Management and Leadership Analysis for TESCO Company - Essay Example

Executive Summary TESCO plc is a UK based international grocery and general products retail chain. In the present scenario, the company is looking to enhance its network to the new markets of Far-East Asia. To encounter the organizing, controlling and managing problems in its new business set up, TESCO may apply different management and leadership styles. These styles include the traditional trait approach, behavioral approach, transformational leadership approach, and path-goal leadership. In order to keep its employees motivated and dedicated to organizational goals, Herzberg’s Two Factor Theory and Organizational Behavior Modification theories can be applied. But in terms of foreign establishment, it is recommended that TESCO should apply Behavioral Leadership approach along with its Task Performance and Maintenance Performance categories. Democratic style of leadership is recommended in general conditions but to counter the high internal and external threat, autocratic leadership style would beneficial to TESCO. Section 1 Case Summary and Problem Identification TESCO plc is a UK based international grocery and general products retail chain. With respect to worldwide sales and UK market share, TESCO is the largest British retailer that currently has profit greater than 03 billion pounds while at the same time it is 3rd largest global retailer based on revenue, after United State’s Wal-Mart and France’s Carrefour. Presently TESCO is operating 923 grocery stores and approximately 240,000 workers. During the last decade, the company has expanded its network to new UK supermarkets in new territories. Moreover from 1994 to 2004, the company had launched its operations in 12 international markets including Central Europe and Asian markets. TESCO’s internationalization has direct repercussions on its operational management. It includes a variety of planning, retail designing and process, operational management and controlling, stock management, and human resource management. Several internal and external factors have created serious implications for TESCO during recent years. Along with other UK and US markets, TESCO has also been affected by the global recession and has economic concerns through the credit crunch. Rising prices of raw material used for food and non-food products has created overall negative impact on profit margins. As far as market competitors are concerned, United State’s Wal-Mart is a persisting threat for TESCO that may takeover the market with respect to profit and share. Beside this, the dynamic company has corporate strategy to maximize the shareholder value, growth expansion, workers motivation, and business operations optimization. The growth expansion is the leading issue for TESCO in present as well as in future scenario. This is the major factor that can contribute a lot to minimize the risk from Wal-Mart and Carrefour. In order to implement the growth strategy, TESCO is required to enhance its operational network to new emerging markets of China and Far-East Asia. These issues can be resolved effectively by applying appropriate management and leadership actions. Spurgeaon and Cragg (2008) believe that leadership applications are really needed when there is a need (1) to execute an innovative thinking for the improvement of structure and non-routine task, (2) to motivate and encourage the employees to accomplish the desired targets, (3) to set up momentum and to ensure the things moving in a new and right direction. Before discussing the application of different management and leadership styles in TESCO, few general theories are presented in the subsequent paragraphs for understanding. Section 2 Basic Concepts of Management and Leadership Management may be defined as an art and science of efficient and effective utilization of resources available to a supervisor for achievement of organizational goals. The resources at the disposal of a supervisor are human resource, material, structure, machinery, money, market, time and space. Significance of functions of management cannot be over-emphasized in running of contemporary organizations. On page 14, Robert Kreitner (2008) presented Fayol’s (1930) eight functions of management namely planning, decision making, organizing, staffing, communicating, motivating, leading and controlling. Leadership is the dynamic way to encourage the people and support them to perform their role passionately to achieve common objectives. Leadership is the ultimate act that brings to success all the potential that is in an organization and its people. “A leader is someone who holds a dominant or superior position within his or her field and is able to exercise a high degree of influence over others” (Business dictionary, 2009). It is not necessary that efficient manager will also act as a good leader. Even such managers perform their duties effectively but the vision and scope of leadership remain invisible in their role. Actually these are the managers which provide a place for the leadership. But it doesn’t mean that management is less important than leadership. Both have their vitally important role. To highlight the need for more leadership is not to minimize the importance of management or managers. It is to say that leadership involves distinctive processes that are discernible from basic management processes (Yukl, 1994). Some people dislike the idea of distinguishing between management and leadership. In order to support their claim they argue that it is an artificial or deprecating approach toward the management and effective leadership processes. Styles of Leadership Robert Kreitner (2008) discussed number of leadership styles to cater different sort of activities and issues. The trait approach is the oldest leadership perspective that emphasizes on individual leaders and attempts to determine the personal characteristics which the great leaders share. The approach mainly focused on different traits of great leaders, such as vision, enthusiasm, emotional stability, courage, wisdom, inspirational power, foresight, etc as essential prerequisites. This theory assumes the natural existence of a leadership personality and believes that leaders are born, not made (reference). A detailed survey