social network could take advantage of its chat facility to make live video and voice. And would even increase more the volume of its users, and have a greater flow. It also would invite countries and governments like China who are blocking Facebook to open up towards it, or platforms such as Orkut in India to diminish in regards of Facebook.

Facebook is also entering the business sector, not only to increase the number of users in volume, but to also add a new purpose to enter, surf and use the service. Mixing social and professional use in one website could be highly beneficial yet highly risky, if not well managed. Simply by exposing pictures of a certain CEO drunk in a bachelor party would be a scoop by itself. However, allowing even more flexibility to manage one’s pictures and appearances would ease that use. It’s more privacy than freedom of speech.

Facebook will be able to increase the number of users by 50% by 2012, if not more. However, it has to maintain it and create potential of better use. The active users with at least one visit a day and constant updates will see themselves hostages of a routine activity without real or concrete return, when it comes to absolute term of socializing. Socializing can have a more useful payback: Networking. Facebook has it. It should activate it more and make out of it a new version of LinkedIn, that’s cooler, professional and gives results. Especially that it’s more widespread. It should try to link professionals not only according to friends they have in common, but also to jobs preferences, and professional backgrounds. This way, Facebook would have drawn its path to be the “all in one site”: Socialize, update, find your soul mate and find the job of your dreams through relevant and “cool” connections.

Google Interactive session

One criterion to differentiate an MBA program from another is the visitors that drop by for a specific presentation, and how they run it. Enrique Dans, the information system Guru, invited Google’s General manager for Spain Portugal and Turkey Mr. Javier Rodriguez Zapatero for a Q&A session at IE University. The objective was clear: get the expert’s point of view.

As a start, the ice was quickly broken with an informal introduction with small laughs and deliverable promised. Afterward, Mr.Zapatero proceeded by taking and noting our questions to build his presentation. This approach filled more our curiosity and quenched more our thirst to know about Google and its mystery, than a one way presentation would have done or a monologue.

When Mr. Zapatero was asked to summarize and describe Google’s mission in one sentence, his reply was easy, but also clear and made lots of sense: “to organize information and make it accessible to anyone anywhere”. Hence, Google the major search engine, is not aiming to maximize profit with less quality but rather looking at the value proposition their service is offering and how could it be enhanced to serve better and more. Having a clear vision about the consumers preference, and which path to walk on, Google facilitates its task in developing programs such Chrome, Google maps, Gtalk, Google translator etc... These products are “tools” and converge into materializing their mission that’s facilitating information by organizing it; had the easiness come from communication or from simple searches. The need for information is there. Google made it more accessible. The access itself has been eased through specialized tools.

Tackling Google and its business model from this angle, crystallizes the success story the company is witnessing and shows a bright future. At the end Google went simple in complex world. Information: let’s ease it.

Back to the presentation, its main drawback was time. The famous rolling stones song: Time is on my side was not at the menu that day. Time was NOT on our side. The highly interactive and exciting meeting had to see its end after one hour and a half, and was over quicker than what we wished for. Passion was also at the rendezvous, and made the hour and a half look even lighter.

Google it

“Google it”, “search for it on Google”, “log on Google and see what it says” etc… Google is like any other giant company that was able to establish itself in its industry and more specifically in its sector: search engine. Besides the fact that it has written its name in one of the most sexy ways by replacing its O’s with Pamela Anderson’s assets, Google was able to impose itself as well in terms of relevancy and importance.

Three facts about Google: Google is a highly useful search tool, a globally understood word that needs no translation just like Coca Cola and a revolutionary workplace.

First of all, as a tool, Google imposed itself as the ultimate search engine that provides us (web surfers) with the largest data possible by only typing a word or more. With a mouse click, we are linked to tens of pages that are discussing or treating our “word” in a way or another. It is so powerful, that probably its competitors (if any) have to go through them to complete effectively their search. Its great performance is not only limited to the searching sector in which it is firmly holding a 90% market share, but it also has a wide variety of application/tools that are as well highly useful: As a matter of example, Google maps, can provide its users with very accurate data by only entering a location, and gives exact direction by car, by walk, or by public transportation. I personally could not wish for a better system.

