Tesco's Leadership and Change Management Strategies: A Case Study

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UNDERSTANDING AND LEDING
CHANGE
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INTRODUCTION: -
TESCO is a British company dealing in multinational groceries and work as general
merchandise retailer, its headquarter is located in Hertfordshire, England. If measured in terms of
gross revenue it is known as the third largest retailer. Since 1990 Tesco expended globally in 11
other countries of the world. Tesco is a part of list of London stock exchange and its total market
capitalisation is around 18.1 billion. Extra shops established by Tesco are known as
hypermarkets which are mostly located out of town and also works as warehouse also as it
contains almost every product of Tesco ( Smith and Sparks., 2004.).
COOPERATIVE STRATEGIES
 Tesco picked a trick that no retailer was aware of that is to appeal to all chunks of market
, Tesco use products of its own brand and make products easily available to the consumer
in finest mid ranges .
 According to the marketing strategy Tesco promote its product with a tagline ‘the tacos
way. The tagline shows company’s core purpose, principles and goals and also promotes
Tesco products not only domestically but internationally also.
 Another strategy of Tesco for expansion is innovate the use of existing technology for
example Tesco was the first one to use cameras to reduce the mess created by queues .
Strategies followed by the company include seven parts:-
 Growing in the core of UK: -this includes renovation of stores, increasing the staff
and coming up with more promotion ideas.
 Creator of own high value brand: -crating own products of high quality and making
them available to the consumers in low competitive prices.
 Maintaining outstanding results as a retailer: - expanding the business of each product
not only by expanding the stores but also by doing business online.
 Generating new services in retail markets: -by establishing banks company is playing
a crucial role in future success of retail services served in the market.
 Distributing responsibilities among the communities.
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 Building an efficient team: - company believes that its basic assets are its employees
for this reason company provide training to its employees so that they can work
efficiently.
 Constructing a better image: - Tesco believes that constructing a better image by
selling every product of good quality will increase overall outcome of the company
(Palmer, M., 2005.).
Vision and mission ofTesco: - strategies of Tesco change continuously in this changing world
but its core mission remains constant. A clear vision provides direction to the business and helps
in survival. There are four elements involved in vision of Tesco:-
 Company aspires to be wanted by the people around the world.
 Developing a business abandoned with opportunities.
 Innovation of Morden and creative ideas
 Maintaining trust and loyalty of customers.
Management of Tesco recognise the key to success of vision and mission of the company that
helps them to evaluate and enhance the performance of the company.
Tesco tries to work with communities so that it can stand in front of its rival. its main ambitions
are :-
 Creating opportunities for the youth around the world.
 Reduction of waste of food globally.
Company’s values and the essentials include:-
 Trading responsibly
 Reduction of company impact on the environment.
 Supporting local communities.
Overview of case study:-as Tesco establishes its grocery store it uses mass mailing as its
marketing strategy but after some time retailers started facing many issues for example bouncing
mails, incorrect addresses etc. company knows that an old customer is valuable five times more
than acquiring a new customer . Unfortunately company’s loyalty was declining so it decided to
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thank its old customers.To overcome all these problems Tesco decided to take a feedback to
know what customers wanted to purchase and how much money a customer is willing to spend
on the product. From the above information Tesco divided its customer into two parts: - old
customers and new customers. Tesco had millions of customers in its mailing list and each
customer receives various personalised promotions. The retailers had to search a millions of
products acquiring those promotions for the customers.
Demand of every customer is different but it’s very interesting to know what they have in
common. For acquiring this information Tesco launched a CRM programme. The programme
allows the retailer to know customer’s purchase history and emailing habits.
This CRM strategy resulted in re-activation of many previous customers’ emails. Pervious
loyalty of the customers was restored.
Swot analysis of Tesco
Its strengths:-
 Biggest retailer of grocery in UK: - Tesco acquires largest supermarket in UK and have
better sales and revenue as compared to other markets.
 Leading market share: -among the largest markets in UK Tesco’s grocery market is also
known to be a most popular supermarket.
 Increasing number of stores: - Tesco operates a large number of grocery stores worldwide
which lead to increasing revenues every year, addition of new stores help in generating
more revenue.
 Variegate markets and product range: - this strategy of Tesco has proven to be successful
for the company. It has diversified range of clothing, home-wares, mobile phones, music
downloads and DVD etc.
 Superior and modern technology: -using modern and superior technology not only
reduces the cost of product but increases the profit and also enhances shopping
experiences of the customers.
 Effective and efficient supply chain network: - a simplified model of business reduces the
cost incurred in development of product. Waste management policies help Tesco to
maintain a profitable relationship with its customers and suppliers.
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Tesco’s weaknesses:-
 Treacherous trial and accounting scandal: -Tesco was charged and fined because of
wrong deceleration of accounting and misrepresenting the profits.
 Reduction in operational profit: - the share prices of Tescoare declining since 2018
because of reduction in company’s operational profit.
