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An Analysis of an International Organisation using HRM

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Any opinions, findings, conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of UK Essays.

Published: Mon, 5 Dec 2016

The name Tesco was first initiated in 1919 by John Edward Cohen who invested in his small grocery in the East End of London as a market trader. Cohen become a successful trader and he decided to brunch out to the other market traders. In 1929 the Tesco store limited was officially founded , where by the name originally was given to a private-label brand of tea in which Cohen sold, created from the initials of T.E. Stockwell, a merchant from whom he bought tea, and the initial two letters of his sir name(Datamonitor 2004).

Company overview

Tesco is the one among the largest company in UK dealing with food and grocery retailer which is headquartered in Hertfordshire, the company has successfully operate inside Europe, US and Asia and employs over 472,000 people(Datamonitor 2010).

In general tesco deals with foods and non- food retailer in the world including gasoline, clothing, electric goods, house wares and alcoholic beverages , It also provides complete online services through its subsidiary , Tesco.com including Tescodirect .com and tesco.net. However, in recent the company has introduced the Clubcard loyalty card called Clubcard Plus, a Tesco Visa Card, and a Tesco saving account.(referenceforbusiness 2007).

Due to diversity of products and apart from the online service offered as mentioned above, Tesco operates under the four banners which are Extra, Superstore, Metro and Express(Datamonitor 2004).

In 1995 Tesco compete Srainsbury’s as the UK largest supermarket with the market share of 15.6% of grocery retail market up to 2001 and was the market leader. holds the leading position among the Grocery retailers in Great Britain with market share that exceeds to 28% in 2004 (tescoplc 2010).

Besides of the supermarkets the company runs its business in England, Scotland and Wales, also the company operates many super stores in the rest of Europe, US ,Asia such as in Northern Ireland, Republic of Ireland, Hungary, Malaysia, Turkey, Poland, Thailand, Japan, Czech republic and Slovakia both operates under the Tesco brand names.(Tescoplc 2010).

SWOT ANALYSIS

A SWOT analysis can help to analyse the effectiveness and performance of the company,by examining the internal and external forces that occurs in the company (Mullins 2007),

In SWOT ,analyses the strengths and Weakness of the company in relation to threats and opportunities that can occur in the company, and the impact of the said analysis, the company must put much effort to overcome the threats and weaknesses with the basis of decision making and problem solving and on the other hand, to create a room for increasing Opportunity and Strengths for the survival of the company as well as to be in competitive position.

According to Zain,M(2008) stated that. SWOT analysis help the company management to formulate strategies, and those strategies will foster to increase profit of company and at the same times makes the employees to adapt changes .

Therefore, the internal forces within the company will lead weather the strengths or weaknesses and the external forces will drives the opportunity or threats of the company.

The following are the SWOT analysis of Tesco company, by (Datamonitor 2010)

WEAKNESSES

Leading retailer win back the lost market share to discounters except Tesco

High cost of growth in central European markets compare to competitors

STRENTHS

Building sustainable business model

Gaining market share in non-food

Retailing services

Investment in IT to operate efficiency

THREATS

Economic recession

Low growth market reduces sells in non- food product.

OPPORTUNITIES

Strong growth in Asia markets

Increasing market share through online channel

Strong private label portfolio enables the company to effectively differentiate

Focus on fresh produce and convenience store format.

Figure 1:SWOT analysis of Tesco company.

Strengths

Building a sustainable business model

Tesco has successfully maintain its strategy of building business model through diversification of new geography to expand business market areas, and innovation of new product and services that attract market demand.

Tesco increases operating business 8%GDP in 2000 up to 53% in this year 2010,on gain profit for the international business Tesco generate 1.8% in 1997 to 22% early this year 2010. this strategy made the company to grow faster and improve shareholder returns. On the other hand, Tesco maintain the sustainability through the customer as its strategy, Tesco’s customer attracted through the unique way of using low price ranges, discount brands and club cards program which make the sales growth partially by 150-200 basis point compare to year ago(Datamonitor 2010).

Gaining market share in non food

Tesco has developed strategy as to be strong in Non – food product as in food with the quality, and affordable price for the customers (Tesco plc 2010).and as being international retailer, Tesco was able to undertaking new non – food merchandise with competitive prices, the company grew its presence through continuous selling non- food products and maintain competitive advantage over the others retailer in the UK market like Morrison and Sainsbury,

Non- food product is the leading grocery will make Tesco improve its market share and lead for the primary growth of the Tesco company(Datamonitor 2010).

