The Strategic Change Deployed by Tesco - Case Study Example

Introduction Ever changing business environment in the existing market scenario has made change management a pivotal component for every organization. Every organization has to come up with certain change in their management by executing new approaches. Due to constant evolution in the organization, people and organization undergo transformation which can be immense or minutes. The ever changing requirements of internal and external customers are served by the constant renewal of abilities, direction and structure of organization. Tesco one of the leading multinational retailers in the world also implemented change management to gain competitive advantage over competitors. Tesco is the third largest retailer in the world (Innovation Leader 1). Tesco has over 2100 supermarkets and shops all over the world (Smith 1). The main aim and drive for Tesco is to earn customer loyalty by generating value for money (Hunt 82). The change management implemented by companies is to improve the efficiency of employee performance and company performance. Due to the rapid globalization of the economy, downsizing, alteration in business environment and exploding innovation in information technology enabled companies to apply change management. The change in management can be both external and internal. The modification in internal force can be minimal or massive depending upon the market survey and company needs. There have been significant changes in the introduction and implementation of new self-checkout system in Tesco. This is undoubtedly the strategic change deployed by Tesco to change the payment system to make payment easier for customers. Analysis Every leading organization has to introduce change management to gain advantage over other competitors. Tesco introduce new payment system which is Self-checkout. This is the change management strategy executed by Tesco. The introduction of new payment system changed the way of transaction carried out and serves customers in a best possible way. The normal checkout system used to take lot of time. But the application of self-checkout system provides customers better shopping experience and reduced time required for transaction. The frequent implication of new technology would make customer feel that they are valued by the company. It became much easier for customer as customer can easily choose item to buy from shelves and move to self-checkout system to pay. The self-checkout system was first introduced in the year 2003 (Digital Screen Media 1). The gradual progress of the system and huge customer satisfaction about the system made Tesco to install self-checkout system in all their stores and supermarkets (Craig 22). The changes undergo by company to remain competitive may be small such as installation of new software or sometimes changes can be as huge as changing overall marketing strategy of organization. In the world of globalization, high rate of changes occurs in an organization by number of sources (Tanzi 4). Sources can be from internal pressure and external pressure. Changes in the economic, legal and technological environmental create external pressure to organization to change. Internal source pressures are created by Employees, top level managers and hierarchy to bring change in organization for betterment of company. Change management in organization can involve in four areas such as people, structure, technology and strategy (Tschirhat 44). There are three stages of strategic changes implemented by Tesco which are reliving the current strategy to introduce in organization; creating a vision for organization to future perspective and supporting the implementation of new strategy (Hunt 82). The management of Tesco followed and stands by the installation of self-checkout system. Internal and External Drivers Internal and external drivers are the major part for change management in organization. Changes are applied to the introduction new technology, management, structure and new product. The driving forces enable businesses to secure maximum profits and provide best service to the customers the drivers are the factors which enables to influence the decision making of the company for their betterment (Aladwani 2). Internal drivers are the changes occurring inside the organization. Internal drivers are in control of company and company can make change according to the requirement. The internal drivers help to increase the efficiency of operations, improvement of processes and improve the service and products for customer satisfaction. First internal driver is employees of organization. The implementation of customer relationship management by Tesco helps to enhance the knowledge of employee regarding the profitability and long term value of company. Tera-Data software introduced by Tesco is to help employees in organization to store every inventory and supply data available (Rogers 514). Employees are trained to use big data analytics and automated data collection to improve the supply chain (Rogers 514). Technological innovation in organization is one of the internal factors. The introduction of self-checkout system was first innovative fast transaction system introduced by Tesco. Tera--Data software introduced by Tesco is to keep details of all supply data and inventory (Rogers 514). The integration of innovating technology is the main focus of Tesco to increase its efficiency and improve customers shopping experiences. Tesco also introduced club card and loyalty bonus card for customers to make them feel they are valuable part of organization. In the year 2006, it has been found out that the online shopping has become huge success for Tesco and made huge profit than that of other retailers (BBC 1). Effective innovation has made Tesco a successful renowned brand worldwide. Another internal driver for change is new product development (Reiss, 20). Every year new products are launched in the organization. The launching of new products the target market of the new products launched are not the same. Some new products are Tesco flowers yogurt. Tesco flower has been introduced for home decoration. The launch of these new products is done by different marketing approaches by leaflets and advertisement in television or online Tesco site. The morale of the employee is another internal driver. The morale of employees is increased by introduction of several programs to boost the confidence of employees. External drivers for change are occurred outside of the organization. External driving forces are not in hand of company. But implementation new strategies can help to nullify the driving factors. One of the pivotal external drivers for change is globalization. The globalization