BUSM3125 Strategic Management: Case Study Analysis of Tesco

Introduction

Organizations always have specific leanings down its business path for reaching to its set purpose.  In business parlance, these leanings are governed by firms’ mission and business objectives. Particularly, it can be said that direction is a business journey that includes determination of the business destination. Hence, the organizational direction is required to stay within the business scope and the mission. The direction of business becomes more oriented in tune with business objectives when the leadership of business entities is effective. Thus, some leadership qualities are essential. In this report, the case study of Tesco is selected for analysing the organizational direction and in the course of the report, an effective leadership style has been recommended for the firm.

a) Analyse The Organizational Directions

Tesco was formed by Jack Cohen in the year 1919 at the east end of London. Ever since, the firm has emerged as one of the leading retail firms in the world. The core trade function of the business is in retailing in the UK. The brand has expanded its operations in countries like the Czech Republic, Malaysia, India, China, Poland, and Hungary. Tesco believes in constantly working on its international brand and this is supported by its operational expansion. Tesco has a highly focused business goal, setting its sight on long-term success in competition (Nooteboom & Termeer, 2013). Customers are the most vital stakeholders of the firm and their satisfaction is always instrumental in carrying business performance in a consistently better manner.

 The vision and the mission of the business are static and are looking for adapting to a business environment which is always subject to change. The firm’s business view is inspirational and is supported by the vision and mission, which are although pinned on similar purposes but are archetypal in their own proposition. The vision of the business is ‘to be a highly valued business by serving customers, communities, employees, and the shareholders.’The mission of the firm is‘ making what matters better, being together.’(Murawski & Dieker, 2013).

The strategic planning of Tesco has its own process that holds the direction of business in a bid to stay in a competitive position in the retail sector in the UK. Tesco keeps its direction aligned with the consistent search for business excellence by providing maximum satisfaction to the people the firm works with. Customers, employees, community members, and the environment are most important and a constant effort of keeping them satisfied comprises the business direction. The firm feels that the business functionalities are the basis of better performance and this could be ensured by adhering to the vision and the mission propelled by a strategic direction.

A discussion regarding some moves undertaken by Tesco will render this report more analytical in terms of understanding the business direction and nature along with the scope of business. Tesco’s thought for customers, employees and communities mirror in its business philosophy that in turn influences the direction of business to remain within the framework of the business objectives. The firm defines its philosophy as ‘Every Little Helps’ for customers so that they get seamless shopping experiences. It holds a better commitment to customers and the community by ensuring environmental sustainability. Day (2013), stated that commitment to customers and the community becomes more defined when the environment is taken care of. This opinion has symmetrical justification for Tesco since the firm opened its supermarket known as a zero carbon retail chain in Ramsey of Cambridgeshire and was conferred green retailer in annual grocer gold award held in 2012. Tesco has slipped from its numerousUNO position in the retail sector in the UK, but still has a dominating position in support of its consistent growth in mission with the help of the core business of retail (Day, GU& Sammons, 2016). In this regard, multichannel customer service by the firm focused on ‘Click and collect service’.

Tesco’s strategic direction leads the business towards growth based on the foundations of innovation and customers’ satisfaction. Tesco formulated department based strategies to interrelate every strategic move with core business values. While the direction of the firm is aligned with a search for continuous excellence in the retail sector in the UK, the performance of employees is never undervalued and key performance indicators help the firm to ensure better evaluation of performance. Scholars like Breevaart, Bakker, Demerouti & Derks (2016), always stressed on motivating the boosting factors rather than limiting the focus on employees in the performance segment. This is somewhat opposed by Shapira-Lishchinsky & Levy-Gazenfrantz, (2015), as it was suggested that employees are made to be aware of the kind of business and firm they are associated with and this causes motivation from within, leading them to offer better performance and this follows better evaluation to enable the firm to judge the employee satisfaction level. Community focused business of Tesco affirms a better direction which justifies the firm’s corporate social responsibility moves known as ‘Tesco in Society’.

