A change is a form of transfer from one state to that of another. In today's competitive environment 'changes' and the need for changes occur frequently. Changes that occur can be of different forms such as change in consumer taste, change in the consumer needs, behavioural change of the consumer, technological change, political change, developmental change, transformational change and so on. Hence changes are more common in the business environment.
????????In order to tackle these changes, organizations should use different strategies and effective plans for different changes. The management requirement is here to manage these changes effectively. These changes have to be tackled in time in order to remain competitive in the current competitive business environment. The organization needs to study these changes, design strategies and plans to manage these changes as and when required. It is not only act when changes occur but also introduce a change when the market needs or demands it.
????????In the following assignment we have focused to analyze the changes that have occurred at 'Tesco' in the last five years and the steps taken by the organization to manage these changes effectively.
Objective
The objective of the assignment is to analyze the changes that have occurred at Tesco in the recent years, the steps taken by the management to effectively manage these changes and the effectiveness of these steps in managing the changes.
Scope of the study
For most of the business, changes occur more frequently, but the main fact that matters is how fast and effectively the changes are managed. It is important to go with the changes that the market expects or demands. This helps in the survival of business and to remain competitive.
????????In this study we have considered the UK's largest grocery and general merchandising chain i.e. TESCO. We have tried to analyze the changes that occurred at TESCO in the last five years and the steps taken by the management to manage the changes effectively in this competitive business environment.
????????Hence this study helps us to know and understand the managing tactics required to meet the changes that occur in the business environment.
Methodology
The information in the assignment is primarily based on the secondary source of information. Various journals and newspaper articles have been studied on this regard and to a certain extent primary source of information are also considered in order to review the facts.
Brief Introduction about TESCO
Tesco, the British based retail chain is the largest retail chain in UK and one of the top three retail leaders in the world. Tesco is mainly into grocery and general merchandising business. It was formed in 1919 by Jack Cohen. He began by selling the surplus groceries in the East End of London, which is now emerged as a largest retail chain in UK. It operates over 3700 stores worldwide and employing over 430000 employees. Initially, in 1929 Tesco store was opened at Burnt Oak, Edgware. In 1947 TESCO was listed on London stock exchange under the name as Tesco Stores (Holdings) Limited. The strategy at Tesco is to move products on its own brand.
????????Tesco's UK operations are divided into six types, that can differentiated by size and the variety of products sold which mainly are: Tesco Extra, Tesco Superstores, Tesco Metro, Tesco Express, One Stop and Tesco Homeplus.
????????Tesco Extra stores are larger, mainly located out-of-town that stock most of the products of Tesco's product range. Tesco superstores are mainly standard large supermarkets that stock groceries and a smaller range of non-food goods. Tesco Metro stores: these stores, area wise are between Tesco superstores and Tesco Express stores and are mainly located in city centers, the inner city, at the high streets of the towns. Tesco Express are the shops that mainly stocks food and focus on daily essentials. These are small shops and mainly located in the busy city centre places, residential areas and at small towns. One Stop stores are very small stores which erstwhile were part of T&S store business. Tesco Homeplus stores focus on non food category business; these stores are mainly located on shopping centers.
????????Tesco has a great commitment towards fulfilling corporate social responsibility. In the recent years Tesco has contributed in the form of contributions to the charities and local communities centers. It also follows "computers for schools scheme" which offers computers for schools. In 2005-2006 TESCO had conducted football competition for the 'TESCO CUP' conducted through out UK and over 40,000 youngsters were participated.
????????As on 28/02/2009 Tesco's UK store portfolio is as follows: the percentage of store space of Tesco Extra, Tesco Superstores, Tesco Metro, Tesco Express, One Stop and Tesco Homeplus are 40.35%, 42.94%, 6.47%, 6.79%, 2.15%, 1.30% respectively. Tesco has the concept of long term suppliers which has helped them to have currently more than 1500 suppliers that are with Tesco for more five years now.
????????Leading position in the market has served TESCO to perform well this year even in this challenging consumer environment and economic downturn. The strategies and plans that are implemented at Tesco as and when required have helped them to retain their position in the retail business and hence have helped them to maintain their competitiveness in the current business environment.
