Competitive Business Strategy, Organizational Culture, and Future Human Resource Management Strategy - Case Study Example

Competitive Business Strategy, Organizational Culture and Future HRM Strategy: A Case of Tesco Table of Contents Table of Contents 2 Introduction 3Task 1 3 a.Tesco’s primary business strategy 3 b.HR Issues and challenges 4 c.Significance of SHRM 5 a.1Organisation and Strategic Framework 5 b.1Suggestive HR Strategy 7 c.1Competitive Business Strategy 7 Task 2 10 a.Tesco’s Organisational culture and values 10 a.1Current HR Practices 10 b.1Justification in Line with HR Strategies 10 d.Conclusion 12 Reference List 14 Appendix 16 1. Introduction In the present era of extreme globalization, companies across the world are trying to completely develop their organizational capabilities and meet the changing needs of the customers to outshine the competitors in retail business (Johnson and Scholes, 2003). From the corporate strategy point of view, through an avid reformation of operational and functional strategy, Tesco has been capable of determining its business vision. This has led to a consistent growth in customer flow, sales and profit for the company. Tesco has successfully ruled out the strict pressure of competition and demand in domestic and international markets. Presently operating in twelve markets, Tesco success is related to its excellent business strategies. In fact the international expansion strategy is sensitive to the needs of the customer in the countries being approached. Tesco presently operates in the countries of China, Czech Republic, Hungary, India, Japan, Malaysia, Poland, Republic of Ireland, Slovakia, South Korea, Thailand, Turkey, UK, and USA (Clarke I., Bennison D. and Guy, 1994). With an efficient control system and implementation of an excellent business strategy, Tesco has been maintaining the integrity of an organizational structure. Through the following discourse, the paper will be assessing the unique organizational culture in the company which has led to its excellence in business operation and its appropriate competitiveness in the world of retail-business. Task 1 a. Tesco’s primary business strategy The core philosophy of Tesco believes in every-little- help counts, placing the customers, employees at the core of its business goals and aspirations (Anon Case Study IV, 2004). Tesco makes sure to impart a good shopping experience to its customers, whether in stores, online or even in other service provisions. Undoubtedly, the commitment and responsibility as a branded retailer is the motto of its operations. The trail of awards bagged for its responsible approach to doing business conforms to its core values. By introducing its zero-carbon supermarket in Ramsey, Cambridgeshire and being awarded with the Green Retailer of the Year 2012, fulfils its motto. Aiming to execute a zero-carbon business by 2050 and improve its competitiveness through a £1 billion to an investment programme. The trust behind its excellence in strategies is concentrating on price, quality, range and innovation and a multi-channel customer delivery, such as click and collect, one (Tesco, 2013). This further necessitates the need of looking into its vision, aims, cultural value system at the organizational space that aid in integrating the core missions into a strategic business value. Tesco started with a strong business plan for long-term sustainability. However, constantly adapting and changing as per the needs of the present day customers has been an important consideration for Tesco’s clear business visions. Specifically, Tesco follows a seven-part business strategy with an aspiration to set realistic targets. For that, setting a benchmark is important. Customers and employees, who are more treated as colleagues and stakeholders are the centrum of their core considerations. The five distinct elements that describe Tesco and its aspirational goals are as follows: • Sought-after and preferred global brand image. • Teeming with opportunities and a growing business. • Creative, innovative an very contemporary • Locally sound and internationally well-accepted. • Customer-brand loyalty and steadily earning trust from its customers and colleagues. b. HR Issues and challenges A closer analysis reveals that Tesco approaches a departmental-based strategy to attain its objectives that drives the entire strategic planning process. The overall purpose is betterment in business and keeps the stakeholders well-informed on the decision-making towards achieving a collaborative mission for the company. However, a feedback system is deployed that the employees, stakeholders and customers at liberty to convey their difference in opinions if not convinced, owe Tesco’s sincerity and commitment to each of them. Tesco’s unique organizational structure depicts some unique characteristics on the intricacies of beliefs, customs, arts, potential habits of employees and other members of the organization. The organization follows a hierarchical structure because of its large number of levels and involvement of a lot of people who are more accountable to more than one person for information and delivery of business. Each level is governed by one person and involves sequences of commands that look like a pyramid structure (Euromonitor, 2013). The foundation is composed of a large amount of workers who are in charge of supervising the junior level on top of them. They are in turn supervised by the level over them and this continues till the apex to ranking officers, such as CEO levels etc. This organizational structure enables the workers to be appropriately aware of what they are expected to do so that there is no miscommunication and moss of resources. There exists a clear form of authority and a sense of responsibility within the organisation ensures that everybody knows what they are being assigned and time and resources allotted for