Organizational Change Management at Tesco: A Case Study

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UNDERSTANDING AND LEADING CHANGE
TESCO

Contents
Introduction...........................................................................................................................................0
P1 compare different organization where there has been an impact of change on an organization's
strategy and operations.....................................................................................................................0
M1 Access the different drivers of change in each of the given example and type of organizations
change they have affected.................................................................................................................3
P2 Evaluate the ways in which the external and internal drivers of change affect leadership, team
and individual behaviour within an organization...............................................................................3
P3 Evaluate measures that can be taken to minimize the negative impact of change on
organization behaviour......................................................................................................................5
M2 Apply appropriate theories and model to critically evaluate organizations response to change 6
P4: Explain different barriers to change and determine how they influence leadership decision-
making in a given organisational context..........................................................................................9
P5 Apply different leadership approaches to dealing with change in a range of organizational
context.............................................................................................................................................10
M4 Evaluate the extent to which leadership changes can deliver organizational change effectively
applying appropriate models and frameworks................................................................................12
Conclusion.............................................................................................................................................0
References.............................................................................................................................................0

Introduction
Organization change is the process through which the companies change organization
structure, culture, technology and operational methods within the organization and its
impact on the organization. In today's business scenarios the company have to embrace
change in order to remain competitive in the marketplace. The report analyses the
importance of organizational change. To understand better the study was conducted in
context to an organization. Microsoft and Tesco reorganization efforts and its positive
impact on the organization is presented in the report. After studying the organization
change at two organization it can be concluded that change is important and organizations
need to understand its value. Both Microsoft and Tesco were able to transform themselves
through change. Currently, both companies are leaders in their respective business. For
effective organization change, it is important that the companies try to minimize the
negative impact of change on the organization.

P1 compare different organization where there has been an impact of change on an
organization's strategy and operations
Organization change is one of the riskiest things a company do. Reorganization can have a
great impact on the company business. It can help the company in setting its path towards
future success for the company. Organization change leads to affecting the fundamental
nature of an organization. Reorganization can be a very radical move for the company, but it
the only way through which the company can make for the loss or the company aim for
maintaining its business growth momentum. The process of reorganization has the potential
for converting a struggling a company into a profit making organization (Burke, 2017).
Example of organizations that have reorganized themselves successfully
 Reorganization of the Microsoft
 Reorganization of British Airways
Microsoft Reorganization
Microsoft is a great example of organizational change. The company has revamped itself for
competing in the marketplace. It has achieved what many companies can never achieve.
Microsoft is currently the most valued organization in the world. But this was not possible a
few years back. The company CEO Satya Nadella saw the need for the reorganization of the
company. The company was very successful with its flagship product the Windows
Operating System. The OS business was able to provide the best returns and soon the
company become one of the most profits generating company (Jones, 2013). The long-lived
success of its OS business has helped the company in becoming the most valued tech
company in the world. After the success of its OS and Office products, the company was
struggling to repeat the business success that the company has enjoyed since decades. The
organization was struggling and facing various challenges from its competitors. After the
failure in the mobile OS business the company business was declining.
The major competitors of the company like Google and Apple were successful with their
smartphone business. The launch of the Android operating system was able to gain most of
the market share in the smartphone OS business. Microsoft was facing the most challenging
business environment at that time. The company founder Bill Gates appointed new CEO for

the company. The new CEO Satya Nadella was able to sense the need for the company
reorganization. The organization change was the only option through which the company
will be able to gains its previous glory. The major challenge for the company was its own
employees. There was a constant war between various different business units, the different
department was not able to work in coordination. The company lack of innovation forced
the company to become depended on its OS and Office products. The company made most
of its profits by launching new versions of Windows operating systems and office products.
The company's top tech competitors like Google and Apple were able to move forward by
launching new products and services. Google become the market leader and Apple was able
to dominate the mobile business. Microsoft struggled to launch and successful products
(Cummings and Worley, 2014).
The previous situation of the organization:
After taking on the responsibility of the company in its own hand the company new CEO
Satya Nadella took on major organizational structuring that helped the company in
removing the destructive internal competitions within different units. The CEO suggested
that the various products and services of the company will no longer be separate units
within the company. All employees must focus on a limited set of goals and targets (Dhillon
and Gupta, 2015). The main focus of the company should be on;
 Building more products and services for the customers. The company should
encourage innovation culture at the organization.
 Various different units of the company must work in coordination. They must help
each other in developing new and innovative products
 The company should focus on improving the productivity of employees
 There was an urgent need for reorganizing the business process of the company
 The company focussed on building the new cloud platform. Through its flagship
cloud offerings, the company is able to compete with Amazon cloud business.
 The company should focus on its traditional personal computing business.
In 2016 the CEO took important decision of merging its Research Group with Bing, Crotona
and Information Group for creating the new AI and Research Group. The company Artificial