 Financial mistakes: -company’s profit and revenues are majorly affected because of its
high debt and credit liability.
 Low-cost strategy: -although the company plays the role of price leader in the market but
its strategy leads to reduction in profit margin.
 Poor performance in specific market: -due to lack of sufficient information about the
market,many outlets and grocery stores of the company are not able to perform well in
the market.
Tesco’s opportunities:-
 Expansion of jack’s business: - the company has recently established a discount store
named jack’s store which is significantly growing. Company has the opportunity to
successfully grow the business and compete with its rivals.
 Establishing alliance with other brands: - collaborating with other reputed companies
may prove to be a good opportunity for the company. It will help the company to produce
different variety of products for offering the customers.
 Online shopping: - company can attain success by improving its online shopping system
and customer delivery services.
 Emerging of markets and addition of stores: - although Tesco covers large area of market
but setting up stores in different markets and in different countries can be a reason for the
company’s success and expansion.
Tesco’s threats:-
 Controversy of Christmas ad: -after launching the Christmas ad of 2017 company faces a
lot of issues, people boycotted the company’s products clamming that company has
shown a disrespectful act towards the faith of Christians.
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 Competition with large supermarkets: -increasing performance and growth of various
supermarkets acts as a threat to the company.
 Government regulations and economic crises: -these include tax matters and credit
crunches, economic ups and downs in the company can affect efficiency and operational
performance of the store in various regions.
Some external factors that affect the company are:-
 Political factors: - increase in political instability may affect the environment of the
company by making many different rules and regulations.
 Economic factors: - these include demand of the product, rate of interest.
Inflation,employment or income levels.
 Technological factors: -efficiency of human resources,type of technology used etc.
 Legal factors: - these include various laws for example consumer protection, investment,
business laws, heath and health and safety.
 Environmental factors: - change in climate affect demand, supply and transportation of
the products (Level, Q.F.C., 2009).
Change in leadership of Tesco due to factors:-
Management and leadership are different from each other. Management teach us how to get
things done while on the other hand leadership influences, motivates and inspires people.
Manager organise various resources with the motive of achieving company’s aim or objective on
the other hand leader chooses and creates a strong team that work together for the betterment of
organisation as a whole.
Type of leadership depends on the task, some leaders allows the team to take the responsibility
and authority of taking the decision on their own and some take on the behalf of the team. The
leadership framework of the Tesco does not only depend on skills and competencies but also on
personal behaviour and characteristics of the leader. Tesco requires a leader who possess various
leadership qualities such as confidence,positivity, capacity to inspire and can encourage team
members. Tesco provide tanning to the leaders to encourage self-review and reflection.
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Due to the changes that took place in Tesco autocratic and lazis-faire leadership style can take
place in Tesco, now the leader is solely responsible for the activities going on in the company.
Before taking any decision the leader will take the task in hand and will also consider the people
who will be affected by the task, after taking everything into the consideration he can take any
decision.He will look after the skills of employees and take care of healthy communication in
company (Nwagbara, U., 2010.).
Suggestion for improvement: - Tescohave huge success scope in the grocery market. Here are
some recommendations:-
 Exploring the existing markets: - collecting sufficient information from Exploration,
Company should expand its stores in various countries.
 Up-gradation of online business: - using innovative e-commerce sites for providing
pleasant shopping experiences to the customers.
 Feedback: -receiving feedback from public regarding new ads and schemes may protect
the company from disapproval issues.
 Boosting marketing and advertising strategies :- finding more creative and attractive
activities to grab the consumers better than competitors
 Resolving legal and financial issues: -these includeincreasing tax, payments and credit
crunches (Taylor, B., 1995.).
Barriers that change leadership decision making of the company:-factors that act as a
barriers in decision making of company are :-
 People: -for bringing a change in the company it’s very important to convince people for
the change, people in Tesco are rigid and resistant towards the change. They are not
ready for the change which acts as a complete failure in change.
 Money:-money acts a most powerful resource that has the ability to bring the change
successfully. With the help of available money resources company can establish new
stores in various parts of the country.
 Material information: - proper informative material such as reports, data and market
information acts as a barrier in bringing change. Even in Tesco if company does not have
proper information about the market it will not be able to open successful stores.
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 Stakeholders: -company’s suppliers play the role of internal stakeholders. Cutting the
prices of product by the supplier’s acts as a major concern for bringing change in the
company.
 Climate: - climate is an unpredictable resource that can change anytime and sometimes
can be ahindrance while an organisation is adapting a new change (Aboutalebi, R., 2016.).
Change that took place in Tesco Company due to these factors is:-
 Awareness: - employees of the company are more aware of the internal and external
challenges and know how to deal with those challenges. They have more information
about the market. They are now able to produce better outcome for the company.
 Desire: - desire of the employees working in the company has increased and they are
willingly supporting the change in the company.
 Knowledge: - knowledge of employees about the market has increased, they knew what
change is needed in the company and what will help them to bring that change.
 Ability: - every employee now possesses the ability to work for change in the company.
