Corporate Communications - Case Study Example

Corporate communications Executive Summary Corporate communication function is characterized by a number of variables ranging from the size,the nature and the market of the organization to the impact of government policies. Tesco is the biggest retail chain in Europe. Its European operations in particular and global operations in general require the company to adopt far reaching changes to the existing communication strategy and its orientation. For instance Tesco's corporate communication strategy is highly influenced by the fast expanding network of retail outlets in many parts of the world. Particularly its European operations require rapid restructuring of its infrastructure and a change in its strategy. In the first instance Tesco's internal communication strategy is based on a vertical manager-to-subordinate hierarchical flow and thus a series of constraints concerning effective communication flow can be noticed. Structural constraints are the most formidable of them all and therefore the company ought to put in place far reaching changes. These changes include a reorientation of the communication strategy to meet competition related strategic changes along with a policy shift that places emphasis on cost related re-design and re-planning. In fact the current operations at Tesco as a retail chain are partially affected by some organization-specific communication bottlenecks including IT related constraints. Tesco has extensively invested in modern IT infrastructure though such investment expenditure has not produce proportionately incremental positive synergies in respect of organizational efficiency and communication related outcomes. Therefore the top management of Tesco must be able to identify the existing constraints including the numerous delays in reaching out to the store employees and the ever rising cost at each department level. In other words the inter-departmental communication at Tesco requires a greater degree of attention so that costs associated with the existing constraints can be reduced to a greater extent. This paper particularly identifies Tesco's structural constraints in its communication strategy implementation process. Introduction The UK-based international grocery chain Tesco is a world leading retail chain and its general merchandising retail chain activities stretch far beyond the European Union. By sales and profits it is not only the largest British retail chain but also the best known grocery store in the neighborhood. Right now according to statistics its global sales along with domestic market sales, exceed 3 billion. Going by revenue figures it is the third biggest global retail chain based on revenue, behind Wal-Mart in the first place and Carrefour of France in the second place. However Tesco is ahead of Carrefour in profits. Though the organization started off as a seller of food and drink, now sells almost every imaginable item required by the household, including clothes, banking and financial services, telecommunication, healthcare, insurance, electronics and electrical and many more. Analysis and evaluation of the communication system at Tesco Corporate Communication can be defined as "The activities undertaken by an organization to communicate both internally with employees and externally with existing and prospective customers and the wider public. Corporate communication is sometimes used to refer principally to external communication and sometimes to internal communication, but strictly speaking covers both, the term implies an emphasis on promoting a sense of corporate identity and presenting a consistent and coherent corporate image" (www.dictionary.bnet.com). Thus Tesco has been using Information and Communication Technology (ICT) in its retail operations. The use of ICT at Tesco is effectively practiced in its public and customer relations strategy such as with individuals and organizations, including its employees, customers, competitors and suppliers. An effective communication strategy is an essential element at the organizational level if Tesco were to achieve long term objectives and carry out operations smoothly. In fact Tesco has been using different communication channels internally and externally in different departments (Greyser, 2006). The availability of sophisticated ICT infrastructure - networks, equipment, services and license agreements - has enabled Tesco to expand overseas. This is regarded as an opportunity to identify structure and operation level related benefits such as increasing sales volumes through viral marketing efforts. Such structure and operational level related opportunities are mostly influenced by the level of communication related efficiency of the organization. For instance smaller competitors that seek to capture niche markets for their products have little opportunity to expand on the available scale of operations because niche markets do not allow the management to initiate expensive internal/external communication programs (Grocer, 2002). On the other hand according to recent research on the corporate communication policy related developments at Tesco, the strategic operational environment has enabled it to initiate communication policies and initiatives that would continuously bring about positive changes in its overall operations. Tesco has been using multi-medium channels for its communication and especially Tesco relies on modern ICT to communicate with people (Argenti, & Barnes, 2009). Thus communication strategy and technology can be regarded as vital in Tesco's business operations because it has more positive outcomes - objectives are clear; everyone is informed about specific changes and developments; and encourage smooth and accurate communication within the organization and between the organizations and individuals. Corporate communications can be classified in to internal and external. Internal corporate communication methods consist of meetings, interviews, presentations, memos, letters and so on (Argenti, & Forman, 2002). These methods can be used in decision making and information sharing. This in turn will lead to an effective working environment with improved productivity and employee motivation. Hierarchy of the organization plays a major role here. Internal communication