Analysing Tesco's Management & Organisation Post-Brexit - MORG4038

This report examines Tesco's management and organizational strategies in the wake of Brexit. It discusses the effectiveness of Tesco's current organizational structure, highlighting the benefits of its parallel corporate governance and hierarchical store-level management in adapting to the changing business environment. The report suggests a contingency approach to management to address uncertainties arising from Brexit, particularly in operations and supply chain management. Furthermore, it includes an industry analysis using Porter's Five Forces, assessing the impact of Brexit on Tesco's competitive landscape. The report concludes that Tesco's strategic objective of improving service and value through automation is crucial for long-term success in the post-Brexit environment. Desklib provides students access to similar solved assignments and past papers for enhanced learning.

MANAGEMENT
AND
ORGANISATION

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Contents
INTRODUCTION.................................................................................................................................1
Organisational structure and its effectiveness........................................................................................1
One management approach that could help Tesco.................................................................................3
Industry analysis of Tesco.....................................................................................................................4
Conclusion.............................................................................................................................................5
REFERENCES......................................................................................................................................6

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INTRODUCTION
Tesco is one of the biggest groceries and general merchandises firm in Britain. In terms of
gross revenue it is the third largest retailer in the world and ninth in terms of revenues. It is
having its branch in seven nations across Europe and Asia. In UK its market share is around
28.4% and is leader in groceries market of UK, Hungary, Thailand and Ireland. It was started
as group of market shells by Jack Cohen in 1919 (Grant, 2016). In 1924, he purchased a tea
shipment from T.E. Stockwell and named it Tesco. This report showcases the way in which
structure functions appropriately after the decision of Brexit. It also suggests a modern day
management approach that might help the firm in dealing with this situation. Last part of this
report shows the industry analysis in the wake of Brexit.
Organisational structure and its effectiveness
Political environment in UK has changed and the decisions such as Brexit have affected the
business operations up to a great extent. Both EU and Britain are calculating potential
impacts that will be caused by the separation and hence companies will also have to plan their
strategies to make sure that they reduce the impact of Brexit.
Organisational structure is understood to be as the system that shapes the way in which
different tasks are directed so as to achieve the organisational goals. It has a very crucial role
in the management of business in different situations (Clarke, et al. 2017). Tesco’s
organisational structure at the corporate governance level is parallel where there are several
departments headed directors with a CEO heading them all.
At the store level its organisational structure is hierarchical which is reflecting its large size.
There are four levels management in bigger stores but it is not rigid in the case of all the
Tesco stores. The flexibility comes according to the size, range of store specific factors and
also the location (Yueh, 2017).

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Organisational structure helps organisation to strengthen the strategic decision making
process. The flexibility in the organisational structure will help Tesco in adjusting according
to the changing situations in the Brexit Environment. Since the financial problems in the
European region have got bigger hence the corporate governance has to be very effective.
Tesco has a parallel organisational structure to check and balance each decision being taken
in this situation. Since the turbulence due to Brexit at the store levels will be large hence the
roles and responsibilities must be hierarchically distributed so as to improve the flow of
instructions and make the work process smoother. In the wake of Brexit when the new ties
and business partners need to be made, flexibility in the organisational structure will help the
firms in managing the task (Howell, 2018). This will also help to manage changes that will be
made at individual activities of the firm as experienced managers will be placed for each of
their operations. Since the changes will be required due to the changing environmental
conditions hence hierarchical structure could benefit the organisation.
Along with this the organisational structure of Tesco will help in removing the chances of
failure and improve the risk taking ability of the company which is very much necessary in
the environment that will be created after Brexit. Tesco has more local people in the
organisational structure at the store. This will help the firm in managing the operations even
after Brexit as they will not have to leave people from other regions of EU at important
positions of the organisational structure. This will not create turmoil in the talent management
of Tesco.

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One management approach that could help Tesco
In order to reduce the impact of the Brexit, management needs to adopt an approach that is
capable of dealing with the situations that would occur in front of the company on regular
basis. Among the different types of management approach available with the firm, the best
approach that suits the firm in the wake of Brexit will be Contingent approach. This approach
will help the firm in managing all the situations that arise due to Brexit. Contingency
approach states that no approach to management is the best approach and the changing
environment cannot be handled with rigid approach. Company must change the approach
according to the changing situation (Dudovskiy, 2016).
Since the consequences of the Brexit is uncertain and largely depends on the negotiation that
is going on between EU and Britain. If the negotiations are in favour of the organisation, then
there is a chance that the challenges for the companies working in the UK will be less
otherwise company will have to face lot of challenges. Most numbers of issues will arise in
operations management and for resolving these issues the most effective ways will be to use
the contingency approach (Weinberg, 2017). The leaders needs to respond according to the
situation and must have creativity in their idea so as to reduce the effect of challenges posed
on different departments of Tesco due to changing environmental condition in the wake of
Brexit.
For example there will be change in the supply chain management of Tesco as lot of suppliers
and distributors of the Tesco are from different parts of the EU. Company will have to find
new partners and will have to improvise their supply chain management so as to ensure that
no gap remains in the demand and supply of different types of products (Butler, 2018). In
order to maintain the balance company will have to take contingency approach so as to act as
per the changing demands of the market and hence availing products from the producers.
Contingency approach will also help Tesco in making sure that they have an effective plan
for dealing with different bleak situation that arise in operations management. In
implementing this approach, flexibility in the leadership will play a much greater role.
Contingency approach in the management will help in maintaining the faith in the minds of
the stakeholders that the company is ready to face any situation that arise due the situations
such as Brexit.