that. In terms of the organizational culture, Tesco has is very welcoming and adaptive in terms of receiving the staff to perform well and behave cordially towards each other. Tesco is constantly working towards managing business in a way that helps people do things efficiently. The control measures are continuously managed by competent staff and managerial decisions. Arriving at conclusions is through companys hierarchical level strategic meetings that symbolize a strong internal atmosphere to be streamlined and properly managed. c. Significance of SHRM There are two board model approaches of SHRM, one is the Ulrich and other is the Best practice model. The ultimate objective of SHRM is to improve the organisational HRM strategies and make it perfect and more motivated towards its staff. Comparison between two models sets some drawbacks from each, but again, the approach identifies that whatsoever model approach, a company’s success depends on the fact how it links its effective planning and policies to contributing in to an effective HR strategy. Through an effective planning, Tesco pursues the key objectives of selection, recruitment and HR development. a.1 Organisation and Strategic Framework A close analysis of the strategic business model and the competitive analysis reveal that Tesco business and operation management is excellent. Being extensively technology dependant and keeping on adding more value to its goods and services makes Tesco competitively advanced than its competitors. But, the company needs to also consider human resources, as success cannot be technology-dependant only (Graiser and Scott, 2004). With a close focus on its employees and customers, Tesco has ambitious business plans. Non-food items hold a dominant position and more innovation in required in improving its services on this. With strong potentiality, the internet sales and online shopping needs to be expanded, in the domestic and international markets. Tesco also needs to look into strengthening the talent pool in the organization, in addition to marinating employee motivation. A close vigil on systematic recruitment, more training and development, performance oriented reward and pay policy and more up-to-date information system to keep the employees and customers informed about company progress is the way forward for Tesco’s all-round growth. Strengths: Company sales figure has shown that from online sources the figures have increased by 35% in the year 2012, rising to 50% during 2009 (Tesco, 2013). The loyalty schemes of Tesco Clubcard help in retaining and following up on customers using efficient CRM systems, like Crucible and Zodiac. All this information is used for effective direct marketing and other promotional techniques that help enhance the competitiveness of Tesco (Prospects, 2013). Weakness: The internal factors that create the problems within an organization to compete in the global market refer to the weaknesses (Lynch, 2006). Depending more on the UK and Europe market with other competitors operating in almost equal dimensions in other developing nations, Tesco’s annual revenue has been found to reach almost 70% from UK (Witt, 2008). This refers to a lack of geographic diversification in Tesco’s approach that can be seen as a sign of weakness threating creation of systemic risks in the UK market. Even the price of Tesco products in local markets has been found to be considerably high, representing a weak point of the organization. Also, a high transport cost and unavailability of branches are other forms of weaknesses. Opportunities Recently, the company has expanded into Asian countries that have helped in diversifying its base. This is a helpful move for the organization to increase its effectiveness of economic of scale (Porter, 1985). Through its retail shops and online shopping, the customers are provided an end-to-end support. Tesco has earned a strong recognition from its offering, such as Tesco.com and company is capable of generating revenue of more than 60% from about 1 million online customers. Different business strategic alliances with many companies have increased the efficiency level and the organization makes sure to provide superior quality products and services. As an example, the limited franchise agreement signed with Trent, the retailer of Tata group, is one of the strategic business decision (Daily Mail, 2010). Threats Basing a majority of its operations in UK and Europe, leaves the company risk-prone as most of the recent EU countries are facing financial problems, with downsizing, attrition and inflation. The retail market is a highly competitive market with many established businesses competing with each other (Euromonitor, 2013). All the above problems have influenced the behaviour of consumers impacting company’s sales, especially for non-food items. The Wall mart and Carrefour are posing to be biggest threats for the company with their effective and aggressive business strategies (Anon Case Study IV, 2004). b.1 Suggestive HR Strategy The main mission for the company is to maintain extreme loyalty to the customers, based on changing social behavior and maintain performance, by taking advantage of the change. This also signifies taking risks, creation of innovative sections within the organization and implementing diverse tools and techniques, through properly planned approaches, including financial resources and human resources. The KPIs, therefore, include: 1. Increasing sales and market share 2. Improved stakeholder relationship 3. Targeting diverse customer needs. 