can be divided into two - horizontal and vertical communication - based on the direction of the communication flow. Tesco has been using phone/mobile, fax, memoranda, memo, e-mail, club cards, letters, word of mouth, notices, meetings, computers and letters in internal communication. Tesco also uses various types of communication methods to achieve different objectives that are predefined and strategically determined (Varey, 2000). For instance in order to give specific information to the public, inform employees about a new rules and procedures, provide information about promotions to customers in detail and so on, the company needs to put in place a far more effective communication system though the extent to which it can be cost effective depends on a number of other factors. The scope and quality of external corporate communication methods such as advertising, public relations and marketing are all determined by Tesco's operational breadth in the UK and in the rest of the world. These methods are used by the company to project its corporate image to the external world (Jablin, Linda & Putnam, 2000). Though Tesco has consistently been adopting a series of communication techniques to maintain a closer link with the external world, equally well the cost factor has been a substantial reason for worry. For instance its current UK operations alone take up millions of pounds for outreach programs. Public relations of Tesco are characterized by three overarching approaches. Community based corporate social responsibility programs. Employee relations based programs. Customer relations and integration of social networking sites in to the overall communication network. Communication network infrastructure and equipment such as telephones, mobile phones, facsimiles, memos, e-mails, club-cards, and letters have been used at Tesco to integrate the external community with internal operations and services with a degree of success though the structural inhibitions have been mounting along with costs (Goczol, 2003). Hoardings, websites and even television commercials that promise a new and unique experience in retail shopping have been adding to the rising costs and operational constraints of the company though such negative developments are disregarded in the heat of competition. Tesco's competitors like Asda, Carrefour and Sainsbury have been aware of these negative developments too. Internet usage has acquired a significant dimension in the coordination efforts of all retail chains in their domestic and global operations. The internet is increasingly becoming the most important communication tool for Tesco's commercial and trade related issues and actions. For instance its significance in the internal and external communication strategy in its domestic and global operations can be seen with regard to the level of its applications in coordinating inter-country and intra-country operations (Malmelin, 2007). The changing ICT environment at domestic branches and operations of Tesco has such a big impact on the internet related decision making process. It has played much greater role in this corporate communication change process. Despite the fact that Tesco has been making use of corporate communication strategy as the main investment related strategic policy alternative for some time now, the company has also realized the limitations arising from rising costs. Tesco has adopted growth oriented communication policy measures primarily with the intention of enhancing growth through a strategic shift in the corporate communication policy related approach (Christensen, & Morsing, 2008). Thus on a historical note Tesco in particular has been greatly influenced by both the need to reorient business strategy and communication strategy in an ever stiffening competitive environment. This paper would investigate the overall corporate communication environment and the impact of the internal and external communication tools on business environment and finally the extent and the current prevalence of communication strategies used at Tesco. The strategic imperatives of the current communication policy and initiatives of Tesco are basically intended to establish a direct connection with stakeholders of thus placing emphasis on the operational efficacy and public relations (Singh, 2009). Some time back only the traditional communication facilities were provided to the relevant business parties and to the community but at a much reduced speed of service. By switching over to modern communication technology and equipment Tesco has achieved what could termed as "revolutionary communication synergies". This paved the way for stakeholders to benefit with access to modern communication equipment. Management of Tesco is responsible for the ICT policy design, planning and implementation in the overall operational activities (Belasen, 2007). Its wide-spread influence in creating the relevant atmosphere for the effective use of the communication tools in particular and the ICT infrastructures within the company is of very great significance. What just began as an exclusively narrow official policy of designing, planning and implementing some guidelines for the use of the communication methods by stakeholders of the Tesco in particular has grown into one of the most remarkable outcomes for its business operations (Martin, 1995). Up to now the policy has benefited thousands of users though the pace of growth has been dismally slower in some sectors. Corporate communication policy of Tesco has ensured the provision of universally available, high quality and affordable communication and information technology services for their business parties. Though the organization has been investing in new communication tools the use of English exclusively has also an undesirable impact on the large multicultural workforce at Tesco (Mee, & Clewes, 2004). Tesco has realized that the use of English language in its ICT related activities at times has a negative impact on motivation of its culturally diverse staff (Riel, & Fombrun, 2007). According to recent research skills training and development related expenditure for culturally diverse staff is rising fast. Social integration has helped the prevalence rate to increase much faster than was initially planned for. The overall outcomes