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Management Principles: Tesco Plc

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Questions:

Task 1

Briefly explain: manager, management and organisation. Assess the significance of managers in achieving organisational success for a company of your own choice.

Task 2

Analyse how size and strategy of a company can affect its organisational structure? Support your answer with relevant examples.

Task 3

Scenario:

Tesco has said it will close 43 unprofitable stores across the UK, The firm is also shelving plans to open a further 49 new "very large" stores. Additionally, Tesco is closing its staff pension scheme, will make cuts of £250m and reduce overheads by 30%.

Shares in Tesco rose by more than 13% on Thursday, as investors welcomed the company's announcements. It comes after two years of troubles at Tesco, which has suffered falling sales, in another development, credit rating agency Moody's downgraded Tesco's rating by one notch to Ba1, equivalent to "junk" status. (BBC, 2015)

Questions

a) Discuss Tesco’s current mission, vision and corporate strategy.

b) Suggest and explain the process that can help Tesco to formulate its corporate strategy for the year 2015.                                                                                                  

c) What do you understand by the term “organisational culture”? Can Tesco improve its performance by changing its culture? Discuss.
 
 

Answers:

Introduction

In the contemporary business scenario, management and management play an important role in shaping up the organizations.  The chosen company for the study is Tesco Plc, which is one of the largest retail chains in UK (Hall, 2011).  The study will focus on the management and strategy used by the company in order to sustain in the competitive market.

Task 1: Manager, management and organizations 

Tesco manager is very much experience and is qualified in the  specific area. Manager of the Tesco uses participative form of leadership in order to maintain the long-term relationship with the employee. Manager of Tesco are coming are very much using the two-way communication process in order while decision-making (Douglas and Craig, 2014).  Manager of Tesco is very much believed in the taking feedback and listening to the grievances of the employees. Tesco manager uses the 360-degree appraisals system to assess the actual performance of the employees (Dick and Basu, 2007).  The normal appraisals salary and promotion is based on the performance of the employee and their knowledge and expertise in their work.

Management of Tesco very much are employee friendly are created the positive atmosphere at the workplace.  Nature of management of Tesco suggests that, manager of the company consent process. With the help of implementation of reward system, company has the bale to achieve its organization goals and its vision (Tesco.com, 2015).  Company operates in very dynamic market where the practical evidences are used to achieve the right kind of exposure. 

Figure 1: Organization levels in Tesco

(Source: Doyle and Stern, 2006, pp-334)

One of the major objectives of the Tesco management is to bring the co-ordination among the employees. Another major goal of the management is to maintain the equality and customer satisfaction level. Management of Tesco follows the strategy t that has been made by the administrative level of the organizations (Drummond et al. 2012). In this case, it will be board of directors and CEO.  The management Tesco executes the planning and controlling to achieve the objectives of the organizations.  For instance,  `management Tesco are very much  among and control the human resources , recruitment and section , legal concern etc, at operational aspects , controlling and planning the operations , making the working schedule via Gantt chart and finally,  leading the team delegation the authority and budgeting, etc. are some of the major roles that have been played by the Tesco management.

In order to achieve the goals and objective of the Tesco, manager of Tesco uses motivational factors; follow the group dynamics rather than praising the individual intelligence and use two-way communications which resolve the issue of the conflict and divergence within the employee (Henry, 2008). Company uses feedback in order to enhance the creativity and innovation among the employees that help them to gain the large customer base.

Task 2: Impact of Size and strategy of the Tesco affects its organizational structure 

The larger would be the organization larger would become the structure of the organizations.  Since the Tesco was established in the year 1919 by the Jack Cohen in London. At that point, Tesco operates with only two stores with few employees and has headquartered in Chestnut Herefordshire (Tesco.com, 2015).  The Tesco structure was two Manager, 12 employees, and the one CEO.  The structure of the company in 1919 was very much small and simple.