The firm’s direction falls in some focal parts strengthened by some core purposes like the achievement of a continual growth in the UK retail market, to remain as a most valued brand, to be an excellent international retailer, and team development to fulfil a commitment to community and customers (Singh, Kumar & Puri, 2017). Tesco is criticised for its failure in China market and the reason for this is the overconfident view of expansion tactics leading to an overreach coupled with a low business performance both in Japan and China. It started facing questions from investors regarding the know-how about its business and business direction. It is stated by Goetsch, & Davis, (2014), that strategic efficiency and farsightedness are different, but helpful to each other, however, the latter does not necessarily develop efficiency in strategy arrangement. The business direction of Tesco has suffered some hiccups which do underrate the balance between the firm’s direction and its nature along with the scope of business supported by its vision and the mission.

b) The Most Appropriate And Effective Style(s) Of Leadership For  The Organization

Successful implementation of the strategy and a better turnaround of business are reliant on capable management, however, that too has a dependence on the aspect of better leadership. The retail sector is full of competition and an effective transformation of business leading towards goal achievement is dependent on the capacity of the management to champion new styles of leadership within business organizations. Supermarket businesses of the retail segment are competitive and the risk of dropping market shares is always high. An organization like Tesco in consideration is always in need of thinking and implementing a new style of leadership with a focus on its business objectives and its current position in the market (Markopoulos & Vanharanta, 2014). The business of retail from the firm’s perspective includes activities which always demand coordinated and collaborated efforts among all staffs under the supervision of management. A better leadership does the effective task of people management and purpose achieved without compromising the motivation level among the people.

Tesco although is poised for continual growth in the competitive sector with a capacity of adapting to changing business environment, the need for better leadership style is almost imperative in the face of rising volatility and competition in the retail sector. Since the firm is exposed to risks like incremental product prices, competition in the market, the excessive scrutinization of quality aspects, ever-changing external business environments, it needs to have business agility consistently with the support of a firm leadership strategy (Menaker, 2013). By practicing transformational leadership in the firm, the business could think of risk minimization by following the set strategies of the leadership style. Engaging of employees and their collaborative working relationships get developed by transformational leadership. The retail industry incorporates a change which is in terms of industry regulation, buyers’ perception about service and products, quality and service benchmarks, performance expectations and accomplishments, which incidentally is in relevance to Tesco’s leadership style requirement. Business is always dependent on the performance backed by managing the people as well as a set vision and mission. Thus, the firm is always on the lookout for abilities among its leaders to initiate and accomplish change management in the sector. In addition to this development of vision and motivation of its people, the firm is always in consideration for ensuring success in the sector. Therefore, senior people of the firm must have the skill of motivating the workforce by instilling a vision of business into their performance, by encouraging them to deliver performances with a focus on better working relationships among them (Vizzuso, 2015).

Overall, peoplemanagement, whether done individually or by the team is a suitable quality aspect of leadership required for the firm. These all match with transformational leadership in which leaders are always expected to deliver a performance before a team of people and also set an example of integrity and fairness to them. Better interpersonal relationships among leaders and employees help in the task of leading them towards accepting changes motivated by the common goal of their organization. Tesco relentlessly pursues the course of strategic orientation, balanced by business direction to achieve its business vision of fulfilling commitments by helping customers, society, employees, and the environment. Therefore, leaders are always in need of setting expectations before its stakeholders so that these could be fulfilled by their cooperation and consistent level of loyalty.

