Managing Organisational Change: Tesco and Nokia Case Study Analysis

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Understanding and Leading Change
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Table of Contents
Introduction......................................................................................................................................3
Task 1...............................................................................................................................................4
Task 2.............................................................................................................................................11
Conclusion.....................................................................................................................................22
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Introduction
Managing changes in the organisation are crucial for every organisation, to meet the business
objectives and ensure business growth. In this context, it can be said that change is required to
manage any kinds of organisational issues, to improve business functions, and to make the
operations dynamic. Considering this, in the following essay, the key focus would be upon
demonstrating the organisational situations in Tesco and Nokia, two organisations, which
undergo a significant downturn in business growth. The following essay would focus upon
understanding how the organisations responded towards the issue and managed change in such
situations. In order to do that help of some theoretical backgrounds would also be undertaken.
Finally, some recommendations to deal with those issues would also be given.
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Task 1
a) Compare the impact of change on each organisation's strategy and operations and assess
the different drivers for change in each of the given examples and the types of
organisational change they have affected
In April 2015, the UK supermarket giant, Tesco, reported a record statutory pre-tax loss of £6.4
billion for the year. In addition to that, the brand trust was also hindered, as the brand was losing
the potential customers to the discount retailers, like Aldi. On the other hand, in the case of
Nokia, the organisation has undergone a downturn, upon the launch of iPhone and later the
Android smartphones. Both the organisations, Tesco and Nokia, implemented change in their
business strategy and operations. However, the impacts of the change were different for the
organisations. For instance, the change implemented by the retail giant promoted its growth and
helped the organisation to regain its position in the market within the next three years. On the
contrary, the change implemented by Nokia further possessed risk on the company's growth, and
finally, it sold the brand to Microsoft.
Considering the situation in Nokia, it has been revealed that the change impacted upon the
operations significantly. In February 2011, Nokia underwent a substantial program of change,
when a strategic partnership with Microsoft was done in March 2011, when the partners decided
to develop Windows-based smartphones, ceasing Symbian platform jointly. One of the key
drivers for this change was the growing popularity of Apple iPhone, which was grabbing its
market. To balance the investment priorities, Nokia planned to rescale the organisational
operations by making additional, reductions in Devices & Services. Nokia further planned to
pursue a range of planned measures, like reduction of some R & D project, which resulted in the
closure of facilities in Ulm, Germany, Canada and Burnaby. Further, they consolidated some
manufacturing operations, which resulted in the planned closure of manufacturing facilities in
Salo, Finland. They also reduced the non – core assets, including possible divestments. The key
driver for change in Nokia is the high, increasing popularity of Android and Apple iPhone,
which was changing the market trends and customer demands. Thus, Nokia needed to undertake
a drastic change, to gain back its market. However, the change undertaken by Nokia did not lead
to success, as they lacked enough market research.
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On the contrary, Tesco utilised thorough market research and implemented significant change in
operation and business strategies. The key drivers for change were the huge loss of market and
entry of smaller businesses and increasing market share of competitors like Aldi. They
introduced a new product line, shifted towards digital marketing and attempted to compete with
smaller chains. They focused upon customising media, for regaining the trust of the lost
consumers. The impact upon the operations was effective, which was evident by its profit return
of £162 million for the year to February 27 on sales of £48.4 billion. Via thorough market
research and findings the root behind their fall, Dave Lewis emphasised upon customers, while
improving the availability of customer services and price cuts. Driving the marketing towards
digital aspects helped the organisation to sustain its loss and improve business profits. Market
loss Tesco went good increased market share (Vizard et al., 2019).
Symbian ph, iPhone, to windows ph with Microsoft for beating android while, Nokia went bad,
sold to Microsoft
Figure 1: Nokia Phones Operating Margin
(Source: Statista.com)
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Figure 2: Tesco Financial Performance
(Source: BBC.com)
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b) Evaluate the ways in which internal and external drivers of change affect leadership,
team and individual behaviours within both Tesco and Nokia.