Retailing services

Since the customers are differ in their need and availability for shopping, Tesco company had offer more than one way of shopping like Tesco Personal Finance which dealing with Visa card, home insurance, motor insurance, pet insurance and travel insurance. Other services called Tesco Telecoms which include Tesco mobile and Tesco talk and also the use of online services called tesco.com.(tesco plc 2010).By introducing variety of retailing services will enable the customer to provide the simplicity to a complex market and provide the services on real time basis, on the other hand, the Tesco will drive margin and provides incremental sells.

Investment in IT to operate efficiency

Tesco has invested Information technology system to provide great performance to the customer services and cost efficiency by implementing self-service checkout which lead to less waiting lines for the customer as well as the using of loyalty card in their phones. Furthermore, tesco implements an in-house designed supply chain application. more efficient ordering system and designed in-store monitoring system which enable to monitor the availability of product in store and reduce warehouse stock. Also Tesco invested a “Tesco digital” a kind of software placed in help desk to respond customer queries and problem which crop up, so as to improve customer service and customer experience, and enable Tesco to retain customer as a key competitive advantage.

Weaknesses

Leading retailer win back the lost market share to discounters except Tesco

During the downturn in UK, Tesco company left in disadvantageous position and was unable to gain the lost market share after the four leading market in UK which is Asda, Sainsbury and Morrison boosted their shares. The biggest gain came from Morrison, taking its main users to 14.5% from 12.6% where as Tesco lost its share 0.2% to 30.9%

High cost of growth in central European markets compare to competitors

Tesco operates a high capital intensive model in Central Europe compare to the other competitors which lead to lower capital turnover that pressurize the Return on Investment Capital (Datamonitor 2010).

Opportunities

Strong growth in South Korea, Chinese and Indian markets

Due to the company analysis information via (Datamonitor 2010)has reported that, Asia is estimated to lead the world in terms of growth rates, the estimated retail sales seems to increases especially in China, South Korea and India where by those said country Tesco has several invests, and they may made presents strong opportunity for Tesco. Example in china the retail sales rose to 17.9% in January and February 2010,the growth in India since owing large population is a factor that makes the retail sales will grow from $353.0 billion in 2010 to $543.2 billion by 2014.

Increasing market share through online channel

Tesco online customers has graduals increases and made the Tesco to gain popularity .Over one millions of customers uses online shopping due to the busy live and sometimes the difficult of transport(Tesco plc 2010).

The online channel made the Tesco to be the profitable online retailer in the world, and expected to increase the growth of $48.8 billion by 2013(Data monitor 2010).

The company uses Tesco direct and Tesco .com, and they are about to established two news addresses for clothing and entertainment.(Data monitor 2010 ).

Strong private label portfolio enables the company to effectively differentiate.

According to Datamonitor (2010:12) has stated that, Tesco continue to innovate to private label segment with over 2,6000 new or improved food lines, which are goods, better and best ranges, and sell to price sensitive to customer base. However customer likes to switch over to the premium range. Through the innovation of private label brands enable Tesco to curve a niche in the market and effectively differentiate and hence, will make Tesco to improve the revenue and create competitive advantage.

Focus on fresh produce and convenience store format.

Tesco has invested stores ranges from small local Tesco Express sites to large Tesco Extras and superstores, for the purpose of satisfies customer needs.

According to thetimes100 (n.d) has tried to show the ranges of store according to the convenience of customers or how the customers are benefited.

The following are the store format operated in Tesco retail company (Tesco plc 2010).

Express: for convenience and value, fresh food located mostly near homes and offices

Metro: Convenience in town city centres lots of food lines, designed and targeted towars busy customer

Super store: convenience for a wide non- food lines, such as DVD’s and book

Extra: A wide range of food and non food lines that varies from electrical to home wares. health and beauty, including seasonal items such as garden furniture

Since the customer behaviour changes times to times, trend of eating at home from the scratch, health and nutrition, as well as fresh fruits and vegetables, all are available at Tesco company with the best quality. Tesco company won the ‘Fresh producer retailer of the year’ Award in 2009.(Datamonitor 2010).The store formats effectively address the increasing popularity of convenience store.

Threats

Economic recession

Tesco company still faces the hard times of economic downturn, especially with the company competitors like Morrison, Asda, Sainsbury and even Waitrose by loosing the customer base. Tesco work hard to maintain customers base by discount range and sharper promotions to defend itself against formidable competition, on the other hand, the company tends to loose market share(Data monitor 2010)

Additionally, bbcnews (2009) reported that,Tesco’s share of the UK market dropped to 30.6% in the 12 weeks to 19 April, from 31.1% during the same period in 2008, due to the recession where as other “big four” supermarkets, Sainsbury’s, Asda, and Morrisons all gained market share. Sainsbury’s grew from 16.1% to 16.3% of the market and Morrison increased to 11.5%, from 11.4%.

