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Strategic management and information systems at Tesco

Outsourcing ICT is quite commonly employed by organisations as an approach to strategic management. Measure the advantages and disadvantages that outsourcing can bring in developing effective uses of information systems in an organisation such as Tesco.

What do you understand by knowledge management and knowledge management systems? Analyze how useful such a system is to Tesco and why it is difficult to persuade employees to use such systems.

As markets evolve the firms that are in the most notable seats will be the ones that excel in organizing recruiting and material's, also forecasting the possible changes in markets. To manage this many companies use the help of others to grow in this straggle of competition. This is called Outsourcing. If a company will not want to utilize its internal resources to generate or operate information systems, it can hire an external organization that specializes in providing these services to do the task. The procedure of turning over an organization's computer center operations, telecommunications networks, and/or applications development to external vendors is called outsourcing (Laudon & Laudon, 2005).

This definition covers the greatest part of Outsourcing, but what happens when we refer to ICT Outsourcing?

First of most, what is ICT?

Information Technology (IT) is most likely one of the very most used terms in business nowadays. Information must not be confused with knowledge, however this happens occasionally.

The term information is employed extensively in no formal speech. This, and the several meanings used, helps it be hard to define. From my point of view after studying on this subject, information covers data to which meaning is assigned, according to context and assumed conventions. Knowledge is derived from information. (Miller, 1999)

Any equipment or interconnected system or subsystem of equipment, that can be used in the programmed and digital acquisition, storage, manipulation, management, movement, control, display, switching, interchange, transmission, or reception of data or information. The term information technology includes computers, ancillary equipment, software, firmware and similar procedures, services (including support services), and related resources.

Taking in mind the above we conclude that ICT Outsourcing can be explained as follows.

Information Technology outsourcing is the idea of an organization contracting-out IT activities to a third party vendor, who in return provides and manages the services for a certain time frame in trade for a monetary fee. The deal range from the transfer of IT assets and people involved with IT to the external entity. (Roland Booijen 2006)

The main trend in international businesses nowadays is to outsource their production process as well as a few of their services outside of their base country. The term 'outsourcing' basically refers to the procedure of subcontracting goods and services from an outside supplier, usually from another country. Most companies choose to outsource due to its many advantages over the traditional process of production. This informative article will show you some advantages that outsourcing can do for your business.

Most companies choose to outsource because it lowers the price of production and other expenses such since it services and customer services. China and Vietnam, popular off shoring countries do not have strict labor laws allowing relatively cheaper wages. This guarantees that the business will get the most from the capital invested in the business enterprise.

A consequence of the benefit mentioned, outsourcing will certainly reduce the overhead cost of maintaining the business enterprise. Outsourcing will help you to reduce the amount of your employees that may lead to savings in utilities, a save in taxes and less insurance among others. This will boost the funding of your company that can be committed to any other parts of the business. Another good thing about outsourcing is gives you better control of your business. Outsourcing can significantly reduce the number of your employees, thus making all of those other staff easily manageable. By that, you can increase the responsibility of your employees inside your company and make sure they are feel like a part of the business enterprise, something they have got put their effort to bloom. Outsourcing gives you the opportunity to concentrate on other business aspects like the marketing process. By taking other parts of the business enterprise like production and other process away, you have significantly more period to plan others steps of your small business like how to sell your products in a more efficient way. This can provide you with the weapons to become recognizable marketing utility company.

Another good thing about outsourcing is that it allows you to choose professional degree of processing or utilization based on the needs of your company. Since you choose expertise in their field, the grade of your service will also improve. Outsourcing means to expose your production to external procedures that you may well not know or considered looking at. This can provide innovation features for your business. This provides useful information about how to boost your products by using the earned technological info and professional production means. They are some of the benefits that outsourcing can brink to your business. In companies like Tesco using outsourcing will benefit in lots of ways as this huge business colossus always needs innovation, using outsourcing provides fresh ideas for them and also can keep them focused on other areas of the business like promotion or marketing.

As you study the right path through using outsourcing you will have to retain in mind that we now have advantages to outsourcing and disadvantages of outsourcing. A number of the disadvantages of outsourcing are the following:

One disadvantage is lack of management Control. Whether you sign a contract to have another company perform the function of a whole department or single task, you are turning the management and control of that function to another company. True, you will have a contract, but the managerial control will participate in another company. Your outsourcing company will not be driven by the same standards and mission that drives your business. They'll be driven to make a profit from the assistance they are providing for you and other businesses like yours.

Another disadvantage is hidden costs. You may sign a contract with the outsourcing company that will cover the details of the service that they can be providing. Anything not covered in the contract will be the basis that you can pay additional charges. Additionally, you will experience legal fees to retain a legal professional to review the contacts you will sign. Remember, this is the outsourcing company's business. They have done this before and they're those that write the contract. Therefore, you'll be at a disadvantage when negotiations start. Another drawback could be the threat of Security and confidentiality. The life-blood of any business is the info that keeps it running. If you have payroll, medical records or any other confidential information that'll be transmitted to the outsourcing company, there's a risk that the confidentiality may be compromised. In the event the outsourced function involves sharing proprietary company data or knowledge, this must be taken into account. Measure the outsourcing company carefully to be sure your data is protected and the contract has a penalty clause if an incident occurs.

