Case Study: Tesco Multinational Corporation.
This study deals with company named as Tesco Multinational Corporation. This particular organization deals in retail sectors in operations of supermarkets chain in and around the world. It clearly mentions regarding activities like company background as well as product offerings for retaining in the global marketplace. This retail organization conducts market research for understanding the needs as well as perceptions of the potential customers in the most appropriate way. In this particular assignment, comparison is made between earlier Tesco and recent Tesco activities for future analysis purpose. Further, it gives detailed analysis on 7S framework, SWOT analysis, PESTEL analysis required for attainment of future goals and objectives. Earlier, Tesco faces difficulty in handling weak culture. In the present stage, Tesco enjoys strong culture as well as meets the customer expectations for the same (Cameron and Green 2012). This particular retailing organization has access to welcoming as well as supporting approach in recent market. It has regular ways for staff members. Tesco aims at performing in construction of people in continuous form. It controls over arrangements as well as measurements in continuous ways. Manager’s keeps check on the monitoring level of competence of staff members. It conducts meetings as well as communication at each stage. Hierarchical structure symbolizes ways for strong internal atmosphere for all the activities for Tesco.
Background of Tesco
Tesco is an UK-based retailing Company that supplies customers nationwide with groceries with variety of services. In the past, this company started as simple supermarkets. In the recent market, it offers customer insurance, mobile phones as well as electrical goods for the same.
Figure: Tesco Multinational Company
Tesco believes in offering their customers with reward system for getting 1 % return on purchases in form of voucher. Tesco is a big organization consisting of systems for assisting company at various operating levels. It ranges starting from operational level to purchases. It is considers as structure of systems for allowing business in running in an efficient way. It aims at making correct decisions in reports in complication with effective management. Transaction Processing Systems considers as vital systems in business operations. It is equally responsible in serving operational levels in an organization. Transaction Processing Systems consists of recording of payments in receiving various goods as well as services. It places orders in way of products and services at the same time. It withdraws money from cash machine (Cawsey et al. 2012). TPS contacts with customers constantly if their problem occurs in failure of systems. Tesco benefits from usage of transaction processing system in number of ways. It helps in holding as well as collecting information in about customers purchases mainly loyalty card. It assists ways in targeting other products for customers in increased sales. It creates automatic links with suppliers for improved stock levels. It helps in reduced physical efforts at operational levels in case of business organization. Tesco make use of Electronic Point of Sale for scanning barcodes as well as communicating with in-house system. It aims at recording all data transactions as well as stock in re-ordering level in batch systems. It accesses information from higher management for generating reports. It aims at providing distribution centre especially from third party suppliers. Stock ordering helps in minimization of errors as involved in manual ordering. It ensures great effectiveness in case of customer services for modified prices. It involves great choices of products in attainment of lower prices to the customers.
Extended 7S framework of Tesco
Tesco McKinsey 7S model mainly aims at illustrating on linkage between seven separate elements for business enterprise. It helps in increased effectiveness at the same time. This model addresses certain hard as well as soft elements in shared values as results in interaction between employee behaviour and performance for the same.
Figure: 7S framework of Tesco
Strategy- This includes strategy by Tesco in cost business leadership strategy. It effectively manages with marketing communication in business operations. Tesco is a supermarket retail chain for sustaining business culture. It revolves around extensive exploitation in case of economies of scale as well as exercise over bargaining power. It deals with suppliers in securing low purchasing costs in the most appropriate way.
In the current marketplace, Tesco deals in taking complex challenges like restoring customers trust. This acts as following profit accounts scandal as well as supplier payment delays. It faces scandal and dramatically declined sales for resulting incidents. The main strategy of Tesco deals in addressing issues by CEO Dave Lewis. It takes into account items like reduction of capital expenditure (George and Jones 2012). It revolves around GBP of one billion. Replacement benefits reveal position schemes for employees as well as reviewing of property portfolio. It aims at cost reduction in the most appropriate way. It aims at focussing mainly on availability as well as services for future analysis purpose. It emerges at price attributes serving as strategic priority as new management in an effective way.
