Analysis of Leadership Theories and Styles within TESCO Organization

This report provides a comprehensive analysis of leadership within TESCO, a multinational grocery and general merchandise retailer. It delves into various leadership theories and models, including behavioral and contingency theories, and assesses their applicability to TESCO's challenges. The report examines the leadership styles of Philip Clarke and David Lewis, comparing their approaches and evaluating their impact on the organization's performance. Furthermore, it explores motivational theories suitable for TESCO's leaders, considering the company's specific context and challenges, such as job cuts, budget problems, and competition. The analysis includes a discussion of the advantages and disadvantages of different leadership styles, and suggests the adoption of a democratic leadership style combined with contingency theory for effective management. The report highlights the importance of adapting leadership strategies to address the changing market conditions and internal issues faced by TESCO, providing insights into how the company can improve its leadership to achieve its goals.

Leading Business
Organisations

Table of Contents
INTRODUCTION...........................................................................................................................3
PART A...........................................................................................................................................3
(1) Critical discussion on leadership theories and models..........................................................3
(2) Leadership styles of Philip Clarke and David Lewis............................................................5
(3) Motivational theory that should be used by the leader of TESCo.........................................7
PART B..........................................................................................................................................10
Covered in PPT.........................................................................................................................10
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................10
.......................................................................................................................................................12

