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Tesco's History and Success in the UK and International Market

Discuss about the Management and Organizational Analysis Of TESCO.

TESCO is the biggest and the leading supermarkets which sells a variety of food line. The food provided is fresh and local.  This is more practical according to TESCO and it is of great value in UK and the city centers. It also provides its customers with nonfood lines such as electronics and stationary etc. It also includes a few of the seasonal things such as garden furniture. With having 360,000 employees worldwide, the major employer sector is covered by TESCO in UK. 86% of the sales is done from UK only(Tesco, 2018). Variety of Tesco stores from the local Tesco express to having large Tesco superstores, this organization in total operates in 12 countries outside of the UK. The countries include China, Japan and Turkey too. The organization was also opened in United States but very late. This was called to be an international expansion of the company to grow the business in the international market. In Thailand, there are floating markets from where people buy goods. The produce is not packaged there. There is a rewards system started by Tesco for the customers too where the customers get 1% of the total purchase. A voucher is made for this reward which can be used by the customers in various ways. The major part of the group sales in UK is done by Tesco with the entire percentage of 70 of the group sales. There are a total of 2,200 stores in UK only(tesco, 2018). During the recession times, Tesco learned that people want more value for their money and the customers will never any compromise in the quality of the product. Tesco then designed strategies like Club card, a loyalty program which helped the organization to understand its customers in a better way.

In the year 1919, Tesco was founded by Jack Cohen. It has made an immense amount of growth and success in the field of grocery selling and merchandising chain. In today’s world, it is the largest retailer in the UK domestic market(Clark & Chan, 2014). It has acquired a market share in which the profit exceeds 2 billion pounds. At first, the organization made itself an expert in food and drink chain and later it diverted its way towards different areas such as financial services, insurance, clothing, electronics and others. The leaders of Tesco define the values of Tesco as the kind of help they can do for their customers and in any way possible. They also always look forward to be loyal to their customers. The company believes in working hard to make its buyers happy as well as act sensibly with its employees too. They also believe in respecting each and every employee of the company. The market strategy to attract the customers all throughout the year is to sell great quality of products at affordable prices and the products should be of huge variety. It aims to produce outstanding value and provide its customers with the good they need or want. To create such values, social and environmental challenges should be taken care of by Tesco(Theguardian, 2018).

Organizational Structure and Culture of Tesco

Tesco’s structure is simplest but it has a high amount of labor force under its belt. This company has found out the efficient ways of task completion or any business activity. It has that advancement that a company should have in terms of technology. This technology minimizes the human error(Michael, 2017). For e.g.: Delivery schedules or in stock ordering etc. Tesco has given the independence to the staff and they get most of the responsibilities too while helping the customers. The Tesco culture is deeply enhanced with great values and beliefs. Culture of Tesco is the behavior which results when the groups have to work together on a set of rules that are implicit and unrecorded. Tesco leaders show friendly approach and supporting behavior every day with the staff members and even to the people outside the organization. Monitoring of the staff and manager’s decision is done constantly by the management(Dudovskiy, 2016).

There are five parts of the configurations in Henry Mintzberg’s model. These configurations are done below in terms of the Tesco Company.

Mintzberg's Model

  • The Operating Core: This includes all the basic work that is done in the operations and the output is directly related to goods and services when the organization sells. In Tesco, the operations are monitored constantly and the operating core is always kept in place in order to maintain the core operations working(Lunenburg, 2012).
  • The Strategic Apex: Strategic Apex includes senior management and leaders who provide the goals and the mission to the company. They give a sense of purpose to the employees to work upon. In Tesco, the  top management regularly works with their employees and get ideas from them so that the employees too feel respected and valued.
  • Middle Level Managers: This phase is like a sandwich which lies in between the strategic apex and operating core. People in this phase take the orders from the higher hierarchy and gives them to the people under them to start working on them. This is a very essential function is Tesco as leaders have to keep deep knowledge as to what exactly is going on with the order they have given. This means that the middle level managers have to be very precise with the lower level people in terms of the orders given(Kumar, 2015).
  • Techno structure: This consists of planners, trainers and analysts who do all the intellectual work. They do function in the advisory capacity as they take orders from the other parts of the configuration(Ramezani et al., 2011).
  • Support Staff: In this phase, people do the supporting kind of work. In Tesco, this is considered to be important as Tesco does not believe in human errors. They make sure that even the small task is done efficiently.
Morgan’s Metaphor Model

Morgan initiated the idea of the metaphors just for understanding the organization’s obstacles and issues if any. There are eight metaphors which are discussed below in terms of the organizational analysis of Tesco.

