Organizational Structure of Tesco and Sainsbury - Case Study Example

Introduction Stellion Convenient Stores is a chain of grocery stores and supermarkets that were founded in 1989 by my father Peter Howard. The group has five supermarkets and convenient stores around the country. It has been a profitable organisation, courtesy of Howard's business acumen. Stellion has become a house hold name in most of the towns that it is operating. It employs a total of two hundred employees at a full time basis. Due to chronic bronchitis, Howard has been unable to run the business on a day to day basis, given the cold and frosty conditions of this environment. He has been reduced to working from home most of the times. After deliberations with the family members, Howard has opted to retire from the company completely at the end of this year. He will relocate to Kenya, due to warm climate here. This will be good for his health. Having graduated recently with an undergraduate degree in business management, Howard has selected me, as his eldest child, to take over the running of the business. I plan to make radical changes to Stellion Convenient Stores. This is to make sure that it grows, instead of the current stagnation. To this end, am carrying out a research on Tesco and Sainsbury stores. The results of this research will help me in making the decisions that are necessary for this company. Part 1 Task 1-(LOI) Organizational Structure and Culture of Tesco Supermarkets Chain Tesco has a unique form of organizational structure. It is devolved and decentralized. This means that rather decisions been made by the top tier managers and passed down the hierarchy, the managers at the lower levels can make decisions (Crowther & McNiff: 2004). What the top tier managers at Tesco do is just to arm the lower cadre managers with general terms like price list and terms and conditions. But the rest of the decisions, like determining which staffs work where are determined by the lower managers (Crowther & McNiff: 2004). Each branch of this chain of supermarkets has its own manager. This is the one who decides on matters to do with the store, and then he makes a report to the regional manager. The hierarchy of Tesco supermarkets can be looked at as been flat. There are six tiers of hierarchy between the highest official, who is the C.E.O, and the lowest staff, who is the checkout cashier. Since the organisation has several branches, there exist two separate but interrelated forms of structures (Crowther & McNiff: 2004). The first is for the whole company, while the second is for each of the branches, which can also be referred to as regional or internal organisation structure. Every company has norms and values that are common amongst the employees. This is what is referred to as the organisational culture (Mullins: 2008). There are weekly meetings for the employees, where they get the opportunity to share ideas and suggestions about the running of Tesco. During these meetings, the management gets the feedback from their staff on how the business is running, since the workers are the ones who are in direct contact with the customers (Mullins: 2008). It is also the culture of Tesco to inform the employees of new developments in the company, for example change in terms and conditions, during these meetings. The chain of supermarkets has adopted a slogan "every little helps", which shows how they value their employees and customers. Every little input from these employees and customers aimed at improving the business of this company is appreciated. The culture adopted by Tesco helps both the employees and the customers. For example the weekly meetings and update from the company makes the employees feel that they are part of the company, they are not alienated (Crowther & McNiff: 2004). The employees are allowed to make suggestions as to the best way of running the company, they become a part in the decision making process. They feel that they have control over their work, which is really good for morale (Crowther & McNiff: 2004). The customers get their feelings and suggestions relayed to the management by the staff during these meetings. This ensures that there is a connection, albeit circuitous, between the management and the clientele. Devolution of power means that the top tier managers can concentrate on other important duties in the company, leaving the others to the lower managers (Crowther & McNiff: 2004). The workers are also motivated, since they feel that their input in the company counts. Better decisions are made which satisfies the customer. This is because the person who is in contact with the customer is the one who is left to make the decisions that he deems fit to satisfy the customer, according to the customer's needs and wishes. However, some of these lower cadre managers have been accused of making decisions that are in contrast to the company's goals. For example, they might make decisions to buy products from suppliers at very low prices, hence exploiting the supplier. Organisational Structure and Culture of Sainsbury This company trades its shares in the stocks exchange market. As such, it can be said to be a public quoted company (Mullins: 2008). Its organisational structure follows that of quoted companies. There is a chairman of the group, the secretary and the board of directors, who make up the top tier team (Crowther & McNiff: 2004). These are the ones who appoint the C.E.O of the group. The C.E.O is the one who is in charge of running the chain in an everyday basis. Sainsbury has diversified its operations and services. It is made up of five different companies. These are Sainsbury supermarkets. The other is Shaw supermarkets. Then there is Sainsbury bank, JS Developments and lastly there is Sainsbury properties. All these are controlled by J Sainsbury PLC. This is the parent company. There is one manager for every branch. This manager is the one who makes the decisions that affect the running of that particular branch. Many people have described the organisational style of this company as been autocratic. This is because there is only one manager in a store. The manager does not have assistants (Crowther & McNiff: 2004). He is the one who makes all the decisions pertaining to that branch. There is no delegation of duties; he is the one that gives orders. What this style of management means is that decision making, been centralised, takes too long. The people who are in contact with the customers are not allowed to make decisions. This has led to reports of customer dissatisfaction and dillydallying as far as decision making is concerned. Many of their customers have been absorbed by Asda, who have a different management style. For example, the decision on whether they should slash their prices took so long. By the time they made that decision, Asda have taken most of the customers. Culture of an organisation affects its economic performance either positively or negatively (Crowther & McNiff: 2004). One of its cultures, introduced in mid 2007, is to sell food at what they called fair prices. This means