Significant changes at Tesco
Change is the continuous adoption of corporate strategies and structures to changing external conditions. In the present scenario change is not at all the exception but it is an ongoing process. Tesco has met many challenges in its decades of existence in the business. Most of the times the first effects of changes are negative. In the last five years Tesco has undergone developmental change and not much on organizational change. The management has implemented many strategies in order to overcome the challenges and manage the changes that occur as a result. In the following assignment we have tried to identify the significant changes that have been taken place at Tesco and the methods implemented by the management to implement these changes, thus maintaining resistance over changes.
Significant Changes
- The consumer approach concept
- Strategic HR as a change agent
- Technological change
- Distributional channel change
- Consumer behavior changes
Drivers of these changes
- Develop a strategic way of dealing things in a rapidly changing environment.
- Retain the leadership position even in this most competitive environment.
- To move with the trend of the changing world.
- To meet the changing consumer behavior.
- The need to emerge as a strategic leader.
- The need to gain the satisfaction of stakeholders, employees, shareholders and customers.
- To achieve the financial benchmark year on year.
The phases of change
Explanation of changes at Tesco
Objective: "To achieve consumer loyalty towards the company"
In the free business market, consumer is the King with lot of options in front of him. They drive the business in this environment and the future of the business lies on their satisfaction. It is important to focus on satisfying the consumer needs and wants which helps in survival of the business both in short term and long term.
????????To gain the satisfaction of the consumers, Tesco introduced four aspects in the consumer approach. Firstly, strategy of listening to the customers: this approach helps to understand the changes that the consumers are expecting and it also helps to know the stand where the company stands in the perception of the consumers. This helps in the means of building the tactics to change. It also indicates the need to change. This strategy helps in the long run of business. It also helps to know what to be delivered for the customers.
????????Secondly, the concept of nothing is sacred: this strategy talks about taking the challenge to change. Here it means every aspect in the business world has the change and can be changed. Here the organization speaks about introducing changes on the aspects especially where people think aspects can't be changed. This concept helps to take it as a challenge on things that spoken as can't be changed and thus questioning everything. If things are taken as sacred, then there cannot be a place for change thus there would be no entry for the innovative instead it has to be treated as a challenge and more innovative ideas should be implemented.
????????Third cornerstone says that loyalty has a price: this approach is for long and medium term gain rather than gain in short term. This focuses on long term bonding with the consumer maintaining healthy relationship with the consumer builds loyalty towards the business. It takes time to build loyalty but surely helps in the long run of the business.
????????Final corner stoner stone says that hold your nerve: here it gives motivation for the employees to spot the moving trends and also gives a boost for the innovation. This concept gives motivation to become market leader by innovating new ideas, spotting the trends and moving along with the expectations of the consumers and their taste. Rather waiting for the competitors to move ahead first this concept also says that to be the first to take challenge and innovative before its competitors.
In this regard, Tesco has been managed the change required in the consumer approach by implementing the four cornerstones as a bench mark and guiding principles. By implementing these cornerstones it has helped in achieving a shift to consumer oriented approach from product oriented approach which further helps to build consumer's loyalty towards the company.
Objective: "To strengthen the work force of the organization"
Employees are the main pillars for the organization's growth and the future of the business. Tesco functions in the most competitive business environment. Hence it is important that employees are up to date with the aspects and are dynamic in facing the challenges that are in front of them.
????????As with every company, Tesco also faced with the challenge of out dated HR department, which are incapable of meeting the challenges. Here instead of replacing the out dated HR department Tesco introduced the concept of 'Strategic HR as a change agent'. Here it means instead of replacing the out dated Human resource department, a high level training is provided to employees to make them move along with the trend. With introducing strategic HR as a change agent, Tesco makes its employees more dynamic and confident in taking up the challenges of the current market scenario. This also helps in enhancing the knowledge of the personnel department. In order to maintain Tesco's reputation this strategy is very much in need to build the strong workforce that can meet the challenges effectively.