  • Metaphor of Organization as Machine: It consists of the tailored management principles. This situation occurs when the organization is ruined like machines are ruined. The metaphor that was adopted was Max Weber’s bureaucracy concepts and principles of management by Fayol are which consists of regularity, precision, efficiency and speed. In Tesco, all these are achieved by dividing the tasks into hierarchy and supervision. Efficiency is guaranteed and the wastages are minimalistic. The culture is maintained properly and the performance is done in synchronized manner with timely deadlines(Ortenblad et al., 2016).
  • Metaphor of Organization as Organism: In this metaphor, the organisms try and adapt according to the organization’s environment. The environment is sometimes demanding which calls for the people who can survive by being the best in the organization. It is known to be as survival of the fittest. Morgan found out that, for becoming the fittest of all employees, the organisms need to adapt according to the rules and regulations of the company. Tesco in itself is the disciplined but it still does not put much pressure on its employees. Although, without being harsh and putting pressure, the leaders of Tesco motivate the employees to be open to the challenges and perform better(Lawley, 2001).
  • Metaphor of Organization as Brain: When the organization works as a brain, it needs to become the source of the information and have to understand the theoretical ways of understanding the work culture. The level of intelligence a brain has and the thoughts it preserve in itself that it could enable system to organize and evolve when the challenges arrives in the organization. In Tesco, when any challenge arrives, the CEO of the company too coordinates and controls the department and gets out of it(Cliff & Grant, 2015).
  • Metaphor of Organization as Culture: In any organization, the culture of the company is known to be as the small society which has its own value and beliefs. It can be considered as the construction of process which permits the employees to analyze the situations in different ways. Culture of Tesco is flexible and their belief is to support each other in a way that it helps in increasing the profit of the company as well as helps the staff too. Tesco’s culture can be considered as the culture which will make the employee believe that they are values and respected.
  • Metaphor of Organization as Political System: People face issues with the office politics and conflicts within the staff members every now and then. Political activities include rights and the power, the agendas which are hidden by the top management, back room deals and party line. Politics is certain in corporate life as it exists in every company be it small or big. Hence, this metaphor is not of much influence(Engen, 2008).
  • Metaphor of Organizations as Psychic Prison: Through psychic prison, the organization can be viewed as the system which is knotted with its own thoughts and actions. Obsessions, fear of death, mind traps, narcissism or any other strong emotion takes focus in this situation. This metaphor helps in coping up with all such situations. This metaphor is also of no such importance if Tesco case is considered as the employees are usually supported every now and then anyway(Cornelissen & Kafouros, 2008).
  • Metaphor of Organization as Change and Flux: The changes which on goes in an organization is linked to the metaphor of change and flux. Profound transformation and change is done when this metaphor is applied. Tesco needs to apply this metaphor to make some important changes(Itkin & Nagy, 2014).
  • Metaphor Organization as Instrument of Domination: This metaphor looks into the matter in which employees are exploited and make unethical moves for their personal gain. It also exposes social and ethical dimensions of the organizations(Digha, 2014).

This theory focuses on the human behavior as the interrelation of the multiple systems. For issues that occur individually, in organizations or family, societies or in any other system are involved and they should be considered and understood before assisting any individual. This theory suggests that all the systems are related to each other and every part influence the other parts on the whole.

Major applications of this theory are:

  • Productive process: The leader should have the idea as t o which product is going out for delivery and people are getting good services or not. Tesco leaders are well informed as they communicate constantly with their subordinates.
  • Enabling Process: In this mechanism, Tesco control and measure that social communications they have among within the organization’s parts, with groups, departments and profit centers.
  • Developing process: Growth and development is an important phase as it helps Tesco to operate as open system even prior to the organization’s capability to work as an open system(Chikere & Nwoka, 2015).