Low growth market reduces sells in non- food products.

The Uk retail market is expected to low growth rates in the short term. In 2009 the market reduced by 0.4% and in marginal growth of 1.3%.The low growth market will shrink the Tesco’s sells and revenue as well as competition in which several players compete in a small market growth.

SUMMARY

The Tesco – SWOT Analysis company is the essential source for top-level company data and information that enable them to make proper decision, and to overcome the weaknesses and threats and increases the opportunity in order to provide company performance in the rivalry .

In tesco, Analysis examines the company’s key business structure and operations, and products. In operation, it seems that the economic recession is the major factor for tesco to drop in market share but in slightly, not only Tesco company, but also its competitors, but due to its discount’s strategy, it might the reasons why the company loosed small market share, as shown in the threats as reported in bbc above.

For Tesco and other major competitors ,Asda, Morrisons, and Sainsbary , Tesco’s expansion outside the UK increasingly focuses on smaller grocery retailing formats and through internet retailing, makes the tesco’s major opportunities, that makes higher position compare to other company.

CHAPTER TWO

ORGANISATION STRUCTURE

Mullins(2007) explained Organisation structure is the pattern and relationship among position in the organization and among members of the organization .It define tasks and responsibilities, work roles and relationships and channel of communication

Organization structure is the way a business is organized into different functions or operational units, with lines of managerial responsibility.(The times100 2010)

Both two’s definition above, stated the Organization structure organized pattern where peoples do their roles according to their skills and responsibilities , communicate each other to facilitate working relation ship between various section of the organization, for the purpose of achieving organization goal, hence, the wrong organization structure will delay the success of the organization

The organization structure depends on the organization’s objectives and the chosen strategies required to achieve them

Since tesco purpose is to save its customer, therefore., Its organisational structure has the customer at the top level of this structure as shown in the fig.2 below (The times100 2010).

Customers

Work level 1

Work level 2

Work level 3

Work level 4

Work level 5

Work level 6

Figure 2: Organisation Structure of Tesco Company

The organization structure of tesco company is comprised by division of work and grouping of peoples in which there are six work levels within the organization, gives a clear structure for managing and controlling the organization .

The following are the brief descriptions of each work level in Tesco company (The times 100 2010).

Work levels

Description of Work level

Work level 1

frontline jobs working directly with customers. Various in-store tasks, such as filling shelves with stock. Requires the ability to work accurately and with enthusiasm and to interact well with others

Work level 2

leading a team of employees who deal directly with customers. Requires the ability to manage resources, to set targets, to manage and motivate others

Work level 3

running an operating unit. Requires management skills, including planning, target setting and reporting

Work level 4

– supporting operating units and recommending strategic change. Requires good knowledge of the business, the skills to analyse information and to make decisions, and the ability to lead others

Work level 5

responsible for the performance of Tesco as a whole. Requires the ability to lead and direct others, and to make major decisions

Work level 6

creating the purpose, values and goals for Tesco plc. Responsibility for Tesco’s performance. Requires a good overview of retailing, and the ability to build a vision for the future and lead the whole organization

Therefore, these are the basic activities of Tesco company which complete the productive process and hence produce the required end result.

Decentralization of Tesco Company

Due to its geographical separation of different parts that tesco group operates, Tesco uses Decentralization organization as sksowe (2009) has stated in its online articles when try to explain the difference in decision making between centralized structure and decentralized structure, “An example of a decentralized structure is Tesco the supermarket chain. Each store of Tesco has a store manager who can make certain decisions concerning their store. The store manager is responsible to a regional manager”.

Therefore, the decision making power for Tesco company will spread responsibility for specific decision due to its division of work and grouping activities as well as geographical separation of companies business in Asia, India, USA and Europe. Where as In a centralized organization structure, the decision making power is concentrated in the top layer of the management and tight control is exercised over departments and divisions.

For the company likes Tesco which operates under Private limited Company , Decentralization is easier to implement because there is a great demand for the accountability of their operations, regularity of procedures and uniformity of treatment, compare with the public sector organization (Mullins 2007)

A decentralised organisational structure has the following advantages: senior managers can concentrate on the most crucial decisions, decision making empowers and hence motivates the staff and increases their output, it gives people a better understanding of their work environment, including the colleagues and the customers and increases their knowledge and experience, responses to challenges and changes are much faster in a decentralised organisational structure and empowerment brings more responsibilities and brighter changes of accepting them and carrying them out more successfully.

Span of control

Span of control is a term used to describes the number of subordinates who report directly to a given manager or supervisor (Mullins 2007).