of the corporate level implementation of the ICT initiatives at functional level in the Tesco identified a higher usage of modern communication tools by the staff and other parties. However the current economic downturn also has played a significant role in determining the level of use of communication tools at Tesco due to the rising operational cost factor. According to researchers operational drawbacks at Tesco are basically determined by the higher level of coordination related drawbacks. This study has identified an ever increasing willingness at Tesco to integrate organizational and corporate goals with the corporate communication policy (Goodman, 2008). In other words this researcher has noticed a marked tendency to place emphasis on effective communication strategies at Tesco. Though Tesco has adopted a structural change related approach in internal and external communication and ICT policy it's not adequate. It must be noted that e-commerce strategy of competitors has acquired a new dimension. In fact according to recent reports nine out of ten companies engaged in international business operations have invested a greater percentage of asset related investment funds in communication systems (Balmer, 1999). This is because that such investment brings about a qualitative shift in their operational environment and capabilities. Such capabilities include incremental growth rates in financial management cash flow, quality, sales revenue and profits. Despite a series of communication systems related investments by Tesco the current economic downturn has played a very important role in changing the fortunes. Falling demand and supply constraints have forced it to adopt variety of ICT policies in their international operations. Of these polices a new communication strategy is the latest (Dolphin, 1998). Despite all these possibilities it must be noted that continuing cost rises have forced Tesco to abandon some of its own expansion plans including those directly related to the communication systems development. In the first instance its relative expenditure on training and developing language skills of the culturally diverse staff has been rising. This is not a peculiar problem at Tesco alone. Its rivals are also faced with similar problems. However Tesco has been recruiting many college undergraduates for part time employment and as a result its skills training programs have run in to difficulty (Belmiro, & Gardiner, 2000). Basically difficulties are related to the structural problems such as the inability of the top management to functionally integrate different tasks at the departmental level. These difficulties are further exacerbated by the hierarchy related vertical communication bottlenecks. For instance senior managers and subordinates at Tesco have experienced some difficulties in communicating to each other. While this is mainly due to the language skills problems among culturally diverse employees, there is also a difficulty related to the existing organization structure's rigidities. Findings Difficulties experienced in functionally integrating various tasks at departmental level. Rising overhead costs. Structural constraints such as vertical hierarchy related communication bottlenecks, e.g. delays in reaching out to store level employees. Poor coordinating efforts between the senior staff and subordinate staff at the store level. Multicultural staff has one of the major hindrances in effective communication at Tesco Recommendations Tesco must adopt a communication strategy in keeping with its culturally diverse international staff's immediate requirements such as bridging the gap between their local culture and the foreign culture. Structural constraints of Tesco's communication system have to be overcome by adopting restructuring policies that would address the fundamental constraints like the need for introducing organizational changes that are focused on reducing the number of layers in the hierarchy between senior managers and bottom level or subordinates. Finally Tesco must focused its attention on strategically integrating a multi tasking communication system in to the functional inter links between departments. Conclusion A successful communication strategy goes along with well defined organizational goals and such organizational goals might vary from one business organization to the other. For example retail chains are faced with a different set of policy alternatives while service organizations have a completely different set of priorities and opportunities (Massie, & Anderson, 2003). Determining the nature and the extent of the strategic influence in coordinating activity in the business operations at Tesco is related to the organizational outcomes and/or goals while competitors adopt far reaching changes to the existing communication strategy with such huge expenditure programs when they expand into overseas markets. Given the opportunities that exist for such expansion and the way in which those opportunities acquire such a significant dimension in the international and domestic competitive environments, the communication strategies of Tesco would have a far reaching impact on the organizational and corporate goals (Balmer, 1999). Such goals include e-commerce strategies as well. Thus environmental factors other than the nature and extent of market oriented competition and penetration would have an impact on the firm's strategic ICT policies and intiatives. It's not a secret that firms respond to the changing environment of competition by adopting new communication infrastructures. Therefore such strategic intents enable the firm to achieve corporate goals to such an extent that other variables remaining constant the communication policy and coordination activities within the firm enable the management to design and plan successful communication programs in recognition of the existence of such opportunities and their relevance to more advanced coordination efforts (May, 2006). Tesco would definitely have an advantage here while smaller retailers are not altogether far behind because the latter could still strategically orient themselves to capture niche markets from big retailers. Communication strategy and ICT policy play a very important role here. 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