Leading Strategic Systems And Culture Change In Tesco Plc Essay.

Discuss about the Leading Strategic Systems and Culture Change, strategic change management can be considered to be a design for diverse marketers to comprehend their current situation in the market in order to divert their actions for future advantages.

Study of the UK retail industry

Strategic management of change can be referred to as the art as well as the science of formulating, executing and arriving at cross functional decisions that can help organizations to attain its objectives. As such, strategic change management can be considered to be a design for diverse marketers to comprehend their current situation in the market in order to divert their actions for future advantages. The current study intends to analyse the significant trends influencing the forces and nature of organizational change and nature of relationship between an organization’s environment and forces for change with special orientation to the operations of Tesco Plc, a UK based retail giant. Moving further, the study also critically analyses the key issues arising from management and leadership of change in the organization with management and leadership responses in relation to change forces and emerging organizational dynamics.

Study of the UK retail industry

The retail Segment in the UK can be regarded as the most competitive as well as rapidly growing one. As per records, of all VAT (Value Added Tax) registered businesses operating 11% are the retailers and the total number is presently recorded to be 180875. Essentially, retail sector of UK generate around 8% of the GDP that accounts for nearly one-fifth of the total UK economy. In addition to this, the retail industry in the UK also employs nearly 11% of the entire workforce of UK. However, the total combine sales of this segment in the UK are recorded to be approximately £ 265 billion during the year 2007, greater than the combined economies of both Denmark as well as Portugal (Pantano 2014).

Background of Tesco

Tesco Plc is referred to as the largest retail chain in the UK that has outlets in every post code of the nation with around 2115 outlets employing nearly 280000 staff (Tesco plc 2017). Globally, it is referred to as the third largest chain in the entire world, employing nearly 440000 people in approximately 4000 retail outlets across 14 different nations. Essentially, Tesco has 6 different formats of operation that is to say; Express Stores (961 outlets), Extra stores (177 outlets), Superstore (448 outlets), Homeplus (10 outlets) as well as OneShop Stores (512 outlets) (Tesco plc 2017). In addition, Tesco also operates through its online wing that is the (Tesco.com) in order to facilitate the overall delivery of products, primarily grocery to the doorstep of the consumers. However, Tesco Direct is the online shopping centre for different non-food items (Tesco plc 2017).

Background of Tesco

Evaluation of relationship between an organization’s environment and forces for change

Significant trends influencing the forces and nature of organizational change

As rightly indicated by Shirey (2013), change is often considered to be necessary due to external as well as internal development factors. Therefore, it is important to understand the micro as well as macro environmental factors that influence the organization to change. Pestle analysis of the company Tesco considers all the significant external facets influencing on the corporation. The Pestle analysis focus on the six different factors as mentioned below:

Political: Political instability can influence the business by means of democratic government and political legislation (By and Burnes 2013).

Economic:  Inflation rate, rate of interest, level of employment and income also affects the business operations of Tesco

Social: demographics of population, pattern of lifestyle and social interaction, religious beliefs as well as norms

Technological: Level of competent manpower, internet penetration and advanced transportation and logistics systems (Packard 2017)

Legal: Laws of employment, protection laws of consumers, laws of investment along with health and safety regulations

Environmental: Alteration in climate is influencing the overall supply as well as transportation (Packard 2017)

Significant Trends influencing the external change drivers of Tesco Plc

Analysis of the operations of Tesco reveals that the company has successfully placed itself as a rapidly growing firm in the global market.

The significant trends that affect the external change drivers include the following:

• Implication of a worldwide market place
• Wider recognition of diverse environmental issues
• Awareness regarding health
• Demographic change (Dinwoodie et al.2015)