There are a few approaches which can be discussed in terms of TESCO.

  • Scientific Management Approach: This approach monitors the manufacture process in any of the organization and the obstacles that come in the cost of production. This approach helps in reducing the cost of the labor and also helps the company achieve the stability it should have in the market economically. Tesco adapted to this approach in order to offer the customers some good quality products at reasonable prices.
  • Classical Management Approach: This approach will always promote the structure of hierarchy in the organization with three categories. The three groups that are made have their own set of responsibilities and duties. Top management includes the board of directors and executives who prepare the long-term goals for the organization. Middle level management consists of the managers and the supervisors whose implementation is required in operations on a daily basis. Final layer includes people who ensure daily basis work and make sure that the important targets are done on time. In Tesco, also these things are done in the above explained way(Ferdous, 2016).
  • Bureaucratic Approach: This approach is not traditional. This was later introduced and followed by the companies which want to be extra disciplinary with their employees. Tesco gives flexibility to the employees and hence, this is not a very applicable approach in that organization(Sarker & Khan, 2013).
  • Human Relations Approach: It is used when the development of human capital needs to be done in any organization. Huge amount of stress is given to the employees in order to make them understand their work in detailed way. Tesco does not follow such kind of approach. This type of approach is followed by companies like Delloitte or Pwc.
  • System Approach: In this, the organization is treated like a system. Hence, it has to provide all types of inputs and controls the external environment of the company. This is important for Tesco as this approach is used in retail chains which operate in the global world.
  • Contingency Approach: Due to this approach, the management becomes effective as it is dependent on the factors such as morale, conditions of the market and expertise. It is relevant for the retail companies like Tesco as the conditions of the market is very vulnerable in terms of the external environmental factors.

Competing value framework is a very important model which is used extensively by the organizations all over the world in order to do the cultural research. First dimension of value relates to the focus on organization in terms of the micro analysis or the internal system and the development of the people to external or macro environment. Second value is related to the structure of the organization which puts the emphasis on the stability from flexibility. Quinn in the year 1983 found out that a set of two values which competes are recognized dilemmas in the organization(Lincoln, 2010). 

There are four models of effectiveness in the competing value framework which are also called four organizational culture types. Cameron and Quinn termed them as four culture types: Clan, Adhocracy, Market and Hierarchy respectively.

  • Clan Culture: This type of culture is completely occupied with shared values and the goals, the ambience of collective help, empowerment and evolvement of employee. The founders say that this culture is just defined as the culture of the organization which is developed by the conditions happened in long history and stable membership. This also can develop in the absence of institutional alternatives and huge interactions with the members. Tesco also believes in empowering of their employees.
  • Adhocracy Culture: This is a kind of temporary institution which can be rejected when the tasks in the organization are ended and refilled when different tasks emerge. This type of culture is found in a few industries like filming, space flight, consulting and IT etc(Botti & Vesci, 2018).
  • Market Culture: Market culture will always focus on the environments in which transactions happen outside of the organization rather than internal organization. The goal of the company is to earn profits with the help of the competition that occurs in market. This was founded by Ouchi with the study of market control system.
  • Hierarchy Culture: In this type, the structure of the organization is very clear. It had certain standardized policies and procedures and control. This can be taken as the image of bureaucracy as defined by Weber in the study of modern organizational management (Yu & Wu , 2009).

Market Strategies of Tesco

The culture of the organization can be studied by Hofstede’s Theory of Cultural Dimensions. Hofstede’s model provides an outline for studying various features of human behavior across different cultures.

Power Distance: This dimension defines the structure of the company and the attitude for power. These can be distinguished between two patterns: firms which have clear structure and distinctions in those who manage the firm and those who are managed by them. And firms in which flat structure is there where people are more or less equal in designation. It describes degree with which people accept any one of those two patterns. People, who have larger degrees, feel easy and comfortable in the hierarchy. People with low power distance wish for equality at work(Hofstede, 2011).

Individualism: This dimension helps the determining whether people use “I” or “We” in while talking. Those who prefer “I” are will be responsible for their own welfare. Those who use “We” will take help from their relatives and burden them.

Uncertainty Avoidance: Degree of risk acceptance is defined by this dimension. If the degree of uncertainty is high then future is also uncertain. If low then it means free ideas are accepted.

