Organizational Change Management at Tesco: Strategies and Challenges

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UNIVERSITY
Understanding and Leading Change
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UNDERSTANDING AND LEADING CHANGE
Table of Contents
Introduction.................................................................................................................................................3
P1 Compare different organizational examples where there has been an impact of change on an
organization’s strategy and operations.........................................................................................................4
M1 Assess the different drivers for change in each of the given examples and the types of organizational
change they have affected............................................................................................................................6
P2 Evaluate the ways in which internal and external drivers of change affect leadership, team, and
individual behaviors within an organization................................................................................................7
PEST Analysis.........................................................................................................................................7
SWOT Analysis.......................................................................................................................................9
P3 Evaluate measures that can be taken to minimize negative impacts on organizational behavior..........12
M2 Apply appropriate theories and models to critically evaluate organizational response to change........12
P4 Explain different barriers for change and determine how they influence leadership decision making in
organizational context...............................................................................................................................15
M3 Use force field analysis to analyze the driving and resisting forces....................................................16
P5 Apply different leadership approaches to dealing with change in a range of organizational contexts. .18
M4 Evaluate the extent to which leadership approaches can deliver organizational change effectively
applying appropriate models and frameworks...........................................................................................18
Conclusion.................................................................................................................................................20
References.................................................................................................................................................21
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Introduction
Change management or organizational change is referred to as the approach of evaluating the
transition or transformation of a company’s processes, objectives or technologies. The key
intention behind the change is implementing different strategies that help in making the change
adapt to the people. This sort of strategies mainly includes structured process for bringing a
particular change and then following up in a proper manner. Considering the significance of
change management in an organization this particular paper emphasizes on evaluating the
process of change management by focusing on distinctive theories, frameworks and models for
the chosen organization Tesco. It has been assessed that the UK based retail organization is
planning for an organizational change in its structure and based on that the entire provides in-
depth understanding and knowledge about the change and how it can be managed.
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P1 Compare different organizational examples where there has been an impact of change
on an organization’s strategy and operations.
The present-day companies have been quite prolific in regards to change and the impact it has on
the companies. Critically assessing the significance of change, it can be stated that change
impacts an organization in different ways and there are instances the inevitable change impacts
the strategy and operations of an organization to a certain extent. Organization change is
specifically referred to the phase of transformation an organization goes through. The
organization change specifically occurs when the major sections or the business strategies of an
organization are altered (Lamgley et al. 2013). The phase is also termed as restructuring,
turnaround and reorganization. Change can be considered as the basic foundation of competitive
advantage but for being effective, a change management program needs to be identified
specifically for the areas of addressing the requirements of all the people in the company,
potential conflicts and systematically bridging the gap among the objectives of the teams
associated with a project, executives and the employees those who are impacted by the change.
Critically analysing the significance of change and the impact it has on the strategy and the
operations of the organization, the best example that can be drawn is the case of Santander.
During 2008 Santander emphasized on establishing a significant hold in the banking industry of
UK. The major strategy of the company was to attain a prolific portfolio of the financial
institutions like Abbey National, Leicester and Alliance and various others. As per the chairman
of the organization the legacy of the organizations dates back to 1849 which has been the key
reason behind the incapability of change, and restricting the evolvement and growth. Purchasing
the financial organizations and amalgamating under Santander specifically aimed in breaking
down the processes and making them into retail banks. This has enabled Santander in
requirement of fast-tracking systems which are led by the advanced banking models that has
enhanced the way operations are carried out. The incoming CEO of Santander assessed in
overcoming the traditional ways for bringing a change in the banking sector. It was basically
considered to be a revolution rather than just evolution of the financial institutions. It has been
observed that there were certain opportunities mainly when these changes programs are
implemented. Additionally, it has been observed that the cultures of United Kingdom
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acquisitions were quite distinctive as it has been created emphasizing on the regional building
societies and footprints which are unique in nature. This particularly highlighted that forceful and
careful management were needed for integrating the processes, people and systems. The people
those were impacted by this significant change were provided with all information in detail and
the associated risks were mitigated. The teams of the branch for instance were prepared for the
distinctive consumer responses during the transition phase (Cummings and Worley, 2014). In
fact, the ones that were not impacted by this change were provided with proper understanding
and knowledge so that the changes can be embraced. In the year 2010 Santander United
Kingdom came into existence and by 2013 it became the leading retail bank that provided
savings and mortgages.
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M1 Assess the different drivers for change in each of the given examples and the types of
organizational change they have affected.
