Tesco's Ways of Cutting Cost

Topics: Cost, Costs, Cash flow Pages: 2 (769 words) Published: March 31, 2011
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 the cleaners who tend to be idle at times. Few cleaners will increase efficiency and reduce the labour costs. The reduction of specific fixed and variable expenses can improve the profit picture of Tesco for example in the electric gadgets side there any more than three televisions on sale of the same type switched on, it will be best to switch of the other two televisions since there are of the same type to cut cost on electricity since electricity is charged based on consumption. Tesco can reduce costs without cutting specific expenses. for example electricity costs, by switching off some of the lights in the shop, this can increase the average income per sale, per customer, per cost centre. Tesco has plenty ways to cut costs without drastically affecting the success of the business. This includes producing Tesco branded products for example Tesco cooking oil, mineral water, Tesco value toilet rolls. Making its own products has proven to be cheaper than buying from other producers. Tesco reduces operating costs by offering special discount for goods and products which are about to expire, the special discounts are there to promote sales and to get read of the products that are about to expire at the same time getting something...
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