Tesco Change Management Strategy

Tesco Change Management Strategy Tesco is the UKs most successful and high profile supermarket and one of the worlds leading international retailers. Tesco was founded by Jack Cohen at east London in 1919. The name came about after Jack Cohen bought a shipment of tea from T.S. Stockwell. He made new labels using the first three letters of the suppliers name (TES), and the first two letters of his surname (CO), forming the word TESCO (tesco.com). Tesco is the market leader of the supermarket industry in UK with revenue of  £38.558 billion including VAT and  £62.537 billion of revenue worldwide in 2010 (tescoplc.com). Even in this recession Tesco has made an incredible  £3.4 billion profit worldwide this year (guardian.co.uk). 1.2: Mission statement: To create value for customers to earn their life time loyalty (Please see appendix no 1 for full details). 1.3: Objectives: The objectives of the strategy are: To be a successful international retailer To grow the core UK business To be as strong in non-food as in food. To develop retailing services such as Tesco Personal Finance, Telecoms and Tesco.com To put community at the heart of what we do (Tesco.com). 1.4 Performance: Tesco has highly market growth among all supermarket giants since it is performing. It has highest number of store across UK .It is also providing service in Europe , Asia and initial market in the U.S .A by the name of Fresh and Easy as it is third largest supermarket in the world (Tesco.com). 2. Introduction: Strategic change management can be defined as the art and science of formulating, implementing and cross-functional decisions that enable an organisation to achieve its objectives. Strategic change management is design for marketers to understand their current position in the market to divert its actions for future benefits. It brings the idea of management, operational, financial and all other forms of action need to change for future benefits in the long run. 2.1 The action of Strategic change Management: Adapting the strategic change management is a significant element of exploiting and creating new and different opportunities for tomorrow. It magnifies and implements its operational actions in the long run to achieve target. To survive, all organisations must astutely identify and adapt to change. The strategic management process is aimed to allowing organisation to adapt effectively over long period of time. 2.2 Contribution by gurus: Peter Drucker (1969): Coined the phrase age of discontinuity to describe the way change forces disruption into continuity of our lives. We are now in an age of discontinuity and extrapolating from the past is hopefully ineffective. The information is needed for the performance of service operation is rely on the perspective is operational managers require finer obtained information than is needed as part some corporate diagnostic. According to peter drucker Two problem arise from strong corporate reporting, first, policy and political goal can down played, and second, the focus can easily become concentrated on organisational effectiveness at the expences of community needs analysis. He argued downside of the organisational information system was that management focus inevitably became drown to internal system (Longo and Cristofoli, 2007). Change is essential and compulsory in order to ignore the discontinuity of our life. AC 4: Examining the need for strategic change in Tesco: An organisation needs to change in order to meet the following condition. To remain competitive in their respective market. To ensure that they can adapt to change in order to meet ever changing environment circumstances. To remain focused in order to plan their future. Changes respectively occur on the basis of its objectives and competitiveness. The relative importance of change is to identify what market is needed for and to enable them by supplying the essentials. Tesco has made its significant strategic change on growing market particularly in the UK. Tesco has a well-established and consistent strategy for growth, which has allowed themselves to strengthen their core UK business and drive expansion into new markets. Tesco is a giant supermarket it has remained highly competitive in the market because of its market growth by adapting to the need for change. Corporate strategy: Examination of the current and anticipated factors associated with customers and competitors envision a new or effective role for the firm in a creative manner for organization. Tesco corporate Change: Tesco had undergone some strategic change in the respect of till set up. They introduced self service till in order to remain competitive and satisfied customer requirements. There is a need to implement such a change for Tesco to remain the leader in the retail industry. 3.2 What is change management? A structured approach to transition individuals teams and organisations from a current state to a desired future status. A systematic approach of dealing with change both from a prospective of an organisation and on the individual level. Including: Adapting to change, controlling change and effecting change. [AC: 4] Assess the factors that are driving the need for strategic change: Change is often necessary because of external and internal development and external factors. Theory: Micro environment influences the organization directly. It includes suppliers that deal directly or indirectly, consumers and customers, and other local stakeholders. Macro environment includes all factors that can influence an organization, but that are out of their direct control. A company does not generally influence any laws. It is continuously changing, and the company needs to be flexible to adapt (www.blurtit.com). The general environment and the task environment PESTEL analysis: A PESTLE analysis for Tesco must consider all the important external factors impacting on the company. These factors may have