Importance of Organizational Culture in Companies: A Case Study of Tesco

This essay outlines the importance of organizational culture in companies, using Tesco as a case study. It discusses the impact of leadership styles on the organization and provides recommendations for improvement.

Individual Report

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Executive Summary
This essay outlines the importance of organizational culture in the companies these days. For
better understanding the example of the retail company of UK has been taken, that is, Tesco,
where the organizational structure and culture of the company has been explained along with its
leadership roles that are practiced in the same. The study highlights the impact of the leadership
roles of the working of the company and further the recommendations to the same are also
discussed. Below is the complete deep discussion about the organizational structure of the Tesco
company, which highlights and provides guidance to the other companies as well.
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Contents
Executive Summary.....................................................................................................................................1
Introduction.................................................................................................................................................3
History and Summary of the Company: Tesco............................................................................................3
Vision, Mission & Organizational Structure: Tesco....................................................................................4
Organizational culture: Tesco......................................................................................................................6
Leadership styles & its impact on the organization.....................................................................................6
Recommendations for improvement............................................................................................................9
Conclusion.................................................................................................................................................10
References.................................................................................................................................................11
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Introduction
This topic is an individual report where it is entailed to define the organizational culture or
structure of a specific company like Tesco, the largest retailer of UK has been taken in order to
describe in detail the organizational dimensions of the same. Further, the leadership styles that
the company follows are also outlined in order to describe its working. A complete analysis of
the company has been done stating its internal functioning, which is further accompanied by
stating the recommendations that can be adopted for improving any drawbacks that the company
has in terms of its structure, culture and leadership styles, which could help the company in
achieveing its targets and goals.
History and Summary of the Company: Tesco
Since 1998, Tesco has been established and is considered as the biggest network in the trade
segment of the United Kingdom. Tesco is one of the largest retailer of United Kingdom and is
considered as the third largest retailer across the world. This organization operates in 14
countries with over 6569 stores and 470,000 employees all over the world. The company as of
now has an operating income of $1644 million. It is such an organization that provides the
highest quality grocery items to its customers across the universe and is now considered as the
best online retail merchant too. Tesco is the leading global grocery store and a general
merchandiser, which is listed on the London Stock Exchange and is also a part of the FTSE 100
Index.
This company was primarily founded by Jack Cohen in the year 1919. Tesco opened its very first
store in Burnt Oak, Middlesex in the year 1929. Since then, Tesco has spread its business not
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only terms of geography, but also has diversified its area of operations to retailing of books,
electronics, petrol, clothing, financial services, internet facilities, furniture and telecom services
across the world. Also, the company provides services like music downloading and DVD rentals.
In the year 1974, Tesco launched its first petrol station and soon became the largest independent
petrol retailer of UK. Ever since then, Tesco had been trying hard to build its operations and
expand in such a way that it covers the UK by diversifying into various products and services
and capture the market by a huge mass. Also, in the year 1996, Tesco launched its 24 hour retail
store, which expanded overseas to countries like Poland, Slovakia and Czech Republic(Tesco,
2017).
Today, Tesco operates with different names that are its stores providing different and more
products and services across the globe. These are named as Tesco Extra, Tesco Superstores, One
stop, Tesco Express, Tesco Metro, Tesco.com and Tesco ClubCard. This further states that Tesco
covers for more than 30% of the market share in the grocery segment of the UK and it continues
to remain stagnant and achieve its goals by providing the facilities at just one stop for varied sort
of products and services. Tesco in respect to the retail industry of the UK faces a huge amount of
competition from the other well established brands like Sainsbury, Aldi, Asda, Morrison’s,
Waitrose and many more.
Vision, Mission & Organizational Structure: Tesco
Every organization works on the basis of its vision and mission formed. Tesco’s vision is to
strongly capture the retail market and be a leader in the same across the world by simply
achieving its long term goals and objectives by making strategic decisions with the help of the
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leaders. The main goal of the company is to serve the needs of its customers by understanding
their customers and then providing them with creative and unique products and services, which
no other competitor of Tesco can provide to the customers around the world. Also the company
aims to focus on its employees to be effective leaders, who would help Tesco in standing out
from the other players in the retail market of the UK(Nwagbara, 2010).
Tesco’s mission is to “create value for the customers in order to earn their loyalty for a lifetime”.
It is their mission to become one of the largest retailer in the world that provides safety for its
shareholders and employees and earns the highest level of loyalty from its customers. The
management of Tesco believes in delivering the best products and services to its customers by
understanding them and by acting responsible for their society and community. Further, Tesco
values its employees to a greater extent and aims at providing them with good pay and a strong
working environment. They aim at providing long term career growth to its employees and
constantly aim at training them in order to develop them and the organization as a whole. Tesco
also has introduced a new slogan “ Every little helps” by aiming to provide their customers with
every little thing through the help of their effective employees(Dozier, 2012).
