Tesco Plc Leadership Styles and Management Practices

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Tesco Plc. - Leadership Style, Management Practices, And Organisational Culture
Context of Business - Assignment 2

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Table of Contents
ASSIGNMENT – 2......................................................................................................................2
INTRODUCTION........................................................................................................................2
1. TESCO – HISTORY, PROFILE AND RATIONALE.......................................................................2
2. VISION, ORGANISATIONAL CULTURE, LEADERSHIP STYLES, AND MANAGEMENT PRACTICES
................................................................................................................................................. 3
3. INFLUENCE OF CULTURE AND MANAGEMENT STYLE ON BUSINESS STRATEGIES AND
FUNCTIONS.............................................................................................................................. 5
4. RECOMMENDATIONS...........................................................................................................6
REFERENCES............................................................................................................................. 8

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ASSIGNMENT – 2
THE LEADERSHIP STYLE, MANAGEMENT PRACTICES, AND ORGANISATIONAL CULTURE OF
THE TESCO PLC – A REPORT
INTRODUCTION
The report considers the organisational culture and leadership and management practice of
Tesco PLC, the leading retailer in the UK. The report explores the history and summary of
Tesco’s business while considering its vision, organisational culture, and leadership and
management practices in the context of different applicable theories. These aspects are
then analysed to identify their influence on the strategies and function of the company. The
report concludes with suggested recommendations.
1. TESCO – HISTORY, PROFILE AND RATIONALE
Tesco Plc is a multinational retailer of general merchandise and grocery based at
Hertfordshire, UK. It’s the leading grocery retailer in the UK with a market share of over
28%; Thailand, Ireland, and Hungary. In the world retail market, it’s considered to be the
third largest in terms of gross revenue (£57.5 billion) and ninth largest in terms of revenue
(£51 billion). Tesco has a presence in over 7 countries through over 6500 shops that are
managed by an employee base of over 440000 employees (Tesco, 2019b). It was founded by
Jack Cohen in 1919 as a collection of market stalls, the brand Tesco came into play in 1924
when Jack Cohen started selling tea bought from Thomas Edward Stockwell. The first Tesco
shop was at Barnet and it was opened in 1931 from there it reached to 100 shops by 1939.
In addition to grocery, Tesco also has a portfolio of products related to financial services,
internet services, telecom, petrol, software, books, electronics, toys, furniture, clothing, and
petrol. Tesco has been a pioneer of many new concepts that were later adopted across the
industry such as loyalty cards, self-service, high-volume low price, and product range from

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least expensive to premium at the same place. The choice of Tesco as the objective of this
study stems from the fact that Tesco is the market leader of the retail sector in the UK and
studying its organisational culture and leadership and management practices will give an
insight into what’s successful and effective in the retail sector in the UK (Tesco, 2019b).
2. VISION, ORGANISATIONAL CULTURE, LEADERSHIP STYLES, AND
MANAGEMENT PRACTICES
Vision
The vision of Tesco is,” Serving shoppers a little better every day” by abiding by the mission
“to be the champion for customers, helping them to enjoy a better quality of life and an
easier way of living.” (Tesco, 2019c). The vision of the company indicates its focus on
customer service, delivering good quality products at an exceptional value. The focus of the
company on continuously improving customer service allows it to fulfil its vision and
mission.
Leadership Style, Management Practices and Organisational Culture
In general, there are three basic leadership styles utilised by various organisations to lead
them efficiently. The first is the autocratic leadership that involves centralised decision
making without any involvement from the employee end. The second leadership style is
democratic that involves promoting and ensuring employee participation in the
organisational decision-making process. The third leadership style is the Laissez-faire
leadership style that involves the delegation of the task execution and decision making to
the employees (Thorpe, 2016). Tesco employs two leadership styles namely Autocratic and
democratic leadership styles within the organisation (Nwagbara, 2010). One is applicable at
the organisational level and the other is at the store level. At the store level, the employee
participation in the store level decision making is promoted by the store manager
incorporating the democratic leadership style while at the organisational level; the strategic
decision making is in the hands of the senior management with no contribution from the

