Strategic Change Management and Leadership: Tesco Case Study Report

This report provides a comprehensive analysis of strategic change management and leadership within Tesco Plc, a major player in the UK retail industry. The report begins with an overview of the UK retail market, highlighting its competitive nature and rapid growth. It then delves into Tesco's background, operations, and global presence. The core of the analysis examines the relationship between Tesco's environment and the forces driving organizational change, utilizing PESTLE analysis to assess political, economic, social, technological, legal, and environmental factors. The report identifies significant trends influencing change drivers, including globalization, health awareness, and demographic shifts. Internal change drivers, such as efficiency and technological advancements (e.g., self-service checkouts), are also explored. The report utilizes Porter's Five Forces and SWOT analyses to evaluate Tesco's position and the factors that have caused alterations in the company. The main areas of change, including technological developments, customer value enhancement, and competitive pressures, are then discussed. Finally, the report addresses key issues arising from the management and leadership of change within Tesco, with an emphasis on the company's responses to these challenges and emerging organizational dynamics.

Running head: MANAGING AND LEADING STRATEGIC CHANGE
Managing and leading strategic change
University Name
Student Name
Authors’ Note

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Table of Contents
Introduction................................................................................................................................2
Section 1.....................................................................................................................................2
Section 2...................................................................................................................................11
Section 3...................................................................................................................................15
Conclusion................................................................................................................................16
References................................................................................................................................18

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Introduction
Strategic management of change can be referred to as the art as well as the science of
formulating, executing and arriving at cross functional decisions that can help organizations
to attain its objectives. As such, strategic change management can be considered to be a
design for diverse marketers to comprehend their current situation in the market in order to
divert their actions for future advantages. The current study intends to analyse the significant
trends influencing the forces and nature of organizational change and nature of relationship
between an organization’s environment and forces for change with special orientation to the
operations of Tesco Plc, a UK based retail giant. Moving further, the study also critically
analyses the key issues arising from management and leadership of change in the
organization with management and leadership responses in relation to change forces and
emerging organizational dynamics.
Section 1
Study of the UK retail industry
The retail Segment in the UK can be regarded as the most competitive as well as rapidly
growing one. As per records, of all VAT (Value Added Tax) registered businesses operating
11% are the retailers and the total number is presently recorded to be 180875. Essentially,
retail sector of UK generate around 8% of the GDP that accounts for nearly one-fifth of the
total UK economy. In addition to this, the retail industry in the UK also employs nearly 11%
of the entire workforce of UK. However, the total combine sales of this segment in the UK
are recorded to be approximately £ 265 billion during the year 2007, greater than the
combined economies of both Denmark as well as Portugal (Pantano 2014).

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Background of Tesco
Tesco Plc is referred to as the largest retail chain in the UK that has outlets in every post code
of the nation with around 2115 outlets employing nearly 280000 staff (Tesco plc 2017).
Globally, it is referred to as the third largest chain in the entire world, employing nearly
440000 people in approximately 4000 retail outlets across 14 different nations. Essentially,
Tesco has 6 different formats of operation that is to say; Express Stores (961 outlets), Extra
stores (177 outlets), Superstore (448 outlets), Homeplus (10 outlets) as well as OneShop
Stores (512 outlets) (Tesco plc 2017). In addition, Tesco also operates through its online wing
that is the (Tesco.com) in order to facilitate the overall delivery of products, primarily
grocery to the doorstep of the consumers. However, Tesco Direct is the online shopping
centre for different non-food items (Tesco plc 2017).
Evaluation of relationship between an organization’s environment and forces for
change
Significant trends influencing the forces and nature of organizational change
As rightly indicated by Shirey (2013), change is often considered to be necessary due to
external as well as internal development factors. Therefore, it is important to understand the
micro as well as macro environmental factors that influence the organization to change.
Pestle analysis of the company Tesco considers all the significant external facets influencing
on the corporation. The Pestle analysis focus on the six different factors as mentioned below:
Political: Political instability can influence the business by means of democratic government
and political legislation (By and Burnes 2013).
Economic: Inflation rate, rate of interest, level of employment and income also affects the
business operations of Tesco