In the year 1997, Terry Leah became the CEO of the company, who is considered as the
visionary leader of the company that changed the organizational structure of the company. After
his reign, the company was then more focused towards delivering the best and premium quality
products and services to its customers. Also, the focus was on in a very high manner at training
its employees to the highest level for helping them become effective and sound leaders. The
organizational structure of Tesco is a flat hierarchial structure, where the employees of the
company have a clear and good clarification of the superiors and subordinates. The company has
a good organizational structure. The functional departments of the company are separated and
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categorized, which helps the company in defining the roles of each of the employee and helps
them in understanding their behavior and responsibilities for the same(Haddock-Millar & Rigby,
2015).
Organizational culture: Tesco
The basic organizational culture of Tesco is market oriented, whereby, it states that the company
aims at constantly dwelling to achieve the paths of integrity, responsibility, respect and
maintenance. Corporate Social Responsibility is the prime aspect of the company. They aim at
serving the customers to the fullest just like how they want to be served as a customer. Which is
why, it is also ascertained that Tesco is a customer oriented organization, which focuses on
delivering the best quality products and services to its customers by understanding their
demands and needs. Tesco focuses on understanding the customers and approaching them softy
as they are the key to their success and at the same time to treat the employees of the
organization also in a well manner(Hussain, 2015). Along with this, Tesco practices the model of
steering a balance in the management. Tesco’s culture is all about managing its employees,
customers, finance, operations and its resources in order to achieve their objectives and goals.
Through such a culture, Tesco has been able to achieve its goals and objectives, which has made
it one of the largest retailer across the globe.
Leadership styles & its impact on the organization
Leadership refers to the process of motivating the employees in such a way that it helps in
achieving the common goals of the organization. Tesco being the largest retailer, practices
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various leadership styles in the organization according to its management style and structure.
Following are the leadership styles followed by the company with specific examples:
Transformational Leadership Theory: The success of Tesco was all possible due to the vision and
practice of appointing a visionary leader that brought significant changes in the organization in
order to achieve the goals of the company and make it the largest retailer across the world.
TESCO appointed such leaders who transformed the working environment of the company by
providing a sound and happy environment for its employees as his focus was to provide the best
facilities to its employees in order to help them in delivering the best services to the
customers(Shukla, 2018). This helped the company in making the employees and the style of the
company customer-oriented. Such a leader who helped the organization and its employees in
transforming their work culture and ethics that helps in increasing the levels of customer and
employee satisfaction. TESCO has achieved several benefits only because of its visions and
clarity towards working effectively.
Model- Bases of Power: In this leadership model, there are five powers like Coercive Power,
Reward Power, Expert Power, Legitimate Power and Referent Power. Out of these five powers,
the three bases of power helped TESCO in achieving success for the company. The company
exercised the Legitimate power for achieving, where it is today(Allan, 2018). Further, TESCO
could practice the Expert power, where the company led the people of the company through
strong communication, scientific knowledge, determination, interpersonal skills and other
various skills. Also, the company is known for practicing the Referant power, where the skills,
expertise of employees have been noticed. Being a charismatic leader with wide experience of
running a company. The Referent power is all about the attraction and identification of the leader
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and the employee of the company has been known for their skills, knowledge and charisma that
helps them in attracting a group of people towards the company structure.
Democratic Leadership style: This leadership style is all about motivating the workforce of the
company to participate in the decision making. TESCO previously followed the Democratic
Leadership style, where the workforce while making strategic decisions for the company were
motivated to put forward various ideas and approaches. This helped the company in encouraging
creativity among the team members, but at the same time, at certain situations where more
authority is needed, and company exercised the Authoritative Leadership style. TESCO company
also emphasizes on following the Democratic leadership style due to which all the employees of
the company are encouraged in performing to the best of their ability and help them in delivering
the best quality products and services. The company gives utmost importance to appointing the
leaders as the heads of each of the departments categorized in the organization(Lau, 2012). The
management has been effectively stating the organizational structure and roles of each of the
employees in order to define the roles and responsibilities of the leaders. The management at the
same time ensures that the leaders and the managers are performing their duty according to their
roles and emphasizes on providing them with facilities that help in training and developing them.
Due to the democractic leadership style in the company, the company forms a decentralized
structure, where the employees have the freedom to interact with any of the persons. Tesco
considers their employees are the assets to the organization, whereby, they are encouraged and
motivated to participate in the effective decision making process. To effectively motivate their
employees, the management follows the system of providing reward and benefits to the
employees like paying a bonus, safeguarding their future and health, pension schemes, discount
cards and so on(Chui, 2016).