The span of control become difficult to supervise effectively, if superior is in charge of many employees who lead stress on the manager and resulting in slowness to adapt to change. On the other hand, If the span of control is too narrow, may present a problem in coordination and consistency in decision making (Mullins 2007).Additionally, for the manager to supervise subordinates effectively, the number of subordinates in organization structure, at most should not exceed 6, according to Mullins, V. A. Graicunas has developed a formula for the span of control which help to determine the number of interrelationship for the manager or supervisor to be attention with. The formula is:

R = n (2n/2 + n – 1)

Where R is the number of interrelationships and

n is the number of subordinates

Since tesco organization structure presented in Pyramid shape as shown in figure:2 above, usually, In Most of the Organization the pyramid shape represents the combination of span of control and chain of command but it is difficult to identify the exactly number of span of control as in hierarchical structure format (Mullins 2007), with this scenario the Tesco company it has the span of control since the company published the organization structure in Pyramid shape, therefore, it is difficult to identify the exactly numbers of span of control but the company has got six (6) levels. The levels represent the chain of command

According to Mullins (2007 ; 578) has defined the chain of command, refers to the number of different levels in the structure of the organization, the chain or lines, of hierarchical command, sometimes known as scalar chain. additionally, the chain of command establishes the vertical graduation of authority and responsibility.

There fore, for this aspect, the Tesco organization structure have six (6) chain of command or line of authority, as it shown in figure 2, that contains six lines of work level. The line of authority is necessary for the effectives of the operation and provide proper decision making of Tesco company.

In every aspect of organization structure, the organization structure can be Tall or Flat structure. The distinction of these two’s structure is the representation of layers of command. For tall organization structure, if the organization structure have several layers of command or line of authority, The number of layers decreases the span of control and each superior is responsible for few subordinates where as Flat organization structure means the structure have few layer of chain of command and each superior has responsible for a large number of subordinates (the times100 2010).

Tesco company operates in Flat /tallorganization structure

The store manager has span of control over all the deputies who have span of control of their section. When some thing needs to be done the store manager would ask his deputies who would divide the work between other workers following the chain of command. Tesco controls its own massive empire. This could leave some weaknesses due to the huge span of control and can suffer from bureaucracy

Organisation strategy

According to Thompson ( 2002) has defined the Organisation strategies are the means to ends, and those ends concern the purpose and objectives of the organisation. They are the things that business do, the paths they follow, and the decisions they take, in order to reach certain point of success.

It is difficult to run the organization without strategy, the organization strategies will help the clients to focus on business strategies for those dealing with business arena (company)or organization strategies. The correct implementation of business strategy is essential step of achieving high performance of organization or company regarding as the design of organization structure is relies with business goals or organization goals.

Additionally, According to the Accenture(2010) stated that, the impact of a merger or acquisition is powerful and long-lasting. Designing an appropriate post-merger organization will help organizations to reach the longer-term effects of a merger and realize the predictable output. In order for the organization to attain its objectives as well as organization goal, it is necessary to develop strategies that lead the organization.

On the other hand, the company may have good strategies and designing appropriate post – merger, but the company fail to achieve them due to the bad execution , decisiveness, follow-through, delivering on commitments. Fortune Magazine dated 21 June 1999 reported that 70.% of 10 CEOs fails to achieve the desired result because of bad execution (Charan & Colvin1999).

For the company operates in the company rivalry and to successful it has to choose to the strategies which is distinctive to the other competitors.

According Markides, (2004) explained that, “A company has to decide on three main issues: who will be its targeted customers and who it will not target; what products or services it will offer its chosen customers and what it will not offer them; and how it will go about achieving all this -what activities it will perform and what activities it will not perform “

Tesco company strategy

Tesco company has well established and comes up with the the Growth strategy (Tesco plc 2010). The Growth strategy has strengthen the business starting in central Europe, and starts to expand its market share to Asia and recently in USA for the purpose of delivering and maintain long term growth.

The strategy for broaden the scope of business was started 1997.Through its Growth strategy ,Tesco comes up with the following objectives (Tesco pls 2010).

To be successful International retailer

To grow the core UK business

To be strong in non food as in food

To develop retailing services such as Tesco personnel finance, Telecoms and tesco.com

To put community at the heart of what we do

Source: Tesco corporate website (Tesco plc 2010).