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Industry analysis of Tesco
For doing industry analysis, Porter’s five force model will be beneficial.
 Bargaining power of customers: This will still remain on the higher side as the
competition within the industry is very large and people have huge numbers of
options to select from (Itv Report, 2017). Only a slight reduction will in the numbers
of company who were doing free trade in UK from other parts of EU.
 Bargaining power of suppliers: This will become moderate as the low cost suppliers
of the Tesco that were from other parts of the EU might not be available hence it will
increase the bargaining power of the local suppliers (Chapman, 2018). Still it will be
moderate as there are large numbers of internal suppliers present in UK who will
reduce each other’s power.
 Competition: There seem to be very little effect on the numbers of competitors
present in the UK retailing market (Itv Report, 2017). Only a slight bit of reduction
will be in the numbers of small scale companies as Brexit is going to affect them most
harshly. Even in the wake of Brexit this threat remains on the higher side.
 Threat of new entrants: This threat is moderate as the changing norms will attract new
investors to invest in the retailing sector. But, it is also the fact that in order to open
such large supermarket chains lot of capital will be required hence the threat remains
to be moderate (Bold, 2017).
 Threat of substitutes: There are large numbers of innovation going on in the retailing
industry hence the numbers of substitute products are also in large numbers. This
condition is not going to change much after enforcement of Brexit also hence this
threat remains to be on the higher side (Conrad, 2017).
In the changing business environment it has become essential for the organisation to bring
innovative strategic objectives so as to ensure the long term success of the company. For
Tesco Innovative strategic objectives is to improve the service and value rather than pricing.
They are planning to make their organisation more automated and hence removing large
numbers of people from its stores (Potts, 2018). Removing people will help the firm in
making cost cuts which is a major concern of the investors in Britain these days. They are
planning to bring more innovative technologies in their operations so as to bring efficiency in
the work process. Most of them will be in the supply chain management.

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Conclusion
From the above based report it can be concluded that Tesco being one of the biggest retailers
in UK will face different types of challenges in the wake of the Brexit. They have a parallel
organisational structure at the corporate governance level and at the store level they have a
hierarchical organisational structure. The flexibility in the organisational structure will help
them in adjusting to the changing business environment due to Brexit. Contingency approach
to management will let the functions of the company to be effective. Industry condition for
the company will remain favourable and the innovative strategic objective that company has
used is to bring automation to the business processes.

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REFERENCES
Bold, B. 2017. Tesco brand 'most associated with Brexit'. Online Available at:
https://www.campaignlive.co.uk/article/tesco-brand-most-associated-brexit/1429028.
[Accessed on 17th December 2018]
Butler, S. 2018. Tesco to shed up to 1,700 jobs in new management shake-up. Online
Available at: https://www.theguardian.com/business/2018/jan/22/tesco-to-shed-1700-jobs-in-
new-management-shake-up. [Accessed on 17th December 2018]
Chapman, B. 2018. Tesco planning to stockpile food over no-deal Brexit fears, supermarket
admits. Online Available at: https://www.independent.co.uk/news/business/news/tesco-food-
stockpiling-no-deal-brexit-a8566571.html. [Accessed on 17th December 2018]
Clarke, H.D., Goodwin, M.J., Goodwin, M. and Whiteley, P., 2017. Brexit. Cambridge
University Press.
Conrad, A. 2017. To go or not Tesco? Brexit’s Potential Impact on the UK Food Industry.
Online Available at: https://rctom.hbs.org/submission/to-go-or-not-tesco-brexits-potential-
impact-on-the-uk-food-industry/. [Accessed on 17th December 2018]
Dudovskiy, J. 2016. Tesco Organizational Structure. Online Available at: https://research-
methodology.net/tesco-organizational-structure/. [Accessed on 17th December 2018]
Grant, W., 2016. The challenges facing UK farmers from Brexit. EuroChoices, 15(2), pp.11-
16.
Howell, E., 2018. An Analysis of the Prospectus Regime: The EU Reforms and the
‘Brexit’Factor. European Company and Financial Law Review, 15(1), pp.69-100.
Itv Report, 2017. Tesco boss: 'Brexit is squeezing household budgets'. Online Available at:
https://www.itv.com/news/2017-04-12/tesco-operating-profits-up-30-to-1-28-billion/.
[Accessed on 17th December 2018]
Potts, O. 2018. Tesco’s new Brexit supermarket doesn’t stack up. Online Available at:
https://www.spectator.co.uk/2018/09/tescos-new-brexit-supermarket-doesnt-stack-up/.
[Accessed on 17th December 2018]

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Weinberg, C. 2017. Brexit vs. Tesco: Will Britain’s Largest Grocer Stand the Ultimate Test?.
Online Available at: https://rctom.hbs.org/submission/brexit-vs-tesco-will-britains-largest-
grocer-stand-the-ultimate-test/. [Accessed on 17th December 2018]
Yueh, L., 2017. Britain's Economic Outlook after Brexit. Global Policy, 8, pp.54-61.