As a transnational corporation, Tesco is affected by the increasing concern regarding global warming. Consequentially, management of Tesco have laid great emphasis on handling climatic change by eliminating carbon business and ensuring 0% carbon operations by the year 2050, lessening 30% of the emissions of diverse products Tesco markets by the year 2020. In addition to this, health awareness can also be considered to be a very important issue that is influencing the operations of Tesco. Therefore, health awareness is a very significant concern Tesco is introducing for their own consumers by delivering improved information on level of nutrition in order tom improve their health (Pantano 2014). Management of the company is also making different health options accessible to consumers by offering price as well as promotions, more number of health ranges and reformulating diverse products. Furthermore, Tesco is also constructively developing stratagem for demographic alteration among different races. Moreover, Tesco also has a regional buying stratagem in each region that is dedicated to demand of regional markets on demand of several customers that again can boost up the overall economy (Northouse 2015). Tesco has also segregated all its suppliers for their own products with approximately 4000 regional and national suppliers. Even though Tesco appears to be one of the largest supermarket chain operating in the UK, it has several rivals in the market that are Morrisons, ASDA and many others. Again, management of Tesco has also instituted own bank that is Tesco Bank.

Evaluation of relationship between an organization’s environment and forces for change

Significant Trends influencing the internal change drivers of Tesco Plc

The triggers for bringing about change in a rational corporation such as Tesco might be the continuous search for efficiency. Otherwise, they might stem due to ratio monitoring as a consequence of external bench marking practices, tensions that prevail especially at different senior levels within a specific corporation and conflicts between employee and management (Jones and George 2015).

Due to technological factors, Tesco brought about drastic alterations in the segment of customer service by establishing self service that is “Till” in a bid to lessen queue in the line. Tesco Plc. Tesco also operates different types of stores in 14 different markets with considerable food as well as non-food offerings. In addition to this, the company also have rapidly developing services arm that includes dot com, services of telecom and finance services (Cummings and Worley 2014). In order to avoid conflict in the internal management, management of Tesco instituted an “internal support as well as recognition programme” for their workforce.  

The systems approach emphasizes the significance of the inter relations between different important internal sub systems that include the following:

Technology- In order to be competitive in the market, Tesco instituted Customer Relationship Programme referred to as CRM and Clubcard during the mid of 1990s. Again, an advanced technology of self service that is “Till” has also helped the operations of Tesco.

-People- Tesco also has more than 472000 workers that serve for millions of consumers.

-Management- Management of Tesco also need to be properly structured and strategic administration is essentially Pestle analysis, Five Forces Analysis of Porter’s, SWOT analysis and diverse critical success facets along with the value chain analysis (Kuipers et al. 2014).

Organizational Evaluation

Porter’s Five Forces Analysis takes into consideration different external factors influencing the company.

Threats of New Threats:

The retailers market in the UK is mainly managed by very few numbers of competitors that include ASDA, Sainbury’s and Morrison among many others that approximately have around 70% of the entire market share. The more lucrative the industry the higher is the number of new entrants. High levels of profits in the industry attract more number of new entrants (Hornstein 2015).

Power of Suppliers:

Retail industries have got their suppliers for their requisite raw materials. However, the power of the suppliers in this industry lies with the retail players. However, the retailers have the power to dictate low prices at which they can acquire the raw materials (Rock 2014). Since Tesco is a market leader in the industry, they can negotiate the prices better from their suppliers as compared to their competitors.

Significant Trends influencing the external change drivers of Tesco Plc

Power of Buyers:

The power of purchasers in this retail industry essentially lies with the purchasers as there is low switching cost and customers are more sensitive to price than brand.

Threat of Substitutes:

In case of the retail segment, there are different substitutes of Tesco that includes not only the big retail giants but also the corner shops, diverse market malls and many others (Cameron and Green 2015).

Rivalry:

Huge product differentiation does not exist between products of Tesco and its competitors. The higher level of intensity of rivalry directed Tesco to introduce self check out system in outlets in order to enhance services to customers (Cameron and Green 2015).

SWOT Analysis

Strength Tesco has 31.6% share of the market and provides different insurance services, club card to gain points, banking services and many others (Hayes 2014).	Weakness Tesco has enormous dependence on the UK market for the success. However, this is unsafe as a weakness in the UK market can hugely affect the operations
Opportunity Business expansion of Tesco in global markets such as European nations, America as well as Asian continents opened up new avenues for the corporation. Ventures into markets of different markets namely phone as well as internet shopping also generates opportunity for Tesco.	Threat Entering various new markets with new brand calls for the need of heavy investment as well as marketing, additional distribution and operation expends and many others. Recession in the market also adversely affects the company (Hayes 2014).

