Certificate In Business
I have been allocated a responsibility by Kal Panchal to follow a line of investigation with regard to how business is conducted online. This exploration will also include an investigation of the Price Brown Partnership website and will comprise of a well structured and detailed report that will pen ultimately involve me writing a letter to the directors of the Price Brown Partnership commenting on how successful I feel that their online strategy has been.
The report firstly requires me to describe with examples, how an online presence may support the accomplishment of a given business’s respective aims and objectives that they wish to fulfil. Once having explained that, I will illustrate the impact on a customer point of view with in relation to the introduction of the online presences of the companies and outline the main business opportunities that arise from that online existence. With consideration to the report, I have selected to investigate two companies which are situated within the retail region, groceries vicinity to be precise.
In addition, the two companies which I chosen to explore are J Sainsbury’s and Tesco Plc’s. I will then contrast these two supermarket chains against that of Price Brown in terms of design,
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Establishing objectives may be done in a number of ways for example, looking at corporate aims in terms of looking at the company as a whole and once this has been recognised, the mission can be segregated into divisional objectives. Achieving Profit – Profit is effectively the disparity between the total costs that are associated with regard to manufacturing a product and the selling price per unit. In other words profit is what every organisation strives to reach in order to move forward and grow within the market they operate in.
Thus, unless an organisation attains profit, they will be have the inability to modernise themselves, reward shareholders, install new and innovative technologies nor justify some sort of investment. According to the guru Peter Drucker, Profit is: “Profit is not a cause. It is the result – the result of the performance of the business in marketing, innovation and productivity. It is the first duty of a business to survive… Business enterprise must produce the premium to cover the risks that are inevitably involved in its operation and there is only one source for this premium, profits” 1
In light of the information referred to above, the introduction of online presence will help both Tesco and Sainsbury’s achieve profit because with an e-commerce base, both companies do not have the need to pay out more on overhead costs. I. e. they will not have to pay planning and manufacturing fees for new premises seeing as it is virtual reality therefore they are eliminating the need to pay for constructing new outlets. A global business on the Internet does not require building costs such as paying for land or labour, just a web site and possibly one central warehouse.
Generally, the cost of the site is about 8 percent of that business’ revenues which makes them fairly cheap to cover maintenance and continued management expenses. In addition, as business transactions are primarily handled electronically, there is no need for a large sales staff. The virtual storefront also minimises theft, damage, or breakage of the inventory. Another way in which an online presence assists Sainsbury’s and Tesco become more profitable is because their e-commerce base is limitless.
For example, Sainsbury’s and Tesco’s online presence is only limited by their imagination and their determination to succeed. A web presence will allow both these firms to become more diversified in the sense that they are not limited to space – on the internet they can sell an enlarged range of goods and services that may not be possible for them to do so in stores, they can increase their product portfolio. Furthermore, Sainsbury’s ‘Picking Centres’ where orders are verified by staff have a broader reach.
This will help them gain more profit because more prospective consumers can be targeted in a wider field – online presences for both Tesco and Sainsbury’s covers the width of the entire country whereas stores only cover a certain catchment area which is restricted by the prime factor of space. “The ordering centres have the capacity to handle a much greater number of internet shopping orders than stores. Park Royal can handle around 15,000 orders every week, against the store average of around 650, meaning it can handle any sharp increases in trade”. 2
“Sainsbury’s to You’ has proven to boost annual profit margins for Sainsbury’s because profits have climbed from a mere ‘i?? 462 million pounds in 2000 when it was first launched to 2003 profit standings of i?? 572 million. ” 3 “Tesco. com’ on the other hand has accelerated their profit margins at much faster pace as their profits have increased from ‘i?? 995 million pounds in 2000 when Tesco. com was initially launched to i?? 1401 million pounds in 200″‘. 4 Increase Market Share – Market Share is the term given to the percentage of a certain market a firm has control over/owns over rival competitive firms.
It is imperative that in such a fierce and competitive market such as the groceries/retail market that Sainsbury’s tries to reduce the percentage of the market that Tesco own who are the current market leaders. For example, TNS Market research group said that Sainsbury’s market share depreciated to 16. 1% in the 12 weeks running from July to 14th September 2003 against 17. 2% in the same period last year. ‘Tesco extended its market lead to 23% as the hot summer of 2003 boosted sales of barbecue foods and beer. Asda, which recently overtook Sainsbury’s, retained the number two slot, boosting its share to 15. 4%’. 5