Structure- It is necessary in viewing at that Tesco organizational structure. It maintains high hierarchical as well as consists of layers of management in and from store sales assistant to CEO. New CEO eliminates roles in case of deputy store management in the year 2015. It attempts ways for simplification of organizational structure. There are total ten members in Board of Directors as well as Executive Committee in Tesco Multinational Corporation.
Systems- Tesco is one of the multinational Corporations dealing in retail sector. It relies mainly on wide range of system daily for sustaining business operations in every form. CEO of Tesco named as Dave Lewis announced revised plan for simplifying organizational systems for getting business back on track. It reforms from Steering Wheel performance appraisal system in containing forty measures for referring as a perfect example in real practice. As far as new performance evaluation performance systems are concerned, it deals with key performance measures for simplified process for future analysis purpose.
Tesco uses balanced scorecard for strategic planning as well as management systems. It is known as Steering Wheel. This particular organizational tool centres revolves around business for delivering core purpose at the same time. Tesco performance reports quarterly in the Board in summarized form (Griffin and Moorhead 2012). Salary of senior management created with the usage of key performance indicators with bonus. It establishes ways at descending scale in accordance with success level in steering wheels in the near future.
Figure: Balanced Scorecard of Tesco
Financial Perspective- It is important to understand the fact that financial perspective of an organization allows managers in tracking financial success. It helps in creating wealth for the shareholders for the same. It requires providing balanced approach in performance management. It focused mainly on traditional financial measures in the most appropriate way. Financial measures considers as an important dimensions in accordance with balanced scorecard (Hersey, Blanchard and Johnson 2013). Financial perspectives aim in measuring on strategy as well as execution and implementation. Financial perspectives aim at focusing on traditional return-based efficiency metrics in the near future.
Customer Perspective- In this particular segment, it identifies with customer perspectives in the balanced scorecard approach. Customer perspective implements ways for competing with performance measurement system. It ensures successful outcomes like customer satisfaction, profitability as well as retention and acquisition in new product market segments. It helps companies in measuring as well as identification of value propositions for delivering targeted customers as well as market segments. It includes existing as well as possible customer populations in identification of segments for competing in the most appropriate way. Tesco attracts more than 15 million customers on weekly basis. This retail organization implements steering wheel for market segments in comparison with other related segments. Tesco aims at gaining customer satisfaction as well as decides in catering towards income groups. It offers distinct ranges for own-brand products for satisfaction for customers (Hulleman and Marijs,2012). Tesco launched Loyalty Club card in the year 1995. It serves as positive relationship between returns and loyalty of customers in an overall manner.
Internal Business Process Perspective- In this particular attributes, mangers focus on identification of internal process in succeeding with implementation of required strategy. Metrics based upon perspectives leading by the managers in measuring goods as well as services. Internal business process helps in measuring internal process for achieving customers as well as financial objectives.
Innovation-Tesco product development managers constantly look for latest trends in regard with food markets. Latest range of Tesco develops healthy eating market in finest range of operations. Designing and development involves new products for timely implementation of sourcing suppliers as well as conducting market research (Jabri 2012). Tesco aims at measuring payback period of new products as well sales in place of new product line.
Operation Process- Traditionally, it involves in operations process in measuring performance management system. Tesco requires managing transport in better ways and has 2000 trucks. This organization identifies issues in drivers and decides on managing withy transport in better form. It reduces cost of transport as well as standard way for deports.
Supplier process- It handles supermarkets in control assessment for consumers and increased exercising with buyer power for the same. Tesco demands millions of Irish suppliers in against returning sustained stocking of Irish shelves (Kinicki and Fugate 2012).
Learning and Growth Perspective- This particular perspective aims at including training as well as employee learning in and within organizations. It continues in pleasing customers in the near future. This particular metrics guides managers for training funds and helping most of the business organization. Tesco believes in employing staff from multitude of different backgrounds as well as gaining opportunity in developing purpose. Tesco regularly measures the performance of staff members in the most appropriate way. Employees apply for training with performance appraisal in improving knowledge as well as skills for the same.
