Strategic Review: Tesco's Organisational Change - HR2015 Report

This report provides a comprehensive strategic review of Tesco, one of the UK's largest retailers, examining its current performance, challenges, and opportunities for change. The report critically analyzes Tesco's strengths, weaknesses, and external threats, considering competition from budget rivals, Amazon's entry into the food delivery market, and internal issues such as employee satisfaction and infrastructure liabilities. A force field analysis is conducted to evaluate the pressures for and against change, and diagnostic models, including PESTLE, SWOT, and McKinsey's 7-S model, are applied to assess the wider implications of proposed changes. The report offers recommendations for improving Tesco's business, considering both real events and fictional scenarios supported by academic theory, and it addresses the need for effective change management strategies in a dynamic market. The report aims to guide Tesco's board in making informed decisions to improve their operations and enhance their competitive position.

HR2015 – Work and Organisational Change
Assignment 1: Case Study – Tesco’s strategic change review
Tesco’s grew into one of the largest retailers in the UK from its modest start in the East End
of London in 1919. These days, Tesco publishes its performance figures in its annual report
and they look rather impressive. However, Tesco understands that constant change is the
only option if the group wants to stay at the top. Therefore, the board would like you to
report back with a strategic review and ideas for change.
The statistics show that Tesco is an esteemed UK giant. Tesco serves 80 million customers
weekly in its 6800 stores and online. (Tesco, 2018) Group sales increased 11.5 % from
2017/18 to £56.9 billion in 2019 whilst operating profit increased a huge 17.1% from its
2018 level of £1837 million to £2153 m in 2019. (Tesco, 2019) Crucially, Tesco’s dividend
per share is now 5.7 p, which is good news given that this has not always been the case.
(Tesco, 2019) These figures look impressive, but are they as good as they could be? Part of
your task is to read between the lines and be as critical as possible in order to promote
change.
There are definitely advantages to Tesco’s position, which the board likes to hear and
publicise. Apart from the impressive figures in its annual report, Tesco remains the giant of
the UK supermarket scene. The company already has a developed strategy which has seen
things improve recently. Tesco is proud of its strategic drivers and key performance
indicators (KPIs) Tesco’s Group Chief Executive, Dave Lewis, feels Tesco is a winner and
promotes healthy living in its food sales, and that customer satisfaction is improving year
on year. Tesco has a good image due to its Corporate Social Responsibility (CSR) and has
even re-invented its brand image as it rebrands Tesco Finest as ‘good’ ‘better’ and ‘best’ to
keep up with the times. However, remember that the UK spends £ 110 billion on
supermarket food and another £89 billion eating out each year. (Tesco, 2018) There is a
huge market opportunity to go after and change is the only constant!
However, it is tough at the top and Tesco faces threats/ challenges internally and
externally. The board also needs to hear a critical review and how to manage change. It is
your role to produce a 1500 word report to deliver this news to the board!
Competition from continental budget rivals are reported and this can be seen as a genuine
long term threat. Also, Amazon has entered the food delivery market in parts of the UK with
its subsidiary Amazon Fresh.
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Being the largest supermarket chain in the UK brings a long list of British market
challenges. Supplier Unilever publically challenged Tesco for trying to maintain low prices
as the pound fell after the Brexit referendum. This conflict has settled, however, similar
issues may arise again in the future due to the need to import food to offer a wide product
selection.
Issues and debates about executive remuneration have been around since the Cadbury
Report in 1991. However, whilst the executives are paid around £4 million annually, most of
the staff are paid like the ‘Precariat class.’ (Standing, 2011) Do zero-hour contracts and the
living wage make for a happy workforce which Tesco’s management believe exists?
Also, is Tesco’s historical infrastructure a liability? Are the open 24 hours mega stores that
Tesco was proud of, now liabilities as the trend is towards smaller, low cost venues? Tesco
launched its own chain of small budget outlets called Jacks which will differ from its present
Tesco Metro outlets, but there are many questions remaining about this future line. This
summer, Tesco announced that 4500 jobs are to be lost at its Metro stores. (BBC, 2019)
Also, are customers really as satisfied as Tesco’s customer satisfaction ratings suggest?
Some people complain about the alcohol licensing hours; the requirement to show ID whilst
purchasing alcohol; long queues and many customers can remember the UK horse meat
scandal.
All the supermarkets made the headlines during the early days of the Covid-19 pandemic.
At first there was the concerns about stockpiling and the issues the nation face of empty
shelves of soap products and toilet tissue.
Tesco has seen first-half profits rise by more than a quarter (28.7% up on 2019) as
customers bought more food during the pandemic and online orders have doubled. With
more customers turning to online shopping, Tesco more than doubled delivery capacity to
1.5 million slots a week including serving 674,000 vulnerable customers. While demand for
food rose, clothing sales were down 17.2%. Like many of its rivals, Tesco was forced to
overhaul its strategy in-store and online amid the coronavirus lockdown.
Next came the implementation of enhance cleaning and face covering policies as a
response to the threat of coronavirus. Overall, there was a sense that supermarket staff
were now key workers helping society in a difficult time. However, in the background other
issues remained, such as, how the company’s financials may have changed during the
pandemic. Moreover, what about the leadership and the move to Ken Murphy, chief
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executive (CEO) of Tesco since October 2020? Murphy replaces Dave Lewis who had been
running the UK’s biggest retailer since 2014.
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Task
Your role is to act as a change management consultant to investigate and critically
analyse the current situation at Tesco so you can conduct a strategic review in report
format.
The ideas stated above are simply to introduce the assessment, and as you start to
research you will uncover or discover(?) many more facts and issues.
Please write a 1,500 word report to send to Tesco’s board, and make recommendations
on the changes that are required to improve the business.
You must consider the following numbered, specific tasks and include relevant theory:
1. Compile a force field analysis of the present situation at the Tesco that considers
the pressures and tensions that are for and against making change, and reflect
on how you would facilitate change.
2. Apply an appropriate diagnostic model (Pestle and SWOT or McKinsey’s Seven
‘S’ model) and consider the wider internal, external and strategic implications of
the proposed changes.
3. Please note that Tesco already has a well-developed strategy, so your role is to
improve it and generate ideas no matter how big or small.
4. Your ideas may be from real events OR they can be imagined/ fictional provided
that they are supported by academic theory.
Assessment Criteria
Identify and critically analyse different theoretical approaches to the management of
organisational change and their relevance within organisations
Demonstrate an understanding of different theoretical approaches and methods in the
implementation of organisational change
Critically analyse the application of theoretical approaches to change to organisational
situations
A well-structured report that is clearly presented, with an appropriate depth of analysis leading
to well justified recommendations
Clear evidence of wider reading and correct referencing, using the Harvard method.
Word Limit: 1,500 Assessment Weighting: 70% of the module
Submission Date 15th January 2021 Marks Released 5/2/21
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