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Management Style – Tesco Plc

Free Management Essays

Tesco’s Organizational Structure, Culture, and Style

Effective management does not always translate into the success of an organization, but poor management is a sure way for any company to collapse. The effectiveness of management, thus, cannot be overstated. In many cases, entities that are run efficaciously have experienced impressive performances in a market characterized by cut-throat competition. One of the companies that, over the years, has shown steady growth, diversifying geographically into many foreign countries is Tesco. The conglomerate grocery and general retail business under review have been operational since 1929, having started as a market stall (Tesco Plc.). It was started by Jack Cohen in Hertfordshire, United Kingdom, and has grown to diversify from grocery to clothing, furniture, books, and software among others. Today, Tesco is ranked third-largest retailer in the world based on profits and second-largest in terms of annual revenues (Tesco Plc.). The company is presented worldwide and operates facilities in 12 countries across Europe and Asia (Tesco Plc.). With an approximate 28.4% market share, Tesco remains a grocery leader in the U.K. It also leads in Ireland, Malaysia, Thailand, and Hungary (Tesco Plc.). Effective management can be attributed to the success that Tesco has achieved. The essay explores the organizational structure, culture, and the role of communication and information systems in Tesco’s decision making.

There is no particular organizational structure that is proved to yield the best results. The structures that various organizations embrace are dependent on numerous factors, including but not limited to the customers, the type of goods and services the business specializes in, the environment that the organization operates on, the number of employees, diversity, the size of the organization among others (Hill, Jones & Schilling, 2014). Organizational structure theories demand that a given entity adopts the structure and culture that best befits its conduct as what works in one organization might not necessarily be functional in another. The organizational system establishes the channels and methods that an organization uses to demarcate lines of communication, power, management, responsibilities, and procedures. The best organizational framework chosen is one that brings together all elements of the organization to work effectually together. The systems theory, for instance, appreciates that interrelatedness is key in every organization. Therefore, a modification in one area might affect the entire system. Entities, thus, are systems with both internal and external interactions. This calls for structures and cultures that promote interrelatedness (Hill, Jones & Schilling, 2014).

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Tesco Plc. has a hierarchical organizational structure. The choice of structure is informed by the fact that the company has many layers, employees, and numerous operations. A hierarchical organizational structure is the one wherein most cases, the CEO, every other employee in the organization is subservient to another person within the company. Following the shape of a pyramid, a hierarchical organization has multiple units that incline to the base of the staff level who characterize the bottom of the pyramid. Tesco has various levels of management within its subdivisions. There are many levels and types of managers to whom its employees are answerable. Before the information gets to the topmost levels, it has to pass through subsequent management layers. As such, every department has a team leader who can be approached in case of a clarification or a debacle (Tesco Plc.). It means that there are decisions that can be made without necessarily involving the top levels of management. These characteristics are unlikely to be seen in flat structures, where middle management is eliminated, facilitating direct contact between employees and the senior managers.

The hierarchical structure in Tesco has formed positions for senior, middle, and junior level managers who have varying roles as shall be demonstrated herein. The senior administrators are responsible for making strategic decisions (Tesco Plc.). Their choices usually have long-term effects and impacts on the organization (Frankel, 2008). Examples of strategic resolutions include the decisions to open a new store, decisions to downsize, expanding the store by including new unrelated services among others. In the case of Tesco, the senior management is responsible for making such essential and sensitive decisions that are deliberated upon for a while, and which have significant impacts on the company. However, top managers require the help and contribution of the middle level and junior managers as they help compile data, carry out research, and provide suggestions and recommendations on the best decisions.

Tesco’s middle-level managers ensure that within the locations they oversee, things run smoothly. They are also responsible for monitoring sales and further ensure the well-being of their employees is upheld. Moreover, they make decisions that do not necessarily have to involve top-level management. In many situations, they are bestowed with the responsibility to make tactical decisions. These are imperative in implementing strategies. When plans have been made, for instance, to open earlier on Sundays with the intent of attracting a new group of customers, the middle management has the accountability of ensuring that these choices have implemented.