that they sell cheap but the also sells quality. They have increased their range of non-food products, especially in the supermarkets. They have also developed a new culture of selling their products on line. The company also tries to apply the same procedures in management and operation to all their branches around the world. This is what has been referred to as "sainsburyising" offshore operations (Crowther & McNiff: 2004). The top mangers also have a culture of growing through other means other than take-overs. This means that they prefer to expand their stores instead of buying out other stores, like in the case of Tesco. The culture of online marketing has satisfied customers since it is more convenient. This has increased their customer base. When they tried to apply same techniques of operations to every branch that they have, some plans backfired. For example, Shaw supermarkets in the U.S, which were hitherto growing, started to decline (Crowther & McNiff: 2004). The stores have also been accused of harassing their suppliers by offering them very low prices. For example, they have been accused of dealing Kenyan flower farmers a raw deal by buying their products at low prices then selling them at very high prices in their stores. Factors Influencing the Behaviour of Individuals at Tesco and Sainsbury For starters, the behaviour of individuals is affected by the management structure operating at the place of work (Mullins: 2008). For example, Tesco managers can make decisions independently, while those at Sainsbury cannot. Also, the behaviour is affected by the relationship between the people who make decisions and those who implement those decisions (Mullins: 2008). In Tesco, the workers enjoy a great relationship and contact with the top cadre. They are allowed to contribute to the running of the company. However, in Sainsbury, the workers can only ask for clarification of orders that are issued by the manager. They are to follow orders, not make decisions. The behaviour of the individual can also be influenced by the powers that are vested on him (Mullins: 2008). If the powers are vested on one person, then he is likely to act with impunity. This has been the case at Sainsbury. In fact, more than a hundred of their managers were to be scrutinised following reports that they have acted in contradiction to the company's expectations. This was in the year 2002. Part 2 Task 2- (LO2) Management, Leadership and Organisational Theories of Sainsbury Organisational theory has been defined by many people differently. Mullins (2008) contends that it is the "systematic study and application of knowledge on individual and group behaviours within organisations". Different organisations adopt different theories, either deliberately or otherwise, in running their operations. The theory applied will inform the management structures and designs, and leadership adopted by the management (Mullins: 2008). These theories also inform how the actors within the organisation act. This is because their action must complement the theory in operation. Sainsbury seems to have adopted the scientific method of running the organisation. This is called scientific or Taylorism theory of oirgasnisation (Mullins: 2008). The aim of this method is to improve productivity of the workers. This theory has it that every task must be planned before hand and allocated to the most capable individual (Crowther & McNiff: 2004). The theory contends that every individual at work must be closely supervised to ensure that he performs what is expected. As such, employees do not have control over the decisions on the work pace and direction. The theory focuses more on the importance role of managers in supervising the workers. Every task, regardless of where it is being conducted within the organisation, must be done uniformly. To this end, Sainsbury has managers who supervise the workers in every store. The manager makes all the decisions regarding the pace and the direction that the work is going to assume. The workers have little or no control over their work. Also, Sainsbury tries to make each every store around the world that is affiliated to them to do things uniformly. The type of management and decision making in every Sainsbury store is the same. The advantage of this theory has been that the workers efficiency is improved, their output maximised (Crowther & McNiff: 2004). Also, the centralised decision making means that every person is reading from the same script, avoiding misunderstanding and duplication of roles, and further, averting ambiguity of orders. Management, Leadership and Organisational Theory of Tesco The theory that seems to describe the activities of Tesco as an organisation is the contingency theory. This theory opines that there is no superior or universal way to run an organisation (Mullins: 2008). This includes making decisions and managing the workers. Rather, the decision making and running of the organisation should depend on the circumstances and conditions that are prevailing at the time (Crowther & McNiff: 2004). The running and operation of the organisation is affected by many factors, some of which are external to the organisation. These are what the proponents refer to as contingencies (Mullins: 2008). What this means is that the decisions that are made should reflect the environment and conditions that necessitated it in the first place. In Tesco, lower cadre managers are allowed to make decisions that they feel are the best for their particular duty station. Different stores of Tesco have different ways of running things. Workers are given freedom to make the decisions that they believe are the best to deal with their particular situation. They are not tied down by rigid and "one size fits all" rules (Mullins: 2008). The advantage of this method is that the stores are able to adapt to their environment, for the rules are very flexible. Decision making is also very fast. But the negative is that confusion reigns, as the workers have no blueprint to refer to. Also, many decisions that are at variance are made, leading to a lot of confusion and conflicts. Conclusion When one is getting into a new market that already has some established players, it helps to find out how these potential competitors are operating. This will give the new business an idea of what to expect as far as competition is concerned. The new business managers usually take the best performing and worst performing businesses and compare them. This helps them realise the mistakes that were made by the bad performer, and factors that are aiding the best performer. This way, they have an idea of what to do and what to avoid in their new market. This study took as its case Tesco and Sainsbury supermarkets. Their management structures and organisational culture were compared to find out what makes them tic and what may bring them down. References Crowther, S & McNiff, T. Organisational Structures and Organisational Theories. 1st ed. Oxford: Oxford University Press, 2004. Mullins, L. Essentials of Organisational Behaviour. Brendice Hall, 2008. Read More