IHRM and Organizational Structure of Tesco Company: A Critical Analysis

The essay discusses the role of IHRM in Tesco's organizational structure and how it affects the company's success. It also explores the challenges faced by Tesco in international business and how IHRM can help overcome them.

INTERNATIONAL HUMAN RESOURCE MANAGEMENT
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The essay is based on IHRM with respect to Tesco Company in the context of the United
Kingdom. The purpose of this essay is to highlight how IHRM is in alignment with the
organizational structure of the Tesco Company to do successful business. IHRM stands for
international human resource management and it plays a key role to get success when it is
aligned with the company's organisational structure. The essay discusses how the owner of Tesco
is able to make use of IHRM in its organisational structure to gain success nationally and
internationally.
Tesco plc is also known as Tesco and it is a multinational retail company based in the United
Kingdom. It is headquartered in Welwyn Garden City in Hertfordshire located in England and it
was established in the year 1919. The stores of Tesco are present not just in Britain, but also in
other countries, such as Europe, Asia, Hungary, and Thailand and so on. Jack Cohen was the
one, who had founded the company in 1919 just as a group of some market stalls. Tesco plc has
been expanding its business operations in distinct countries by taking the right business strategies
and by increasing its workforce per month. In 2017, this company had a total amount of
workforce of 460, 000 employees and it had a hefty amount of £1.208 million in the year 2018
(Tescoplc, 2017). This company has been successful enough to spend over 100 years in Britain
and in other countries due to its successful organisational structure Tesco plc is listed on the LSE
that is London Stock Exchange and it is present in FTSE 100 Index too. At present, the CEO of
this company is Dave Lewis and John Allan is the chairperson of the board.
The organizational structure of Tesco plc is following a hierarchical structure in keeping mind
the alignment of international human resource management of this company. The people, who
are working in the higher part of Tesco Company has major responsibilities to run the company.
Dave Lewis is the CEO of this company and the board's respective chairperson is John Allan, a
director is Mark Armour (Tescoplc, 2019). The other directors incorporate Melissa Bethell,
Stewart Gilliland, Steve Golsby, Byron Grote, and Michael Ohlsson. On the other hand, there are
other directors in the organizational structure, who try to expand this company by doing their
duties. The directors incorporate Deanne Oppenheimer, Simon Patterson, Alison Platt, and
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Lindsey Pownall. In Teso plc, it is the duty of the chairperson of the board to keep into
consideration the interests of every Group members, different stakeholders and so on. In
addition, it is a chairperson's duty to promote the high standards of corporate governance. This
company has its main shareholders and they are BlackRock Inc. Norges Bank and Schrodes plc.
BlackRock, Inc. consists of 6.64% of the holding of Tesco plc, Norges Bank has 3.99% of
holding and it has 4.99% of holding for Schroders plc (Tescoplc, 2019).
The chief executive of the company is leading the work of taking strategic direction by making
implementing the right strategies. Chief executive does the internal controls of Tesco Company
after doing management of risk profile of this group. A chief executive of Tesco's organizational
structure has to make sure that communication is done effectively with every shareholder. The
non-executive directions work together along with the directors to handle the IHRM of this
company on a timely basis. The non-executive directors have enough experience and skills to
offer a constructive challenge, analyze the overall performance of employees to create better
strategies in the workplace. The senior independent director is known by the abbreviation of SID
this company's organizational structure. The meeting is done mainly with an independent
director and the chief executive at least once a year to make distinct strategies. The company
secretary of Tesco plc is mainly having a duty to develop, implement and maintain the high
standards of corporate governance. Moreover, the Tesco Plc Board consist of distinct board
committees, who handle IHRM of this multinational company and it incorporates nominations
and governance committee, audit committee, corporate responsibility committee, disclosure
committee, and remuneration committee.
Some issues of IHRM in the company have affected the global performance of Tesco plc over
the years. There are many organizational structures that have been shaping the company so far,
however, the organizational structure of international diversification is stopping the growth of
this company. This branch of organizational structure, its effect from IHRM and the issues
resulting from this branch has been discussed. One of the main issues that are hampering
international growth of Tesco Company is its lack of presence online and this company is facing
issues trouble to continue its stores in Britain too (Tandoc and Vos, 2015). The issues in business
in the overseas market had started to happen since the year 2013. In 2011, Sir Terry was working
in the job position of chief executive in Tesco and fir 2 and a half years, his strategy had
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improved this company's business. Due to this reason, Tesco Company is able to expand its
operations in a total of 13 countries apart from Britain (Theguardian, 2013). Philip Clarke was
working in the higher position of Chief executive after Sir Terry's departure from this role in
Tesco Company. This company had faced business loss in December month of 2012 in the US.