Upon the change implementation in the organisation, the leadership and organisational
behaviours were affected significantly. The change strategy in Nokia refocused the business on
leadership and markets mainly. The leadership change promoted the managers to take decisions
and responsibility for every operation in the organisation. In regards to the team or individual
behaviour, it has been revealed that decision making has been delegated to the local or national
teams, instead of relying upon the decisions by the overly – centralised senior management team.
The change further made the goals and incentives for more transparent for the senior leadership
team (Slideshare.net, 2019).
Although the change upon leadership gave a new direction to the company; but it was not
enough to grab and sustain success. The consequences reported laying off 4000 employees to
move to manufacture from Europe and Mexico to Asia in February. Within one month it was
announced for terminating about 1000 employees from Salo, Finland to focus on software. In
June 2012, 10000 further job losses were announced, and the closure of facilities in Finland,
Germany and Canada was reported (Dadablog.net, 2019). It indicated a significant negative
impact of leadership management on employee's satisfaction and retention. Similarly, the change
also affected the leadership, individual behaviour and team performance. Taping into its relevant
humour, the management emphasised upon a decentralised structure of the management and
leadership. It promoted satisfaction and commitment in individual behaviours. Leaders promoted
the entry of fellows in decision making, following participative leadership. Teamwork became
the major factor to achieve customer satisfaction while keeping it at the top priority for the
Tesco’s business (Smart Insights, 2017)
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c) Evaluate measures that can be taken to minimise negative impacts of change on
organisational behaviour within the organisations.
Lewin’s change management model can be implemented by TESCO to change the organisational
behaviour while having a minimum amount of negative impacts as the model is a simple to
establish in an ongoing leading company. TESCO recorded their highest losses in the year 2015,
yet they aren't going to be bankrupt like Nokia, so they need to create an innovation in the
organisation, not a total reestablishment. Lewin's model to establish the change in the
organisation by following three methods of unfreezing, transaction and refreeze can help TESCO
create the change awareness among the employees and their store before implementing them and
making the situation more complicated instead firstly properly guiding their workers to be
efficient while the transaction takes place.
The time when the transaction has been implemented the leaders keep motivating and
encouraging the efforts of the employees while marinating the efficient transaction. At last, the
organisation can make sure the business is being conducted in the manner similar to before the
transaction occurred. While for Nokia the company can establish the Kotter's 8 step model of
change as they need a total reboot of their organisational culture and new innovative products to
have a profitable business. The Kotter's 8 step model can help Nokia implement a new
transaction of their organisation to have a minimum negative impact. Kotter's 8 step plan can
manage the transaction throughout the internal and external part of the company. By ensuring
new teams of guiding the employee, analysing every factors and opportunity, creating a new
strategy for the company and their vision. Establish a convincing communication so that
everyone is aware about the company's objectives, then removing any obstacle that can occur
during the transaction. Creating faster success stories to that company can measure their
profitability and analyse to create more ways for improvement and finally ensure that the
transaction has been implemented with minimum negative impact ( Burden, 2016).
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d) Apply Systems theory, Continuous Improvement model and the Burke-Litwin Model to
critically evaluate organisational response to change.
The system theory is an interdisciplinary theory about complicated systems. It investigates the
organisation to evaluate their workflow efficiently. There can be various factors that can affect
an organisational response to change. The organisation is seen as an energetic input-output
system where the output of the energy reactivates the system. The organisation is categories in
two parts the first part of a social component, which includes the people, and the second part are
call technical component, which included the equipment, machines, and technology. Both the
components are needed for growth and to establish a change in the organisation. The company
can’t perform if the social component couldn’t cope with the change. Continuous improvement
model helps to identify the profits and saving opportunities while adapting new change model.
The method helps to find opportunities and reduce wastage.
It is overall a profitable way but training the workers through this process takes time, and
investment also makes the starting phase of the employee lengthy and exhausting (Valle et al.,
2017). The Burke-Litwin model represents the overall profitability and production of the
organisation the factors that can influence the model are leadership quality as it defines the
organisation. The strategy of the organisation also plays a major role to describe the purpose of
change. A bad organisational culture will lead to bad responses from the employees about the
change. And without proper management, the organisation won't be able to establish the
transaction.