The fishbone or the ishikawa diagram depicts the causes which has an undesirable effect. These causes in fact necessitated the change.
The intention of introducing the strategy of 'strategic HR as a change agent' was to achieve the work simplification and passing on enhanced skills to all the office employees and thus link the performance to the rolling out targets. Tesco with its strategy ensures that every employee understands his respective role in the organization. It also ensures that where ever the employees work they are aware about their contribution in building up the success of the organization in the competitive environment. Tesco's strategy also focused on giving freedom to its employees in implementing new ideas in the stores so that they can perform more and thus build customer satisfaction.
????????The strategy also gives clear understanding to employees about their core responsibilities and roles in the organization. As the organization grows, to survive requires new innovative ideas and skills; this strategy has helped them to achieve the required talented work force.
Tesco has integrated the personnel department to its overall business objectives. With its importance given to personnel department, it has boosted the moral of the employees towards the organization. At Tesco personnel department is not considered as the administrative department rather is looked on the strategic level and has helped them to move towards learning society.
With this strategy being implemented employees are performing much better than ever before and the expectation of management on the performance from the employees has also increased. Thus the strategy led personnel resource department of Tesco is been successful in performing the task and thus helping to achieve the organization's overall objective.
Objective: "To reduce long waiting queues at cash counters, thus provide more convenient form of shopping"
As the technology advances day by day, the consumers are looking at more convenient form of shopping. It is necessary to keep the track on the consumers taste as they impact on the business. In the present scenario of retail industry convenient form of shopping can attract more number of customers. Tesco also came across this situation. Tesco identified the needs of the consumers and the need to implement change. Technology helps to build competitive edge in the business and thus pull more consumers towards it.
????????Earlier Tesco observed long queues waiting for billing at the cash counters in the store. Customers were unhappy with the long waiting queues. Here came an idea for technological advancement at Tesco. Tesco by understanding the needs of the customers developed a system i.e. a cash desk which needs no help of the cashiers. This was an amazing concept of Tesco. As this market is the technology driven market, Tesco used the technology to overcome the required change. Tesco used the barcodes technology where automated system works for billing and collecting cash or pay by credit cards. The customer can just, with his purchases come across the laser sensors and the bill is generated automatically. This helped in reducing the long waiting queues at cash counters which helped in increasing the convenience in shopping to customers. This also attracted more consumers to the stores.
Tesco overcame the change in the need of the consumer's luxury form of shopping and managed the change by introducing cutting edge technology of cashier less cash counters. Thus Tesco with its strategies and plans managed the changed effectively which paid off positive response from the beginning of the implementation.
Tesco's self check out machine concept has clicked well in the market and is been implemented at almost all the stores of Tesco in UK. Thus Tesco has the will to introduce and develop new technological aspects of the business before its competitors think off. This however increases the competitive strength of Tesco in the most technology driven business environment.
However criticism remains over the concept as there are many complaints rising about overbilling. This problem has to be solved in the initial days itself else people would start avoiding the concept and flow back to the same old technology and it even hampers the trust factor on Tesco.
????????A force field diagram for the technological change would sum up the entire technological change process which happened in Tesco.
Thus Tesco's strategy has a mixed opinion from the customers. It is necessary that the management focuses on the issue and solve the problem pertaining to the concept immediately to maintain its reputation as well to gain complete praise on implementation of the concept as well as to manage the implementation of the change effectively.
Objective: "To reduce the dependency on single mode of distribution channel"
Even though the change sounds simpler, it has largely contributed to the cost reduction in the means of transport and also helped in reducing the dependency on truck transport. Distributional channel is one of the most important aspect for the smooth running of business operations. Distribution channel are the intermediaries between the producer, distributors and consumers for the goods and products to be moved from one hand to another. A good distributional channel empowers the business to achieve a competitive edge over its competitors. Therefore there is a need for an effective distributional channel for the organization.