Intelligence and Research Group have around 5000 engineers that have the responsibility of
innovating new products for the company's AI business.
The reorganization of Tesco
The Tesco is the top retail business of UK. The company operate around 37000 stores all
over the world and employees around 440,000 employees. The company has its operations
in more than 30 countries. To operate such a huge business, the company constantly
analyses its current way of working and if there is a need for any improvement than Tesco
uses change management to introduce new innovative ways to do its business. The
company believes that the constant changes have helped the company in managing tough
business challenges (Lowe et al., 2012). The company is currently working on the concept of
change. The employees of the company are working hard to respond to these changes.
Since its inception of Tesco business in1929, the company has adopted so many innovations
and opportunity for the business. Since the 1990's the company has faced various
challenges for its competitors. To stay at competitive advantages the company need to
embrace the culture of change. The company has to implement its business strategies
according to new business situations.
Sir Terry Lee was the company CEO in 1997. The CEO's main focus was on finding the areas
where the company was lacking. He suggested that the company buying and selling strategy
was perfect, but they need to focus more on customers need and demand. After
understanding the customers need the company started investing in products that can meet
the customer's demand. The company launched loyalty schemes such as the clubs cards and
online website for buying the products and services online. The CEO emphasised on
providing the best customer service so that the customers will like to buy company products
(Nwagbara, 2010).
The main aim of the company is to better understand the customers better than any other
company. One of the main reasons for the company success is that the company understand
its customers and also understand the importance of innovation of its products and services.
The aim of best customer's service is to remain competitive and can challenge their
competitors.

M1 Access the different drivers of change in each of the given example and type of
organizations change they have affected
The company reorganization began with a new mission statement for the company. The
company mission is to empower every person and every organization to achieve more. The
CEO was able to provide the necessary motivation and encouraged the employees to work
for the vision of the organization. Prior to reorganization the company's employees were
lacking motivation, low morale and weakened employees relation and engagements. Overall
the company reorganization has brought a positive impact on the company business. The
company products and services are improving. The cloud business is thriving and giving
tough competition to its competitors. The recent acquisition of Skype and LinkedIn has
shown that the company is still hungry for success (Soni, 2016).
Tesco in past was a typical food retail business that only focuses on the traditional factors
such as the products, price and money. Earlier the company does not put its focus on
customer satisfaction, but the company was able to realize the importance of the
customers. Many companies started to expand their business to other countries, the
company realized the importance of Globalization and started its overseas operations in
various different countries of the world. This helped the company in expanding its
customer's base. It also helped the company in expanding its brand to other countries. Due
to these efforts, the company have become a global brand.
Presently the company has adopted innovation culture which is helping the company is
introducing new innovative ways to promote the company products and services. Use of the
internet for customer's services has improved the customer's interaction; the company is
using the website and mobile apps for offering its products. An overall introduction of
changes has resulted in a high growth rate, an increase in the productivity of the company
employees, an increase in overall profits. Embracing the changing culture has made the
company the best retail brand in the UK (Nwagbara, 2010).
P2 Evaluate the ways in which the external and internal drivers of change affect
leadership, team and individual behaviour within an organization.
Internal forces are referred to the elements that occur within the organization. The
organizations have direct control over the internal factors.

Technology: The companies should utilize technology and modern tools and techniques for
managing business operations. The advancement in technology has provided various
sophisticated machines that have the ability to automate the whole production process.
Technology such as IoT, Big data and advanced analytics are helpful in reducing the overall
cost and increasing the profits for the company.
Financial Management: It is very vital for any business. Companies need financial capital for
production, marketing, promotion etc. Every business should have sufficient financial
capital. The finance department has the responsibility of managing and allocating budgets
for different business activities. It is responsible for the leadership team to properly analyse
the current and future capital requirements. Financial management has a great impact on
the company reorganization efforts.
Organization culture: The organization culture is referred to studying the behaviour of an
individual and an organization. The organizations that adopt the culture of change are the
most forward-looking organizations. They understand their employees and motivate them
to achieve the best performance and productivity. The companies that embrace the best
behaviour and culture are able to give tough competition to other companies. Hence
organization culture has a direct impact on organizations leadership, teams and individual
(Benn, 2014).
Employee Motivation: It is the responsibility of managers and leadership teams to
encourage and provide the necessary motivation to employees. The employee's strengths
and morale are important because if the employees are not motivated, they do not perform
to their best levels. If the employees are satisfied with their jobs then they will be loyal to
their company.
Competition: Nowadays the businesses all over the world are facing tough competition
from their rivals. To deal with heightened competition the companies are using technology,
ideas, innovation, tools and techniques etc. These factors are helping the company in facing
the competitions. The leadership team should analyse the main competitors and take
necessary measures to counter their influence in the marketplace.