Analysing the scenario of Santander, it can be stated that change brought in is organization wide
change as large-scale transformation took place which impacted the entire organization. The
change can be referred to alterations of the strategies, operations of the traditional UK based
financial institutions which was took over by Santander and transformed into nation’s leading
retail banks. The change brought in by the organization provided the new acquisition in
transforming the strategies as well as the operations on a vast extent (Rainey and Fernandez,
2012). Analysing the entire scenario of Santander, both the external and the internal drivers of
change have affected the organization for the overall betterment. The change in the operations
can be specifically evaluated by the transformations of the UK based financial institutions in
retail banks and innovation, technology, capital and government has been the major drivers for
this particular change. Considering the innovation prospect, it can be stated the alterations of
traditional banking operations were transformed to retail bank operations which created new
opportunities for enhancing the processes and operations for the betterment of the acquired UK
traditional financial institutions (Hayes, 2018). In a similar manner technology or radical
innovation in bringing new processes revolutionized the way the operations and the strategies
implemented were carried out. Investment of capital for the resultant alterations in the
performance standards has been the key for attaining success in the UK market by Santander.
The changes brought in were also driven by the government led drivers as the policy initiative
and legislative policies impacted the entire business to attain the key objectives of success.
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P2 Evaluate the ways in which internal and external drivers of change affect leadership,
team, and individual behaviours within an organization
Tesco being a successful organization needs to critically monitor the requirement of change. It is
evident that for a big organization like Tesco the external and internal aspects of change can
influence the potentials of leadership, the teams and the individual behaviours which can create
significant amount of impact over the operations and strategies of the organization. For
evaluating the critical aspects of internal and external drivers both SWOT analysis and PEST
analysis needs to be used to provide an in-depth understanding about the ways the internal and
external drivers can impact the mentioned aspects.
PEST Analysis
Political: For the employment legislations, the UK government encourages the retailers
in providing a mixture of job opportunities from the lower paid, flexible and locally
based jobs to high skilled, and high paid jobs. Tesco being a multinational retail
organization understand the business has significant impact on the jobs and the local
people living in UK and when any new store is opened it directly destroys other jobs in
the particular sector like the traditional stores and the shops which are forced to cut down
the costs for competing with organizations like Tesco (Alvesson and Sveningsson, 2015).
The organization being an inherently labour intensive and local sector, Tesco employs
immense number of students, disabled and elderly people often providing them with
lower rates. Considering the fact that the retail industry has huge staff turnover, all these
employees provides high loyalty level and thus considered to be desirable employees.
Tesco has been benefitted from the overall promotion of trading blocs by the UK
government. The immersion for ten more nations in the EU has provided the organization
to further expand its retail operations and network all across the European nations.
Economic: The economic factor also plays a key role in understanding of change within
the organization and the impact on the leadership, team and individual behaviours. Tesco
in regards to this factor plays significant emphasis on the economic aspects as it directly
impacts the operations of the organization. Though UK economy was facing immense
recession in the year 2008 the government’s reduction in the interest rates helped in
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minimizing the rise of unemployment (Burke, 2017). This has resulted the spending
power of the consumers enhance as they were aware as well as confident about the
financial scenario. Though there was financial uncertainty therefore the consumers were
less likely to spend on the premium products. However, the positive side of recession was
that the consumers were spending more on household products rather than spending
outside which provided the opportunity to Tesco to enhance their sales output.
Understanding the key aspect of the economic side, it has been a major driver which
affected the leadership, team and individual behaviours in regards to adopt change for
performing the operations as per the requirement.
Social: The social aspect is another significant driver that enables Tesco to opt for
necessary changes within the organization and to a certain extent it impacts the
operations and the individual behaviours, team and the leadership potential. It is evident
that Tesco needs to emphasize on the requirements of the UK people therefore the social
aspect needs to constantly monitor by the organization in regards to change. It has been
observed that the UK population has more retired people compared to the children and
the ageing population bring in significant demerits for Tesco (Jones and Jones, 2013).
Considering the fact that Tesco has to provide services to the masses the ageing
population is becoming a major barrier as small deliverables are termed to be expensive
as well as ineffective. As the attitudes of the consumers towards buying of products are
changing incessantly the organization needs to change the strategies on a frequent basis
which impacts the overall organization including the behaviour of individuals, leadership
changes and the team associated to the particular operations. Thus, for making up to the
constant changes among the requirements of the consumers the organization needs to
facilitate changes to meet the demands of the consumers.
Technological: Considering the changes within the organization affecting the leadership,
teamwork and individual behaviours technological factor is among the topmost drivers of
change. It has been observed that UK is a nation which mostly emphasizes on
digitalization and therefore Tesco always focuses in updating their technology for
enhancing their consumers’ experience in Tesco stores. The constant changes in
technology for meeting the requirements of the consumers lead to changes in strategies
and operations of the organization which eventually impacts the leadership, team work
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and individual behaviours of people associated with Tesco (Huczynski et al. 2013). It is
obvious that for every new technology implemented by the organization, the employees,
teams, leadership ways need to be altered to cope up and it is an issue among the people
of Tesco as constant training and knowledge is required which impacts the operations and
most specifically the operations. For example, the introduction of RFID technology
brought in a massive change within the organization which needed intensive training of
the employees and teams to cope up with the requirements. Though the implementation
of new technology has enabled Tesco to gain competitive advantage but constant
alterations in technology also impacts the overall organization to certain extent.