Tesco needs to remember that leaders need to focus on the human side of the practice of leadership as excessive task orientation is not better for the firm and its workforce to deliver the desired level of performance. But at the same time, excessive leniency can expose the management to criticisms. In such a situation the aspect of leadership alone can balance between people management and task accomplished without any negative effect on employees’ satisfaction (Barney, 2014). Here is the maximum importance of transformational leadership by which leaders could set goals, practice skills of mentoring, understanding the problems of employees before assigning them tasks to deliver. Most effectively, transformational leadership helps to transform the organizational vision and effort of people’s contribution and motivation into the accomplishment of the mission. Development of trusts becomes easy among people and a situation like the practice of change and decision making become relatively easy. People tend to accept decisions so long as the faith prevails that the leadership in the firm is not detrimental to their interest. The business process and operation of Tesco are expected to become more dynamic, with an adaptability to change and getting accustomed to business risks while the leadership of the firm helps the business performance soar new heights (Asif & Palus, 2013).

Successful business venture in retail segments in China and Japan will no more seem implausible by the firm and teams’ motivation could support quality and operational benchmark achievement. Business is always uncertain with no predefined set of norms of performance and this necessitates change. Since transformational leadership speaks of better management of people and their motivation, success does not seem far, even in a competitive sector like the retail industry in the UK.

Retail market’s dynamic aspects like fluctuation in demands among customers and innovation led products modification for development, keep people engaged in creative thoughts and team working. The need of appropriate leadership is immense. People management, team working and performance achievement on consistent basis are the most crucial aspects related to Tesco if its business and business orientation are concerned. In this respect, transformational leadership is expected to produce much better results like productivity among workers and more task achievement capacity by leaders through team working. Leaders are to focus on some aspects like better coordination with team members, developing mentoring skills among them alongwith exchange of ideas to generate better motivation among employees. These are related qualities needed for task achievement and fulfilment of their leadership roles in the firm. Moreover based on the transformational leadership employee enagement and coordinated performance can be ensured by the firm (Barney, 2014). Retail industry always thrives on team work and better leadership for  supporting organizational goal to achieve best performance in industry. This cannot be possible without a proper and suitable leadership strategy. From the case study based on Tesco, transformational leadership styles is more suitable and appropriate.   

c) Plan For The Development Of Leadership Skills For The Organization

An effective plan for leadership development in Tesco starts with the understanding of the company strategy and identification of a suitable leadership style for the company. Leadership development for Tesco needs to commensurate with the strategies, vision, and the mission of the business.  Following are the important phases of the leadership development meant for Tesco:

Review And Understand Leadership Styles Adopted And Organisational Direction

This stage begins with certain acitivities based on leadership evaluation and its justification followed by understanding the direction of business in retail sector. Firstly leadership requirement and its style are to be evaluated in the organizational context (Santamaría & Santamaría, 2013). This only becomes possible if knowledge on the leadership approach in the firm is clear for management. This is in relation to understand the fruitfulness of leadership adopted in the firm in accordance with organizational direction in the industry. This is most vital stage in the leadership development plan and without this, next stages cannot be properly performed. The basic elements in this stage are evaluation of leadership, knowledge development about leadership approaches and understanding the organizational direction. 

Identification Of Present And Future Leaders Of The Firm

In this stage, it is important to identify a leadership programme so that an expected level of leadership competencies and skills for the benefits of the firm can be understood. Internally leaders need to be recognized so that the employee feels appreciated and valued. Moreover, those who are under observation by the management must display the expected level of skills and talents. Apart from this, the performance criteria and its evaluation are to be fed into a performance management process of the firm (Ladegaard et al, 2014).

Identification Of Leadership Gaps

This is an important evaluation with regard to the presentation of the skills of the current batch of leaders and the eagerness of the firm to get an important job done by them. Some important elements in the evaluation process revolve around the know-how of the requirements of the present and the future leadership. The requirement of future leadership needs to be compared with the present leadership. Leaders who are seemingly interested to leave the firm need to be retained through the process of mutual understanding followed by succession planning. The gap in leadership skills needs to be identified for measuring the time required for fulfilling the gap (Santamaría & Santamaría, 2013).