Company’s Model of change: -
Model shows how an organisation travel from one change to another. in this process organisation
come across three steps: -
 Unfreeze: -in an organisation many people are rigid and does not want to bring the
change in the organisation, they do not want to come out of their comfort zones. In this
case leaders of the organisation have to make them believe that the change is for their
betterment. This stage is known as the stage of motivation.
 Change: - this stage causes many issues in the organisation as employees have knowledge
of old system and adopting to the new one takes some time to increase their efficiency. in
this stage managers motivate their employees and build their confidence by providing
training and moral support.
 Refreeze: -in this stage employee with increased efficiency become comfortable with the
changed working environment (Brown, S., 1987.).
What to do to establish this change in Tescocompany?
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Create urgency: -thought of taking initiative towards the change help the organisation to actually
move towards the change. The company should analyse its strengths and weakness and have to
prove to the scenario that lack of new technology and self-check machines lead to many issues in
establishing the stores and also cause delay in time.Whenever there is a need for change in the
organisation, a leader should know how to bring the change and how to convince people about
the change in the organisation. Tesco should select good leaders that can work on building good
teams and can give better outcome for the company. Company needs to set another vision for
change and make a plan to implement that vision. Tesco should communicate that vision to its
employees so that employees can easily understand what company expects from them.
TYPES OF LEADERSHIP FOLLOWEDBY TESCO
Autocratic leadership: - in this type of leadership leaders tell the staff of the company what to do
and take decision for the company and for the employees solely. This type of leadership helps in
providing a single direction to the company. It is useful when company get stuck in some crises
and urgent decision is needed. However, in Tesco managers are allowed to take many
operational decisions but final decisions are taken by leaders only.
Advantages of autocratic leadership: -
 Allows fast decision making
 Improves level of communication
 Handles problems effectively
 Improves productivity
 Development of leaders
 Reduces stress of the employees
Disadvantages faced by autocratic leadership: -
 Sometimes lead to mismanagement
 Does not offer professional ownership
 Creates burden and dependence on leaders
 Lack of trust of leaders over employees
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Democratic leadership: - democratic leadership approach depends on share philosophy where
decisions are made with the combine opinion of employees as well as leaders. Each member of
the company engages equal input. In Tesco company managers sometimes involve employees in
some decisions as they feel that employees can give better opinions in some matters which may
help them to take a good decision. This approach improves motivation of employees and
encourages creativity. If some mistakes are made, they are considered as learning experiences
(Iqbal, Anwar and Haider., 2015.).
Advantages of democratic leadership: -
 Encourages creativity
 Strengthens the power and relationship of a team
 This type of leadership can be practiced by anyone
 Encourages honesty in work place
 Improves job satisfaction of employees
 Stronger commitment levels
 Increases team spirit
 Helps in building stronger vision and mission of the company for future
Disadvantages faced by democratic leadership: -
 Can lead to negative emptions
 May lead to procrastination by the leaders or the employees
 Takes a lot of time in making a decision
 It offers an element of continuous uncertainty
 In this type of leadership no one takes the responsibility of the failure
 Required trained and highly educated employees that can take proper decisions for the
betterment of the organisation (Higson and Sturgess., 2014.).
Laissez-faire leadership: - this approach of leadership is based on hands-off philosophy. In this
leadership whole authority is given to the employees for taking decision on behalf of leader.
leader is not responsible for any success or failure in the organisation. In Tesco also leaders trust
the manager and believe that manager acquires good knowledge of the department and the
business.
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Advantages of laissez-faire leadership: -
 Develops the confidence of employees
 Special authority and responsibilities given to the employees
 Better performance and outcome of employees
 Development of employee’s personality
Disadvantages faced by laissez-faire leadership: -
 No authority given to leaders
 Reduction in the confidence level of superiors
 Lack of overall development of the organisation
Tesco aims at the development of the leadership qualities of the people throughout the
organisation from lower level to upper level. All the leadership have their own advantages and
disadvantages (Bergiel, Bergiel, and Balsmeier., 2008.).
Implementing the change in Tesco: - whenever an organisation bring change whether its big or
small, many advantages and disadvantages come with it. Leaders know what change is needed in
the company but they don’t know how to implement that change in the company.
For implementing change in Tesco company following steps are needed: -
 Hiring leaders for delivery of change in organisation
 Encouraging people by rewarding them for supporting the change in the company.
 Should try to convert people with rigid nature towards the change into supporters
 Giving rewards to employees for achieving targets.
Conclusion: - Tesco should take timely feedback from its customers. Feedback should be written
in easy languages so that customers can easily understand it. Performance indicator tool should
be used by the company for measurement of its success. It also indicates the need for
improvement in the organisation. For Tesco democratic leadership is perfect where both the
employees and leaders involve in decision making. They both take decisions together for the
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betterment of the company. Democratic leadership not only involve development of employees
or leaders only but it includes development of the company as a whole (Guy, C.M., 1996.).
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