In addition, this company's US branched had lost £1.8 billion amount of money in total
(Theguardian, 2013).
The buyers could not be found to buy the poorly functioned shops of this company and so the
moment of the shutdown of the shops was raised at this moment. This incident showed that
Tesco Company's owner had failed to successfully align the organizational structure of this
company. In 2018, the net income of Tesco Company was £1,208 million (Tescoplc, 2018) and it
showed considerable growth of this company. This growth was somewhat possible due to efforts
that were given by investors. It is the duty of Chris Griffin to handle investor relations and other
departments, such as debt investor relations, shareholder enquiries. Customers and potential
clients can be able to ask any queries that they have related to the shareholder, debt, any
complaint, investor and general queries.
The situation of 2013 in Tesco Company was becoming poor. In 2013, it was announced by
Clarke that it was decided to close 131 Chinese stores in China. In addition, the joint venture
business of Tesco with Vanguard was not proving its influence positively on this company. The
sales of Tesco's 131 Chinese stores were lowered by 5%. The joint venture business was done
between Tesco and Vanguard as the latter is part of CRE that is China Resources Enterprise.
Since 2004, Tesco Company was doing successful business in China by using IHRM in a proper
way. However, this company for expansion mainly chose China as since 2013 China is hailed as
the world's largest market for groceries and food and this market worth $1 trillion and had a
forecast of only 50% gains in the coming 3 years. Tesco had been facing issues on international
business to gain success due to the presence of its rival companies including Carrefour and
Walmart. Tesco's attempt to sell live toads and turtles in Shanghai stores could not increase its
sales target (Raconteur, 2015).
In Japan, Tesco Company was not able to do successful business for long years and Clarke had
to pay £40 million to a local group for taking the business of this company's stores in Japan. The
owner of Tesco plc was unable to align IHRM with its organizational structure of international
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diversification in 2013 and until now (Son et al. 2018). Problems in ding international business
had not happened in China, Japan; however, such issues had taken place in other countries too.
The other countries include Turkey, Czech Republic, Ireland, Thailand, and Poland and so on
(Telegraph, 2013). The sales rate of the companies, such as Turkey, the Czech Republic, Poland
were down by 15%, 9%, and 8% respectively (Telegraph, 2013). In addition, Ireland and Poland
had a lower sales rate of 3%. During this problematic phase of 2013, only two countries
including Hungary and Malaysia had achieved substantial growth so far. The reasons behind
such a downfall in enhancing sales target of the company happened due to local tax, bird flu,
restrictions given on opening hours. In 2013, China assisted Tesco to grow and Britain's stores
of Tesco had contributed to 65% of profits (Telegraph, 2013). This system of international
diversification was destroying the value of the company.
The IHRM policy is used to some extent in Britain to hike up the sales of products largely. In
2013, Britain, the home market of Tesco had reported a substantial growth for three years of
Christmas trading. However, problems had happened in this company in the stores of the UK
when its like-for-like sales had declined in the last three months of 2013 (Telegraph, 2013). This
company had to witness a slump in case of sales of non-food items. The fall in sales target of
Tesco in case of like-for-like sales had happened at least 1pc for long 13 weeks until Saturday of
May 25. This British-based company had to face issues in the business after facing a slump,
particularly in post-tax profits to £120 million in 2012 (Telegraph, 2013). It can be stated from
the above situations that Tesco plc under the guidance of Clarke had faced more problems in
comparison with gains from its overseas shops in 13 countries.