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e) Draw conclusions and recommendations with valid justifications for planning effectively
for change and applying change impact analysis
TESCO and Nokia are desperate in need of a proper organisational change to conduct a
profitable business. Both the company can use various method and model to establish the change
in their company. There are many different ways the company can have a proper transaction of
the change, but it also depends upon the leading cause of change whether it is an internal threat
or an external. Both the companies’ leader can take the situation approach to the change. For
TESCO it will be beneficial to implement the Lewin's model while for Nokia they can use the
Kotter's 8 step model to reboot and reestablish their branding.
The change impact analysis will help to determine the effects of the change and identify the
potential consequences. It can also help both the organisation to estimate the things that are
needed to modify. Nokia needs a total change in their organisation with new innovative products
that are better than their competitors. It can profit from Kotter's 8 step model in implementing
changes for their organisations and help to keep the change efficient and provide positive results.
While TESCO needs a need promotion and marketing ideas to create a better impact on the
audience. TESCO can use the Lewin's model to implement changes in their organisation as this
technique can help them in changing the behaviour, attitudes, skills of the staffs and create the
new organisational environment more comfortable (Harrison, 2017).
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Task 2
1.(What are barriers to change? Explain referring to Individual and organisational
barriers).P4
Organisational barriers are referred to the obstacles as well as the hindrances, which are in the
flow of information among the employees. In this globalised business environment, the
organisations are constantly struggling to stabilise their market environment through the support
of profitable and the productive business diaphragm. In this regime, organisational stability can
be recognised through law and the separate form of a function under the umbrella of objectives,
culture and identity. Therefore, the organisations have separate rules and regulation to deal with
the mode of communication. This communication level can be hampered due to managerial
infrastructure, and sometimes issues can be reflected within the workplace culture as well as
structure.
The major barriers are complex organisational structure, improper organisational facilities,
hierarchical positions and the organisational policies. Organisational facilities such as stationery,
telephone and translator can be effective for the employees, and it can flow the communication
in a timely as well as accurate manner. In the workplace status, poor communication,
multitasking and inconsistent policy enforcement is a very critical factor to deal with workplace
stability and productivity. It is evident that if the organisation has an inconsistent policy and
does not include any formal guideline, the unequal treatment case can be visualised and leads to
discrimination and other major factors, which can hamper the productivity and organisational
profit. In the organisational context, if the managers can deliver the angle of commitment among
the employees, the degree of success can be assumed. However, if employees have no idea
regarding the business objectives due to various factors, the success level may be low. These
different factors are a diverse workplace, where cultural conflict can be the major barrier in the
group work. As a result, the barrier can be major obstacles for business growth. In this scale, The
current section will evaluate these barriers with regards to the case scenario of both Tesco and
Nokia by means of their decision making process and applied theoretical preferendum
(nibusinessinfo.co.uk, 2018).
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1) Determine how these barriers influence leadership decision-making in Tesco. (P4)
The Tesco is a customer-oriented business, and they aim to provide the entire value of the money
to their customers through the support of quality service. In the workplace, various barriers are a
work environment, Employee expectation, job security, and others. As per the current report, the
communication purpose for the organisation like Tesco is giving informative data to both public
and the employees. Tesco employees have to gather knowledge regarding effective
communication to deal with the customer's complaint and queries (Heyler et al., 2016). Now
internal and external communication is a major challenge here to deal with the business
objectives.
The internal communication is related to employee communication. After achieving higher
growth in the UK market, Tesco has expanded their business everywhere, and the diverse
workplace is evident at all level of business operation. In such a workplace, cultural conflicts are
common, and that can also create issues in the decision-making procedure. In the case of
decision making, power index rate is not the same everywhere, and the employees have not
proper power to involve in the decision making procedures. In this case, leaders are responsible
for understanding the employee behaviour, their knowledge aspects and then the barriers. In the
case of Tesco, such barriers can hamper workplace productivity and lead to a higher rate of job
burnout. Therefore, in the case of decision making, Tesco leaders prefer participative thinking to
resolve the severity index of those barriers.
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