Earlier to 2007 Tesco was majorly dependent on the truck transport for its delivery. In 2007 dispute raised between the drivers of the distribution network and the management. The strike prolonged for two continuous days which majorly affected the distribution model. Tesco learnt a lesson to reduce the dependency on this mode of distribution. However this mode of distribution incurred a major cost with the rising fuel prices. There came a need for implementing a change in the distribution model.
Tesco came out with a strategy of using other means of transport for its distribution. It looked at using rail transport in its distribution network and tied up with Eddie Stobart Group for its distribution of goods and collection of goods from the suppliers. The daily delivery train was commenced on this regard. This helped them to reduce the lorry journeys by over 120,000 journeys. It also helped to reduce the miles to be travelled.
This added to the cost reduction by choosing better means of transport and mainly reduced the dependency on truck transport. Tesco did not completely come out of truck transport but it reduced the dependency on them. In order to track the trucks Tesco managed them by using RFID technology i.e. radio frequency identification system. RFID tags are tied to the goods which help them to track the inventory as well as the trucks which are on move. This technology improves the efficiency of the transport system and to track the misplaced items. Thus with the changed strategy of distributing, Tesco is been able to reduce the cost incurred on transportation and switch towards the better means of distribution channel. It has now become the integral part for the company's success. However the initial reaction to the concept of RFID was negative by the truck drivers as this would impact on them in strict controlling of the delivery operations but the management at Tesco managed to implement the change by convincing them. Tesco managed to continue with the changed concept which further gained resistance to change by the truck drivers who did not accept it initially. Effective distribution channel at Tesco further adds to the success story of the organization.
????????In implementing the change at distributional channel at Tesco the management has played a key role by understanding the root cause of the problem and has managed them efficiently by introducing the strategically bound tactics in handling the issues faced by the organization. Thus the management at Tesco has managed the change effectively in its implementation.
Objective: "To understand the consumer behavior changes and manage these changes by implementing new strategies and plans"
In the present scenario consumers are the Kings, the whole business environment revolves around them. The perception of the consumers may change from time to time. It is important to keep a track on the behavioural changes of the consumer. Lot of factors influences the consumer. It is important to have a study on these changes as consumer can no longer be taken for granted.
????????At Tesco, it has a passion to keep an eye on the behavioural changes of the consumer. As the largest retail industry player it is very much in need to have a track on these changes and introduce innovative concepts and strategies to manage the changes of the consumer. The behavioral pattern of the consumer involves the study of how the products are purchased.
????????In the recent year the management has observed significant changes in the buying pattern of the consumer. It is observed that consumers are bargaining more and have started hunting for the products that offer higher value. It is also known that unlike before the consumers are now becoming more sensitive in their purchases. It is also observed that consumers are shopping locally in order to cut down the cost on transport. The reason for this might be the recent economic slowdown that has occurred globally. The spending power of the consumers has been drastically affected. Consumers are becoming more cautious on their spending and expenditure but it is true that products that offer better value are still in demand. Currently a treat means cooking a meal at home rather like earlier going out on spending. Tesco has noticed that consumers are still wanting for convenience but they need them at a better value.
????????Noticing these changes, Tesco to maintain these changes is focusing on cutting down the cost and also focusing on introducing the products that offer better value for the money as the current scenario looks like this is the only way to retain the customers. Even in this downturn market there is a concern for brand. Tesco can easily take this advantage and offer better value products to the market. Since the consumers are making buying decisions from home it would help if short term ads are placed to attract the consumers as well as it would act as a reminder ad.
????????Thus Tesco is struggling hard to maintain its growth even in economic slowdown period by introducing the strategies, introducing innovative concepts and offer products of better value that help them to attract the consumers which further help to maintain its position in the business environment. Tesco has also maintained the pricing strategies on most of the products at the consumer acceptance level in this downturn environment.
Change Model Incorporated
In all the above said changes, the intervention strategy model was incorporated by Tesco. The managers of Tesco first analyzed the change situation before commencing the change management process. The problem owner along with the change management team acted as the change agents who studied the change situation and made a in-depth specification. The internal managing team review was also conducted periodically. An iteration process which included a development feedback loop acted as a platform to include the additional change process. The environment is dynamic and the change cycle is never complete.