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Recommendations for improvement
In order to compete and sustain in the highly competitive business environment, it is important to
have strong and effective leaders, which is why, it is very important for the employees to work
hard. The potential of the workforce has to be ascertained and must be provided with better
services, which is why, Tesco must incorporate the Participative management and Employee
Empowerment plans within the organization. These two strategies will help in increasing the
level of productivity, job satisfaction, effective decision making and will improve the employee
morale. There are certain skills that the company must help their leaders to possess like Synergy,
Communication, Negotiation, Compromise, Interest, Flexibility and Conflict resolution(Zhao,
2014).
Another future requirement of Tesco is to build the leaders for challenging jobs. The future
leaders must be directive, self-driven, optimistic and trustworthy. The leaders at Tesco must not
only achieve the task, but should be able to develop the people and lead them. He must be able to
maintain a balance between relationship- orientation and task-orientation. The future leader must
have the capability of leading and motivating the employees through emotions and rewards
towards the achievements of the goals(Haddock-Millar & Rigby, 2015).
Other proposals for the improvement of the leadership style at Tesco are to provide On-The-Job
Training facility to the employees, where the educational facilities must be provided to the
employees in order to learn and develop themselves. Another recommendation is the Leader
Sponsorship program must be assigned by Tesco, senior executives will be able to share their
discussions and experiences in the conferences that will help in developing the future leaders of
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the organization. Also, the leadership development review must be introduced, where the
competencies must be laid down in order to help the leaders to know the criteria for becoming
the future leaders of the organization. Lastly, developing the sense of emotional intelligence will
also help the organization in improving their current leadership styles and will help them in
developing their workforce.
Conclusion
It can be concluded from the study that Tesco has undoubtedly maintained its position so well
uptil so far by maintaining a cordial work environment. It is the organizational structure and
environment that helps in exhibiting the firm a well defined outlay. Tesco though follows certain
types of leadership styles in order to run its business operations and the employees, but they
really need to adopt certain methods in order to overcome the miscelleanous problems that
happen to exist due to certain leadership rigidity and issues.
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References
Allan, J. (2018) Serving shoppers a little better every day: Strategic Report 2018, Available at:
https://www.tescoplc.com/media/474794/tesco_2018_strategic_report.pdf
Chui, L. (2016) Strategic management analysis- Tesco plc, UK, Available
at:https://www.academia.edu/35032009/STRATEGIC_MANAGEMENT_ANALYSIS-
_TESCO_PLC_UK
Dozier, B. (2012) Leadership and management at Tesco Incorporated, Available
at:https://barbradozier.wordpress.com/2012/10/12/leadership-and-management-at-tesco-
incorporated/
Haddock-Millar, J. & Rigby, C. (2015) Business strategy and the environment: tesco plc’s
declining financial performance and underlying issues. Review of Business &Finance Studies,
6(3), pp. 91-103, Available
at:ftp://ftp.repec.org/opt/ReDIF/RePEc/ibf/rbfstu/rbfs-v6n3-2015/RBFS-V6N3-2015-9.pdf
Hussain, K. (2015) Business strategy. A scenario on Tesco Company, Available
at:https://www.academia.edu/12801294/Assignment_on_Business_strategy._A_scenario_on_Tes
co_Company
Lau, P. (2012) Business Strategy Tesco - Pan UK Supermarket Retail. pp. 1-15, Available
at:https://www.scribd.com/document/256704724/Business-Strategy-Tesco
Nwagbara, U. (2010) Managing Organizational Change: Leadership, Tesco, and Leahy's
Resignation. 8(2), Available
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at:https://www.academia.edu/3364798/Managing_Organizational_Change_Leadership_Tesco_a
nd_Leahys_Resignatio
Shukla, P. (2018) Leadership styles in organizations, Available
at:https://www.slideshare.net/pankajshukla87/leadership-styles-in-organizations
Tesco. (2017) Leadership styles - Tesco, Available
at:https://download.businesscasestudies.co.uk/retrieve_tesco_16_dGVzY28vdGVhY2hlcnMvM
TYvbGVzc29uLXJlc291cmNlLWxlYWRlcnNoaXAtc3R5bGVzLnBkZnx8
Zhao, S. (2014) Analyzing and Evaluating Critically Tesco’s Current Operations Management.
Journal of Management and Sustainability, 4(4), pp. 1-4, Available
at:https://pdfs.semanticscholar.org/f80f/67e087bca9a44531c4e69b399ac5395f148b.pdf
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