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Social: demographics of population, pattern of lifestyle and social interaction, religious
beliefs as well as norms
Technological: Level of competent manpower, internet penetration and advanced
transportation and logistics systems (Packard 2017)
Legal: Laws of employment, protection laws of consumers, laws of investment along with
health and safety regulations
Environmental: Alteration in climate is influencing the overall supply as well as
transportation (Packard 2017)
Significant Trends influencing the external change drivers of Tesco Plc
Analysis of the operations of Tesco reveals that the company has successfully placed itself as
a rapidly growing firm in the global market.
The significant trends that affect the external change drivers include the following:
- Implication of a worldwide market place
- Wider recognition of diverse environmental issues
- Awareness regarding health
- Demographic change (Dinwoodie et al. 2015)
As a transnational corporation, Tesco is affected by the increasing concern regarding global
warming. Consequentially, management of Tesco have laid great emphasis on handling
climatic change by eliminating carbon business and ensuring 0% carbon operations by the
year 2050, lessening 30% of the emissions of diverse products Tesco markets by the year
2020. In addition to this, health awareness can also be considered to be a very important issue
that is influencing the operations of Tesco. Therefore, health awareness is a very significant

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concern Tesco is introducing for their own consumers by delivering improved information on
level of nutrition in order tom improve their health (Pantano 2014). Management of the
company is also making different health options accessible to consumers by offering price as
well as promotions, more number of health ranges and reformulating diverse products.
Furthermore, Tesco is also constructively developing stratagem for demographic alteration
among different races. Moreover, Tesco also has a regional buying stratagem in each region
that is dedicated to demand of regional markets on demand of several customers that again
can boost up the overall economy (Northouse 2015). Tesco has also segregated all its
suppliers for their own products with approximately 4000 regional and national suppliers.
Even though Tesco appears to be one of the largest supermarket chain operating in the UK, it
has several rivals in the market that are Morrisons, ASDA and many others. Again,
management of Tesco has also instituted own bank that is Tesco Bank.
Significant Trends influencing the internal change drivers of Tesco Plc
The triggers for bringing about change in a rational corporation such as Tesco might be the
continuous search for efficiency. Otherwise, they might stem due to ratio monitoring as a
consequence of external bench marking practices, tensions that prevail especially at different
senior levels within a specific corporation and conflicts between employee and management
(Jones and George 2015).
Due to technological factors, Tesco brought about drastic alterations in the segment of
customer service by establishing self service that is “Till” in a bid to lessen queue in the line.
Tesco Plc. Tesco also operates different types of stores in 14 different markets with
considerable food as well as non-food offerings. In addition to this, the company also have
rapidly developing services arm that includes dot com, services of telecom and finance
services (Cummings and Worley 2014). In order to avoid conflict in the internal

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management, management of Tesco instituted an “internal support as well as recognition
programme” for their workforce.
The systems approach emphasizes the significance of the inter relations between different
important internal sub systems that include the following:
Technology- In order to be competitive in the market, Tesco instituted Customer Relationship
Programme referred to as CRM and Clubcard during the mid of 1990s. Again, an advanced
technology of self service that is “Till” has also helped the operations of Tesco.
-People- Tesco also has more than 472000 workers that serve for millions of consumers.
-Management- Management of Tesco also need to be properly structured and strategic
administration is essentially Pestle analysis, Five Forces Analysis of Porter’s, SWOT analysis
and diverse critical success facets along with the value chain analysis (Kuipers et al. 2014).
Organizational Evaluation
Porter’s Five Forces Analysis takes into consideration different external factors influencing
the company.
Threats of New Threats:
The retailers market in the UK is mainly managed by very few numbers of competitors that
include ASDA, Sainbury’s and Morrison among many others that approximately have around
70% of the entire market share. The more lucrative the industry the higher is the number of
new entrants. High levels of profits in the industry attract more number of new entrants
(Hornstein 2015).
Power of Suppliers:

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Retail industries have got their suppliers for their requisite raw materials. However, the
power of the suppliers in this industry lies with the retail players. However, the retailers have
the power to dictate low prices at which they can acquire the raw materials (Rock 2014).
Since Tesco is a market leader in the industry, they can negotiate the prices better from their
suppliers as compared to their competitors.
Power of Buyers:
The power of purchasers in this retail industry essentially lies with the purchasers as there is
low switching cost and customers are more sensitive to price than brand.
Threat of Substitutes:
In case of the retail segment, there are different substitutes of Tesco that includes not only the
big retail giants but also the corner shops, diverse market malls and many others (Cameron
and Green 2015).
Rivalry:
Huge product differentiation does not exist between products of Tesco and its competitors.
The higher level of intensity of rivalry directed Tesco to introduce self check out system in
outlets in order to enhance services to customers (Cameron and Green 2015).