Factors that caused alterations in Tesco

Creation of Value for different consumers- In order to retain all the existing customers and attract the new customers, Tesco adopted the strategy of creation of more value for the customers (Quinn and Quinn 2016). This led to the implementation of different new stratagem that includes self check out, among many others new strategies.

Growing base of customers- The overall success of Tesco can be essentially attributed to different factors among which one of the most important is the growing base of customers. For example, the self checkout was executed for easing out the congestion on particularly check outs (Goodwin 2016).

Technological Advancements- Owing to growing age of technology, it is imperative for different corporations to improve the overall technology. Management of Tesco executed the self check out in order to enhance the overall operational efficiency, online platform (Tesco.com) and many others (Hechanova and Cementina-Olpoc 2013).

Competition- Competition among different corporations can be considered to be one of the most important triggers of change in majority of industries. Prevalence if huge number of retail players in the retail market of UK has necessitated the changes for attainment of competitive advantage in the market.

Cost of Labour- one of the primary objectives of the company is to maximize the overall profit of the firm. This is why Tesco implemented various strategies for development of operational capacity, enhanced online business platform to avoid costs of maintaining brick and mortar stores, self check out system to avoid employment of more number of cashiers and many others (Cummings et al. 2016).

Main Areas of Change

Based on the analysis of the significant trends, the three main areas of change include:

• Constant technological developments for attainment of constant growth trajectory (for example, development of online space, self service till and many others)
• Enhancement of higher customer value by concentrating on diversified as well as international market in a way that can prove to be advantageous to customers and help in attainment of corporate responsibility.

Key issues arising from management and leadership of change

Significant Trends influencing the internal change drivers of Tesco Plc

Managers often resist the overall idea of participation in order to reach a specific destination during the time of early involvement. There are two significant advantages that include participation to occur as early as possible during the process of change. As rightly indicated by Lozano et al. (2015), it is vital to distinguish between diverse symptoms of resistance to alteration and various causes behind the same.

Employee resists transformation:

Employees of Tesco also resist alteration as they need to learn different new things in order to cope up with the change. In several cases, there exists no disagreement with different benefits of the new procedures, however, fear of unknown regarding the future and capability to adapt creates resistance (Hornstein 2015).

Shock of the new:

In general, individuals are very doubtful of anything which they perceive to upset recognized routines, mechanism of operating or else stipulations of employment (Hornstein 2015).

Thus, resistance of the workforce in the corporation Tesco can be considered to be a complex issue that the management of the organization encounters. However, the entire procedure of transformation is very ubiquitous and this resistance to change can be recognized as an important contributor towards failure of different efforts to initiate transformation within the corporation.

Lack of consensus:

Lack of consensus can also be considered to be an important issue that arise between management and leadership of the firm Tesco. Failure to bring everyone involved on board with different corporate alterations leads to barriers in the procedure. However, the decision to execute the changes needs to come from the top level of the corporation. Again, all the management staffs also need to be essentially on board and need to deal with different alterations. As such, showing the firm’s managers the way the changes can affect the corporation and the requisite steps for implementation of change can help corporation to get them on board (Cameron and Green 2015).

Low Level of Tolerance to Alteration

Low level of tolerance for alteration can be defined as the fear that a particular individual might develop due to the need of developing of new competencies as well as behaviours that are necessary in a new operational setting. As rightly indicated by Hayes (2014), in case if a particular employee possesses low level of tolerance towards change, the enhanced ambiguity that stems as a consequence of having to perform their own work in a different way can cause resistance to the novel way of carrying out the operations.

Force Field Model

According to Force Field Model proposed by Lewin, equilibrium needs to be disturbed in a much planned manner in a bid to bring about alterations. In essence, this is carried out by strengthening the overall forces that lead to change or else by weakening all the forces that works against the alteration. According to Lewin, this process consists of three different steps that include unfreezing, change and refreezing (Hayes 2014). Management and leadership to change include issues in carrying out the process that can essentially awaken an entire system to the requirement for change. Again, management as well as leadership also faces trouble in developing various new responses founded on new information. Again, management also encounters problems in the process of stabilizing the transformation by instituting the novel responses into the personalities of essentially those concerned (Hornstein 2015).