Delivery of Products and services: The companies should be able to deliver its products and
services on time. If the products and services are not delivered on time then it has a
negative impact on the profit margins. It is very important that the companies are able to
deliver its products on time. Companies can use online websites and apps for taking online
orders.
External factors are the force that occurs outside the company. The company does not have
direct control over external factors.
Political: political forces have a huge impact on the business environment of the company.
Different laws and regulations, tax laws can have both positive and negative impact on the
business environment. The leaders should analyse the political situation before making any
investments in foreign countries. The local political situation like the Brexit has affected
many businesses within the UK.
Economic: The economic environments have a direct impact on business organizations.
Various factors such as inflation, deflation have an impact on the business. High inflation
rates result in a decrease in the customer's base. Less number of customers is interested in
buying company products and services.
Customers Satisfaction: Every company want to provide the best products and services.
Organizations must try to offer products that meet the customer need and demand.
Companies can use technology such as advanced analytics for analysing the customer's
satisfaction. Social media platforms can be utilized to receive valuable feedback from
customers.
P3 Evaluate measures that can be taken to minimize the negative impact of change on
organization behaviour
Communication: Effective communication is one of the important factors that can have a
negative impact on organization behaviour. It is the responsibility of the managers to share
data and information with employees. Communication will make sure that the employees
are aware of changes happening at the organization.

Need for change: The managers should clearly mention why the organization need a
reorganization. The employee should be aware of the positive and negative impact of
organizational change.
Training: organization change might involve transferring or promotion of employees to
higher roles. Training will be helpful in an easy transition from a lower position to the higher
job roles. The organization should invest in training and development of its employees. The
learning opportunity will minimize the impact of the change by making the employees ready
for taking on future challenges.
Improving participation: Participation of employees in the reorganization process is crucial
because the employees are the people that are going to be affected by organizational
change. If employees are involved and allowed to participate in the process, they will be
better equipped with skill and knowledge about organizational change. It will be helpful in
improving coordination and employees relations. Leaders can take feedback or suggestions
from the employees and try to implement those suggestions within the organization.
Providing moral and motivation: For embracing change motivation is utmost important. If
the managers or the employees are not motivated for change then it will be very difficult for
the company to adopt change culture. The leaders must tell the importance and advantages
of change for the organization.
Leadership: It is the vision of leaders that is important for any organizational change. The
leaders are an important element of any organization. Effective leadership skills can be
helpful in resolving conflicts issue at the company. The leadership will have an important
role in implementing organizational change.
M2 Apply appropriate theories and model to critically evaluate organizations response to
change
The concept of change management is important for businesses today. The constantly
changing business scenario has forced the company to embrace the organization change.
The process of culture change might vary drastically depending on the company culture, the
people involved and how aware the people are about organizational change.
Kurt Lewin change theory

The theory was developed by Kurt in 1940. The theory was developed for understanding the
process of organization change. The model is popularly known as the Unfreeze-Change-
Refreeze. The three-stage theory was presented using the analogy of the changing shape of
a block of ice. The theory states that before making any change it is important to
understand the need for change. According to the scientist, the motivation for change must
be generated before making any change (Shirey, 2013).
Unfreeze: This stage is concerned with understanding the need for the change. The
organizations should understand and accept that the change is necessary and try to present
evidence such as a decline in sales, poor financial results etc.
Change: At this stage, people start to embrace change. They look for new ways to do things.
This stage is concerned with implementing change strategies. The major activities that are
carried out at this stage are training, analysing the skill and knowledge of employees, finding
solutions to problems, measuring the performance of employees and try to motivate
employees.
Refreeze: the stage is concerned with fixing the organization changes. This stage is very
difficult especially when the company is a multinational organization. The freezing of
changes will help the company in setting standard practices within the organization (Al-
Haddad and Kotnour, 2015).
Burke Litwin
The Burke Litwin model of organizational change is based on the cause and effect
relationship. According to the model, there are twelve elements that define organization
change. The tool can be used for better understanding of the organization change.
According to the theory, many organization do the mistake of not considering these factors
before making organizational change. Burke and Litwin suggest that these elements are
interconnected and have an influence on each other. The model assumes that the changes
come from external influence.

Figure 1: Burke Litwin Model
Source: management study guide
 External environment: The model suggests that the external influence is responsible
for organization change. The external factors such as the economy, political
environment, customer's behaviour influence organizational change. According to
the model, an organization cannot control the external environments (Jacobs et al.,
2013).
 Individual and Organizational performance: It is concerned with the performance of
employees as well as the performance of the company.
 Leadership: It is a responsible position, the managers should decide the vision and
mission of the company. The leaders are responsible for motivating and encouraging
their employees.
 Mission: It is referred to as the organization goals. It is the responsibility of the
higher level management to define the organization goals and vision.