INTRODUCTION
Leadership can be defined as a practice of instructing or guiding others so that they can
contribute in the achievement of set goals of firm. A leader is that person who motivates, guides
or instructs the employees towards pre-specified goals (Kotb and Roberts, 2011). Leadership is
most important element for getting success so manager should adopt style as per marketing
situation and working environment. If in an enterprise there will be no good leader then company
will not be able to achieve its desired result or outcome because without manager, employees
will not perform according to the specified standards due to lack of proper guidance or
instructions. This project is based on TESCO which is a multinational grocery and general
merchandise retailer. The study will state about leadership problems that are being faced by the
chief executive of TESCO along with various types of theories and models of it. It will also
describe an appropriate style which will be suitable in summer of 2017.
PART A
(1) Critical discussion on leadership theories and models
In TESCO, the chief executive officer, Mr Dave Lewis who attempts to buy Booker
Group is criticized by many people as he has taken some decision related to business expansion
he did not get the desired results. For gaining the desired outcome of made decision, he can
adopt one of the following leadership theories and model which are given as below-
 Behavioural theory- This model focuses on the behaviour of leaders. According to this
theory, leadership can be the result of effective role behaviour. A leader can get better
results by his behaviour rather than showing his traits. Mr Lewis can adopt this strategy
for getting success in the market. A leader should behave according to the environment
so that it can produce effective results. This theory is divided into two parts which are
concerned with the tasks as well as people (Craig and Campbell, 2012).
 Contingency theory- As per this concept, there is no specific way for leading people and
so, a leader should adopt the style as per existing condition. This theory is the best
because it adjusts itself as per prevailing environment that assists in achieving specified
targets on time as well as in effectual manner. It is basically divided into three parts
which are given as below-
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 Identifying leadership style which will help in motivating the people. It can be known
through questionnaire.
 Defining situation
 Matching style with existing situation (Bello, 2012)
Chief Executive Officer of TESCO should adopt contingency leadership theory which
will assist in attaining success in the market and can also guide to its employees in an effective
manner so that they can contribute in the achievement of specified vision or mission statement
(Aftab, 2013). This concept will help in dealing with any critical situation in an effective and
efficient manner by which TESCO can achieve its desired result or outcome. According to this
framework, leader can change himself according to the changing environment which will aid in
handling the team effectively and efficiently. Because of Summer 2018, this company is facing
some problems such as-
 Job cut- Because of this, many people are being unemployed and facing financial
problems due to facing loss in the business (Odumeru and Ogbonna, 2013). As per given
scenario, it is said that TESCO is facing financial failure in their business that's why it is
terminating their employees.
 Budget problem- After purchasing of booker group, TESCO is facing budget problems.
Now it has no more money to expand their business (Schyns and et. al., 2011). This
problem arise because of purchasing new group in which it has to invest their capital in
that business.
 Decrease sales- Because of less number of staff, its sales is also reducing because people
will not be served according to their expectation. If there will be less number of workers
then customers will not be served on time or according to their requirements then they
will switch to other brand (Prochaska, 2013).
 Do not know about target market- The major problem of TESCO is that it does not know
about its target market such as its supermarket is providing their services to that area
where products' demand of Sainsbury and Waitrose are high which is the biggest issue
because company will not be able to generate desired result. This problem arises because
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of Mr. Clarke because he failed to cut prices early enough to compete with the German
discount brands.
 Less overseas advantages- TESCO earns more profit in the form of major overseas
presence. In 2011, Clarke said that he is committed towards TESCO but after some time,
this business begin to start loss so CEO of company has to shut down 18 month later and
write-off 1 billion pound from the value of firm's land bank.
 No clarity and consistency- In recent years, TESCO does not about its brand management
and identity which result was that it has to loose their brand image in the market because
there is no one to control this situation.
 Lack of management strategy- At work place of TESCO, there is lack of management
strategy by which no staff perform their job effectively and efficienntly.
 Cafe culture- Mr. Clarke and Lewis thoughts that cafe and restaurants is the important
part of TESCO' service mix so they begin to start on focusing this sector which was result
that other services have to face loss in their business.
 Competition- TESCO may be the biggest super market in UK but according to the
survey, it is the second worst organisation which is providing bad services over the 12
weeks. It reduced its sales by 2.7% as well as market share by 28.3%. Recently,
Sainbury is the best performer. So for TESCO, there is huge amount of competition.
 Reducing share price- Because of having bad services, TESCO' share prices are going
down. From a report, it is analysed that in December 2015, its price was dropped to 153
pound.
(2) Leadership styles of Philip Clarke and David Lewis
A leadership style is a way of providing direction, implementing plans and motivating
people. CEO of TESCO also adopts leadership style for guiding their employees so that they can
contribute in the success of company.
Philip Clarke
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He is a chief executive officer in TESCO since 1998 who was grew up in Liverpool and
worked for company as a boy. Firstly, he is rejected by this company then he started at the co-op.
He is the biggest fan of Liverpool and also likes horse riding and sailing in his free time. After
joining TESCO, he carried out business activities in the new market in Europe and Far East as
well as he acquired 38 hypermarkets in South Korea in 2008. This action provides many growth
opportunities to its stakeholders.
He spend his too much time in examining ways to turn around the ailing Japanese chain
which it acquired in 2003. Clarke has joined TESCO board since 1998. His CV bears a
remarkable similarity to that of Leahy (Sharma, Mithas and Kankanhalli, 2014). Now 50, Clarke
has spent his entire life at TESCO which he joined in 1981 as a graduate trainees after studying
economics at Liverpool university. He contributed in the success of Tesco's march into new
market in Europe and the far East. In the time of Mr. Clarke, TESCO' sales was decreasing from
last three years because he was not adopting right leadership style that's why, employees were
not performing according to the standards. He is the first person who worked for TESCO
stacking shelves as a schoolboy. He cut the prices and reduces its profit margin and failed to
generate expected sales. After this, he said that “ having taken the business through the huge
challenges of the last few years, I think, it is the right time to hand over responsibility to other
leader” then he gave his power of attorney to Mr. David Lewis.
David Lewis-
He has spent his entire career at Unilever and worked as a head of the personal care
division. He is the first outsider to run TESCO but, is well known to senior team because of his
role at one of the retailer's main suppliers. He successfully contributed in the success of business.
Lewis moved to South America in 1996 and then Indonesia in 1999 before taking the advanced
management programme at Harvard University (Morgan, Pritchard and Pride, 2011). He is a
great leader but he has no knowledge about retailing but it does not matter. He became CEO of
TESCO when it is announced that it has generated profit by pond 250 million in the end of 2014
(Bello, 2012). When Mr. Lewis has joined to this organisation, he found that it is facing many
losses such as from supermarkets, it has to face loss of 4.15 million pound etc. then he takes
corrective action by which enterprise begin to earn profit. A year later, he started to travel
globally so that he can put TESCO's ever diminishing overseas empire under the microscope and
is also shutting the cheshunt operation down. Before entering into TESCO, he has no knowledge
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that how to run business but from his efforts he carried out firm towards success and make
positive perception in the mind of consumers.
In summer of 2017 case, chief executive officer of TESCO should adopt democratic
leadership style which will assist in motivating the employees. If business will adopt this concept
then it will gain many benefits which are given as below-
 It will increase the effectiveness and efficiency of entire organisation.
 Business operations can be carried out effectively.
 New or innovative ideas can be collected which can be used for attaining the pre-
determined objectives.
 Workforce will treat themselves as a part of company and then they will work as per the
specified standards along with giving their 100% for attaining success in the market.
As per the given situation in TESCO, leader adopts contingency theory so that he can
adjust himself as per critical situation and adopts democratic style so that it can control given
condition successfully (Aftab, 2013).
Following are given the leadership styles that are used by both leader of TESCO which
are given below-
David Lewis adopted democratic style for attaining the specified objective because
before taking decision, he asked to stakeholders for participating in decision making process. It
has many benefits such as it will motivate the stakeholders to do work according to the standards
which will aid in achieving competitive advantages over its rivals (Chen and et. al., 2011). But
Mr. Lewis took the company towards the way of success. Democratic style is the best method for
motivating an employee because in this, leader takes suggestion from workers which increases
the motivation level of them and they feel themselves as a member of company. It has many
benefits such as-
 Employees get motivated.
 New innovative ideas are received from the people which may help the company in
getting success in the market.
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But Mr. Clarke adopted autocratic style because he took decision without taking
suggestion from anyone. Just because of his wrong decision, Tesco has to face loss or other
problems such as budget problem, less generating sales etc. (Craig and Campbell, 2012) In this
style, a concept is followed which is that “Boss is always right” that means if leader will say
anything then employees have to follow it otherwise they will be liable for penalty. It has main
benefit which is that decision can be taken easily, effectively and quickly. But it has also some
disadvantage that workers get demotivated and will not work according to the standards and it
also increases employee turnover (Gormley, Colella and Shell, 2012).
(3) Motivational theory that should be used by the leader of TESCo
Motivation is the most important factor that aids in achieving the desired results or a
certain level of performance. If TESCO wants to achieve specified objectives and competitive
advantages over its competitors then it should motivate the employees or stakeholders so that
they can participate more in the success of company (McKinley, 2014). For enhancing the
participation of stakeholders, leader should take following actions-
 He should organise events so that stakeholders can learn about the working which will
result that they will participate more in business activities.
 Leader should induce them by giving incentives, bonus etc. so that they become
committed towards company (Prochaska, 2013).
Stakeholders are those whose activities influence the business operations and who are
concerned with company. TESCO has many stakeholders which are given as below:
 Consumers- It is very important for every organisation because with out having them,
enterprise will not be able to achieve its specified objectives. They are the king of
business. It influences the business activities more because if they will not be there then
company's production process will be stopped.
 Employees- They are the blood of company because if they will not be capable then
they will not be able to serve the consumers and then company will not achieve its
desired result. So TESCO should hire that person who can perform their job according
to the specified standards.
 Suppliers- He is that person who provides raw material or other necessary things to the
company. If they will not supply goods or services on time then company will not be
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able to serve the consumers on time. So it is concluded that they are also other factor
which influence the business activities.
 Government- It plays an important role in every business. It has made many rules and
regulations that have to follow by every company if it will not then it will create hurdles
in running the operation.
Stakeholders engagement is very important because if they will contribute their 100%
efforts then firm can easily move towards their decided destination. Company can achieve more
contribution from the workforce when employees will be highly motivated which can be done by
following the below given theories:
Recommendations-
 Leader should motivate the workforce by satisfying their needs and wants so that they
can contribute in the success of the company (Odumeru and Ogbonna, 2013). Needs can
be analysed by using Maslow hierarchy because all people have basically five types of
requirement that they want to fulfil in their life. So it is recommended that manager of
TESCO should use this concept which will aid motivating the consumers.
 Leader should induce the staff by giving bonus, holidays packages, incentive, promotion
etc. so that they will remain in the firm for a long period of time. Manager of TESCO can
also applied two factor theory which are explained above. According to this model,
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Source 1: Stakeholder Mapping, 2017

