Importance of Organizational Structure and Culture: A Case Study of Tesco

This essay sheds light on the importance of organizational structure and culture in a company, with a case study of Tesco. It discusses different types of organizational structures, their advantages and disadvantages, and the impact of organization culture on productivity.

Essay

The essay explains about the organization structure and the importance of these
structures. Also it will give a brief idea about different types of organization structures and the
advantages and disadvantages of the structures. This essay shed lights on the similarities and the
difference of these structures. There are different functions in the organizations that are very
important for any organization for their proper functioning. Also the essay provides a brief idea
about the culture within the organization and it impacts company positively. Tesco is a retail
company their main function is to sell and purchase and they deal with consumer goods (About
Us, 2021).
There are many types of organizational structures such as hierarchical, functional and horizontal
or flat organizational structure.
Hierarchical organizational structure, these are those structures in which there is chain of
commands that flows through higher authorities to each employee and supervisors. Most of the
companies have these structures, the organizations such as Unilever is using these structure. The
advantage of this structure is that it transparently defines level of authority and responsibility.
This structure motivates employees with clear career paths and chances for promotions (Chen,
Chung and Chen, 2019). It gives clarity to each person to whom they would report and with
whom they will talk about specific project. The disadvantages of this organization structure is
that It can slow down the innovation and increases the bureaucracy. It can cause the staff to act
in interest of department instead of the organization. It can make the lower level employees to
feel inferior.
Functional organizational structure are similar to a hierarchical. In this employees are
organized according to their skills and their corresponding duty or function. The company like
Amazon is using this type of structure. The advantages of this structure are that it allows the
employees to focus only on their role (Understanding Organizational Structures, 2021). It
encourages specialization. This structure is easily scalable in any sized company. The
disadvantages of this structure are, it can create a gap within the organization (Krishnan and
et.al., 2021). It restricts the inter department communication. The strategies remain unclear to the
employees.

Flat organizational structure are useful for the company that have few levels between
management and staff. The start up business like Zego is using such structure. The advantages of
this structure gives employees more responsibilities. It enables more open communication. This
also improves the speed and coordination and speed of implementing new ideas (Stephenson,
2018). This type of structure also have some disadvantages as it so not have clear monitoring and
this can create confusion. It also restricts the knowledge growth of the employees. From such
structure, it creates difficulties in maintaining the task when company grows from start-up stage.
Comparison of organization Structure
Hierarchical and functional and flat structures are centralized structures. In which there is one
manger that is commanding to the lower levels in the company. In all these levels the
communication is very effective. In both hierarchical and functional structures, there is a
manager and employees the flow of information is through this chain only (Cagle, Yılmaz, and
Doğru, 2020). Both hierarchical and flat organizational structures help the employees to gain the
knowledge of different areas.
The flat and hierarchical organization structure connects employees directly or indirectly with
each other. The employees and whole staff is directly and horizontally connected in flat
organization structure and in hierarchical the employees are connected in both directly and
indirectly with each other.
Hierarchical organizational structures and functional structures have many layers. Due to which
there is a high involvement of managers and each employee does not have direct connection
higher authorities.
Contrast of organization Structure
Flat organization structure is different from the hierarchical and functional structure as flat
structure is one end of the spectrum in which the employees operate on the same level. Also like
in hierarchy and fictional structures, the employees are not assigned with the titles and job roles.

Functional organization structures supports specialization and allows employees to be job
oriented only, whereas flat and functional organizational structure encourage their employees
and team members to learn every aspect of the business.
Functional structure is different from the hierarchical as the employees work within sections and
works in departments only there is no specific communication between the departments
(Heikkilä, Kaipia and Ojala, 2018). The employees only work with the people who have similar
backgrounds, same skills and have matching job descriptions. Unlike hierarchical and flat,
functional organizational structures tends to isolate the employees within the departments on the
basis of their work profile.
The flat structure is different from the hierarchical and functional as it places working circle at
each levels, rather than having single individual on the top levels. Through which it improves the
coordination between the staff members in contrast to hierarchical organization structure, where
there is a poor coordination of staff member because they are only following the commands of
their higher authorities.
There are different business functions that an organization like Tesco consists within the
business such as personnel function, purchasing, research and development, distribution and
finance.
Personnel Function is the most important function for Tesco as the success rate of the business
depends upon this function only. The personnel function includes company policies, a proper
wage structure, the incentive that to be given to their employees (Fernandes, 2018). The
personnel functions also involves the human resource development in Tesco also the other
benefits that are to be provided to the employees in Tesco. Tesco considers that the expenditures
connected with the personnel management are interlinked with the productivity of the
employees.
Research and development revolves around the innovation and competitiveness. The R&D
department of the company Tesco aims for survival in the dynamic environment and growth of
the company. This department takes some expenditure of the company, cutting down this
expenditure will restrict the scope of improvement and diversification of their sells (Ackers and
Black, 2018).