Long-Term V/s Short Term Orientation: It is always reflected in the attitude of the thinker who is normative. Short term gives results quickly and long term focuses more on the savings and investment(Rinuastuti et al., 2014).

Tesco uses external recruitment. This results in the competition between the managers about being potential recruits. The competencies needed in Tesco are universal and this is demanded by many other organizations. Hence, in some of the situations, it is unethical to use Hofstede’s model in recruitment in Tesco. Tesco is a good retailer with broad expansion in its food as they offer wide range of products.

When any change is happening, Tesco must involve internal and external stakeholders. Peter Senge’s theory is used for self-checkout machines in Tesco. The theory is explained in five points:

System Thinking: As a complete organization, Tesco needs to think about it being a system. Blaming should not be done to others rather Tesco should see how it operates and what is going wrong. System should be hunted for it. System thinking sort of helps in observing the whole process in the organization. Sometimes, small things are overlooked by managers. System thinking enables the managers to see those problems and resolve it(Coto, 2012).

Models Used in Understanding Tesco

Personal Mastery: This is related to the motivation and to people who are very committed to their work. Self-motivation should exist in them to achieve change they are looking for. Personal mastery occurs when a person has clear goals with having the perception of the reality. Creative vision if the company will have, people will also have clear vision(Zeeman, 2018).

Building Shared Vision: The stakeholders, irrespective of being internal and external should have the shared vision given by Tesco itself for creating a change. Vision can be shared by having a clear understanding about the change that is needed. The combination of the organization and individual’s vision can make huge change.

Team Learning: Tesco must be able to provide the stakeholders the opportunity to learn in teams. Together, people can learn skillful tasks. In this, personal mastery and shared vision are brought together.

Mental Models: Safe and healthy ambience should be provided by Tesco to its employees so that they feel comfortable while working.  Senge said that, the employees should be able to identify the vision clearly. Correct understanding will give the company a good development. Successful companies are those which adapt to new models for fast growth(Cropper, 2018).

In order to research the gap between the theory and practices, the organizations theories should be discussed with their weakness and strengths.

Classical Management Theory: In this theory, the management theorists got deep down to study the best ways for the employees to do their duties nicely(Alireza Nadrifar et al., 2013).

Strength:

  • Roots of the organizations are met.
  • Management remembers work clearly.
  • Behavior can be judged easily by the management.
  • Focus on the division of the labor is done.

Weakness:

  • This has tough and rigid structure
  • Goals are achieved on the expense of human relations.

Humanistic Theory: A shift from economist views in terms of the market activities goes into the direction of the humanistic attitude(Yaya et al., 2016).

Strengths:

  • It has a holistic approach hence; it seems like a whole person.
  • Many theories treat people like they are components for treating disorders but this thoeyr state lies from the whole person.

Weaknesses:

  • Empirical evidence lacks.
  • No comfort in words of the service.
  • No relatives and friends of dead person.

Contingency Theory: It all depends upon approach is summarized in this theory. The manager those who have contingency approach are of flexible approach and they draw diverse theories and monitor many options to solve the problems(Islam & Hu, 2012).

Strengths:

  • Leader Identification: Model founded by Fiedler provides the Organization with methods for identifying certain group of the best people. The leaders who possess task orientation are suited best because they define tasks with control and supervise them nicely. While, leaders with relationship orientation, get their job done by using of the interpersonal skills. They can deal with the problems while they take decisions.
  • Flexibility: Model is flexible enough that it fits to all the leaders and people in group relationships.
  • Perspective: It provides huge number of factors which might change the management for improving efficiency.

Weakness:

  • Leader power: The power of position is basic when it comes to the rewards or punishments in order to give performance whether good or bad. The more power a leader possess, the good the situation is.

All these theories are good enough to be performed in any kind of organization. Theories have a few weaknesses but still theories provide good enough understanding of the organization, its structure and people.