SWOT Analysis
Strengths
 Tesco is considered to be largest and most significant supermarket retail chain
which various organizations want to emulate. This enables the organization to
constantly emphasize on enhancing the strategies and operations by implementing
various change initiatives.
 Tesco has a history in the UK market providing assurance and credibility for
continuing operating long into the future. This has enabled the organization is
prolifically implementing distinctive tactics and strategies for the growth of the
organization (Cameron and Green, 2015).
 The enhancement of using of new innovative technology in all operations has
created greater cost efficiencies and increase service experiences. The
implementation of such technological advancements is followed by constant
change in ways of operations and regular training programs for the employees and
the leaders.
Weakness
 The organization has been facing competitive pressures that have led to the price
wars which have eroded Tesco’s profit margin. This has enabled the organization
in focusing on other ways for gaining competitive advantage.
 Due to the lack of effective market research various retail formats in the country
have faced immense crisis and has not performed as expected. It has been
suggested that Tesco has been lacking in effective market research analysis which
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has led the organization opt for alternative measures for overcoming this
significant issue (Choi, 2011).
 There are certain subsidiaries of Tesco that has not performed at all and over the
years have become quite vulnerable to certain external aspects. It has been
observed that the profit levels of Tesco Finance were negatively impacted during
the credit crisis and it is yet to rebound from the global crisis event. This has
made the organization in opting for change measures for overcoming this
particular issue.
Opportunities
 Tesco has the opportunity in strategic alliances with distinctive brands available
in the market and the admired organizations for offering quality products for
attracting the consumers in some particular target markets. This can enhance the
performance of the organization and to attain it Tesco needs to implement change
as per the strategic alliances for the betterment of the organization.
 Tesco being a multinational brand emphasizes in enhancing its operations by
bringing in distinctive strategic measures and based on that the organization has
the opportunity in growing online and offer the wide range of products and
services via home delivery in different areas (Battilana et al. 2010).
 Tesco has always emphasized on bringing in change for enhancing the operations
and the strategies that would help the organization in attaining the objectives set.
Considering the fact, Tesco has opportunities in emerging markets for certain
retail formats which are offered by Tesco. It can be quite beneficial and provide
better access to distinctive products and services as per the demands of these
areas.
Threats
 Tesco is threatened by economic recessions and credit crunches which continue
threatening the profitability and market share. These issues also impact the overall
functionality of the organization and also pose immense threat to the functional
and business level strategies of the organization which needs to altered as per the
requirement.
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 Tesco also faces threat from the various government regulations and political
landscapes which puts them under immense pressure to adhere to the new
regulations which makes the organization to bring in changes in the operational
structure which is quite expensive (Thomas and Hardy, 2011).
 Immense stakeholder pressures in regards to the social responsibility and the
environment also brings the organization under immense threat which negatively
impacts the organization on the basis of costs.
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P3 Evaluate measures that can be taken to minimize negative impacts on organizational
behaviour
Considering the entire scenario of Tesco, it is essential for the management to take significant
measures so that the planning for the change can be carried out effectively as well as applying
the change impact analysis. The first and the foremost way are to consider the frontline
employees to actively involved in the change strategy. Providing the authority of active
employee participation in making prolific decisions in regards to the change can be quite
beneficial for getting their buy-in. Secondly, leadership and decision-making process must be
planned along with employees. This can be quite beneficial as it can help in guaranteeing the
support of the employees and gaining the early adopters for spreading the change enthusiasm.
Another way for planning effectively for the change is considering taking up a proper
communication plan in regards to the change and benefits. The leaders or supervisors must
emphasize on leadership for refocusing on the communications. A two-way conversation with all
the employees can be quite beneficial for overcoming the issues and applying the change impact.
M2 Apply appropriate theories and models to critically evaluate organizational response to
change
Considering the PEST and SWOT analysis it can be stated that Tesco change measures are
driven by various internal as well as external drivers that impacts the overall organization. As the
changes to be made for the betterment of the organization proper models needs to be
implemented for minimizing the negative impacts of change on the behaviour of Tesco and its
operations. The Lewin’s change management model is the most suitable model that can be taken
into consideration in regards to minimizing the negative impacts of change.
The Lewin’s model is one of the most significant approaches that can be implemented by Tesco.
By splitting the process of change into three distinctive stages an organization can break a large,
unwieldy shift into small chunks which account for both the people and process. The model
proposed by Lewin is described in three stages of change management that includes unfreeze,
make changes and refreeze.
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