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Junior-level management makes choices that are less sensitive but are important nevertheless. In Tesco, such people are responsible for making operational decisions. These relate to the daily efficient running of the organization and do not require much deliberation or the involvement of middle or top-level managers (Frankel, 2008). For example, junior administrators can decide on the amount of coffee to purchase for a particular day, who will be reporting for what shift, and can thus be said to be in management of line workers. Being a junior manager does not mean that their contribution is less than that of middle management. In fact, though they have no responsibility for setting the goals at Tesco, they have a huge influence on the employees (Tesco Plc.). Therefore, if they perform poorly, the performance of the employees will also be reduced.

Tesco derives numerous benefits from adopting the hierarchical structure. First, a clear authority has been established in the company. Since its managers have certain authority (based on their levels), they can recompense, reprimand behavior, allocate resources, and give orders to employees. The employees are, thus, aware of how to communicate with those in charge and know whom to approach in the case of a debacle. There is little or no interdepartmental or job confusion, as all workers know what is expected from them. Such a structure is also advantageous to Tesco in making decisions as opposed to companies that employ a decision-by-committee approach, which might prove disastrous. Communication has also been enhanced as there are explicit channels and directions. Tesco’s team leaders help ensure that communication remains effective.

However, the structure has promoted bureaucracy, slowing the speed at which decisions are made. The information has to travel up and back down through the chain of command hence, a barrier is created between the employees and the managers. Also, it isolates departments and employees. Therefore, if decisions to be made need departmental coordination and cooperation, they might take a while.

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Tesco’s organizational framework has contributed to its undeniable success. Organizational culture refers to shared values, principles, philosophies, and traditions that govern how employees behave in different organizations. Though invisible, the business culture is a powerful force that has a major influence on employees (Hill, Jones &Schilling, 2014). In Tesco, different features characterize this. First is the devolved structure. The top management has made efforts to ensure that all people employed by the company feel like part of the team by eliminating bureaucracy as much as possible. Decision-making has also been decentralized in the corporation to a certain extent. It is best explained by having different management levels in the organization’s stores (Tesco Plc.). It ensures that issues can be solved easily and flexibly, especially issues which may have painful consequences.

Tesco also has a flexible work environment. The hours are not only adjustable, but employees also have the option of working part-time. Further, if employees choose to pursue other areas such as advance in studies, the organization supports them by adapting their work hours and schedules (Tesco Plc.). Of the seven common characteristics of the organizational culture, Tesco has embraced most of them. For instance, the attention to detail is emphasized to make sure that customer satisfaction is not compromised. Tesco also places an emphasis on people, commonly evidenced through fairness orientation. Treating the employees with dignity and reverence, listening to their ideas, and paying them a decent and fair wage is part of the culture at Tesco. Aggressiveness also characterizes Tesco’s culture. Its major competitors include Sainsbury’s, Morrison’s as well as Asda (Tesco Plc.). Tesco, thus, orients employees on the need to ensure that they give their best to attract and retain existing customers. A strong culture theory can be seen in Tesco. It suggests that if both managers and employees are devoted to the shared values and customs, progressive outcomes will be generated. The framework further asserts that there exists a powerful link between the corporate culture and the performance of the organization. The culture adopted by Tesco, therefore, has contributed to its successful expansion and growth.

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There are several recommendations for Tesco regarding its structure, style, and culture. First, Tesco should reduce the number of layers that characterize it to maximize efficiency. It will ensure that managers can openly interact with their employees, giving room for ideas to be shared. Likewise, having representatives for employees who can represent them to the management would further increase the value of Tesco. Moreover, Tesco should increase its risk orientation. Employees should be encouraged to innovate as they perform their jobs. They should be allowed to explore new ways of carrying out their duties other than always handling tasks as they were trained. One time, the company’s CEO Sir Terry Leahy expressed that “Tesco doesn’t want one leader. We want thousands of leaders who take the initiative to execute the strategy” (Tesco Plc.). It, however, cannot be fully implemented unless people have the full freedom and support to be innovative.

Communication and Management Information System in Decision-Making

Communication between managers as well as to employees has been pertinent to the success of Tesco. Communication aims at improving performance and to inform decision making. Each month, communication is shared with Level 3 managers. It is referred to as the “Team Talk” (Our Tesco). The information is, in turn, cascaded to employees by the members. The information consists of messages relevant to serving the clients better, improving work performance, and information on any developments and changes in the company. In “Team5”, a five-minute meeting and communication are held between managers and employees. The issues relate to work performance, development in the distribution center, and serving customers better (Our Tesco). “The Hub” is a group-wide intranet that allows all Tesco employees to interact and connect across the business. The knowledge is shared, ideas suggested, and opinions collected (Our Tesco). These are some of the ways communication takes place in Tesco. They demonstrate the emphasis that Tesco places on open and effective communication between all involved in the running of the organization.