Continuous Model of Change Process

A specific model of handling change can be referred to as a continuous change process model. Again, this model mentions that top management are very much influential in the process of articulation of mission as well as vision of the corporation along with agenda for carrying out major changes (Hornstein 2015). The changes that are vital in the process of realization of different corporate objectives are to discuss with all the employees the options available and what results are likely to be.

Emergent Approach

As correctly mentioned by Hornstein (2015), management of corporation Tesco also plays a significant role in the process of management of change. As per (), it can be agreed that there remains scope for initiation as well as implementation of change from essentially the bottom up rather than from the top down.

Kotter’s Model

In the Kotter’s model of change, there are necessarily eight different phases that are utilized to successfully execute transformation. The stages essentially include:

Institution of a specific sense of urgency

Establishment of a partnership

Creation of an effective vision as well as strategy for transformation (Hayes 2014).

Communication of both vision as well as strategy by means of combination of specific words, symbols as well as deeds

Removal of barriers

Production of visible signs of advancement in the form of short term victories

Sticking to procedures of change and refusing to give up at the time when circumstances get tough (Hayes 2014).

Nurturing as well as shaping a new culture that can support the enhancements as well as innovations (Hayes 2014).

In this case, it can be stated that the leadership and management of change involves handling the

Participation as well as involvement:

Participation as well as involvement of different important stakeholders can be considered to be one of the significant processes of resolving the resistance. Essentially, this plays an important role in the process of individual involvement and discovers appropriate solution (Hayes 2014). Thus, management and leading change can bring about the effectiveness of resolving resistance.

Education and processes of communication: process of education and communication procedure can be implemented at the time when major stakeholders of the firm Tesco are not aware of the advantages of utilizing changes processes.

Negotiation as well as compromise: Negotiation as well as comprises might probably stem at the time when there is division especially within the group working within Tesco. However, it can also be considered to be one of the most possible manners of resolving the issues associated to transformation (Cummings et al. 2016).

Implicit or else explicit forces: Resolving the overall resistance can be effectively implemented through implicit as well as explicit forces at the time when resistance essentially need to be carried out in order to bring about the transformation.

Facilitating influence: Supplying or facilitating influence of the entire authority can essentially bring about the alteration at the time when there is requirement to sense the apt target. However, this becomes necessary to make the important stakeholder to comprehend the value of transformation (Cummings et al. 2016).

Critical appraisal of management and leadership responses

An appropriate plan for execution of change can be considered to be important in a bid to change. Management as well as leadership responses essentially rely on the identified problems and process of identification of the change for resolving the problems which might occur in Tesco. Analysis of operations of the firm Tesco reveals the fact that it is very important to monitor the overall advancement after the alterations have taken place. People at the top level management can monitor the process of transformation in different ways that include

Goal based analysis- management of Tesco in a bid to establish transformation can set a specific goal founded on analysis of the firm. This can help in analysing the responses of leadership and management responses to corporate changes (Cameron and Green 2015).

Outcome based analysis- administration of the firm analyse the outcome of different progresses that is very crucial for implementation of change.

Daily reporting- Tesco also has a team for monitoring that can submit regular reports on regular basis and recognize whether the transformations are taking place properly.

meetings- management of Tesco convene meetings that probably might occur on regular basis for knowing the ways to changes that take place and the results of different meetings. This can help in developing the anticipated changes (Hornstein 2015).

Progress review- A declaration is provided to individuals that are bringing about the alterations and are assessed to track the advancements

Establishment of milestone- Tesco also establishes milestone for their coalition teams that function for the anticipated alterations. This is necessarily a useful procedure of monitoring the advancement. However, the milestone can inspire the overall coalition team to execute the alterations (Hornstein 2015).

Conclusion 

The current study analyses helps in understanding transformations resulting from advancement of technology, diversification and internationalisation of business for enhancement of customer value are the source of organizational dynamics.  The present segment helps in understanding the significant trends in the retail market of UK and helps in analysing both internal as well as external triggers that drive transformations. In addition to this, the study also presents different models to understand the management and leadership responses to different changes taking place in the organization, thereafter critically appraises their responses.

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