of 100 leadership traits was carried out from 1904 to 1948. The survey concluded that no particular set of traits is necessary for a person to become a successful leader; however, certain traits are potentially significant which distinguish effective leaders from other people (Stogdill, 1948). Later on, the focus of studying leadership shifted from traits of leaders to their styles. Kreitner has identified three basic styles of leadership which were suggested by Lewin et al in 1939. These styles of leadership are illustrated below. At one end of the spectrum is the autocrat, an individual who has little trust in group members, believes that money is the only reward that will motivate workers, and issues orders to be obeyed with no questions asked. At the other end of the continuum is the laissez-faire leader, who has little or no self-confidence in his or her leadership ability, sets no goals for the group, and minimizes communication and group interaction. Autocrat Democrat Laissez-faire Benevolent Autocrat The democratic leadership, suggested as the most effective and productive style, shares decision making with colleagues, explains to the group reasons for decisions when necessary, and objectively communicates criticism and praise to subordinates. Somewhere between autocrat and democrat, there is benevolent autocrat leader who listens carefully to followers, gives the impression of being democratic, but always makes his or her own personal decisions. He argues that the democratic leadership style is too slow and unworkable in our fast-moving business world. A benevolent autocrat is powerful, prestigious, and respected and therefore is more likely to be able to move faster and more effectively in an organization. Section 3 Management and Leadership Analysis for TESCO TESCO has to launch a comprehensive program to achieve its strategic goals and to minimize the internal and external corporate threats. A growth oriented policy is one of the best solutions to cater number of problems. The First Issue: Organizational Structure TESCO should organize its new set up in the form of a divisional structure on the basis of differentiation. Two fundamental concepts around which organizations are structured are differentiation and integration. Differentiation means that the organization is composed of many different units that work on different kinds of tasks, using different skills and work methods while integration means that these differentiated units are put back together so that work is coordinated into an overall product (Ronald & Suzzane, 2000). Initially a divisional structure is the best for TESCO as shown on page 14 as Appendix-I. TESCO is likely to get the following advantages and disadvantages through this structure. Advantages Reduces the problems linked with distributed assets of operational areas Immediate reaction toward environmental changes Better focus on products, customer’ demand and market trends Assist the general managers to progress smoothly Facilitates the managers to gain good operational and strategic control Disadvantages Duplication of personnel, operations and investments almost in all operations Complexity to achieve and maintain uniformity Create dysfunctional contest within company and may detract the divisions from general corporate performance Mainly focus only on short-range performance The Second Issue: Staffing Policy TESCO’s success in achieving the strategic objectives is highly dependant on the successful implementation of HRM policies which must be harmonious with its business strategies as well as with its formal and informal structure. Staffing policy deals with the selection and appointment of suitable human resource to perform particular jobs. Further it provides assistance for developing and promoting a particular business culture. TESCO can apply any of three types of staffing policies. (a) Ethnocentric Staffing Policy In an international business, an ethnocentric staffing policy concentrates on appointing all key staff positions from parent-country citizens. Generally this approach remains congruent with international strategy. For top level managers, TESCO should use this method. Advantages of Ethnocentric Approach Appropriate staff not always available in parent-country TESCO managers will have firm command and control over subsidiaries TESCO’s business may get an international icon and appreciation in this part of the world Expensive relocations Disadvantages of Ethnocentric Approach TESCO’s home staff manage business operations in a foreign country Ethnocentric staffing may result in cultural myopia (b) Polycentric Staffing Policy In this approach parent-country nationals hold key positions at company headquarters while host-country citizens manage foreign subsidiaries. This staffing style can curtail the risks of cultural myopia. For a multi-domestic strategy, this is considered as the best policy. This policy should be ideal for TESCO to establish its middle level managers. Advantages of Polycentric Approach Responsibility is associated to suited personnel knowing local production It avoids relocations from home country Potentially soft and weak control of subsidiaries Disadvantages of Polycentric Approach Create a gap between home and host-country operations Home country staff manage business operations in a foreign country (c) Geocentric Staffing Policy Regardless of their nationality, this policy emphasizes to employee the best, skilled and proficient staff for key positions throughout the organization. This staffing policy is good for both national and international business strategies as it has a constant contribution to produce an informal management network and strong unifying culture in the organization. For TESCO, this approach is best to fill the positions below the mid-level managers. Advantages of Geocentric Approach It produces global managers having high exposure and therefore can adjust themselves easily to any business environment  Global managers enjoy high salaries Disadvantages of Geocentric Approach Regardless of nationality, the best minds manage overseas operations Application may be restricted by immigration policies of national governments The Third Issue: Managing Control Controlling is defined as the process of monitoring activities to