Business Environment of Tesco in Regards to Training and Development - Essay Example

?Review of Business Case and Environment of Tesco in Regards to Training and Development Background of Tesco Starting out in 1929, Tesco has grown tobecome the largest British retailer and third in the world. Its business operations spans across Europe, USA and Asia. From large to small retail outlets, Tesco has a total of more than 2,200 sales outlets, which offers customers a one-stop shopping experience for all their needs. In the United Kingdom, the Tesco work force exceeds 280,000. When all the business operations across the world are taken into consideration, the total work force of Tesco is approximately 460,000. The net profit before tax of Tesco is approximately three billion British Pounds (The Times 100 Business Case Studies, 2012). Business Environment of Tesco In the opinion of Henry 2008, p.6, business organizations face “a constantly changing external environment and need to ensure that their own internal resources and capabilities are more than sufficient to meet the needs of the external environment”. The SWOT analysis is a suitable framework for identifying strategies to exploit changes in the external environment based on internal strengths of a business organization (Hill & Jones, 2008, p.19). Leigh 2010, p.115, defines the SWOT analysis “as a process by which a group of stake holders (a) identify internal and external inhibitors and enhancers of performance, (b) analyse those factors based on estimates of their contributions to net value and approximations of their controllability, and (c) decide what future action to take with regard to those factors. SWOT Analysis of Tesco Strengths Opportunities Proactive remuneration policy Competitive markets Employee stake in organization Resilient Asian markets Training and development focus Improving American markets Weaknesses Threats Non-standardized application of Recession in European markets HR policies Rising consumer pricing demands Wide range of training needs High employee wage bill (Adapted from Haerifar, 2011, p.12-13). The PESTLE (political, economic, social/cultural, technological, legal and environmental) analysis is suitable way to look at the macro-environment or the “the set of factors that are not specific to an organization or the industry in which it operates, but that nonetheless affect them” (Haberberg & Rieple, 2008, p.105). The main PESTLE element impinging on employees at Tesco is the economic recession and the slow-if-any recovery. Consequently, Tesco is reducing employee resources outside its headquarters in UK and shifting that work to its Headquarters. Thus, employee staff will need to be trained to take in these new responsibilities likely to be shifted back from overseas operations (Mulligan, 2010). Porter’s Five Forces Model helps to identify competitive forces and their activities in the external environment. According to Hill and Jones, 2008, p.42, Porter’s Five Force Model is made up of “the risk of entry by potential competitors, the intensity of rivalry among established companies within the industry, the bargaining power of suppliers, the bargaining power of suppliers and the closeness of substitutes to an Industry’s products”. From the perception of human resource management, it is quite likely that competitor’s may choose to use more economical labour from the Eastern European countries to reduce their wage bill in this period of poor economic growth. Tesco will have to factor this possibility in its HR practices (House of Commons Trade and Industry Committee, 2007, p.53). Training and Development at Tesco The ‘one stop’ shopping experience that Tesco offers its customers means that in addition to a wide range of products, it also offers a wide range of servicers from its outlets to its customers. Hence to cater to this need the work force of Tesco at its outlets needs to be knowledgeable, skilled and flexible (Vance & Paik, 2011, p.219). At Tesco training is provided to its employees that allow them to choose their training towards getting specific retail qualifications to enhance their knowledge and skills at work. These qualifications are predominantly National Vocational Qualifications. Tesco has also created Individual Learning Accounts that not only enables younger employees to enhance knowledge and skills required in the retail industry, but offers the older adult employees similar knowledge and skills development. With wide ranging operations, Tesco requires skilled employees, which it finds difficult to source in some of the areas it operates. Through such initiatives in training and development Tesco is able to have knowledgeable and skilled employees to provide it with its competitive edge (Redman & Wilkinson, 2002, p.259). Tesco is an important employer of people out of work or those who have not worked at all. Many older adults also seek and find employment at Tesco. Some of these older adults join Tesco with short term employment objectives, but end up putting in many years of service. These employee resources come with experience useful in the retail industry, and the addition knowledge and skill development opportunities provided to them, make them an extremely useful component of Tesco’s workforce. By using such human resources, Tesco is able to keep a control over its wage bill. Training and development at Tesco is done in such a manner as to offer career advancement. An employee starting at the lowest rung, through development of knowledge and skills and good performance can move up to the higher levels of management at Tesco (Daft, Kendricks & Vershinina, 2010, p.488). Employee retention is important in the retail business and employee turnover is a nightmare, as finding, recruiting and training new replacements is costly and time consuming. By investing in the training and development needs of the employees, employee loyalty is received by Tesco, as they believe that the company has their interests at heart through the money and efforts invested in training and development. The experience at Tesco is that training and development has assisted them in avoiding the nightmare of employee turnover in the retail sector, which has enabled to retain its competitive edge in a competitive environment (Perry & Sherlock, 2008, p.50). Conclusion The business environment for Tesco is very competitive, whereby it is necessary for it to enhance its internal strengths to exploit the opportunities presented by the external environment. At Tesco training and development is taken seriously. It enables it to strengthen employee resources in areas, where it is difficult to source employees and also secure employee loyalty, thereby reducing employee turnover and the competitive disadvantages that are its consequences. Literary References Daft, R., Kendricks, M. & Vershinina, N. 2010, Management, International Edition, South-Western Cengage Learning, Mason, Ohio. Haberberg, A. & Rieple, A. 2008, Strategic Management: Theory and Application, Oxford University Press, Great Clarendon Street, Oxford. Haerifar, P. 2011, Performance Management in Tesco, GRIN Verlag, Munich. Henry, A. 2008, Understanding Strategic Management, Oxford University Press, Great Clarendon Street, Oxford. Hill, C. W. L. & Jones, G. R. 2008, Strategic Management Theory: An Integrated Approach, Ninth Edition, South-Western Cengage Learning, Mason, Ohio. House of Commons Trade and Industry Committee. 2007, Europe Moves East: The Impact of ‘New’ EU Member States on UK Business, the Stationery Office, London. Leigh, D. 2010, ‘SWOT Analysis’, in Handbook of Improving Performance in the Workplace, Volume 2: Selecting and Implementing Performance Interventions, eds. Ryan Watkins & Doug Leigh, Pfeiffer, San Francisco, CA, pp.115-140. Mulligan, J. 2010, ‘Major HQ layoffs at Tesco as operations centralised’, Independent.ie [Online] Available at: http://www.independent.ie/business/irish/major-hq-layoffs-at-tesco-as-operations-centralised-2384759.html (Accessed April 18, 2012). Perry, N. & Sherlock, D. 2008, Improvement in Adult Vocational Education and Training: Transforming Skills for the Global Economy. Kogan Page Limited, London. Redman, T. & Wilkinson, A. 2002, The Informed Student Guide to Human Resource Management, Thomson Learning, London. The Times 100 Business Case Studies. 2012, ‘How Training and Development Supports Business Growth: A Tesco case study,’ [Online] Available at: http://businesscasestudies.co.uk/tesco/how-training-and-development-supports-business-growth/introduction.html (Accessed April 18, 2012). Vance, M. C. & Paik, Y. 2011, Managing a Global Workforce: Challenges and Opportunities in International Human Resource Management, M. E. Sharpe Inc., Armonk, New York. Read More