Previously in 2013, £1 billion was used to modernize the stores of Tesco plc to revive brand of
food and do investment in new digital technology for a plan of three years. This investment of
money was able to enhance the growth rate of Tesco Company in 2013 in Britain; only 0.5% rise
had happened in the first quarter of 2013 in February month. Just by making use of IHRM in
doing international diversification for some years, the owner of Tesco Company was unable to
concentrate on its business in Britain (Bansah, 2018). Due to this reason, at present Tesco
Company have to face stiff competition from competitors from companies, such as J Sainsbury,
Waitrose, and discounters including Aldi (Telegraph, 2013). In addition, it was forecasted by
Nomura, a house broker of Tesco of Deutsche Bank that like-for-like sales in Asia were
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supposed to lower by 4.6% and by 5.5% in Europe. In addition, South Korea's new regulations in
2013 were also responsible for obstructing the growth of Tesco in South Korea (Coe, Lee and
Wood, 2017).
Tesco had faced challenges faced in case of banking business in 2018. Tesco Company had faced
FCA's largest cyber attack, which had levied fine on this company's online services. According
to (Wood, Wrigley and Coe, 2016), FCA stands for Financial Conduct Authority and the hackers
had tried to steal significant data from the funds of customers. In order to prevent this issue and
to maintain its power on an international basis, this company's owner had used IHRM for
suspending every online transaction since November of 2016 after it was detected those
criminals were trying to get access into the services. Tesco, an MNC was unable to state its profit
correctly, which was derived from national and international business. In 2016, Tesco had faced
a claim of about £100 million from its investors to do accounting scandal (Theguardian, 2016).
It was claimed by the group of 124 British institutional funds that they had actually lost millions
of pounds after Tesco had wrongly stated its amount of profits in 2014 (Lee, 2017). This claim
was filed by a law firm named Stewarts Law in London's High Court. This incident showed the
lapses of IHRM in case of handling finance and profits both from international and national
business activities. A group known as Bentham Europe, which was specialized in funding
litigation, funded this action against Tesco and it is mainly controlled by US activist hedge fund
called Elliot Management. Due to this accounting scandal, Tesco had faced legal action in the
United States and so it had agreed to pay $12 million that is £9.87 million deal (Theguardian,
2016).
In 2014, Chief Dave Lewis had to face some major challenges in the workplace and to continue
its retail business even after making use of IHRM in this company to do business. The main
problem that was creating problems for Tesco Company nationally and internationally was to
target the right amount of audience. The offers of Tesco are somewhat are lying between the
upmarket offer of Sainsbury's, Waitrose and discounters of Aldi. Clarke had failed to cut prices
in previous years and so Tesco Company had to face losses. The management strategy of Tesco
was unclear; Laurie Mcllwee was the finance director of Tesco for 15 years and had an
aggressive, abrupt manner, no sense of taking right management decisions. Due to this reason,
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Tesco had taken the assistance of Alan Stewart, M&S's finance director just to improve the
business.
The IHRM strategy of Tesco Company should be better by creating a clear policy that what
higher authorities have to follow. For instance, a better allocation of funds in case of making the
right services for the targeted audience can improve this company's management strategy (as
influenced by Braithwaite and Christopher, 2015). On the other hand, the marketing of the
products in Britain and in other countries should be done in a better way by focusing on creating
a more online presence. In this way, both national and international customers can be targeted
and so Tesco's sales target can become higher.
The practices of identifying constraints and giving the right duties should be done in this
company. As influenced by Izmailov, Korneva, and Kozhemiakin (2016), the theory of
constraints state that some major constraints can lower the growth of companies. However, the
identification of main limiting factors can assist the business leader to achieve the set targets for
a company. In this context, the owner of Tesco should use it to know how constraints in
international sales, marketing of products can be identified. After its identification, the negative
effect of constraints can be lowered in business.
The operations management theory can assist Tesco Company's owner to make right business
policies with right people (as influenced by Hitt, Xu and Carnes, 2016). A business leader should
do the right allocation of resources and duties to the employees in business activities so that no
issues in business occur in the future years. This theory can enable the owner to alter those
members of the company, who do not know how to manage wealth and state profits in a proper
way.
This essay is centered on international human resource management and Tesco Company of
Britain is chosen to show how much IHRM has been aligned with its organizational structure of
international diversification. In addition, it is evident from the essay that Tesco's former Chief
Clarke and finance director named Laurie Mcllwee was unable to cut prices and better
management strategies to hike up sales of their products. In addition, Tesco Bank, claim from
investors had disrupted this company in the past years in Britain and in Japan, China, and South
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Korea. These issues can be solved by using IHRM that is aligned with organisational structure
and use of the theory of constraints, operations management theory.
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