One more disadvantage may be quality problems. The outsourcing company will be motivated by profit. Because the contract will fix the purchase price, the only way to allow them to increase profit is to decrease expenses. So long as they meet the conditions of the contract, you will pay. Furthermore, you will eventually lose the ability to rapidly respond to changes in the business environment. The contract will be very specific and you will pay extra for changes. Another disadvantage is to be linked with the financial well-being of another company. Since you will be turning over area of the businesses of your business to another company, you will now be tied to the financial well-being of this company. It wouldn't be the very first time an outsourcing company could go bankrupt and leave you holding-the-bag. One more disadvantage is bad publicity and Ill-will. The term "outsourcing" brings to mind various things to differing people. If you reside in a community that has an outsourcing company and they employ your friends and neighbors, outsourcing is good. If your friends and neighbors lost their jobs because these were shipped across the state, in the united states or across the world, outsourcing will bring bad publicity. If you outsource part of your operations, morale may suffer in the remaining work force. Companies like Tesco can use ITC outsourcing in their intercompany communications, by using a system of comlinks or anything like that. Another possible use is better organizing stock and storage of items by using computer based systems, databases for storage and self items will be a great effective way of ICT use etc.

2.

Knowledge management and Knowledge management systems ( KMS) are a class of informational systems that refer to the use of managing informational knowledge within an organization. That's, they may be IT-based systems developed to support and enhance the organizational processes of knowledge creation, storage/retrieval, transfer, and application. Although not absolutely all KM initiatives involve an implementation than it, and admonitions against an focus on IT at the trouble of the social and cultural areas of KM aren't uncommon (Davenport and Prusak 1998; Malhotra 1999; O. Dell and Grayson 1998), many KM initiatives rely on IT as an important enabler. ALTHOUGH IT does not apply to every one of the issues of knowledge management, it can support KM in many ways. An extremely common application of knowledge management systems is the creation of knowledge networks (Ruggles 1998). For instance, when Chrysler reorganized from functional to platform based organizational units, they quickly Knowledge management and Knowledge management systems (KMS) are a class of informational systems that refer to the application of managing informational knowledge within an organization. That is, these are IT-based systems developed to aid and enhance the organizational processes of knowledge creation, storage/retrieval, transfer, and application. Although not absolutely all KM initiatives involve an implementation of computer, and admonitions against an focus on IT at the expense of the social and cultural facets of KM are not uncommon (Davenport and Prusak 1998; Malhotra 1999; O. Dell and Grayson 1998), many KM initiatives rely on IT as an important enabler. While IT does not apply to all of the issues of knowledge management, it can support KM in lots of ways. An extremely common application of knowledge management systems is the creation of knowledge networks (Ruggles 1998). For instance, when Chrysler reorganized from functional to platform based organizational units, they quickly realized that unless the suspension specialists could communicate easily with the other person across platform types, expertise would deteriorate. Chrysler formed Tech Cul, bringing people together nearly and face-to-face to switch and build their collective knowledge in each one of the specialty areas. In this case, the data management effort was less focused on mapping expertise or benchmarking than it was on bringing the experts together so that important knowledge was shared and amplified. Providing online forums for communication and discussion may form knowledge networks.

The notion of a KM system is to enable employees to get ready access to the organization's documented base of facts, resources of information, and solutions. For instance a typical claim justifying the creation of the KM system might run something similar to this: an engineer could know the metallurgical composition of your alloy that reduces sound in gear systems. Sharing these details organization wide can lead to more effective engine design and it might also lead to ideas for new or improved equipment.

A very good example in Tesco's case is when they decided to implement a web ordering system that connected the customers with the warehouses and the suppliers. A number of the great things about KMS systems are: Increased order processing capacity, Reduced hardware cost, Increased flexibility in maintaining supplier relationships, Better integration of programs, increased reliability in daily operations.

The key aspect of KM and KMS is to convince existing permanent employees to use such systems to be able to produce/sell more and drive profits upwards. Such a challenged is described in the Tesco Case Study so far as the living service scheme is described in the context of making employees comfortable with the new changes in the way they operates so far. This was achieved by implementing their managers along the way, in order to encourage employees they have some ownership over their workplace and was achieved with 3 day workshops.

However one of the major drawbacks was that the managers had to face was the skepticism of the employees who viewed the complete scheme as suspicious. Trilogy, the group of companies that was outsourced for this purpose ensured that the complete process want a completely internal Tesco-like procedure to ensure that that they had the employee's full trust on the living service program.

that unless the suspension specialists could communicate easily with each other across platform types, expertise would deteriorate. Chrysler formed Tech Cul, bringing people together virtually and face-to-face to exchange and build their collective knowledge in each one of the specialty areas. In cases like this, the data management effort was less focused on mapping expertise or benchmarking than it was on bringing professionals together so that important knowledge was shared and amplified. Providing online forums for communication and discussion may form knowledge networks.

The idea of a KM system is to permit employees to get ready usage of the organization's documented base of facts, sources of information, and solutions. For instance a typical claim justifying the creation of the KM system might run something similar to this: an engineer could know the metallurgical composition of any alloy that reduces sound in gear systems. Sharing these details organization wide can result in more effective engine design and it could also lead to ideas for new or improved equipment.

A very good example in Tesco's case is when they made a decision to implement an internet ordering system that linked the customers with the warehouses and the suppliers. A number of the benefits associated with KMS systems are: Increased order processing capacity, reduced hardware cost, Increased versatility in maintaining supplier relationships, Better integration of programs, increased reliability in daily operations.

The key aspect of KM and KMS is to convince existing long term employees to utilize such systems in order to produce/sell more and drive profits upwards. Such a challenged is described in the Tesco RESEARCH STUDY as far as the living service scheme is described in the context of earning employees more comfortable with the new changes in the manner they operates up to now. This was achieved by implementing their managers along the way, to be able to encourage employees that they have some ownership over their workplace and was achieved with 3 day workshops.

However one of the major drawbacks was that the managers had to face was the skepticism of the employees who viewed the whole scheme as suspicious. Trilogy, the band of companies that was outsourced for this function made sure that the complete process would like a totally internal Tesco-like procedure to ensure that they had the employee's full trust on the living service program.

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