Figure 2: Tesco structure during the year 1924

(Source: Henry, 2008, pp-334)

From the above, it can be found out that, Tesco has a simple structure which specifies that the operation and legal work are done by one personnel during those days. Most of all at Tesco came into brand at 1924 where the brand was then called TES (Ho and Tang, 2009).  The first Tesco brand came into force during the in 1929 at Middlesex. Since then there was no locking back. With the rise of the name and fame Tesco structure and size has been changed with a large amount of market share in the UK market and global recognize at third place is one of the major change since 19256.

Figure 2: Tesco current management structure

(Source: Eesley and Lenox, 2006, pp-234)

Since 1919, company has also changed its strategies to stay in top position in the market.

UK super market

Market share % , 2014

Tesco

29%

Asda

17.4%

Sainsbury

16%

Morrison 

10.9%

Waitrose

6.4%

M&S

5.1%

 

Graph 1: Market share of Tesco

(Source: Douglas and Craig, 2014, pp-445)

Some of the major business strategy used by the Tesco since 1919 that has affected the company structure and it has now become more global and more of the complicated.

-Penetration pricings strategies

-Introduction of loyalty card

-Expansion of market in EU and US with more than 200 stores.

-diversifying its business (grocery to banks to insurance to telecommunications)

- Cost leadership strategy in order to reduce the competitors

After the diversification of the business, Tesco has now become one of the top global business houses of UK. It revenue has now become more than 63 billion as per its annual report of 2014 (Tesco.com, 2015). With diversification, company has been able to create large customer base and also has become giant in its size and structure.

Figure 4: Tesco Diversified business structure

(Source: Dentchev, 2009, pp-122)

Top five global retail companies

Sales (Amount, 000)

Wal-Mart

$256.3

Carrefour

$70.5

Ahold

$56.1

Tesco

$46.2

Kroger

$44.2


Graph 2: Top five global retailer

(Source: Cool and Schendel, 2010, pp-443)

Task 3:  Tesco case scenario

3a. Tesco current mission, visions and corporate strategy

Vision:

To be known as one of the high-value services given to the customers, communities along with maintaining the loyalty of the customer, employees, and shareholders.

Tesco vision statement depicts that, company wanted to provide the value products and services to its customer via right set of prices and on time service. Apart from that,  the vision of the company gives the lots of opportunities to grow and expand its self in global manner by customizing its products as per the demand of the customer base (Bingham and Eisenhardt, 2011). The visions of the company also state that, employees are strengths of the company and use various facilities and motivational skill to improve its employee's skills. Lastly, community's consideration would relate to the use of the recyclables able products and Ban of plastics.

Mission:

- offering value for money products and services with low price in the present market

-Consistently keep the tab of customer demand and customizes and innovating its products in terms of quality, availability and choices (Tesco.com, 2015).

-Introducing new talents and hiring the skills of the supplier who would help the employees  for equal opportunities.

Corporate strategy

-Global presence of business

-Creativity and innovations in its approach (Tesco.com, 2015)

-Creating the loyalty among the customer base and communities

-Establishing the multichannel shop for customers

3b: Suggestion for formulation of corporate strategy in 2015

Multi-channel presence in the market: Multi-channel here indicates the channel where the company will be introducing its products and services. Social media platform and online business have already been introduced by the company in order to cater the large customer base.  With mobile app would bring the down the store in hand. Mobile app will help the Tesco to build its brand more in an international market as the internet, and mobile user has been increased by 41.3% and 89.03% in UK. Multi-channel distribution will make the first leader introduce in the market.  Mobile will help to creates lots of traffic which would again create the long-term relationship with the customer in the global manner (Bingham and Eisenhardt, 2011).  Customer behavior are been changing, and their expectation and demands are been changing which is why mobile app will help the customer to remain connected with the company even if they don't have laptop or computers.

 

Reducing the diversifications:

Company is looking to reduce diversifications this year by closing most of its sick units. In order to do so company is changing its policy which will help them to increase their profitability that has been decreased due to a large part of sick units (Chesbrough, 2009). Apart from that, company is looking to reduce its diversification in business by not introducing its ice cream products in the market because of too much of diversification has affected the company with higher loss.

