Literature Review On Sainsburys Plc Management Essay
Sainsbury's was founded in 1869 by John James Sainsbury and his wife Mary Ann (née Staples), in London, England, and grew rapidly during the Victorian era. It grew to become the largest grocery retailer in 1922, pioneered self-service retailing in the UK, and its heyday was during the 1980s. As a result of being complacent during the 1990s, Tesco became the market leader in 1995, and Asda became the second-largest in 2003, demoting Sainsbury's into third place.
Change means the new state of things is different from the old state of things. Change is everywhere. And today, change becomes survival for the fittest due to keep customer in exiting market. Change will be one of the few constants during the end of this century and into next .The field of organisation was established to help leaders address and embrace change, to view change as an opportunity rather a threat. Demands for change come forces both external and internal to the organization. (French et al 1999)
Organisational must adapt and transform, or die .They must reinvent themselves not once a generation but once every three or four years
Enabler for change
Technology- more computer and automation and TQM programs
Knowledge explosion -
Changing work values more cultural diversity
World politic black rule of South Africa
Social trends delayed marriage by young people, increase in divorce rate.
Resistance to Change
There are two reasons by one is individual, other is organisational
Individual Reasons Organizational reasons
Habit organization culture
Security limited resources
Economic factors sunk cost
Fear of unknown structure, rule .procedures
Dependence threat to expertise
Friendship network threat to establish power relationship
Uncertainty threat to establish resource allocation
Source ( Kotler, p 2008, Marketing management )
Kurt-Lewin's 3-step change theory
Kurt Lewin is considered the father of understanding organizational change by most. His model suggests that there are three steps one should take when undergoing organizational change: unfreezing, moving, and then refreezing. Through this process, the group undergoing change can first be destabilized - that is, allowing behaviours to move away from the status quo. The second step, moving, allows the change agents to implement the different processes or desired behaviours to the point that seems most desirable. Once this is achieved, the third stage is to refreeze, which stabilizes the change, making it the norm in terms of actions and behaviours (French et al., 2005). This model is one of the more popular change models, but also one that many consider outdated. However, Lewin's work should not be discounted as his theory continues to influence emerging thought, such as complexity theory (Burnes, 2004).
Figure: Three stage process of change model.
Source . French , et al 1999., p 74.
Eight Step Change Model.
Successful organizational change requires knowledge, skill, a little bit of luck and the ability to avoid mistakes .John Kotter, a Harvard University professor, is well known as a leader in change management theory, studied more than 100 companies engaged in planned change programs and indentified eight mistakes that have resulted a significant need for change His most famous work was his eight-step model for creating change (Kotter, 1998). The eight steps in his model were:
1. Establish a sense of urgency
2. Form a powerful guiding coalition
3. Create a vision
4. Communicate a vision
5. Empower others to act on a vision
6. Plan and create short-term wins
7. Consolidate improvements and produce even more change
8. Institutionalize new approaches
Factors triggering the change
In the UK, the government decreased the rate of corporation tax by 2% from 30% to 28%, which saved Sainsbury's significant sums of taxation expenditures in 2008.
(HM Treasury (2008). Budget 2008. Stability and opportunity: building a strong, sustainable future. 12 March 2008. )
As developing globalization, Sainsbury's was facing a challenge, which would source the best quality/financially viable products from world over. Sainsbury's can enter the markets of emerging companies through joint ventures or partnerships to explore these new markets, although it does not have any plans on the horizon to do so.
( Killgren, L. (2007). 'Sainsbury launches property venture', Financial Times, London, 14 November.)
The rapidly increasing global food crisis has increased food prices all over the world, which will result in rising purchasing costs for Sainsbury's. This will have an impact on the margins of the organization and might lead to passing over the cost to consumers by increasing prices of most things in the supermarket. Furthermore, rising fuel costs will have implications right throughout the supply chain of Sainsbury's leading to an overall situation of increasing prices.
Stiff competition within every segment of the retail sector has lead to retailers giving a lot of incentives to the consumers. This will affect Sainsbury's prices on being driven down most of the time. (Sainsbury Annual Report 2007)
â€¢ One hand, nowadays there seems to be more emphasis on fresh, easy style cooking. This serves an opportunity for Sainsbury's to encourage new recipes and unfussy eating. On the other hand, with the big change of consumers' taste and favourite, Sainsbury's seek to access varied material suppliers for increasing the choices of consumers so as to benefit from this new trend and gain more consumers
â€¢ The IT system has dramatically growing within western countries over recent years. It is predicted that by 2011 online retail sales in Europe will have reached Eur263billon, with British shoppers accounting for more than a third of all revenue. Competitors like Tesco use their own online delivery model successfully.
Sainsbury's as a company has gone through a lot of Organisational changes from last couple of years.