SWOT of Tesco
Tesco occupies the topmost position in the retailing organization in UK
Involves in effective online operations
Club card is one of the effective consumer informational tool
Ensures strong property portfolio
Tesco faces weak financial performance
It faces serious damage in brand image from the commercial income scandal in the year 2015
It lacks reliance in the UK market
It employees diminished morale of employees
Tesco has the opportunity in pursuing international market expansion strategy
Tesco has the capacity in increased presence in financial services industry
Tesco enhanced increased non-food retail range for the same
Tesco has the ability in enhanced effectiveness of marketing strategy
Tesco faces threats and unable in new leadership in turning over business activities
Tesco is unable in sustaining cost leadership competitive advantage
Tesco faces lot of currency fluctuations in the current global marketplace
Tesco indulges in emergence of new ethics related problems
Strength of Tesco- It is important to understand the fact that Tesco enjoys increased market shares in recent global marketplace. It holds more than 13% of market share in the UK retail market. It has multi-format capability for continuous growth share in form of food as well as increased space contribution. It establishes hypermarkets as well as allows higher shares in non-food items (Kreitner and Kinicki 2013). As far as Tesco international business strategy is concerned, it deals with steady growth as well contributes in ascertaining group profits in the next five years. In accordance with geographical spread, it continuous in growing as well as ensuring continued regional strength for the same.
Weakness of Tesco- It is important to understand the fact that although Tesco enjoys international growth, it faces issue in the near future. Tesco expects reduced debt from the year 2006. It conducts large capital expenditure programs as well as spaces in huge investment in form of new stores. Tesco has little cash for future expansion purpose.
Opportunities of Tesco- Tesco have the ability in improved merchandising skills as well as involving growth for future analysis purpose. It engages in increase earnings and scale of operations for virtuous circle of growth in the near future. Tesco ventures into telecoms at the latest stages as well as developing retail services (Zoogah and BeugreÌ 2013). It ensures repeated approach in form of banking as well as capitalization of branding initiatives.
Threats of Tesco- Tesco face threats in UK structural changes and industrial profitability for the same. Tesco predicts for investment in case of driving higher returns. It faces problems in case of economic conditions as well as failure in business model in the near future.
When operating a multinational organization, there is a need for the evaluation of the macroeconomic environment for this reason. As the CEO of the multinational organization, there is a need for the analysis of the environment of Tesco.
As the operation of the country takes place worldwide, there is the influence of the global political factors on the performance of Tesco. This would be including the rate of tax, the legislation act and stability of the country within which the country operates. The instability in the financial world has encouraged government of the countries to encourage foreign firms to create job for the population. The company provides wide employment opportunities for the country and satisfies the demand of the people.
Economic factors are a major concern for the retailer Tesco as they are to leverage costs , profits , demand and prices. This is the reason there is a need to be aware of the changes in the taxation and the changes in the policies as this is a major reason that would be affecting the finances (Letavec 2014). The business has grown yet it is dependent on the UK market. The market share of UK is almost 30%.
There has been a vast changes in the shopping patter of the customers in UK as they are going for bulk shopping rather than one stop shopping. The sale of the non food items has increased by a larger amount.
The technological advancement has created more opportunity for Tesco. The company has able to provide the option of online shopping to the customers along with the facility of home delivery (Ferrell, Hirt and Ferrell 2013). There is also the option of self-service checkout points, which has brought ease and convenience to the customers. This would also be reducing the cost of labour.
There is increasing pressure on the companies to solve the issues related to the environment and taking up the strategies for benefiting the society. The company Tesco dedicatedly follows the CSR policies. The company also aims at reducing the carbon footprints by 50% by the year 2020. The waste generation is also being minimised by the company
The regulations and the policies of the government tend to affect the Tesco’s performance. In the year 2004, under the Food Retailing Commission (FRC) there was provision of the Code of Practices, which would ban the practices like the changing of the practices without prior notice from the suppliers.
Figure: Flat management structure of Tesco
Earlier, Tesco uses flat organization structure at the time of starting business with small supermarket stores. It started with initial capital and follows simple structure for making final decision-making process. Later, Tesco implements usage of hierarchical structure in business operations.