  1. The culture of Tesco is Multi cultural and rich yet it needs to develop a proper set of groups within the employees so that certain set of values could be created and new beliefs can be organized between the employees and the whole company. This will give a good understanding of the culture which is desired by the company and will make the employees sincere in order to bring that culture in Tesco.
  2. Every norm should be told to the Tesco employees as this helps in carrying forward the culture of the organization by the people of the company. The employees will be more committed if they know all the norms. Whatever changes are expected by the company will be done effectively in this case.
  3. Tesco works on two types of structures which is very different from any other organization. Yet there is a need to change the physical structure in order to align it with the culture of the organization(Asiedu, 2016).
  4. The approach towards the employees needs to be changed a little in terms of rewards and recognition. By changing this approach, the behavior of the employees can be changed and at last, culture of the organization will also be changed accordingly if the employees are motivated and happy.
  5. Work systems should regularly be viewed in order to review employee promotions. This reviewing should also bring new changes in the performance of the management and even in recruiting of the employees. Desired culture can also be brought by doing this (Yusufzai, 2018).

Conclusion

This report focuses on the company named Tesco. This is the company which is big enough that it makes the good profit every year by working in sync with its employees. The organizations structure of Tesco is discussed which informs that this company has a flexible working structure for all its employees, though Tesco needs to make a few changes in the culture and those changes are discussed in recommendations section above. This report also put an emphasis on the Hofstede’s culture and Senge’s five principles for Tesco. With the help of the Mintzberg’s model and Morgan’s metaphors, the organizational culture and structure is learned in the more detailed way. Overall, the learning outcome of this report is that Tesco is a good company as its gives its employees the type of flexibility they look for. It does not follow a very strict culture yet the results from the employees are good and profitable. Due to this culture and structure, it has made its mark worldwide.

Management Theories Applied in Tesco

References

Alireza Nadrifar, A. N., Bandani, E. & Shahryari, H., 2013. An Overview of Classical Management Theories: A Review Article. International Journal of Science and Research, 6(14).

Asiedu, J., 2016. Recommendations for Tesco. [Online]
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Chikere, C. C. & Nwoka, J., 2015. The Systems Theory of Management in Modern Day Organizations. International Journal of Scientific and Research Publications, 5(9).

Clark, T. & Chan, S. P., 2014. A history of Tesco: The rise of Britain's biggest supermarket. [Online]
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Coto, R., 2012. The Five Disciplines Concerning the Dynamics of Change. International Journal of Arts & Sciences, 5(6), pp. 259-275.

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Hofstede, G., 2011. Dimensionalizing Cultures: The Hofstede Model in Context. Online Readings in Psychology and Culture, 2(1).

Islam, J. & Hu, H., 2012. A review of literature on contingency theory in managerial accounting. African Journal of Business Management, 6(15), pp. 5159-5164.

Itkin, H. & Nagy, M., 2014. Theoritical and Practical Use of Metaphors in Organizational Development and beyond. Pannon Management Review, 3(4).

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Weaknesses and Strengths of the Theories

Michael, L. K. J., 2017. Examining the Literature on Organisational Structure and Success. College Mirror, 43(1).

Ortenblad, A., Putnam, L. L. & Trehan, K., 2016. Beyond Morgan’s eight metaphors: Adding to and developing organization theory. Human Relations, 69(4), pp. 875-889.

Ramezani, Z. N., Khabiri, M., Alvan, S. i. M. & Tondnevis, F., 2011. Use of Mintzberg's Model of Managerial Roles to Evaluate Sports Federations Managers of Iran. Middle-East Journal of Scientific Research, 10(5), pp. 559-564.

Rinuastuti, H., Hadiwidjojo, D., Rohman, F. & Khusniyah, N., 2014. Measuring Hofstede?s Five Cultural Dimensions at Individual Level and Its Application to Researchers in Tourists? Behaviors. International Business Research, 7(12).

Sarker, S. I. & Khan, M. R. A., 2013. Classical and neoclassical approaches of management: An overview. Journal of Business and Management, 14(6), pp. 1-5.

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Yaya, J. A., Akintayo, O. A. & Uzohue, C. E., 2016. The Application of Humanistic Management Theories in the Effective Administration of Public University Libraries in Nigeria. International Journal of Advanced Library and Information Science , 4(2).

Alireza Nadrifar, A.N., Bandani, & Shahryari, , 2013. An Overview of Classical Management Theories: A Review Article. International Journal of Science and Research, 6(14).