political, economic, sociological, technological, legal or environmental dimensions. Tescos operations obviously have a significant environmental impact, from fossil fuel use to packaging issues. Reducing the demand on the planet is a challenge for any big company. A PESTLE Analysis for Tesco must look at all the six factors we have mentioned. Here they are again, with examples of each: Political: The increase numbers of political instability can affect the business by the Democratic government, political legislation. Economic: rate of inflation, interest rate, competition demand, employment level, income level Sociological: population demographics ,Lifestle, pattern of social interection, Religion, Believes, Norms Technological: Level of skilled Manpower, Transportation. legal: Employment laws, Consumers protection laws, investments laws and Health Safety laws (Class lecture). Environmental: climate change is affecting supply and transport, how can Tesco adapt External change triggers: Tesco has been able to place itself as a fastest and highly growing market in the world. As a worldwide business Tesco have great concern of global warming. As a result of this they have put important roles for climate change by becoming 0% carbon business by 2050, reducing 30% emissions of products they sell by 2020. Health awareness is a significant issue Tesco is introducing for their consumers by providing better information on nutrition to improve health. They make healthy options more accessible by providing price and promotions, healthy ranges and reformulating products. They are also responsible of selling alcohol. Tesco working constructively and developing strategy for demographic change on among all races. Near or task environment: Cover all the stakeholders who can influence and be influenced by organisations direct actions. Tesco has local buying strategy in every region dedicated to local market on demand of many consumer want to boost up their domestic economy. Tesco has segmented the suppliers for their products with 4000 local and national suppliers. Although Tesco appearing one of the super market giant in the UK yet it has got some main rivals which are Sainsburys, ASDA, Morrisons and Co operative. Tesco has established own bank by the name of Tesco bank. Internal change triggers: Technology: Tesco made a drastic change in their customer service sector by introducing self service till in order to reduce the queue in the line Outlets: Tesco operates 4500 stores in 14 markets with a substantial food and non food offering. Also they have fast growing retailers services arm (including dot com, finances and telecoms).As they have their internal sources tell them every day and week by exit and telephone survey with customer to understand them how they are benchmarking against their key competitors. As Tesco involved the qualified people to run its operations therefore there is no senior management dissatisfaction with the status quo has still arrived. To avoid the employee management conflict Tesco established an Internal support and recognition programme for their employee (Tescoplc.com). The systems approach: Technology To be competitive in the market retain consumer revisited and win their lifetime loyalty Tesco introduced Customer relationship programme named (CRM) Clubcard in mid of the 1990s. A modern technology of self serving Till has bought Tesco a successful operation in its management. People Tesco has 472,000 employees serving millions of customer every day. Management Tesco is well structured and its Strategic management is PESTLE analysis, Porters 5 forces analysis, Critical success factors, SWOT analysis, Value chain analysis (ivoryresearch.com). The change agent: A group of people work under the board of Tesco for its internal and external change. They also follow Alton Mayo theory as a process of change. Goal- To retain customer lifetime loyalty. Role Strategic management. Communication- Alton Mayo theory Tesco has come through several changes in internal and external which have held its highly competitive market place among all rivals. [AC: 5] AC 6: Assess the resource implications of the organisation not responding to the strategic change: Resource implication is a tool of company which is used to identify the strategic management available to company. A fundamental principle element is based on maximising potential advantages (Hitt, M. A. et. al. 2001). Tesco as one of the high profile supermarket ha it resources is very rich. It has 472,000 Human resources, Technological resource for online shopping, Tesco financial resources, Thousands of Lorries for transportation, Tesco recycling points located in every Tesco Extra shop for recycle, Tesco Fuel. Tesco as a giant supermarket has its resources very rich. It has potentially identified its resource implication and applied them according to the development stage. According to the company policy it has segmented the resources in three sections which have been discussed below. Human resource of Tesco: Tesco has very good practice of Human resource management. The practice includes: Interviewing: Tesco has highly trained staff and managers for taking interview of applicants according to the level of employment. Training and Development: People realise more committed and involved themselves with Tesco when they know they can grow in the company. Tesco has the strategy of recruiting local people to understand the culture and tradition. They get benefited in the wider economy by investing in training and development as a major company. Restructure: Tesco made a supply chain restructuring programme in Republic of Ireland in 2009 when Pound went down against Euro.