Figure: Hierarchical Management Structure of Tesco
Tesco maintains hierarchical structure. It is because in large levels for people accountability. This structure involves many levels from one person to another. Each single level is mainly governed by one person. It is important to understand the fact that hierarchical organization structure helps in maintaining sequences in commanding like a pyramid. It includes large foundation of workers in straight line supervision in an effective way. It continues as apex ranking officer in most of circumstances in the near future (Mamo 2012). It involves ort of culture for allowing workers in Tesco in precise form. It requires clear authority as well as responsibility in and within organization. It undertakes in estimating costs for finishing on timely basis.
Foundation of Organization Structure:
The structure of the organization will help in defining the way the task is divided, coordinated or is grouped. These are the issues, which are fixed when the organizational structure is designed. The company Tesco must include division of labour so that the work is done in less time (MarkovicÌ 2012). The work when it is divided in many sub parts in which individual workers do each part where they are able to specialise rather than performing the entire task at one go. The organization must see that the work specialization is low as this would lead to higher impact on the productivity but the productivity would lower with the high specialization.
Figure: Life Cycle of Work Specialization
In Tesco, every department performed as different unit with no coordination. This led to the communication gap within the system, which resulted, into loss for the company. The departmentalization of the jobs must be done based on the services or the products that the organization produces. This would be helping in the accountability of the performance as all the activities are related to the specific type of product under the single manager (McFarlin and Sweeney 2013). The firm can departmentalize the store in terms of the geography this will help the organization to locate the customers in the vast geographical area. This would be helping the Company Tesco to reach out for the target customers
The company Tesco has a flat structure of management where the decision of the managers is brought down for the closest managers in action (Toch 2014). In case of centralised or the hierarchical form of the organization the decision flows from the top level to the lower level managers. There is an involvement of formal authority where the rights are inherent in a position. There is a different structure in case of decentralised governance (McShane and Von Glinow 2012).
The organization Tesco follows a simple structure, which is a setback for a growing organization for Tesco as there is lower level of formalization, and this would lead to over loading of the information at the top level. The decision-making would also be slower with this form of organization design as the single executive tries to maintain the decision-making. This type of structure also involves riskiness in the business (McShane and Von Glinow 2013).
The organization of Tesco must be of the bureaucratic form where there is highly routine task achieved through the formalized regulation and rules, specialization and centralised authority and standardized process of work (Spector 2013).
Organizational culture is a system that helps in the sharing of the system by the members that helps the organization to make it an unique culture from that of the other organization. In case of the present organizational culture of Tesco, there is weak culture so the organization is not able to achieve the goals and the objectives (Myers, Hulks and Wiggins 2012). The strong culture will help the organization Tesco to share the value of the organization in a more intense form. The more number of employees who are able to accept the core values there will stronger and greater influence on the behaviour of the members because the higher degree of the intensity and sharing will create a climate for the behavioural control.
The implementation of a strong culture will help in the defining of boundary role. This woul help in creating a demarcation from the organization. This would be creating a sense of identity among the members. The culture will help in creating more larger interest than that of the self interest. The stability of the social system is also enhanced. Strong cultures would be providing the social glue through which they are attached to the providing of the standards to what is done and said by the company (Boonstra 2013). This is a control mechanism and the sense making that would shape and guide the behaviour of the employees. The decentralised pattern when followed then there is a greater importance given to culture. This might be also noted that the implementation of the strong culture might create a weaker decentralised system. With the reducing of the control system and formal authority, the shared meaning of culture will be leading everyone to the same direction (Shani and Noumair 2014).
Cultures within the organization of Tesco will help in creating a favourable climate. The organizational climate refers to the sharing of the perception of the members that they have about the work and the organization environment. This aspect of the culture will help in building team spirit in the organization (Nelson and Quick 2013). There is a need to see that there is a general feeling about how the things are working, the effect of their attitudes will be more than that of the than that of the individual parts. When there is positive workplace climate there will be greater customer satisfaction and high-level financial performance.