Promoting the locally farmed products: With the help of locally made fresh products will give the Tesco to cater the all income group and help to achieve the cost leadership strategies in the UK.  Local farm products will give the company to create value pricing strategies which will boost the confidence of the customers who shift their gear from the small retail companies like Aldi and Lidl (Collis, 2010).  Local farm products give the company to reduce the costing of its set of brands in compared top another brand which will boost the sales of the company in near future.

Introducing the insurance policy on electronic products:  

By introducing the electronic products like mobile, washing, machine of kitchen chimney with free insurance facility will boost up the sale of the company.  Insurance packages are one of the best techniques to attract the customer but the Tesco tech support products. Free insurance and after sales services will help to boost the sales of the company in near future (Cool  and Schendel, 2010).

3c. Organization culture of Tesco

Cross culture management help to understand that, how the national culture of the certain impact on the management practices. Cross culture management helps to identify the similarity and difference as per the cultures which are current counting in the current management practices (Henry, 2008). Cross culture also gives the enough scope to increase the effectiveness of global management practices.

Tesco can improve its global performance of its companies by introducing the cross-culture environment within its organizations. Cross culture management enhances the personal competence of the employees that leads to horns their skill, self-improvement, and tolerance power to resolve the issues or conflicts within the organizations. The importance of the global culture competence is one of the major success factors for the international companies in the current business scenario (Drummond et al. 2012). With more knowledge and information about the hosting nations of work culture and environment, the lesser would be cultural differences that will lead the company to successfully root their business in various nations. The cross culture helps to build the professional skills of the existing employees and their behavior which helps the international organization to reduce and resolve the conflicts (Hall, 2011).

The cross-culture environment will be the positivity among the employees which will lead the company to gain the large customer base because of global culture presence within the store.

Conclusion

From the above study, it has been found that, size and strategy have changed the organization structure of Tesco since 1919. Manager of Tesco uses the participative for of leadership in order to achieve its goals. Apart from that, Tesco has been able to create high market share because of the changing strategy and its approach. Lastly, Cross culture environment is one of the most influential way to emulate the global environment within the organizations.

 

Reference List

Books

Doyle, P., and Stern, P., (2006). Marketing Management and Strategy, 7th ed. Hoboken N.J: Wiley.

Drummond, G., Ensor, J. and Ashford, R. (2012) Strategic Marketing: Planning and Control, 4th ed. London: Palgrave Macmillan

Henry, A. (2008) Understanding Strategic Management - Page 51, 5th ed. New Delhi: Global Indian Publications Ltd.

Journals

Bingham, C. B. and Eisenhardt, K. M. (2011) Rational heuristics: the ‘simple rules’ that strategists learn from process experience, Strategic Management Journal, 32, pp. 1437–1464.

Chesbrough, H. W. (2009) Business model innovation: It’s not just about technology anymore.  Strategy and Leadership, 35: 12-17.

Collis, D. J. (2010) "A resource-based analysis of global competition: The case of the bearings industry." Strategic Management Journal, 12, 49-68.

Cool, K.  and Schendel, D.  (2010)  'Performance  differences  among  strategic  group  members',  Strategic Management  Journal,  9(3) ,  pp. 207-223.

Dentchev, N. (2009) Corporate Social Performance as a Business Strategy, Journal of Business Ethics, 55(4), pg. 397 – 412,

Dick, A. S. and Basu, K. (2007) Customer loyalty: Toward an integrated conceptual framework. Journal of Academy of Marketing Science, 22, 99–113.

Douglas, S. P. and Craig, C. S. (2014) "Evolution of global marketing strategy: scale, scope and synergy," Columbia Journal of World Business, 24(3), pp. 47-59.

Eesley, C. and Lenox, M. J. (2006) Firm responses to secondary stakeholder action, Strategic Management Journal, 27(8), 765–781

Hall, R. (2011) "The strategic analysis of intangible resources" Strategic Management Journal, 13, 135-144.

Ho, T.H. and Tang, C.S. (2009) Introduction to the special issue on marketing and operations management interfaces and coordination. Production and Operations Management 18 (4), 363–364

Websites

Tesco.com, (2015). Tesco.com - online shopping; bringing the supermarket to you - Every little helps. [online] Available at: https://www.tesco.com/ [Accessed 14 Mar. 2015].

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