(Tesco.com) Physical resource of Tesco: As a world fourth largest retailer Tesco has develop constructive Physical Resources. Building or premises: Tesco as one of the biggest supermarket in the world has 2482 stores in UK and 2328 stores in 13 international markets including EUROPE, ASIA and US. Reputation: Tesco as a Britains largest retailer supermarket has extraordinary reputation of expending its operation in the UK and international markets. Vehicle: Tesco has thousands of different types vehicles that are on the road to deliver and transport consumer goods at their doorsteps and to the stores (Tesco.com). Financial Resources: Tesco is one of the successful retail supermarket in the world have its financial resources very strong and established. The financial resources include below are Cost of training: Tesco has put its market place very strong and competitive. As a result of this Tesco spends millions of pounds for its staff training and the training for running the self service till each year nationally and internationally (Tesco.com) Redundancy cost: Redundancy on Tesco has only made on relocation purpose in February 2007 and March 2010 (Supermarket.co.uk). Relocation cost: Massive amount of relocation cost were made in March 2010 When Tesco wanted to relocate its distribution centre in Widnes from Middleton (David Morgan. (2010) Middlewich shoppers boycott stores following redundancies. Middlewich Guardian, 11th march, p. 1.). Tesco has made its resources implicated widely in the market. It has adapted the implications in strategy in order to achieve the target. [AC 6] AC 7: Develop system to involve stakeholder in the planning of change: Stakeholder analysis: Stakeholder analysis is the document information is provided for the key stakeholders Names and organisation, their role in the project, their level of interest within the company, their influence in the individual project and suggestion for managing relationship among each stakeholder (Schwalbe, 2007).Stake holder is person or group of people who have legitimate interest in the company and who have direct and indirect communication to the company. Stakeholder analysis system Tesco can apply to involve its stakeholder in order to bring the change in the service. Customer Supplier Buyer Government Media Organisation TESCO Who have external relationship with TESCO Supply who have internal relationship with Tesco Who have internal relationship with Tesco Who is externally linked with Tesco Who have external relationship with Tesco Role in the project Who buy their shopping from TESCO Supply the product in Tesco Who buy the product for Tesco Who impose the VAT, Taxes, rent and rate etc Supply the information to customer about Tesco Product. Unique fact Quite demanding for quality of product Demand for More product supply Buying product in time for Tesco Government regulation is obeyed by Tesco Quality of product available for Customer Level of Interest High level of Interest Very high level of interest Very high level of interest Low level of interest Moderate level of interest Level of influence Very high level of Influence Moderate level of influence Moderate level of influence High level of influence Low level of influence Tesco stakeholder Analysis 7.1. Divergence and Convergence: divergence and Convergence is another appropriate way of involving the stakeholder into decision in order to bring the change. Convergence is the tendency of Tesco to adopt successful change practices. Divergence is the results of different implementations of the change management practice. Divergence Factors: Leadership Styles: Identify the Leadership style is very important element of bring the change in Tesco. National culture: Cultural effect always keeps a significant impact of interest to adapt a change in Tesco. Organisational Culture: Tesco must bring the change according to the practice of its organisational culture. Industrial development: Changes always adapted in terms of industrial development. Convergence Factors: Technological Innovation: Technological Innovation is one of the important change Tesco may bring in order to change. High Customer Expectation: The potential change must be based on highly customer expectation. In terms of Structure: The change Tesco needs to adapt according to the Organisational Structure. Convergence and Divergence is two important elements of methods Tesco may apply in order to bring the change in the company. The factors that are driving convergence and divergence is way of apply the change. 7.2. Commitment Development: Commitment development is one of the best process of making stakeholder involved with Tesco. In terms of bring the change in the organisation, Tesco can be more responsible to Customer, Suppliers, Buyers, Governments roles and regulations, and be more accountable to media that what is the development they can provide for better service by bringing the change in Tesco. It can reserve the interest of individuals and supply the commitment according to the consumer needs ( Class lacture). [AC 7] AC 8: Develop a change management strategy with stakeholder: Stakeholder analysis: Stakeholders are those people who have legitimate interest in Tesco. There are six steps of analysing the stakeholder in Tesco. Those steps are Step 1.Identify stakeholders: Identifying the stakeholders is the first step of analysing the stakeholder in Tesco. The stakeholders are in Tesco is Customers, suppliers, Buyers, Employees Managers, Community, Government, and Media. Step 2.Prioritise Stakeholder: Prioritise the stakeholders in Tesco according to their attribution is very important element of bring the development in Tesco. It is an effective process of gradual involvement. Step 3.Develop an engagement strategy: One of the important element of stakeholder analysis is to develop an engagement strategy of stakeholders with Tesco. It brings the commitments and individual duties belong to individual into practice. The methods of involvement could be: Meetings, presentations, Group facilitation, Delegating, develop and share a change plan. Step 4.Map their profile: Mapping their profile according to their level of influence and Level of interest is significant element of analysing stakeholder profile. Step 