The strategic business unit organizational structure provides Tesco with flexibility to expand its operations in many different directions – it can expand its electronics line in the Non-Food SBU without disturbing the policies, practices or resources devoted to the International or Core UK strategy which allows it a large degree of flexibility and customization capability within the organization. It also allows the company to be successful internationally, as it can choose its market entry strategy to account for the needs of the new market, rather than simply mimicking the existing competitors or using the home country marketing, branding and business operation techniques (Tesco plc 2010)

SUMMARY

ORGANISATION CULTURE

Organization culture is also among the one’s which affect the implementation of organization goals and objectives in addition with organization Structure and Organization strategy, Organization culture help to account for variation among organization and managers both nationally and internationally, It helps to explain why different groups of people perceive things in their own way and perform things differently from other groups. Every organization have its own unique culture therefore Tesco company have observed to have the following different cultures. (Mullins 2007).

Furthermore, Mullins (2007) defined Organization culture as the collections of traditions, norms, values, policies, believes and altitudes that constitute perverseness context for every thing the organization do and think.

Also, The article on Value Based Management (2010) cited Sheins (1996 )who defined the meaning of Organization culture “as a basic tacit assumption about how the world is and ought to be that group of people share and that determines their perceptions, thought, feeling and their avert behavior”

There are numbers of ways in which to classify different type of organization culture. Mullins (2007)mentioned four types of culture as shown below

Types of Culture

Culture description

Power culture

This type of culture depend on central power source with the rays of influence, Power and influence spread out from a central figure or group within organization. Within a power culture, control is the key element which start from the center into key individuals

However, this culture has its problems, lack of consultation can lead to staff feeling undervalued and de-motivated, which can also lead to high staff turnover(learn Managment2 n.d). Power Cultures have few rules and little bureaucracy. Power culture usually found on small intrapreneurial organization and relies on trust.

Role culture

According to (Learn management 2 n.d) stated that the type of culture is common to most organization, due to the hirachichal beaurecracy , organization is splits into various function and assigned to the individual as a role.

The role culture has the benefit organization specialization, in which each employees works and do the individual roles according with the job description. and hence, provide the productivity of the company. Role culture ussualy organized in large company.

Task culture

This based to complete particular task, like in the organization , they provide a project to complete particular task on date. A task culture offer some benefits for the staff to feel motivated because they are empowered to make decisions within their team, and also feel valued because they may have been selected within that team and given the responsibility to bring the task to a successful end.(learn management 2 n.d).

Person culture

Is where the individual is the central focus and any structure exists to serve the individual within it. In this Person Culture, survival can become difficult in the organizations, since the group of people knows that it is in their own interest to band together to do their own thing and share office space or clerical assistance. Example a group of architects, doctors or consultant.

On the other hand, in the organization culture there are three levels of culture (Mullins cited Schein (1996)). as shown in the figure2 below.

Three level of culture (Schain)

Visual organizational structures and process

Artifacts

Strategies, goals and philosophy

Values

Unconscious taken from granted believes, perception, thoughts and feelings.

Basic underlying assumption

Figure 2: Three levels of cultures (Schain)

Source: Value Based Management (2010).

The description of each level in the figure 2 above can be describes as:

Level 1: Is the most visible level of the culture called artifact and creation the constructed physical and social environment, such as Dress, tools, appliance, Written and spoken language and the overt behavior of group members.

Level 2: This level called espouse values, the culture reflects from learning from someone’s original values, solution of how to deal with original task, solution from problem then can transform on belief. value and belief can justify action and behaviors toward strategies and goals of the organization.

Level 3: The last level categorized in Basic underlying assumption, these are implicit assumption which guide behavior and determine how group member perceive, think and feel about things

.

Tesco company Culture

In the context of globalization, and Tesco is a globally and a huge company it is very important for Tesco to develop cultures in two aspects of culture, the organizational culture and the culture outside the organization since a company operates its business globally , also it has adapt the local culture of outside country.

Generally, Tesco cultures apply to the way they deals with customers and also to the employees of how the company treat their employees, the company has the following cultures (Tesco n.d).

Tesco company offers training opportunity for their people so as to suit with the skills and ambitions, and if the graduate choose to apply in the Tesco company, there is a guarantee that there’ll always be someone there to support the new employee every step of the way.

Tesco company’s rule is ” like to treat everyone the way they would like to be treated” .This means that the aim is to give support to each other through sharing knowledge, working as one team, enjoying work and celebrating success.

Tesco Company provides a working environment to their employees by giving them the chance to make the most of employees potential. And giving them the chance to build a rewarding career.

Also Tesco provide the culture to deliver customers and employees promises in three easy steps, making everything Better, Simpler and Cheaper:

Better – for the customers by helping them with their shopping experience which in turn means they want to keep coming back to us.

Simpler – for the staff to make the work more efficiently and with less stress

Cheaper – by keeping Tesco’s customers loyal and their staff happy.

However, I


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