With regards to the decision-making process, Tesco makes continuous efforts to involve every relevant individual in the organization’s choices. Employees can be asked to come up with new ideas that are forwarded to the relevant managerial bodies. Though it is a hierarchical structure, the information is passed from the bottom to the top and from the lowest to highest ranks. Decisions are communicated through the up-down chain of authority through managers, unlike in flat organizations such as Xerox and HP. Further, if a manager makes a decision that affects the employees, official communication is made as soon as possible. It can come in the form of a memo, or the decision can be communicated during the weekly meetings. In Tesco, it is rare for a decision to be made by a single individual. For instance, middle-level administrators can make decisions that affect the employees, as well as junior managers. They are expected to consult with all other managers, including the junior ones, so as to ensure that only the most suitable decisions are made (Tesco Plc.). Resolutions can also be approved based on the feedback that Tesco receives from the website and social media. Clients have a chance to give their feedback on their satisfaction with the services offered and to give suggestions on how they can be served better. Such correspondence with the customers is tabled and thereafter, after the interrogation of the suggestions by all managers, a decision can be made.

Management information systems (MIS), to a large extent, inform the decisions made in Tesco. Optimization is the key goal of Tesco’s use of these systems. They comprise of individuals, equipment, and processes which aid in gathering, organizing, analyzing, assessing, and circulation of data that is timely and accurate to inform decisions. From the top levels to the bottom, Tesco has made progress in automating the organization with systems to help make suitable decisions. For instance, the “One-in-Front” is a management system, the purpose of which was to address by reducing the number of customers who wait in line. Customers had been complaining about long queues as they waited to be served. Knowing that some of its rivals such as Asda have capitalized on advantage through profit, Tesco could not afford to lose its customers. The camera system helped inform on the need for more payment tills. As such, nowadays, if there is more than a single customer in front of another one, the system notifies the management, and more payment tills are opened (Tesco Plc.). The cameras do not capture real images of people. Instead, they intimate shopper flow and informs managers in case more checkouts are required. It has helped increase customer satisfaction – Tesco’s primary objective in such a scenario.

Tesco has also applied MIS to decide on whether different products would do well in their stores. If Tesco wants to decide on the best price for a product, they use the information system to analyze the product. They compare it with the previous records and thereafter give a report on the expected loss or profit that the company will get should the product be adopted and priced in the store. The results are inputted into the system and later submitted to the top-level management who deal with strategic decisions. Initiatives and decisions will then be introduced on whether to stock the product. Apart from systems that have been utilized at the management level, Tesco has used management information systems at the strategic level to help address the issue of carbon emission. The company used MIS to determine the best decision to make, the levels of emission they would reduce, and the costs they would incur to achieve this (Tesco Plc.). MIS has further helped Tesco to understand their customers better and make the best decisions on loyalty arrangements and pricing. The corporation also applies MIS in tracking the value or quantity of stock available in the different stores. Choices can, therefore, be made on which store should be restocked, the urgency to restock, and the volume and value of stock needed.

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The performance of the firm has reliably been impressive, but with the integration of MIS, the corporate performance has shot a notch higher. The business can be said to have achieved full optimization. However, Tesco can improve in using MIS to decide the best countries to invest in. So far, there has been little use of the system to inform the Tesco of countries where success rates are lower. Market research remains their prominent tool. The company should thus consider the use of MIS in determining whether to invest in new countries.

In conclusion, Tesco has a favorable and well-organized hierarchical organizational structure and appropriate organizational culture as well as an efficient style of management. These elements have set it apart from competitors such as Asad, Sainsbury’s, and Aldi. The company can improve its market position by reducing bureaucracies in its management and by addressing departmental and employee isolation to promote ease in decision making. Further, Tesco should promote risk orientation among employees to improve their performance. Tesco also relies on effective communication as well as Management Information Systems to make important decisions. Nevertheless, the business should consider utilizing MIS before making decisions on whether to open new stores in some states.

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