Tesco's Ways of Cutting Cost

783 WordsApr 14, 20114 Pages
B. Based on your observations from the visit to Tesco, identify how Tesco controls its operating costs Making a profit is usually the primary aim of running any business, and although this is normally achieved by increasing sales, it can also be enhanced through the careful control of costs. A business that keeps costs under control will be able to release more resources for growth and be better placed to survive in a downturn or recession. A structured and ongoing approach to cost control is an essential part of any well-managed business. Finding ways to reduce operating costs is typically a priority for Tesco. On our visit to Tesco we observed that Tesco can control its operating costs by reducing the number of staff especially…show more content…
Some its shelves are made of wood and light material which is a good thing to reduce costs. The shelves are also have wheels for flexibility, they can be moved to create space especially those shelves which are empty. Its air conditioners were also made of cheap material to reduce cost. Tesco practises bulk selling for instance cooling oil was being sold in bulk. This creates space and also reduces unnecessary stocking of goods thereby increasing stock holding costs. Bulk selling helps to reduce packaging costs. They also have their own bakery which means they do not depend on delivery from suppliers or ordering from other suppliers. This is a good thing in that they only bake according to demand at that period, hence it reduces wastage. This reduces wastage of resources because resources are being fully utilised. The use of cameras as their security system is a good thing because it reduces the number of workers to be recruited as security hence saving cost. Tesco is using energy efficient bulbs to achieve low operating costs, incorporating energy-efficient lighting and cleaner ways to operate into the business and it has no empty refrigerators, this is to reduces space and the electricity costs. Tesco will probably see a reduction in total energy consumption and be supporting a greener planet. Tesco maintains proper stocking levels of the items that they actually sell, this way they can reduce overhead in the form of excess inventory,
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