Training and Development in Tesco - Assignment Example

College: Tesco Case Study Introduction Any organization needs to undergo organizational changes from time to time to improve its performance or to be able to cope with the changing circumstances in the industry. In this essay I am going to look at Tesco U.K, why change was needed and how it changed. Tesco is one of the largest t UK retailer and a global player operating in both Europe and Asia. It sells a vast amount of food products as well as non-food products of several kinds. 23 Table of Contents Executive Summery 1 1.0 UK RETAIL IDUSTRY 2 1.1 TESCO 2 1.1a Tesco’s Competitors 2 1.1b SELF CHECK OUT MACHINES 3 2.0 CHAGE MAAGEMET 4 3.0 Types of Organizational Change 4 3.1a Incremental change 5 3.1b Transformational change 5 3.1c Strategic change 5 4.0 TRIGGERS OF CHAGE 5 4.1a Internal triggers 5 4.1b External triggers 6 5.0 PLAIG & MAAGIG CHAGE 6 5.1a Force Field Model 6 5.1b Continuous Change Process Model 7 5.1c Emergent Approach 7 5.1d Kotter’s Model 7 6.0 RESISTACE TO CHAGE: 8 6.1 Causes of Resistance 8 6.1a Low Tolerance to change 8 6.1b Employee Resistance to change 9 6.1c The Shock of the new 9 7.0 ORGAISATIOAL AAYSIS 9 7.1a Threat of new entrants 10 7.1b Power of Suppliers 10 7.1c Power of Buyers 11 7.1d Threat of Substitutes 11 7.1e Rivalry 11 7.2 SWOT Analysis 12 7.2a Strengths 12 7.2b Weaknesses 12 7.2c Opportunities 12 7.2d Threats 12 8.0 What Caused the Change in Tesco 13 8.1a Creation of Value for Customer 13 8.1b Growing customer base 13 8.1c Technological Innovation 13 8.1d Competition 13 8.1e Cost of Labour 14 8.2 Type of Change 14 24 8.2a The Process 14 9.0 Benefits of Self Check out in Tesco 15 9.1a Increase in Sales 15 9.1b Cost Effectiveness 16 9.1c Custom er Satisfaction 16 10.0 Conclusion 17 11.0 Recommendation 17 References 18 Appendix 20 1 Executive Summary The UK Retail Industry is the largest and most competitive industry. Tesco is an international retailer and the leading supermarket in the UK. It controls 31.6% of the UK’s market share. Its main rivals are ASDA, Sainsbury’s and Morrison’s. In every organization there are macro and micro environmental factors that influence its decisions and operations. SWOT, PEST and Porters five forces are used to analyse the industry to gain competitive advantage. Tesco differentiated itself by introducing Self checkout in 2003 in its Dereham, Norfolk store. The success of the self checkout trial in Dereham store led to its implementation in other Tesco outlets. This work seeks to explore the self checkout system in Tesco and its impacts on the organization. A manager at a Tesco store in Essex was interviewed on the self checkout system to determine the reasons for the change, how it took place and the benefits to the organization. The manager purports that the self checkout has added value to the organization. It has enhanced the customer shopping experience by speeding up processes. The self checkout has helped to reduce queues at the checkouts and also boosted sales in the UK. In the UK alone, 25% of Tesco transactions can be accounted for by the self checkout. Inspite of the few challenges facing the self checkout which include minors using the self checkout to purchase alcohol, the self checkout has been successful to the organization. 2 1.0 UK RETAIL IDUSTRY The retail industry in the UK is the most competitive and fast growing one. By the end of 2008, 11% of all VAT registered businesses in the UK were retailers, with the total number currently at 180,875. UK retail sector generate almost 8% of the GDP, accounting for one-fifth of the UK economy. Retail industry employs 11% of the total UK workforce. Total combine sales of this sector in UK were £265 billion in 2007, larger than the combined economies of Denmark and Portugal. 1.1 TESCO Tesco is the UK’s largest retail chain and has outlet in every post code of the country with 2,115 stores and 280,000 staff. Internationally it is the third biggest chain in the world, employing 440,000 people in 4,000 stores across 14 countries. Tesco operates its retail outlets business operation in six formats namely; Express (961 stores) Extra (177 stores), Metro (174 stores), Superstore (448 stores), Homeplus (10 stores) and OneShop (512 stores). Tesco.com is the online arm of the business operations to facilitate the delivery of products, mainly grocery, to customer’s door step. Tesco direct is online shopping mall for non-food items. 