Systems Thinking and Strategic Thinking: Tesco Case Study Report

This report delves into the concepts of systems thinking and strategic thinking, exploring their terminology, approaches, and implications within a business context. It examines how these frameworks contribute to effective organizational management and strategic planning, with a specific focus on T...Read More

SYSTEMS THINKING
ESSENTIALLY SEEKS
TO UNDERSTAND
PHENOMENA AS A
WHOLE FORMED BY
THE INTERACTION

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Theme 1: Terminology of system thinking.................................................................................1
Theme 2: Terminology and approaches of Strategic thinking....................................................3
Theme 3: Complexity perspective: new ways of strategic thinking...........................................5
Theme 4: Complex adaptive systems: Modelling complexity....................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................9

INTRODUCTION
System thinking is the phenomenon for establishing systematic interaction within the
organisation units which helps to handle business problem effectively and efficiently. It plays a
crucial role for enterprises because it promotes implementation of strategic thinking in work
which helps in managing successful business operations. Further, the report will evaluate about
the terminology of system thinking and strategic thinking with the help of views of different
authors. Also, it will identify its implication in Tesco, one of the leading retailer of United
Kingdom. Tesco offers different types of food products, grocery, electronic gadgets, bay care etc.
In accordance to so many functions the firm offers its services online and offline which denotes
the need the of strategic and system thinking in organisation. Thus, the report will outline
Complexity perspective and Complex adaptive systems which is model that demonstrate
effectiveness of system and strategic thinking.
MAIN BODY
Theme 1: Terminology of system thinking.
Systems thinking is termed as phenomena as a whole formed by the interaction of parts
because it helps the firm in deriving different strategical approaches which can assist the firm in
enhancing its growth. Further, it is beneficial as it helps the management in handling
organisational problems by establishing different style of strategical management. Further, its is
implemented in organisation at the time of turmoil in external and internal environment of
business (Ulrich and Probst, 2012). System thinking enables analysis over problems and business
challenges which can lead to uncertainty. Tesco the leading retailer of United Kingdom
implements the use of system thinking as it helps the management in evaluating problems
solving strategies which are effective for solving challenges of organisation. Further, according
to Flood, 2010, system thinking is beneficial because it helps in deriving systematic
understanding over different situations. System thinker in large enterprises helps the
management in developing analytical thinking over different circumstances of business and
business problems. It plays an important role in business as it assists the enterprise in
maintaining sustainability in business operations. The approaches help the organisation in
developing understanding over complex situation.
Moreover, thinking systematically is effective as it helps in analysing problems and
complexity of business issues at initial level. Apart from this, implementing this style of
1

thinking helps the firm in enabling effective communication between different department of
company. Communication in Tesco plays an important role for management of successful
business operations. It is effective tool For retail because it determines behaviours and
involvement of employees with organisational functions. On the other hand it is the way which
helps in identifying effective leadership quality by analysing individuals response to various
business problems. Best and Holmes, 2010, has stated that system thinking is important because
it focuses on generating quick response which is effective of business growth and development.
Further, with the help of this the leaders in company can enhance different ways of managing
organisational problems which arise due to fluctuation in internal and external environment.
This the thinking which assist the firm in making strategic changes in business operation by
implementing systematic methods of improvement. As per the views of Yolles, 2016 system
thinking in organisation connect all the components by establishing effective interaction between
business units. The author believes that system thinking promotes efficiency of employees by
collaborating their efforts. In accordance, system thinking is denoted by the interaction between
all the units of organisation. It is denoted by pattern of behaviours of individuals to different
situation For instance, when taking water in glass and the mind of person instruct it for filling
that glass full with water. Then ultimately when the tap is turned on and when the glass is been
filled than the human mind ultimately is focused on turning tap off. Thus, it is synchronisation of
mind and efforts which happens through collaboration of efforts which is process with the help
of system thinking. However, system thinking is effective process because it helps the firm in
making independent changes, recognising the need of restructuring, gathering feedback,
analysing long-term and short term goals and collaborating all the business units together.
2