Recommendation to managers
- From the above case we clearly come to know that the business should always go hand to hand following the trend.
- Challenges are common in the business environment; it is important for managers to come out with new strategies and plans to face these challenges.
- Always value has a demand, managers should focus on developing products that offer better value.
- Managers should give freedom to the employees to think and implement innovative concept, in return performance has to enhance.
- Managers should give continuous training to the staff which enhances the knowledge level of the personnel department.
- In present scenario; strategy has gained more importance, thus the managers should develop strategic thinking.
- Managers should build flexible strategies and plans that can altered according to the frequently changing environment.
- As this is a technology driven market, it is important to have technological advancement and make necessary changes as and when required.
- Managers should shift to 'consumer oriented approach' from 'product oriented approach'.
- Managers should conduct programs to motivate the employees to perform the task effectively and efficiently.
- Managers should focus on building long term relationship with the customers. This builds the loyalty of the customer towards the organization.
- Managers should consider consumers opinion when introducing any new products in the market, this helps to build consumer centric approach.
- Finally consumers should be treated with highest respect as they are the greatest asset of an organization.
Assessing the need for further change
- Technological advance has to be reviewed i.e. the 'self check out concept' has to relooked as many complaints are rising with this regard. The concept's problem should be rectified and solved immediately before it is hated by the consumers.
- As no longer consumers can be taken for granted it is important to adopt Consumer centric approach in the organization. This helps in building loyalty towards the organization which further helps in the long run of the business.
- Behavioral patterns of the consumers are changing day by day in making purchase decisions. It is therefore essential to keep a close track to study the changes in the consumer behavioral patterns. This helps to move along with the consumers taste and preferences.
Conclusion:
In the competitive market of today's world consumer is treated as the King. He has many choices in making buying decisions. The future of the business stands on the consumers' decision of selecting things. Therefore there is a need to attract the consumers. Organization should focus on gaining consumer satisfaction which helps for the long run of the business.
????????????????The strategies and innovative plans should be introduced as and when required to maintain the changes and implement in order to gain resistance to change among consumer. This helps the organization to reach effectively and efficiently the final step called 'success'.
References
- Tesco logo
- About Tesco
- Tesco's UK store portfolio
- Change process
- Tesco's four cornerstones
- Self check out
- Behavioral changes
Bibliography
Website:
- www.tesco.com
- www.tescoplc.com
Books:
- Peter Block. Flawless Consulting: A guide to getting your expertise used. (Pfeiffer & Co., 1991)
- The Flawless Consulting Fieldbook & Companion: a guide to understanding your expertise. ( Jossey-Bass/Pfeiffer, 2001)
- Jaclyn Kostner. Virtual Leadership: Secrets from the round table for the multi-site manager. (Warner Books,1996)
- Karl E. Weick & Kathleen M. Sutcliffe. Managing the Unexpected: Assuring High Performance in an Age of Complexity. (Jossey-Bass,2001)
- Margaret Wheatley. Turning to One Another: Simple Conversations to Restore Hope to the Future.( Berrett-Koehler, 2001)
Journals:
- Tesco - Competitive Management Development -Steve Hammett, Ken McMeikan-Volume: 12 Issue: 6; 2004
- A brace of new stores for Tesco - international Journal of Retail & Distribution Management; Volume: 12 Issue: 5; 1984
- How Tesco manages the distribution function - International Journal of Retail & Distribution Management; Volume: 12 Issue: 5; 1984
- The return of online grocery shopping: a comparative analysis of Webvan and Tesco's operational methods-Kelly Delaney-Klinger, Kenneth K. Boyer, Mark Frohlich: The TQM Magazine; Volume: 15 Issue: 3; 2003
- Tesco to pilot foundation degree in retailing-Industrial and Commercial Training; Volume: 39 Issue: 6; 2007
- The success of the Tesco Clubcard in winning customer loyalty-International Journal of Retail & Distribution Management; Volume: 32 Issue: 7; 2004
Source: http://www.oxbridgewriters.com/essays/music/managing-change-in-organizations.php
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