workforce can be motivated by giving them bonus, incentive, better working environment
etc. to them so that they can work comfortably (Schyns and et.al., 2011).
After analysing the potential risk, it is recommended that management of TESCO should
motivate employees on a regular basis and identify their needs so that they can take corrective
actions for motivating them (Schyns and et.al., 2011).
Motivation of employees are very important because a motivated worker can perform his
job in more effective and efficient manner rather that normal labour. Motivation includes internal
and external factors that stimulates desire and energy in people so that they can become
committed towards company and their objectives. A firm has various ways for motivate an
employees which are given below-
 TESCO can give incentive, bonus and any holidays packages to that person who are
performing well and is contributing in the success of the company.
 It can promote the subordinates so that in future they will perform better in future.
 It should conduct training programmes which will increase knowledge and skills of
workers which will motivate to them to work according to the specified standards and
will drive the company on the way of success (Sharma Mithas and Kankanhalli, 2014).
 Tesco should make proper working environment so that everyone can do their job
comfortably and efficiently.
PART B
Covered in PPT
CONCLUSION
From the above discussion, it is concluded that there are various types of models and
theories of leadership which help in achieving pre-determined objectives of organisation in an
effectual manner. A leader should adopt his style as per existing environment of the organisation.
It has been assessed from the report that for getting success in the market, employee’s motivation
is highly important as they are the only one who drive company on the way of success. In given
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case study, Mr. David Lewis has adopted democratic style for handling the current situation
while Mr. Clarke has used autocratic style but in those style, democratic style is best because it
helps in achieving competitive advantages over its rivals. TESCO can motivate the employees
from various ways such as by giving incentives, bonus, better working environment etc.
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