Finance management, mainly depends upon the theoretical concepts. Tesco has ensured that their
finance manager is familiar with the economics, macroeconomics and microeconomics. The
overall performance of the company is influenced by the economy because it is dependent upon
the markets for the investible funds. The finance managers in Tesco are specialist and have good
knowledge about the fiscal policies and other theories of economics.
Distribution function, this the main task of the company Tesco, as it mainly targets upon sales
and distribution of goods. It is a major function as it provides continuous flow of cash and
customer satisfaction. So Tesco has selected different and efficient distribution channels. This
leads to increase the benefit to the Tesco in the form of greater profits and to consumers in form
of lower costs.
Purchase function, A company like Tesco is a retail company and it major task is to sell the
products through distribution channels it also buys goods. In this function finance manager plays
major role. To minimise the cost, company uses various management techniques such as
economic order quality, determination of stock level and perpetual inventory systems. The task
of the manager is to manage the availability of cash at the time of purchase.
Organization culture can be defined as a proper manner to behave in the organization. The
culture involves shared beliefs and values that are defined the leaders and the managers. These
are communicated to the employees by various methods such as induction and other ways to
improve their perceptions and behaviours. Organization culture sets the context of each and
every process that company does.
Tesco has a strong culture within the workspace, and the company is very conscious about the
cultural priorities and the values that not only focuses on individual but also on the organization
and their goals. The company and their employees are very clear about their values and
organization's prospective.
The culture within Tesco is very good and employee friendly. It has a huge impact on the
productivity of the employees, they are connected with the goals and supporting them to achieve
it, also the company is performing really well and continuously improving the performance.
The people in company Tesco, have positive relationships with each other and they feel that they
are part of the organization. The employees are satisfied and happy and such employees are more

productive, they are highly engaged. Due which the overall performance of the company has
improved and they have seen the improved statics (Astuti and et.al., 2020). Also the customer
rating is constantly improving and also increasing the sales. These statics have supported Tesco
in ameliorating the employee engagement that helped the company to grow more revenue. A
good organization culture has helped the company to stay on the track and keep running towards
the overall company goals.
The impact of organization culture is that it has helped Tesco to maintain the quality of work. It
has created the working and goal oriented environment in the company and motivated the nature
of long term plans that move the company towards their vision.
This can be concluded from the essay that the different organizational structure are
hierarchical, functional and flat organization structure. The essay also explains that organization
cultures is very important, a good culture improves the productivity and performance of the
company.

REFERENCES
Books and journals
Chen, M.S., Chung, J. and Chen, P.Y., 2019. Employee business at various levels of a hierarchy
for organisations completing case work. Economic research-Ekonomska
istraživanja. 32(1). pp.2818-2828.
Krishnan, S. and et.al., 2021. Functional organisation for verb generation in children with
developmental language disorder. NeuroImage. 226. p.117599.
Stephenson, A.V., 2018. The impact of personal income tax structure on income inequality for
Belgium, Bulgaria, Germany, Lithuania, and Poland: A comparison of flat and graduated
income tax structures. Atlantic Economic Journal. 46(4). pp.405-417.
Cagle, M.N., Yılmaz, K. and Doğru, H., 2020. Digitalization of business functions under
Industry 4.0. In Digital Business Strategies in Blockchain Ecosystems (pp. 105-132).
Springer, Cham.
Heikkilä, J., Kaipia, R. and Ojala, M., 2018. Purchasing category management: providing
integration between purchasing and other business functions. International Journal of
Procurement Management. 11(5). pp.533-550.
Fernandes, A.A.R., 2018. The effect of organization culture and technology on motivation,
knowledge asset and knowledge management. International journal of Law and
Management.
Ackers, P. and Black, J., 2018. Paternalist capitalism: an organization culture in transition.
In Work and the Enterprise Culture (pp. 30-56). Routledge.
Astuti, R.Y. and et.al., 2020. impact of leadership style, work motivation, organization culture
toward Satuan Polisi Pamong Praja work performance. Journal of Industrial Engineering
& Management Research. 1(3). pp.49-64.
Online references
Understanding Organizational Structures. 2021. [Online]. Available through
<https://www.shrm.org/resourcesandtools/tools-and-samples/toolkits/pages/
understandingorganizationalstructures.aspx>. [Accessed on 13th September 2021].
About Us. 2021. [Online]. Available through<https://www.tescoplc.com/about/>. [Accessed on
13th September 2021].