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employee. The autocratic leadership allows faster decision making but could be a cause of
employee dissatisfaction. However, the store level of democratic leadership can go a long
way towards curbing this disgruntlement (Nwagbara, 2010).
The managers at Tesco incorporate the management theory proposed by Henry Fayol that
concludes five basic managerial functions that should be employed or executed by the
managers/management. These are planning, organising, coordinating, commanding and
controlling (Babajana and Webber, 2015). The Tesco manager's employ foresight to create
an effective plan of action while ensuring that Tesco is well organised with sufficient
resources at its disposal to implement the plan of action. Tesco managers coordinate with
other functions to ensure higher efficiency, effectiveness and employee motivation. The
managers direct or command the employees by conveying clear instructions to employees
through effective communication to ensure comprehension of their roles and
responsibilities in accordance with organisational expectations. Tesco managers ensure
effective operations through efficient performance management of employees (Babajana
and Webber, 2015). The management of Tesco follows a hierarchical structure and it’s
divided into three levels that are top, middle and first line. Tesco effectively employs the
concept of Managerial Skills proposed by Robert Katz. He categorised the managerial skills
into three categories that are conceptual, technical and interpersonal management. The
composition of these three skills that are necessary for effective execution of managerial
role is defined on the basis of the position of a manager in the hierarchy with conceptual
skills forming the smallest part at the first line management and gradually increasing to a
maximum at the top management while the technical skills are at its largest at the first level
management and decreases to its lowest at the top level management. The human skills are
equally important at all levels (Babajana and Webber, 2015).
At the time of inception, the organisational culture of Tesco was based on the founder Jack
Cohen tenet of "Pile it high and sell it cheap". It evolved from there to include quality as a
principle tenet both in terms of service and products along with categorisation of goods
ranging from premium to price conscious (Elsmore, 2017). Now, the organisational culture
at Tesco is performance and task-based with employee motivation as a significant part of
the culture. This allows the company to ensure the delivery of its vision of serving the
customers.

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3. INFLUENCE OF CULTURE AND MANAGEMENT STYLE ON BUSINESS
STRATEGIES AND FUNCTIONS
The organisational culture and management style has a significant influence on business
functions and strategies. The organisational culture and the management style define the
organisational performance that's constituted by the level of implementation of business
strategies and the performance of business functions. As mentioned earlier, the
management style of the company is autocratic at the organisational level while it is
democratic at the store levels. So it can be surmised that the first line managers employ a
democratic leadership style while mid-level management onwards the management style
becomes autocratic (Jaruzelski et al., 2011).
The management of the Tesco believes in centralised leadership and hence works towards
establishing a structured way of operating for employees. The employees are not expected
to take part in strategic decision making and are expected to focus on their designated roles
and responsibilities. This allows the employees to focus entirely on their work that becomes
comparatively easier since they have been given a specified way of executing their tasks and
path to career progress (Iqbal et al., 2015). This results in higher performance from even the
inexperienced employees. Also, the task and performance-based organisational structure of
Tesco works well with this leadership style. It allows the management to incorporate an
efficient performance management system exclusively focused on employee performance
to be evaluated on the basis of the employee's ability to incorporate the work structure
defined by the organisation. The authority invested in the managers ensures effective
delivery of performance and instils in employees a need to perform to the minimum
standards required by the company. However, the management style and organisational
culture of the company is a cause of employee dissatisfaction that can be seen by the
comparatively high staff turnover at the company. (Popa, 2012)
The democratic style of management at the store level minimises the negative impact on
employee motivation to some extent. It allows employees to be more productive within the
prescribed work parameters due to the interpersonal style of management by front line