4. Establishing a clear brand positioning 5. Operational efficiency and excellent supply chain 6. Showing cost leadership and competitiveness The company has to strategically organise its key dimensions through further research and development, to develop on brand differentiation, competitive pricing and providing an innovative and integrated portfolio to its ever-dynamic customer range. Competitiveness should be more at a rational scale to welcome quality improvement, to avoid losing ground in a new sphere. Tesco’s work culture always acknowledges the growth and benefits of its employees. The corporate communications existing within the organization needs to be sharpened to keep everyone informed of the management decision and adopted strategies for development. More inventories on the employee issues and their needs are necessary through in-house surveys and setting a benchmark for every exercise would determine the key approaches. c.1 Competitive Business Strategy From its business strategies, the business model of Tesco represents an organizational structure that has many suppliers and the supplies collected in a multiple ways. The details of Tesco’s business model could be well explained with the help of a diagram; Source: Euromonitor, 2013. Through this business model, it could be derived that Tesco performs the departmental works more efficiently that represents its efficiency more than its competitors. Tesco’s strategy is normally a combination of all those activities that aim to focus on investing on affordable product design and delivery, ensuring customer availability and not compromising in quality at the same time. To remain competitive in business, Tesco’s values are extremely vital to its success in business. They include, • More effort for customer. • Equality in treatment • Scaling and evaluation is for good. According to Chief Executive Officer (CEO) Philip Clarke, the value systems of Tesco are embedded at every level in the busy. This helps in letting people know what are they working for and keep the customers informed on what they can expect from them. A community-focussed approach to business is conscious of its corporate social responsibilities, often referred to as Tesco in Society. Even in the face of rampant competition, Tesco ensures an approach of good attitudes for an on-going success. To sum-up, the three big CSR ambitions used by Tesco to stand out in the competition, to create new opportunities for younger people, to improve the health and express consciousness to discouraging obesity and reducing food wastage (Anon Case Study IV, 2004). To drive its value system at every stage of the organization, Tesco trades responsibly and tries to reduce the environmental impact at every stage. By earning trust of its employees, Tesco also stresses on earning the trust of the local communities Task 2 a. Tesco’s Organisational culture and values Tesco organizational features and its justification in line with the defied SHRM strategies has been outlines in the following section: a.1 Current HR Practices Tesco’s unique organizational structure depicts some unique characteristics on the intricacies of beliefs, customs, arts, potential habits of employees and other members of the organization. The organization follows a hierarchical structure because of its large number of levels and involvement of a lot of people who are more accountable to more than one person for information and delivery of business. Each level is governed by one person and involves sequences of commands that look like a pyramid structure (Euromonitor, 2013). The foundation is composed of a large amount of workers who are in charge of supervising the junior level on top of them. They are in turn supervised by the level over them and this continues till the apex to ranking officers, such as CEO levels etc. This organizational structure enables the workers to be appropriately aware of what they are expected to do so that there is no miscommunication and moss of resources. There exists a clear form of authority and a sense of responsibility within the organisation ensures that everybody knows what they are being assigned and time and resources allotted for that. b.1 Justification in Line with HR Strategies Tesco’s organizational peculiarity is in its diversity in the strategy. Aiming to get the best of talents from the industry, Tesco connects two needs with each other. On one end are the diverse customers looking for competitive product prices and the other is marked by employees and pursuant looking for best job deals in the retail industry. The workforce is diversified, bringing an eclectic mix of people from different age-groups, with a wide experience, knowledge and exposure to work for (Euromotor, 2013). In theory, diversity brings flexibility and leads to better performance, productivity and reducing wastage of resources. Tesco is working in an extremely competitive market with fast changing specifics. By being proactive, Tesco is facing all challenges. UK is predominantly a diverse society, where people from different backgrounds and cultures co-exist. Demographics and organisational culture, therefore, play an important role in enriching the workforce of the organization. Culture In terms of the organizational culture, Tesco has is very welcoming and adaptive in terms of receiving the staff to perform well and behave cordially towards each other. Tesco is constantly working towards managing business in a way that helps people do things efficiently. The control measures are continuously managed by competent staff and managerial decisions. Arriving at conclusions is through companys hierarchical level strategic meetings that symbolize a strong internal atmosphere to be streamlined and properly managed. The main aspects that determine behavioural prototypes are the demographic factors, aptitude, skills, insights, attitudes and character (Drejer, 2000). They are as follows: Demographic Factors The socio economic conditions, education, ethnicity, race, age, gender, etc, relate to the demographic factors. By choosing people from stable socio-economic environment, good education, full of life and positive energy, etc. Tesco has been performing well. An admixture of people from different