5.Optimise their support: Stakeholder analysis is the effective way of involving Stakeholders into direct and indirect approach of Tesco activities. Optimising their support means, the support is provided by stakeholder is to utilise them in the best possible way. Utilise the support of stakeholders resources. Step 6.Monitor changes: Changes may come according to the demand of time. It is vital to monitor the changes may come potentially. [AC 8] AC 9.1: Evaluate the systems used to involve stakeholders in the planning of change: The involvement of stakeholder planning includes two steps include stakeholder analysis and commitment development. Evaluation the systems in the planning change: Advantages of stakeholder analysis and commitment development Disadvantages of stakeholder analysis and commitment development. Stakeholder analysis provide the information of the people who are directly and indirectly involved with Tesco. It is time consuming and lengthy process involved. It is the only way to identity the stakeholders who have high level of interest in the company. Low level of interest can bring less revenue in the organisation by the stakeholder By stakeholder analysis Tesco can know who are the people have high influence in order to bring the change Low level of influence and the disagreement of development can bring down the company motive intention for change. Stakeholder analysis and commitment development can give us the information of individual responsibility belongs to individual. It is time consuming and cost effective. Stakeholder analysis and commitment development can provide the information of identifying individual demand within the organisation. Individuals demand can be sometimes outrageous in order to bring the change. Evaluating the system of stakeholder planning can provide the idea of the effectiveness in terms of bringing the change. Advantage of and the disadvantage of the stakeholder analysis and commitment can give us information of how productive they could be in order to bring the change in self service till. 9.2. Evaluate the systems used involve the Stakeholders in the planning of change: Involvement of stakeholders planning includes Divergence and Convergence. Advantages Disadvantages Divergence and convergence may bring Structural, Technological, and operational change. Changes are always variable. Divergence and Convergence may the innovation in the organisation. Innovation may be very costly. Individual leadership style can be applied in different situation in order to bring the success in the organisation. Bad practice of leadership can be destructive for company. Organisational and national culture can be developed by adapting Divergence and Convergence on perspective of change. It may put the negative aspect on the culture. Evaluating the change of Stakeholder involvement can give a positive impact of applying the change in the company in order to adapt a change. Organisational structure and culture can be developed on the demand of situation in the case of being competitive in the market. [AC 9] AC 10: Creating a strategy for managing resistance to change: Resistance of change is the people in Tesco who dont want to bring the change in self service till. The type of resistance can be individual versus collective, passive versus active, direct or indirect, behavioural or verbal or attitudinal and can be minor or major. In order to frozen the resistance situation Tesco has identified the appropriate measure of managing a process. The process of managing the resistance is Participation and involvement: participation and the involvement of key stakeholder is one of the important process of solving the resistance. It plays the vital role of individual involvement and find out the proper solution. Everyone participation can bring the effectiveness of solving resistance. Education and communication: Education and communication process can be applied when the major stakeholder are not aware of the benefit of using self service till. The process of making individual educated and communicative can bring stakeholder co operation of productivity positively. Negotiation and compromise: Negotiation and compromise may arise when there is division within the group resistance. It is one of the possible way of solving the problem. It can resist the problem and work the group within a team. Implicit or explicit force: Solving the resistance is can be applied through implicitly and explicitly when the resistance need to be done quickly in order to bring the change. It is one of the over hasty process of bringing the change when its crucial to do. Facilitate influence: Supplying or facilitate the influence of authority can bring the change when there is need to sense the appropriate target. It becomes essential to make the key stakeholder to understand the value of change. Resistance of change can be arrived any time when the certain change need to be done. The strategy of managing the resistance is the major elements of bringing the intended change. [AC 10] AC 11: Develop the appropriate models for change: Kotters 8 steps change model: Step one: Create urgency For change to happen, it helps if the whole company really wants it. Develop a sense of urgency around the need for change. This may help me spark the initial motivation to get things moving. What to do: Identify the potential change and develop the scenarios showing that what could be happened in the future if the changes not taken Examine the opportunities that could be benefited in the long run. Discuss the change constructive way and give people dynamic reason to make them talking and thinking. Step two: Form a Powerful Coalition Convince people that change is necessary. This often takes strong leadership and visible support from key people within your organization. Managing change isnt enough I have to lead it. What to do: Identify the true leader who can bring the change in Tesco. Make them as a team within