1.1a Tesco’s Competitors Tesco overtook Sainsburys as biggest UK supermarket 14 years ago. Tesco’s main operation is sales of grocery and household appliances. Four major retail supermarket chains in UK have following market share as of August 2008. Main body In the last three years Tesco has experienced changes in various ways. In June 2010 Terry Leahy the C.E.O of Tesco announced that he will be retiring in 2011. Therefore, one of the crucial factors that Tesco has to put into consideration for smooth transfer of power is to create what Armstrong (2009) calls sense of ‘‘ownership’’ among its employees so that they feel that they are part of the change process. This is aimed at the analysis of instilling sense of inclusiveness in the workers as well as their commitment. Since Leahy’s resignation announcement, drastic changes were witnessed in its stock market, which witnessed a sharp drop in the value of Tesco’s shares. From the above, it was evident that Tesco needed to instill confidence in its customers and the public hence there was a re-engineered customer service mechanism in operation for sustenance of Leahy’s transformational leadership style that saw Tesco’s unprecedented rise in the last one and a half decade (Bass,1990) . Tesco has further undertaken transformational change in its organization so as to become a carbon-zero company. This change has been through reducing energy usage and then getting the rest of the energy it uses from renewable sources. In the last few years, Tesco has developed a supermarket that is zero carbon in its operation, but not its build. Tesco has extended its effort to both its supply chain and its customers’ carbon footprint. Tesco also wants to make it easy for staff to understand how they can change the way they work to promote carbon reduction. Another organizational change has been on how to carry out fair trading. Over the years, Tesco has been accused of driving its smaller grocery rivals out of business by the Competition Commission. More so over the last three years Tesco has committed huge resource in its training and development programme. It has made progress toward achieving this by being the first supermarket to have its apprenticeship training programme accredited. This has been a great achievement for the company. This is in line with its strategy of improving its workforce and getting the best out of it. Tesco further introduced Tesco club card which is a kind of customer loyalty card. It is used to motivate customers as score points ones the customer makes purchases with it that translate to using it to buy some goods after a period of time. Tesco was the first supermarket chain in the United Kingdom to start using customer club card for smooth running of business and as an incentive to customers (Armstrong, 2009). Over the last few years, Tesco has been diversifying its business operations. Because of organizational changes, Tesco has been known for its ability to diversify its business operations away from dealing in only groceries and food related goods, which were originally the areas of its business operation. Tesco has gone into the provision of non-food items and other range of services. This has enabled it to be able to cope with the competitive environment in groceries and food related products. One of such is its entrance into the mortgage industry by lending money through one of its arms called Tesco Personal Finance. Furthermore, Tesco has undertaken organizational change by entering into partnership with Shell BP and other providers of fuel in the UK to bring this product close to its customers. By doing this, Tesco’s customers could buy fuel easily without going to other place, thereby reducing their logistic costs. Tesco has further entered into telecommunication market .In 2006, Tesco entered into joint business venture with O2. This saw the birth of Tesco Mobile phones. Thus, Tesco is a mobile telephone operator in the UK, Slovakia and even in Ireland. Tesco offers this service through O2’s network. This service is also brought to Tesco’s customers at a reduced rate. This has enabled it to cope with changing circumstances in the commercial world. Recommendations In consideration of the above changes it is recommended that Tesco puts in place functional measures to enable a smooth transition of leadership without disorienting its customers and employees. It is also recommended that that Tesco adheres to competition laws to enable it regain confidence of the public sine it has been on several occasions accused of engaging in anti competition practices( Armstrong, 2009) . Observation In my observation organizational changes at Tesco has majorly been influenced by the announcement of its CEO Sir Terry Leahy last year and the stiff competition that it has been facing forcing it to diversify its operations. Conclusion Although most of the changes has been well received its customers, there are a few challenges with regard to change of leadership which has seen a drop in its share prices at the stock market. Tesco being one of the successful world retailers and the UK’s leading retailer, it is an indisputable fact that the decision to diversify its operations by engaging in other areas has contributed immensely to its success. References Armstrong, M. (2009) A Handbook of Human Resource Management Practice. London: Kogan Page. Bandura, A. (1986) Social boundaries of thought and action. Englewood: Prentice Hall. Bass, B. M. (1990) Leadership and performance beyond expectation. New York: Free Press. Buckingham, M. (2005) What great manager do. Harvard Business Review, 2-11, March. Tesco.com, Training and Development, Retrieved from, http://www.tesco-careers.com/home/working/training-and-devepment on 6th March 2008 Read More