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Figure: Porter’s Five Forces
(Source: Cameron and Green 2015)
SWOT Analysis
Strength
Tesco has 31.6% share of the market and
provides different insurance services, club
card to gain points, banking services and
many others (Hayes 2014).
Weakness
Tesco has enormous dependence on the UK
market for the success. However, this is
unsafe as a weakness in the UK market can
hugely affect the operations
Opportunity
Business expansion of Tesco in global
markets such as European nations, America
as well as Asian continents opened up new
avenues for the corporation. Ventures into
markets of different markets namely phone as
well as internet shopping also generates
opportunity for Tesco.
Threat
Entering various new markets with new
brand calls for the need of heavy investment
as well as marketing, additional distribution
and operation expends and many others.
Recession in the market also adversely
affects the company (Hayes 2014).

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Factors that caused alterations in Tesco
Creation of Value for different consumers- In order to retain all the existing customers and
attract the new customers, Tesco adopted the strategy of creation of more value for the
customers (Quinn and Quinn 2016). This led to the implementation of different new
stratagem that includes self check out, among many others new strategies.
Growing base of customers- The overall success of Tesco can be essentially attributed to
different factors among which one of the most important is the growing base of customers.
For example, the self checkout was executed for easing out the congestion on particularly
check outs (Goodwin 2016).
Technological Advancements- Owing to growing age of technology, it is imperative for
different corporations to improve the overall technology. Management of Tesco executed the
self check out in order to enhance the overall operational efficiency, online platform
(Tesco.com) and many others (Hechanova and Cementina-Olpoc 2013).
Competition- Competition among different corporations can be considered to be one of the
most important triggers of change in majority of industries. Prevalence if huge number of
retail players in the retail market of UK has necessitated the changes for attainment of
competitive advantage in the market.
Cost of Labour- one of the primary objectives of the company is to maximize the overall
profit of the firm. This is why Tesco implemented various strategies for development of
operational capacity, enhanced online business platform to avoid costs of maintaining brick
and mortar stores, self check out system to avoid employment of more number of cashiers
and many others (Cummings et al. 2016).

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Main Areas of Change
Based on the analysis of the significant trends, the three main areas of change include:
- Constant technological developments for attainment of constant growth trajectory (for
example, development of online space, self service till and many others)
- Enhancement of higher customer value by concentrating on diversified as well as
international market in a way that can prove to be advantageous to customers and help
in attainment of corporate responsibility.
Section 2
Key issues arising from management and leadership of change
Managers often resist the overall idea of participation in order to reach a specific destination
during the time of early involvement. There are two significant advantages that include
participation to occur as early as possible during the process of change. As rightly indicated
by Lozano et al. (2015), it is vital to distinguish between diverse symptoms of resistance to
alteration and various causes behind the same.
Employee resists transformation:
Employees of Tesco also resist alteration as they need to learn different new things in order to
cope up with the change. In several cases, there exists no disagreement with different benefits
of the new procedures, however, fear of unknown regarding the future and capability to adapt
creates resistance (Hornstein 2015).
Shock of the new:
In general, individuals are very doubtful of anything which they perceive to upset recognized
routines, mechanism of operating or else stipulations of employment (Hornstein 2015).

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Thus, resistance of the workforce in the corporation Tesco can be considered to be a complex
issue that the management of the organization encounters. However, the entire procedure of
transformation is very ubiquitous and this resistance to change can be recognized as an
important contributor towards failure of different efforts to initiate transformation within the
corporation.
Lack of consensus:
Lack of consensus can also be considered to be an important issue that arise between
management and leadership of the firm Tesco. Failure to bring everyone involved on board
with different corporate alterations leads to barriers in the procedure. However, the decision
to execute the changes needs to come from the top level of the corporation. Again, all the
management staffs also need to be essentially on board and need to deal with different
alterations. As such, showing the firm’s managers the way the changes can affect the
corporation and the requisite steps for implementation of change can help corporation to get
them on board (Cameron and Green 2015).
Low Level of Tolerance to Alteration
Low level of tolerance for alteration can be defined as the fear that a particular individual
might develop due to the need of developing of new competencies as well as behaviours that
are necessary in a new operational setting. As rightly indicated by Hayes (2014), in case if a
particular employee possesses low level of tolerance towards change, the enhanced ambiguity
that stems as a consequence of having to perform their own work in a different way can cause
resistance to the novel way of carrying out the operations.
Force Field Model