From a marketing point of view, Google, just like Kleenex, Kotex created a halo around its name and became a clear definition in the mind of any computer user. The informatics giant did not only excel in fulfilling its main purpose/task but also positioned itself as the main source of reliable information and reachable by anyone. At the moment, Google is used as a verb to define an action: “search for it on Google”: it’s now as simple as “Google it”. As my boss used to say: “I am very smart! Me and my dear friend Google and I can answer any question”.

From human resource, hence the most important asset, Google created “a very comfortable workplace” where people are encouraged to work on what they think it’s important in an entrepreneurial way. As most of Human resource employees acknowledge, but hardly apply, “people are the most important resource”. Google managed to apply it. The workplace is colorful not only in the absolute term of colors, but also of cultures, thoughts, ideas, experiences, backgrounds… And by securing a healthy work environment, Googlers are motivated to keep their company at the top where it’s and belongs. Their positive input is an asset by itself.

In summary, Google is a highly performing company and successful in terms of search engine or any other tool it has created. Its performance allowed it a strong positioning and is being referenced to as the most reliable search source. Google is a marketing success that all brands with no exception wish to have their strength, where its name is a definition for a specific action. It has also applied hence revolutionized the usual workplace to motivates its employee for a high level performance. In total:a simple success.

Depicting the world without Microsoft and without its added value to the world of software and technology, would be at least a very hard task or somehow impossible. Regardless of the angle from which we tackle the matter, we absolutely can’t ignore its contribution. It pushed the related industry to elevate its quality to be able to cope up with it from one side, and from another side the normal consumers were witnessing the biggest change and improvements of the century.

In June 2008 in the article “A future without Microsoft” http://www.freesoftwaremagazine.com/columns/future_without_microsoft the IT giant was supposed to run out of business in 2010 and fall as hard as a meteorite and hit the ground with no Mercy. Well it did not. Today Microsoft is a company with $58.43 billion of revenue, and conducting harsh battles against its competitors on several fronts. It finished 2009 with roughly a 92% market share with Windows, as well as an 80% market share among enterprise customers and a 63% market share in web browsing through Internet Explorer.

First of all, Microsoft is generating the major part of its profits from “office” which is the company’s winning horse, despite the failure with Vista. However, its ability to change and rapidly develop a new product allowed recovering its downturn.
Moreover, Microsoft is competing in the Music and phone sector. It launched in 2006 the Zune, Microsoft’s Media player. It holds phones and portable music. The Zune 80 was launched to compete with Apple’s Ipod Nano mainly.

They also launched in May 2010, the KIN, that’s a part of the larger Microsoft Phone family. Yet, its performance is still to be questioned, given its drop in market share in the Smartphone category while that same category was growing by 27% in 2009.
The software giant also entered the gaming sector and competed with its X-box, however discontinued it in 2006.

Today, Microsoft is attacking the search engine. It partnered with Yahoo and the 90% market share holder, Google, can’t feel at ease with such a scoop.

These practices show us several aspects: First of all Microsoft still have a lot of room to grow and to introduce new products besides its mainstream, and also it still has a major ability to finance it. Despite all its failures, its success stories are still accounting for more and are rendering more growth and profits, and covering the negative impact overall.

At the moment, its share price is flat and doesn’t encourage investors to pump in their money. Yet its stability and long term sustainability would do for risk adverse investors. But, we can definitely count on a Microsoft’s innovations and it will definitely boost the whole package to rise up again.

A good recommendation would be to move out of the comfort zone and lead the market by distancing itself from the followers. A good start would be opening to the public the software programming, and building more consistency when competing in existing fields.