ethnic backgrounds helps a healthy intermixing. Abilities and Skills Ability is the best form of expression of one’s physical capability. This ability to act in a manner allows an individual to perform well. As a multi-skilled organisation, Tesco helps in skill development so that individual employee behaviours are channelled to perfection. Perception Perception helps in understanding the environmental stimuli in a meaningful manner. On the basis of a situation, a person can organize and read environmental stimuli. There are many factors that persuade the perception of an individual. Attitude Psychologists state that attitude is the tendency to react favourably or unfavourably to a situation, object or individual. The aspects of family, society, traditions, peers, affecting the organisational factors determine personal attitude. If aligned positive, all this influence the employees to deliberate a positive attitude. Tesco undertakes an organizational strategy to develop talent within the organization: Talent Plans Career Plans Succession Plans At the same time, there are measures to review performances by setting up objectives and drawing up personal plans. Each employee gets to discuss his/her performance specifics, through inter-personal communication with the managers and personnel team, and work on a challenge to develop them. There are other opportunities to improve on weaknesses in the annual cycles, helping employees to review and develop plans for revisiting performance betterment. There are two broad organizational structures in Tesco, one is the company as a whole and including the board of directors and the other is the exclusive store-based structures. Here, in the case stores, it is basically a flat-decentralised structure, with decision makings made by the store managers for better customer services. The store structures enable employees to oversee a customer, by recognising the manger and the departmental head in each section (Palmer, 2005). In a decartelized structure, decisions made by a manager are communicated effectively to the staff and it is receipted with comfort. Taking more responsibility, helping to motivate them and improve the work levels create abilities to judge the situation and expand knowledge and expertise, as a KPI decided in the strategic decisions. By reducing the interim managerial levels, a bottom-up command is maintained throughout the organization. So, with an ease in decision-making, the overall efficiency is improved in the organization. The significance of an organizational structure, whether flat, hierarchical or matrix, is that the overall working and effectiveness of an organization comes into the purview. That is to say, no structure is good or bad, but a clear organizational structure, with defined policies and consistent organizational strategies will work towards improving co-ordination, communication and management control in Tesco. d. Conclusion From the case study on Tesco, it is clear that the company is turning one of the largest retailers in the world through its competitive business strategies, involving effective organizational structure and clear goal setting. The company is committed to establishing a more extensive customer base and a regular monitoring system to achieve its set out targets. Customer satisfaction is at the heart of the organization. The Three Big Ambitions and The Essentials show emphasize on that. Customer’s satisfaction and the increase in their shopping experience are key to its loyal branding. Innovating on the human potential other than technology, researching on non-food items in addition to the food items and expanding the internet shopping would help strengthen the brand image of global Tesco in the world of global retail business. Reference List Anon Case study IV, 2004. Tesco implements the business engine network to gain full control of its IT project portfolio. Journal of Database Marketing & Customer Strategy Management, 12(1), pp.66-73. Clarke I., Bennison, D. and Guy, C., 1994. The Dynamics of UK Grocery Retailing at the Local Scale. International Journal of Retail and Distribution Management, 22 (6), pp.11-20. Daily Mail, 2010. Tesco starts Pounds 1bn price war, Daily Mail, [online] Available at :< http://www.highbeam.com/doc/1G1-141009991.html> ]Accessed 2 February 2015] Datamonitor Report, 2003. 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Appendix The seven-part strategy of Tesco is as follows: Seven part strategy Focus and tactics Growth of the UK core Increasing staff numbers by 20,000 over two years and renovating existing stores. Introducing more promotions and making up to the core values of customers wants are important components of the strategy. Creator of highly valued brands Developing its own-label brands and providing customers with quality range of products at competitive prices. Reaching globally in retail With a steady growth reached in 2012, the new strategy includes strategy explores opening franchise stores over the next five years in countries, such as, Middle East, Saudi Arabia, Kazakhstan, Georgia, Armenia and Azerbaijan. Growth in retail services in all our markets By generating a huge revenue in 2012, Tesco Bank is turning out to be a focal part of the potential retail growth in the near future. Community Outreach and Social Responsibility Tesco has been responsible to the communities rather than just be a part of it. The Three Big Ambitions testify so. Team-building and value creation People are the most important consideration of the company, as employees and customers. In this view, Tesco is committed to impart effective leadership training to all members of its group. Strengthening base As the business continues to diversify in food and non-food ranges, adding a value through innovation, such as internet and online services is a strong step to proceed. (Source: Tesco PLC Annual Report, 2012) Read More