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managers and increased employee participation at the store levels. Also, the company's
emphasis on task completion relieves some of the pressure since the employees are only
expected to complete the task and not overachieve. One of the issues of the Autocratic
management style is that the business strategy and functional delivery is defined by the
leader/senior management (Rustin and Armstrong, 2012). The 2015 scandal of alleged profit
misdirection and supplier mistreatment is an example of the failure of this leadership style.
However, in the context of Tesco, it can be surmised that the autocratic management style
has allowed the company to gain a lot as indicated by its being the market leader in the UK
market (Nwagbara, 2010).
The customer-centric organisational culture drives strategic decision making and the
operation of the business functions. The modus operandi of the employee, as well as
managers, is focused on improving customer satisfaction levels and promotes repeat
business. The business strategy of the company evolves from the tenet of the organisation
culture of being the customer champion as well as the influence of its founder Jack Cohen.
The company's strategies are solely based on customer engagement as indicated by a large
product range if the company that caters to the needs of different types of customers from
the customers that seek premium products to people seeking a cost-effective range of
products (Krupskyy, 2014). The success of the company in implementing its customer-
centric business strategy and adherence to the tenet of its founder of high quantity
purchase and cheap selling along with a segment of the premium high-quality product of
higher pricing indicates that the organisational culture of the company and the autocratic,
as well as the democratic leadership style, has worked effectively for the company (Iqbal et
al., 2015).
4. RECOMMENDATIONS
In the highly competitive modern business environment, autocratic leadership is only
effective during a crisis and its management. Also, this type of management style hinders
leadership development within the organisation since the manager up to the mid-level
management are expected to follow directions given by the senior management and this
hinders their ability to take responsibility as well as decisions (Iqbal et al., 2015). The first

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recommendation can be incorporating the element of democratic management at least
within the management allowing the managers to be a party to the strategic decision
making and supporting their development as managers and leaders. The flexibility and
engagement accorded by democratic management not only promotes the motivation of
employees within the organisation but also instils a sense of loyalty within them. This could
go a long way towards reducing employee turnover as well as effective implementation of
organisational business strategies. This change in management style also promotes
coordination and teamwork thereby enhancing the functional efficiency of the organisation.
The autocratic management style is highly dependent on the leader. Their belief and
approach define organisational work culture and task management. The change from
autocratic leadership will allow the company to curtail its dependency on nature and work
ethos of the leaders thereby allowing minimisation of the potential of scandals like the one
in 2015 which involved supplier mismanagement and profit misappropriation that led to
drastic changes in the senior management structure and also the loss of reputation for the
company along with monetary losses (Iqbal et al., 2015).
It is recommended that the company should incorporate flexibility within the organisation
regarding the work execution instead of directing the employees. This can be beneficial for
the organisation since the employees will take ownership of their work and provide a higher
level of customer service resulting in a higher customer satisfaction and brand reputation.
The customer engagement and interaction at Tesco is mostly at the store level and that too
through the store employees. The change in the approach of an employee when they take
ownership of their work not only improves the commitment levels of the employees
towards their work but also enhances customer management. This will be in accordance
with the vision and mission of the company and will lead to the effective achievement of
organisational goals and objectives.

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REFERENCES
Babajana, Z. and Webber, A., 2015. Organisational Behaviour.
Elsmore, P., 2017. Organisational Culture: Organisational Change?: Organisational Change?.
Routledge.
Iqbal, N., Anwar, S. and Haider, N., 2015. Effect of leadership style on employee
performance. Arabian Journal of Business and Management Review, 5(5), pp.1-6.
Jaruzelski, B., Loehr, J. and Holman, R., 2011. Why culture is key. Strategy and Business,
65(1), pp.1-17.
Krupskyy, A., 2014. MODERN METHODS OF MANAGEMENT DECISION-MAKING AND THEIR
CONNECTION WITH ORGANIZATIONAL CULTURE OF THE TOURISM ENTERPRISES IN
UKRAINE. Economic Annals-XXI.
Nwagbara, U., 2010. Managing Organizational Change: Leadership, Tesco, and Leahy's
Resignation. E-Journal of Organizational Learning and Leadership, 9(1), pp.56-79.
Popa, B.M., 2012. The relationship between leadership effectiveness and organizational
performance. Journal of Defense Resources Management (JoDRM), 3(1), pp.123-127.
Rustin, M. and Armstrong, D., 2012. What happened to democratic leadership?. Soundings,
(50), p.59.
Tesco. 2019a. Tesco Annual Report 2018. [Online]. [20 June 2019]. Available from:
https://www.tescoplc.com/media/474793/tesco_ar_2018.pdf
Tesco. 2019b. History. [Online]. [20 June 2019]. Available from:
https://www.tescoplc.com/about-us/history/
Tesco. 2019c. Core Purpose and Values. [Online]. [20 June 2019]. Available from:
https://www.tescoplc.com/about-us/core-purpose-and-values/
Thorpe, R., 2016. Gower handbook of leadership and management development