In accordance from system thinking it has derived that this process of managing functions
systematically assist Tesco in making changes effectively with the helps of strategical thinking.
With the helps of thinking process, the management of Tesco has focused on promoting open
communication between all the units of organisation which assist the firm in eliminating the
communication gap which is beneficial for managing various organisation issues. Interaction
between all departments of Tesco is the major tool of retailer because it is the engaged strategy
which aid in analysing involvement of employees in job functions and further helps in tracking
performance of entity. According to management of Tesco it has been derived that leadership
trait of employees are denoted by successful functioning and management of organisational
functions. The management has implemented systematic thinking in organisation in order to
stability in business operations and for collecting relevant feedback regarding management
functions. In case of business problems in Tesco the firm implements the use of system
Approach to problem solving which enables various differentiated idea to one problem which is
3
Illustration 1: Systems Approach to Problem Solving
Source: (Dr Stuart, 2016.)

the most effective way that establishes collaborate and synchronize in all business components. It
involves two types of thinking first divergent and second convergent. In divergent thinking
problems is being analysed and different solution and ideas are being generated. Further, the
management considers all the ideas and solution and eliminates the least effective ideas which is
termed as solution integration (Jackson, 2010). With this process, the management reaches to the
best alternatives from evaluation and selection is done and lastly last solution is being derived.
This whole process is based on synchronized efforts of employees and management.
Theme 2: Terminology and approaches of Strategic thinking.
Strategy thinking is focused on innovating different strategies to manage business
problems. Strategies are focused on collaborating different procedures together in order to attain
one particular objectives and goals. According to Leveson, 2011, strategic thinking generally
helps the firm in managing decision with regard to external decisions. Strategic planning is done
after analysing the problems and it solutions. Strategic planning of firms needs implementation
of strategic tools which helps the business in determining it problems and shortcomings. This sis
generally done by organisation with the help of tools like SWOT and Pestle analysis. Apart from
this there are different strategical tools which assist the firm in managing fluctuation of micro
and macro environment. Implementing the use Swot analysis helps the company in analysing its
internal strength and weakness. Moreover, it helps in determining various opportunities and
threats which can be beneficial or can be curse to business functions. Strategic planning of
business is done in strategic thinking phase in which the enterprise in focused on overcoming
loopholes and shortcoming of firm which can harm its growth and development. Apparently,
Zexian and Xuhui, 2010, has stated that synchronising efforts of system and strategic thinking is
the process which helps the enterprise in managing successful organisational functions. Strategic
thinking enables different tool to overcome problem whereas system thinking helps the entity in
developing different ides to assist strategic thinking.
Tesco implements the use of Strategic thinking which assist the firm in making changes
in services keeping in mind requirement of internal and external environment. The company
focuses on evaluating market and internal management in regular basis which promotes system
thinking in firm. Therefore, with regards to this, it has been denoted that swot analysis of Tesco
demonstrate that ultimate strength of company lies in its products which are wide and
4

differentiated from competitors therefore to maintain the strength of products, the management is
focused on implementing regular innovation in its products keeping in mind consumers
preferences. However, from weakness it has been evaluated that it is important for the firm
develop its web services and need to enhance its Information technology system. Therefore, to
overcome this, the firm implemented the use of system and strategic thinking from which it has
been discovered that company need to increase investment in web and it department, because
these are units which can directly influence buying behaviour of customers across the globe.
According to North, Collier and Sydelko, 2013, there are different approaches to strategic
thinking that is top down approach, bottom up approach etc. Both the approaches of strategic
thinking helps the organisations in processing information which includes all the views such as
scientific, humanistic, software etc. In top down approach, the management focuses on first
global competition, change, demand and strategies. Secondly it goes to information seeking from
local economy because it helps in determining strategies use by local rivalries for managing
successful business functions. Then, it comes to sector in which the firm focuses on specific
sector in which organisational functions are related. Lastly the industry and business. This
approach helps the firm in seeking for all the necessary information for managing changes. It is
the big approach for organisation but when implementing the use of this system, the firm aims at
dividing information and management in smaller segments which make strategic thinking
process simpler. However, bottom up approach is focused on inductive reasoning in which the
management process the information which from outside world of entity. In this the enterprise
implements the use of system and started thinking as it helps in making perception on external
environment.
In accordance there are different strategical models which helps Tesco in analysing
changes of internal and external environment like Porter five forces approach assist the firm in
analysing competition from substitution, new entries, rivalries etc. The retailer has implemented
the use of this approach to make changes in services to attain competitive advantage.
Implementing the use of strategic thinking helps the company in analysing external and internal
changes which can lead to uncertainties (Paina and Peters, 2011). Moreover, strategic thinking is
effective process of Tesco as it helps the firm in determining emerging strategies which assist the
enterprise in managing changes easily. The strategical thinking and models are important to be
implemented in business because it derives easy way of handling business problems. On the
5