ensure they are being accomplished as planned and of correcting any significant deviation. Like all international organizations, TESCO leaders also face the problems regarding the control of the staff, regardless of home-country or host-country employees. TESCO leaders control this process by applying categories of Task Performance and Group Maintenance of the Behavioral Approach to the leadership. This process consists of 03 separate and distinct steps which are stated below. In order to determine what actual performance is, it is necessary to acquire information about it. Thus, the first step in control is measuring. Let us consider how and what TESCO managers should measure. TESCO managers should gather the information through 04 common sources to measure actual performance. These sources comprise of personal observation, statistical reports, oral reports, and written reports. Each has particular strengths and weakness. However, a combination of them will increase the probability of receiving reliable information. What should TESCO measure, is probably more critical to the control process than how should the performance measure. The selection of the wrong criteria results in a serious disorientation. There are some control criteria, which are applicable to all managers e.g. employee satisfaction, turnover and absentee rates that can be measured. Additionally, some TESCO managers have budgets for their area of responsibility, thus keeping costs within their budget might be a fairly common control measure. The comparison of actual performance with standard performance is the second step in control process. It determines the degree of variation between actual performance and the standard. Some variation in performance in all activities cannot be avoided. So a flexible approach of TESCO leadership should determine the acceptable range of variation. Deviation in excess of this range is significant and receives the manager’s attention. In this stage, managers should be particularly concerned with the size and direction of the variation. The third and final step in the control process is managerial action. Managers can actually choose among two courses of action. They can correct the actual performance or they can revise the standard. If the source of variation is deficient performance, TESCO managers should take corrective actions which include the changes in strategy, structure, training program, replacement of the personnel etc. Immediate corrective actions get things back on track. Basic corrective action asks the probing questions, like, “How and why performance deviated.” After determining the root causes of deficient performance, the basic corrective action proceeds to correct the source of deviation. TESCO managers should tend to rationalize that they do not have the time to take basic corrective action; however, effective leadership analyzes the deviation and spend their time to permanently correct significant variances between standard and actual performance. It is possible that the variance was a result of unrealistic standard i.e. the goal may be too high or low. In such cases, it is the standard that needs corrective attention, not the performance. If a host-employee or unit falls significantly short of reaching its target, the natural tendency is to shift the blame for the variance to the standard. But, the TESCO’s leadership should keep in mind that if the company does not meet the standard, they should not straightaway revise the standard itself. They should check their performance first. Conclusion On the basis of basic concepts of leadership and management, it is recommended that behavioral approach of leadership is the best application for TESCO to enhance its network in new emerging markets of the world. TESCO must apply relevant staffing policy to the level of its staff. In order to control the overall operations and employees, two forms of leadership styles are adopted i.e. democratic and autocratic leadership styles. Democratic approach should be used in normal situation; however, to minimize the high risk threat from internal and external factors, autocratic style of leadership is useful for TESCO authorities. Works Cited Business Dictionary. (2009). Leadership. Retrieved January 05, 2009, from http://www.businessdictionary.com/definition/leadership.html Fayol, H. (1930). Industrial and General Administration. Translated from French by J. A. Coubrough. Pitman. Kreitner, R. (2008). Management, 11th Edition, South-Western Publishers Lewin, K., Lippitt, R., White, R.K. (1939). “Patterns of Aggressive Behavior in Experimentally Created Social Climates”. The Journal of Social Psychology, Vol.10, pp.271 - 299 Ronald, N.A., and Suzzane, C.F. (2000). Integration Managers: Special Leaders for Special Times, Harvard Business Review, No.6, pp.108-116 Spurgeon, P and Cragg, R. (2008). Is it Management or Leadership? Clinician in Management, 15:123-125. Stogdill, M.R. (1948). Personal Factors Associated with Leadership: A Survey of the Literature, Journal of Psychology, No.25 pp. 35-71 Yukl, G. (1994). Leadership in Organizations, 3rd Ed, Englewood Cliffs, NJ: Prentice Hall Appendix-I Proposed Organizational Structure for TESCO Appendix-II Path-Goal Model of Leadership The path-goal model of leadership states that the leader’s job is to create a work environment through structure, support and rewards that help employees to reach the organization’s goal. Barriers to performance are removed, and guidance is provided to the employee. The result of the process is job satisfaction, acceptance and greater motivation. Hersey and Blanchard’s Situational Leadership Theory Paul Hersey and Kenneth Blanchard (1977) have presented a leadership theory which stresses that the most effective leadership style should vary with the maturity level of the subordinates. According to their theory, two dimensions of leadership concern are identified as task behavior and relationship behavior. Task behavior of a leader induces him to interact with subordinates on such matters as what, when, where and how to perform a task. The subordinate gets proper information and guidance from the leader to do his job. On the other hand, relationship behavior highlights the need for two-way communication between leader and his followers. Read More