Some of the main and recent changes are
1- Voice Technology
2 -Online Recruitment
3- Self check out.
Sainsbury's, has implemented voice technology at its distribution centres. The new voice system replace paper pick lists with voice directed work, making the process more efficient and accurate. The implementation consists of over 100 'Talk man' devices that are being used 24 hours a day, 7 days a week to pick up to 400,000 cases.
The Talkman is a wearable voice computer attached to a securely fastened belt and headset and microphone worn by the picker which interacts with the user and the existing WMS, via VoiteQ's Voice Man middleware solution, the UK's leading software for voice-directed operations. Instructions from Voice Man are transmitted over a wireless network to the operative who follows the location and quantity instructions. The operative responds with the verification of the product and the quantity he's picked, the device updates Voice Man in real time, which in turn produces an output to update the host WMS with each pick result. The voice terminal recognises the pickers voice and can understand the key words used irrespective of his nationality or accent.
increase productivity and efficiency
real time operation which saves time
Information technology helps firms contract in size, because it can reduce transaction cost.
It can reduce the agency cost
It also can help to reduce internal management cost
It gains economic of scales
Staff should be well trained
Need a good language skill
Companies find employees faster.
Companies reach more candidates by "casting a wider net" which results in finding better people.
The life of the recruitment ad is much longer than paper ads. Also can be changed any time.
Recruiting costs are significantly lower
Companies can post very detailed descriptions of the available jobs as well as answers to FAQs. This additional information attracts more applicants and saves time for recruitment personal
Applications can be made electronically, saving processing time and reducing errors.
They are exposed to large number of job offerings, can get details of the positions quickly and can begin to evaluate the prospective employer .
Companies cannot reach job seekers who are not on web.
It is not useful for jobs for which the relevant labour market is local
The competition for candidates increases, since it is easy for other companies to find the same candidates.
Self Check Out:
This change was the most noticeable to any shopper going to Sainsbury, Though this technology was introduced quiet some time ago, but it has been upgraded and made it much more user friendly system for Internal and External customers.
The main reasons to introduce this technology was to give the company more efficiency, a competitive edge over other competitors, also to move ahead with times and crucial reason is to save money and man power.
This change has affected the internal customers by reducing the work load and giving them more time to concentrate on customer service. 12082009594
External customers love the new technology, because its time saving, fast and user friendly.
There are certain drawbacks to this technology that is called Shrink (Product recognise by customers).
Some casual's drawbacks are card blockages, differences in receiving correct change (very often) and not enough till roll for receipts.
Besides these drawbacks an average sainbury's have 20 self scan and depends 48% of their transactions should go through self check out.
The most positive and encouraging part of this technology is that it hasn't affected the recruitment process at all. They haven't reduced their staff at all.
Challenges of adopting new technology innovation
As internal customers, employees also are affected by new technology and need retraining
Customer s need to learn know some skills how to operate an new technology
Retailers who have adopted the UPC (Universal Product Code) can use laser scanners to read a bar code on products. Consequently, they can use a computer to register sales and update inventory levels simultaneously. The incentive to innovate in services is hampered. However, because many ideas cannot be patented.
Back office innovation that does not directly affect the customer may raise complications of a different sort.
Resistances to overcome
Information systems potentially change an organisation structure, culture, politics, and work, there is often considerable resistance to them when they are introduced .There are several ways to visualize organisational resistance. Leavitt (1965) used the diamond shape to illustrate the interrelated and mutually adjusting character of technology and organisation ( see figure).Here , changes in technology are absorbed, defected and defeated by organisational task arrangements, structures and people. In this model, the only way to bring about change is to change the technology, tasks, structure and people simultaneously.
However, according to this model, in order to implement change, all four components must be changed simultaneously.
Figure 2.1: Leavitt Diamond shape model
The role played by the managers
Managers play a key role in organization. Their responsibilities range from making decision, to writing reports, to attending meetings so on. Henri Fayol and other early writers first described the five classical functional of managers as planning, organising, coordinating, deciding and controlling .This description of management activities dominated management thought for a long time , and it is still popular.
From this his real observation, Kolter argues that effective managers are actually involved in only three critical activities.
First - general managers spend significant time establishing personal agendas and both short and long-term goals.