other hand there is VIRO strategical approach which helps the firm in determining the value of
its products with regards to competitors and customers. Strategic and system thinking in
organisation is important because of development, increasing sales, attaining competitive
advantage, decreasing congestion checkouts, accelerating profits, reduce labour cost, to serve
customer satisfaction and to make optimum utilisation of resources.
Hence, to address strategical changes which are been analysed from diverged views and
possibilities the firm implements the use of system thinking which helps in making systematic
arrangement of business problems and their solutions. With the help of this the business is able
to determine different possible strategies and opportunities to growth business functions in order
to stand out in competition (Crawford, Costa-Gomes and Iriberri, 2013).
Theme 3: Complexity perspective: new ways of strategic thinking.
Implementing system thinking in organisation is a complex process and comes with
different barriers like it demand effective communication, appropriate behaviour, chain reaction
and track over business performance. The structure of Tesco is divided into units and sub units.
Further every individuals is assigned work according to their skills and abilities of performing.
Setting diversion is roadmap is the difficult process because it aims at interrupting entire process
of management and collaboration between business units (Complexity Theory and Strategy A
Basis for Product Development, 2005). Implementing system thinking comes with making of
assumption and prediction. Therefore, organisation can not predict response of implementing
changes. However, there are different perspective of strategic thinking which are faced by Tesco
such as, lot of alternatives, ineffective communication, poor control over employee and business
performance, arrogance, negligence, poor management practices, lack of strategic and system
thinking, distribution of power and authorities, scarcity of resources etc. There are major
barriers which restrict system thinking process of Tesco. For instance, of in case the management
is planning change in products with collaborative efforts but after al the panning it has been
determined that there are lack of resources and investing in new resources is risky process than it
is the situation which will hinder strategical thinking of management.
In strategic thinking the major problem faced by business enterprise is collaboration
because every department of organisation has different job functions and ability to perform and
when there is need of collaborating and communicating between all units the situation because
barrier because no employee is ready to coordinate and communicate with each other. Apart
6

from \this strategic changes in organisation are risky because all are based on assumption
therefore when implementing the use of strategic models like Pestle and Swot it is difficult for
the firm to determine the most effective step and change which can helps in managing success
full business operations. On the other hand, relation strategic planning to real world is full of
uncertainties. The process of linking strategic planning to real world changes is connected with
different networks like, decision rules, strategy of firm, structure, which is connected with
decision making which is further related to real world scenario. Further, from real world the
management aims at collecting information and feedback which can be true and can be
hypothetical which can directly influences decision making system thinking of enterprise (Dr
Elizabeth and Dr Ysanne 2017). Hence, in accordance to Complexity perspective, it is difficult
of the organisation to implement strategical thing in organisation as it is uncertain and risky
process.
Theme 4: Complex adaptive systems: Modelling complexity
According to Complex Adaptive Systems CAS, 2004, organisations are defined system in
which different individuals and work is connected to each other. Further organisation s are
adaptable to internal and external changes. The author believes that internal competition in
enterprises arise due to socialising of employees and politics between workers of different
departments. Complex adaptive system offers the system to entity in which all the functions and
components of organisations are connected to each other. CAS model is focused on
development assist in turning information into feedback and collaboration. Further, the author
believes that implementing this system in organisation helps the management in making
assumption on the strategical changes in organisation. In accordance, CAS helps the
management in seeking important information which required to be implemented internal
management of firm in order to enhance business growth. This adaptive system thinking is
focused on analysing mission, aligning roles and duties, collaboration and feedback. This
process of system thinking model helps the management in implementing systematic changes.
The system thinking with the help of this model is effective only after effective interaction and
continuous management of changes (Dragoni, Oh, and Tesluk, 2011).
However, the CAS system of Tesco is focus on making effective decision and developing
shared goals to establishing coordination and cooperation between employees job functions. This
system thinking approach provides stability of functioning to workers which help to enhance
7