Culture will help in organizational commitment and this will help in increasing the level of behaviour of the employees, which would be benefiting the organization.
Organizational Change and Stress management:
The company Tesco has a very rigid structure and so any type of changes is not accepted easily by the organization. The resistance of the change can be positive when there is an open discussion and debate (Schermerhorn 2012). The responses will help in the silence or apathy and can help in the indication of the of the processes of change in the organization There can be utilisation of the change agents which will be used as the resistance so that there is changes to fit the preferences of the other members in the organization (Neubert and Dyck 2014). There may emerge a dysfunctional conflict when the resistance is treated as threat. The resistance needs to be managed so that it does not affect the organizational procedure.
The changes in the organization will be done using the Kotter’s Eight Step Plan. Kotter has held the common mistake the managers make while they are trying to implement change in the organization. There might be a failure for creating the sense of urgency, creating a coalition in the change process (Punnett 2013). There is a need for identification of the change for the event. The obstacles needs to be removed as it will be impeding the visions of achievement. Kotter implements eight sequential steps. This model of organizational change is more effective than other forms of organizational change models
There is a need for removing the stress in the organization so that the employees will be able to work together. Some individuals who are able to overcome the stressful situation but there are some individuals who tend to bear it (Phillips and Gully 2013). The differences in the culture can also create stress. There different cultural people working under the organization and so each of them have different level of capacity to work in a stressful condition. The company can encourage some activities that will be helping in the management of stress (Shani, Pasmore and Woodman 2012). The following figure shows the relationship of stress levels and performance in the job.
Figure: Relationship of Stress and Performance in Job
The employees they should be able to take the personal responsibility of reducing the level of stress. The employees they should be able to manage the time, increase the physical exercise, encourage relaxation in training and expand the social support network. Time management among the employees will help in finishing the work early, which will help the Tesco for devoting more time for the other activities. There is a need for the segregation of the activities that is to be performed throughout the day (Oreg, Michel and By 2013). There is a need for the prioritising the activities as per the level of urgency. The schedules must be done as per the priorities set. There is a need for keeping the electronic devices so that the efficiency level is not reduced and limiting the attention. Procrastination would be minimised through the management of time which will help the employees to get more motivation even before the task is given to them.
Tesco should understand that the rigid form of the organizational structure is not valid for competition in the global context. The structure of the organization should be such that they are able to accept the changes that are positive and as per the demand of the market. Production process needs to be changed into a lean management so that there is lesser wastage of the resources. The production process will also be streamlined and which would be more effective. The workers when they are engaged in the work specialization this will help the worker to learn a lot and would devote their skills to it. This will also minimise their efforts as they are continuously involved in the job. The quality and the excellence of the product would also increase. There will be higher revenue earned by the organization through the. Tesco should encourage departmentalization so that organization Tesco can encourage a wider range of audience all over the world. The simple form of the organization structure needs to be changed so that there would be lesser amount of risk faced there is a need for a bureaucratic structure as this would help in the better implementation of the resources and the top management will be able to handle all the operations in the system. Apart from a boundary, virtual organization there is a need for the implementation of the boundary less organization. With no boundary, the organization Tesco will be able get a greater advantage. The strategy of the Organization Tesco should be more specific and must be implemented for increasing the productivity. There might be differences in the culture across the structure of the organization but there is a need for the implementation of the lean management process. The ethics and positivity in the atmosphere will help in reducing the differences in the culture. The management needs to realise the potentials sources of stress affecting the employees and for this, there is a need to apply some stress management techniques.
The change in the organization will be creating more advantages than disadvantages for the company. Like that of the other business Tesco also implements the changes in the organization in the fast paced environment this would help it to develop a competitive edge so that they do not lose the customers who are loyal to them. The use of the technology for the changes will help in creating more advantages as a large number of customers will be attracted. The communication technology would also be very strong. The employees they are able to adjust with the management when there is incorporation of the better strategies. Tesco through organizational change from their present state would be able to create more growth opportunities in the nation. Higher will the number of employment in the organization of Tesco. With higher level of priority offered to the customers, there will be more revenues earned by Tesco.
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