Second- and perhaps most important - effective managers spend a great deal of time building an interpersonal network composed of people at virtually all organisation levels, from warehouse staff to clerical support personal to other managers and senior managers
Third- managers use their network to execute personal agendas to accomplish their goals
Value chain analysis
Value chain analysis describes the activities with and around an organization, and relates them to an analysis of the competitive strength of the organization. value analysis was originally introduced as an accounting analysis to shed light on the value added by separate steps in complex manufacturing processes, in order to determine where cost improvements' could be made or value creation improved or both. These two basic steps of indentifying separate activities and assessing the value added each were linked to analysis of an organization's competitive advantage. The value chain is related concept that describes the different value adding activities that connect a company's supply side with its demand side. (Johnson, g 1199, p 156)
According to Michael porter (2006) traditional value chain can be divided in two parts. One is primary activities which are directly concerned with the creation or delivery of a product service and can be grouped into five main areas: inbound logistics, operations, outbound logistics, marketing and sales, and service. Second one is support activities which provide the inputs and infrastructure that allow the primary activities to take place. Support activities includes finances, human resource management, procurement and information technology
All processes associated with receiving, storing and distributing the inputs to the product or service. They include materials handling, stock control, transport, quality control etc.
Example for in bound logistics is given below:
Argos- Focuses upon low cost offer sustainable over the life of their catalogue. Inbound logistics and the retail operation itself must be tightly managed to keep cost down, IS based systems are important and illustrate another close link to make a competitive gain. (Robson, w 1997, p51)
All activities transform these various inputs into the final product or services , this includes manufacturing , packaging, production control, quality control, assembly, testing and maintenance etc ( Johnson, J 1999)
Example for operations is given below:
Sainsbury's - the retailer giant improved operations efficiency by the help of TPS technology through the EDI link between stores, warehouses, suppliers, and banks. So they play vital role to increase production. (Chaffey, D et al 2006, p261)
Out Bound Logistics
All activities associated with collect, store, distribute the product to customers. For tangible products this would be warehousing, materials, handling, delivery, invoicing, finished goods transport etc. In the case of services, they may be more concerned with arrangement for bringing customers to the services if it is fixed location. (Ward, J 1996 P 218)
Some examples about out bound logistics
Sainsburys - the retail chain Sainsbury's use barcode system which is printed packaging on the products in the field of supermarket, the way these system in work that the code for the product , having been identified by the bar code reader is sent to the computer, there the relevant record for the product is retrieved.( www.sainsburys.com)
Competitive advantage as technology
According to Porter (1996), competition is at the core of a firm's success or failure. An organisation's competitive strategy is the search for a competitive advantage in industry, which gives it advantage over competition in some measure such as cost, quality, or speed. Competitive advantage leads to control of the market and to larger than average profits. However, voice technology can gain competitive advantage over competition. It can help organisation to gain economic scales. Sainsbury's, has implemented voice technology at its distribution centres. The new voice system replace paper pick lists with voice directed work, making the process more efficient and accurate
Non price competition
Managing the new technology adoption process
Innovation is a destroyer of tradition, thus it requires careful planning to ensure success. By necessity, the productivity benefits of new technology will change the nature of work. Any introduction of new technology should include employee familiarization to prepare workers for new tasks and provide input into the technology interface design. Therefore, Robert Radchuk 1982) had developed a ten step planning guide to manage the implementation process.
Change Management enables every organization to ensure practices are used for the efficiency of handling change. Change Management in an organization is very important process. It depends on the accuracy of the configuration data to make sure that the impact of the changes is known and visible.
Â Change Management is also a way to enable the initiatives of a business or courses, and initiatives for the improvement of the project and its services. It ensures that the standardized methods, procedures and processes are used mainly for all the changes. Change Management also maintains the appropriate balance between the need for a change and the possible loss and impact of the change.
Today's competitive environment it is virtually impossible to overlook the market conditions and competition, since both have long lasting effect on an organisations performance.
Organization change Management types of changes has been discussed, 1st of all definition of organization, three different aspects of Change Management, based on theory there some different types of Organizational change Management.
The customer shopping experience would help to improve with changes in the roles of the store managers and their respective teams.
-To use new technology for saving time and achieve a high turnover in a short period of time.
- To train staff for providing a better customer services to all customers.
- To provide better/equivalent quality products especially fresh food stuff.
- To get more feedback from people and look after the demands of an individual customer.
- Sainsbury's Staff should be trained so they can able to guide people use self-check to save their times.
- There should be flexibility on opening hour's times on week-end days.
- Reduce prices of various products as compared to its competitors.
- To provide better customer services on a professional way to all customers.
- To obtain more feedback from Customers either online or written.
- Resolve issues online raise by the customers.
- To rectify the system errors/Transaction errors (issued receipt) twice charge to customers on special offer from Supermarket.
- To conduct online interviews for saving time and easy to choose a right person for particular job.
- Looking through the sub categories Home & Garden, Technology etc looks like the extended range that Tesco have available through their Tesco Direct Catalogue, Sainsbury's should launch a Catalogue, or will these products just be available online & at selected larger stores.
- To provide better technology for rectifying and the match physical stock to system updated Inventory.
- To update web-site time by time to attract new customers.
- To use new technology to introduce their new and coming products in special offers.
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