growth of business. For instance, the CAS approach assist Tesco in connect functions of two
departments of Tesco. For instance, if marketing department of company evaluates need of
making change in grocery products than it is important for the management to implement the use
of system thinking as it will assist marketing team in collaborating their efforts with all
departments like information will be supposed to finance department which will assist in
deriving the need of funds. Further process will move forwards to human resource team who will
seek for more manpower which can helps in making innovation. Production department who will
ensure that the products which are produces and offered are according to consumers taste ad
preferences.
Thus, as per the example it is clear that CAS system promotes systematic thinking and
promotes interconnection between all the business components. In accordance to this model, the
structure of organisation is connected with network in which every individuals perform job
functions for one common goal. There are some specific features of this CAS model which are,
purpose of organisation emerges and changes with time and it can be adapted only with
interaction. Further, the model is focused on measuring performance by fitting into the business
environment effectively (Complex Adaptive Systems CAS, 2004). Apart from this, it promotes
effective system thinking because it focuses on collaboration and communication between
employees and two parties involved in strategic planning.
CONCLUSION
The report summarized concept of system thinking which is focused on promoting
interaction of different business components as it helps in deriving different strategical
approaches to boost business growth and development. Also, it evaluated the system thinking
process of Tesco, the leading retailer of United Kingdom. It has been found out that company
implements the use of system Approach to problem solving which is focused on divergent and
convergent thinking. Further, the report outlined that Strategical thinking which is focused on
innovating different strategies to manage business problems. Moreover, it analyses bottom up
approach and top bottom approach which provides different process of managing change in
organisation. Apart from this it evaluated the barriers of strategical thinking which comprise
business performance, arrogance, negligence, poor management practices etc. Moreover, it
identified various strategical tool which promotes strategical thinking of retailer like, Swot,
Pestle, Vrio etc. Thus, the report concluded CAS model which is focused on development that
8

assist in turning information into feedback and collaboration. From the above discussion it has
been determined that CAS system of Tesco helps the management in promoting effective
decision coordination and cooperation in business activities.
9

REFERENCES
Books and journals
Ulrich, H. and Probst, G.J. eds., 2012. Self-organization and management of social systems:
Insights, promises, doubts, and questions (Vol. 26). Springer Science & Business
Media.
Flood, R.L., 2010. The relationship of ‘systems thinking’to action research. Systemic Practice
and Action Research, 23(4), pp.269-284.
Best, A. and Holmes, B., 2010. Systems thinking, knowledge and action: towards better models
and methods. Evidence & Policy: A Journal of Research, Debate and Practice. 6(2).
pp.145-159.
Yolles, M.I., 2016. Critical systems thinking, paradigms, and the modelling space. Systems
practice. 9(6). pp.549-570.
Jackson, M.C., 2010. Reflections on the development and contribution of critical systems
thinking and practice. Systems Research and Behavioral Science. 27(2). pp.133-139.
Leveson, N.G., 2011. Applying systems thinking to analyze and learn from events. Safety
Science. 49(1). pp.55-64.
Zexian, Y. and Xuhui, Y., 2010. A revolution in the field of systems thinking—a review of
Checkland's system thinking. Systems Research and Behavioral Science. 27(2). pp.140-
155.
North, M.J., Collier, N.T. and Sydelko, P., 2013. Complex adaptive systems modeling with
Repast Simphony. Complex adaptive systems modeling. 1(1). p.3.
Paina, L. and Peters, D.H., 2011. Understanding pathways for scaling up health services through
the lens of complex adaptive systems. Health policy and planning. 27(5). pp.365-373.
Crawford, V.P., Costa-Gomes, M.A. and Iriberri, N., 2013. Structural models of nonequilibrium
strategic thinking: Theory, evidence, and applications. Journal of Economic Literature.
51(1). pp.5-62.
Dragoni, L., Oh, I.S. and Tesluk, P.E., 2011. Developing executive leaders: The relative
contribution of cognitive ability, personality, and the accumulation of work experience
in predicting strategic thinking competency. Personnel psychology. 64(4). pp.829-864.
Online
10

Complexity Theory and Strategy A Basis for Product Development. 2005. [Online]. Available
through: <http://www.complexityforum.com/articles/complexity-strategy.pdf>.
Dr Elizabeth Mc and Dr Ysanne C. 2017. Complexity, Strategic thinking and Organisational
change. [Online]. Available through: <http://oro.open.ac.uk/7497/1/final_paper.pdf>.
Complex Adaptive Systems CAS. 2004. [Online]. Available through:
<http://www.bobwilliams.co.nz/ewExternalFiles/CASmaterial.pdf>.
Dr Stuart Burge 2016. The Systems Thinking Tool Box. [Online]. Available through:
<https://www.burgehugheswalsh.co.uk/Uploaded/1/Documents/Decision-Matrix-Tool-v1.pdf>.
11