the change coalition. Ask the commitment to the people who will bring the change. Step three: Create a vision for change When I first start thinking about change, there will probably be many great ideas and solutions floating around. Link these concepts to an overall vision that people can grasp easily and remember. What to do: Determine the value of the change has central priority. Develop a short summery that will carry the vision to future of the organization. Carry out the good practice of the vision among the coalition. Step four: Communicate the vision What I do with my vision after I create it will determine My success. My message will probably have strong competition from other day-to-day communications within the company, so I need to communicate it frequently and powerfully, and embed it within everything that I do. What to do: Bring the discussion often about the change vision. Openly and honestly address what people think about the change. Lead the change by example. Step five: Remove obstacles If I follow these steps and reach this point in the change process, Ive been talking about your vision and building buy-in from all levels of the organization. Hopefully, my staff wants to get busy and achieve the benefits that Ive been promoting. What to do: Identify the leaders whose mail roles are to deliver the changes. Set up the organizational structure, job description and performance that can meet the identified change. Recognize and reward people for making the change. Step six: Create short term wins Nothing motivates more than success. Give my company a taste of victory early in the change process. Within a short time frame (this could be a month or a year, depending on the type of change), Ill want to have results that my staff can see. Without this, critics and negative thinkers might hurt my progress. What to do: Not to choose early target that are expensive and may not change happened. Make sure that the change can take place without help from any strong critics of the change. Step seven: Build on the change Kotter argues that many change projects fail because victory is declared too early. Real change runs deep. Quick wins are only the beginning of what needs to be done to achieve long-term change. What to do: Analyse what went right and what need to improve after making the change. Set up a goal to continue building the time that has achieved the change. Keep the idea alive and bring the new change leader from the change coalition. Step eight: Anchor the Changes in Corporate Culture Finally, to make any change stick, it should become part of the core of your organization. My corporate culture often determines what gets done, so the values behind your vision must show in day-to-day work. What to do: Discuss the change progress to the coalition in every chance and tell the success story about the change process. Include the values and the change ideas when hiring and training the new staff. Recognize the key members publicly of the change coalition and make sure that rest of the staff new and old remember their contribution. Create plans to replace the key leader of change as they move on to ensure their legacy is not lost or forgotten. Changes may take place at any time in any situation. The difficulties of the change are depending on the size and the length of the problem. Change is potential and vital, referring the unidentified and uncertain changes and take into action is compulsory in terms of change. Kotters eight steps model can help Tesco to identify the necessary change and make the change happen by adapting what action need to be taken. AC12. Plan to implement a model for change: Plan to implement a model for change is important in order to change. The models we can apply to make the change is depend the problem and identification of the change which may come in Tesco. A model of change is discussed below. Transformational Leadership: A contingency process of Transformational leader is who those encourage and simulate both does for the followers to achieve outstanding outcome and in the process of developing their own leadership Strategy according to the capacity. The followers get driven by the transformational leader in order to grow up and develop into the leadership strategy by responding to the individual leader and the Transformational leader provide empowerment and align the objectives and goals of the individual followers, the group, the leader and the organisation. To demonstrate the Transformational leader that could be a leadership strategy what drive the followers to succeed the expected performance (Bass, 1985, 1998). The accumulation of Transformational leadership has demonstrated that it is very important in every sector in every level (Avolio Yammarino, 2002). Transformational leadership is a very constructive process of making the job done. A leadership must be based to bring the change into action and implement it for the purpose of expected change. Transformational Leadership is perspective and constructive way of leadership which Tesco can apply in the leadership strategy in terms of brings the change. AC 13 Develop appropriate measures to monitor the progress: It is very important to monitor the progress after the changes has taken place. Monitor the progress is to identify how the changes taking place. There is various way of monitoring the progress which has been discussed below. Goal based Evaluation: In order to bring the change in set up a goal based on evaluation in Tesco. Goal base evaluation is a conducive way of monitor the progress when the changes are taking place. Outcome based evaluation: when the changes are taking place check out the outcome of the progress is very important way of implementing the change. Regular reports: Set up a monitoring team those will submit the report on regular based to identify whether the changes are taking place or not. Meetings: The meetings may take place on regular based between the coalition teams