Asiedu, J., 2016. Recommendations for Tesco. [Online] Available at: https://prezi.com/yygkuy8xj8-j/recommendations-for-tesco/ [Accessed 19 April 2018].

Botti, A. & Vesci, M., 2018. Competing Value Framework and Public Administration: Managerial Insights, Theoretical Reflections and Practical Implications from Italy. International Business Research, 11(2).

Chikere, C.C. & Nwoka, J., 2015. The Systems Theory of Management in Modern Day Organizations. International Journal of Scientific and Research Publications, 5(9).

Clark, T. & Chan, S.P., 2014. A history of Tesco: The rise of Britain's biggest supermarket. [Online] Available at: https://www.telegraph.co.uk/finance/markets/2788089/A-history-of-Tesco-The-rise-of-Britains-biggest-supermarket.html [Accessed 19 April 2018].

Cliff, O. & Grant, D., 2015. Re-Imagining Images of Organization: A Conversation With Gareth Morgan. Journal of Management Inquiry, 1(6).

Cornelissen, J.P. & Kafouros, M., 2008. Metaphors and Theory Building in Organization Theory: What Determinesthe Impact of a Metaphor on Theory? British Journal of Management, 19, pp.365-79.

Coto, R., 2012. The Five Disciplines Concerning the Dynamics of Change. International Journal of Arts & Sciences, 5(6), pp.259-75.

Cropper, B., 2018. Five Learning Disciplines. [Online] Available at: https://www.thechangeforum.com/Learning_Disciplines.htm [Accessed 19 April 2018].

Digha, M.N., 2014. Morgan’s Images of Organizations Analysis. International Journal opf Innovative Research & Development, 3(13).

Dudovskiy, J., 2016. Tesco Organizational Structure. [Online] Available at: https://research-methodology.net/tesco-organizational-structure/ [Accessed 19 April 2018].

Engen, R.B.V., 2008. Metaphor: A Multifaceted Literary Device used by Morgan and Weick to Describe Organizations. Emerging Leadership Journeys, 1(1), pp.39-51.

Ferdous, J., 2016. ORGANIZATION THEORIES: FROM CLASSICAL PERSPECTIVE. International Journal of Business, Economics and Law, 9(2).

Hofstede, G., 2011. Dimensionalizing Cultures: The Hofstede Model in Context. Online Readings in Psychology and Culture, 2(1).

Islam, & Hu, H., 2012. A review of literature on contingency theory in managerial accounting. African Journal of Business Management, 6(15), pp.5159-64.

Itkin, H. & Nagy, M., 2014. Theoritical and Practical Use of Metaphors in Organizational Development and beyond. Pannon Management Review, 3(4).

Kumar, P., 2015. An Analytical study on Mintzberg’s Framework:Managerial Roles. International Journal of Research in Management & Business Studies, 2(3).

Lawley, J., 2001. Metaphors of Organisation - Part 1. Effective Consulting , 1(4).

Lincoln, S., 2010. From the Individual to the World: How the Competing Values Framework Can Help Organizations Improve Global Strategic Performance. Emerging Leadership Journals, 13(1), pp.3-9.

Lunenburg, F.C., 2012. Organizational Structure: Mintzberg’s Framework. INTERNATIONAL JOURNAL OF SCHOLARLY, ACADEMIC, INTELLECTUAL DIVERSITY, 14(1).

Michael, L.K.J., 2017. Examining the Literature on Organisational Structure and Success. College Mirror, 43(1).

Ortenblad, A., Putnam, L.L. & Trehan, K., 2016. Beyond Morgan’s eight metaphors: Adding to and developing organization theory. Human Relations, 69(4), pp.875-89.

Ramezani, Z.N., Khabiri, M., Alvan, S.i.M. & Tondnevis, F., 2011. Use of Mintzberg's Model of Managerial Roles to Evaluate Sports Federations Managers of Iran. Middle-East Journal of Scientific Research, 10(5), pp.559-64.

Rinuastuti, , Hadiwidjojo, , Rohman, & Khusniyah, , 2014. Measuring Hofstede?s Five Cultural Dimensions at Individual Level and Its Application to Researchers in Tourists? Behaviors. International Business Research, 7(12).

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