Determination Of Suitable Leadership Style Of The Firm

At the very beginning, the firm needs to have the know-how of the adequacy or suitability of a particular leadership style as there is no specific leadership approach that relates to situations within the workplaces. With such a tight course, the firm needs to analyse the organizational work, the degree of complexity of business and the leaders’ qualifications in the identification and the formulation of a leadership style at the initial stage. Attention to the requirement of group decision making does the helpful task. Accordingly, working policies and culture of the firms are worth discussing among senior members of the management of the firm (Scarborough, 2016).

Programs For Retaining Present And Potential Leaders

A focus and effort of keeping talented leaders associated with the firm are highly important. In this attempt of retaining the most talented leaders in the firm, Tesco’s planning of retention of leaders is of great importance. They need to be motivated by the firm on the basis of giving recognition to their talents and performance (Mitchell, 2013).

From the aforesaid discussion regarding leadership development plan, it can be understood that Tesco on the basis of the planning can find its most talented and suitable leaders according to the organization’s working culture and business objectives. Needless to say, it is important to retain leaders in the organization as their business detachment can prove expensive for the firm since they deliver optimal performance for the firm in retail markets (Aarons, Ehrhart, Farahnak&Sklar, 2014).

Development Of Goals Regarding Career Planning For Future Leaders

Tesco in course of leadership development must focus on career development planning for each individual to ensure that they remain motivated. If the firm does not provide them with the opportunity of career development then possibly they are most unlikely to stay in the firm in the long run. After the career development planning is structured, employees get equal opportunities for showcasing their talents and it becomes easy for the firm to identify performers and potential leaders amongst them (Furtner, Baldegger&Rauthmann,  2013).

Evaluate And Identify Skills Of  Leaders And Potential Leaders

In this stage leadership qualities are recognized and efficiency of leadership skill can be understood. This requires better evaluation of present leadership skills from present manpower. If adequate leadership is found then same can be developed more or else focus needs to be  on development of leadership. This practice works better and gap between leadership skills become understandable and future requirement of leadership can be known.

Identification Of Roadmap Of Skills For Leaders

If potential leaders are recognized by Tesco then it becomes important to develop a roadmap of skill for them. This needs the support of suitable training or learning process initiated by the management. The learning may be less formal, traditional or non- traditional in nature.

Development Of Succession Planning For Important Roles

Tesco’s eagerness regarding leadership development gets on the track at this stage as the firm needs to work upon its strategy of delegating the responsibility and important roles to the next suitable leader in the firm. This planning is most important so that when a veteran leader quits then immediately the task is taken over by another talented and skilled leader identified by the firm (Bro et al, 2014).

Conclusion

Leadership strategies if suitable and effective can accrue the biggest benefits to an organization like Tesco. The firm has consideration for customers, the environment, Community, and employees. Transformational leadership is of importance to the firm. In this report, a leadership development plan has been discussed. This report has highlighted organizational direction that relates to Tesco as a case study. The organization is one of the leading retail firms in UK with its vision to be highly valued business by serving customers. Customers’ satisfaction is the core part of business and the strategic orientation of the business is to remain competitive in retail business sector in UK. Performance orientation and people management are important for the firm and need of suitable leadership style can provide the firm with required support.Transformational leadership style is more effective for Tesco (Baldegger&Rauthmann,  2013).

This reports also has discussed a leadership development plan that includes some stages like review of leadership styles, identification of leadership in present and future, identification of leadership gaps,  identification of better styles of leadership, development of planning to retain leaders, development of goals for carrer planning for leaders, identification and skill measurement of potential and present leaders of the firm, identification of road maps, succession planning for leadership and important roles. This report concludes that style like transformational leadership is more appropriate based on strategy and direction of retail business of Tesco. People management, their motivation and task achievement are important for the firm which needs better leadership.  Transformational leadership fits better into this requirement for the firm Tesco (Baldegger&Rauthmann,  2013). 

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