provides opportunities to organization to extend and grow their business globally. The increase in competition in this globalization has made multinational companies to find best possible way to increase their sales. The introduction of self-checkout has caught the eye of customers and created a gain in momentum for Tesco. Another driver is political influence. Government policies, tax policy, political stability and decision of government are the political forces that can influence the introduction of change management in organization. Several campaign and program initiated by Tesco to follow government policies. New competitors are another external drive that can influence in change management. Competition can lead to new ideas, technology and value of increase in customer satisfaction. Tesco is always implementing new ideas and innovating to sustain in the competitive world. New ideas innovative software systems and programs are implemented by Tesco to cope up with competitors (Hiatt 19). Customer satisfaction is another external driver. The strategy executed by Tesco is to satisfy the current customers and increasing customers by attracting new ones. The introduction of self-checkout systems has creates value for customers and eventually leads to increase in new customers. Lewin’s Force-Field Analysis Lewin’s force-field analysis is the useful technique for decision making process. This analysis helps to make decision about forces that are against the change and forces that could drive change (Figure 1). The forces that are against and for the change in Tesco can be analyzed by Lewin’s force-field analysis. Forces that are for the change need of new products from customers, leading position in retail industry, cost of maintenance is lowered, reduction of training time, skilled workforce, improved technology and finally increase in speed of production. Forces that are against the change are cost required for implementation of change strategies, complacency, staff overtime can be lost, impact on environment and resistance to change by staffs and customers. The driving force for the change management is greater than that of forces against the change. The reduction of forces against the changes enables to reduce tension and provide boost to the organization to implement change for betterment of organization. For example, Tesco Plc. has effectively implemented cost leadership strategy in business operation process to maintain low business operation cost. In addition to this, effective training and development for employees also can be considered as positive driving forces. The organization has effectively implemented advanced technological processes in business operation in order to ensure positive business growth rate. On the other hand, Tesco may have to invest a huge amount of business profit in the implementation of change management strategy in business operation process/. It may affect business profitability. Evaluation Tesco implemented organization change to raise customer satisfaction, substantial increase in revenue and cost effectiveness. It has become inevitable factor for organization to introduce change management in organization. Changes can be implemented easily but the resistance to the change has been main reason for failure for many successful organizations. The application of Self-checkout system by Tesco created a huge positive impact on the increase in customer satisfaction and sales. Annual report of Tesco after the introduction of new checkout systems shows that 1.5 million customers prefer to use new self-checkout systems (Digital Screen Media 1). The resistances of change are born from the start of changes in organization (Elearn 23). The effect of resistance can be severe. Therefore strategies must be applied to nullify the resistance of change. Kotter Six Approach Model is one of the strategies that help to provide solution to reduce the resistance to change. First approach of Kotter Six Approach Model is communication and education. This approach is also known as Empirical-rational Strategy. Regular team meetings must be done to make employee free. The workplace environment must be free of any tension among employees. Employees must be educated about the change management (Burns 13). The main aim and logic behind the change must be effectively communicating with the employees. Second approach of Kotter Six Approach Model is involvement and participation. The resistance of change occurs when employee find it difficult to understand the possible outcome of the change. But the involvement of employment on the change can help to change their mentality about the negative aspect of change. Employees must be as much as possible participated in any forms of program that deals with change strategy. This approach will reduce the resistance to change. Employees will feel much more valued when they are involved and participated in the change management process. Third approach of Kotter Six Approach Model is support and facilitation (Goldstein 34). The adjustment problems can create resistance to change. Managers of the organization have to supporting during the difficult times of employees. Regular meeting can help to reduce adjustment problems. The implementation of change management in organization can create some form of detriment effect on the mind of employees. Time off work, special training and counselling is required to change the fear and anxiety among employees. During the time of transition period, employees require support from manager to reduce their fear and adjustment problems about change. Third approach is agreement and negotiation. During the time of change, some employees may lose out and could not resist the change. In this scenario managers have to offer incentives to the employees to reduce the resist to change (Mcshane 19). Fifth approach is co-option and manipulation. In some situation other tactics may not work and can result is increase in resistance to change from employees. Sometime other tactics may be too expensive for company to operate. But according to the Kotter the implementation of effective manipulation techniques can help to nullify the resisters. The team leader has to participate to manipulate and change the fear and anxiety among the employees. Sometimes, employees can neglect the words said by manager. But the word and believe shown by team leader to other members can help to reduce the resistance to change. The team leaders are provided a role in decision making process. Final approach is implicit and explicit coercion. This is also known as power-coercive strategy. This approach is straight forward. Employees are explicit or implicit forced by manager to accept the changes implementing in organization (McMillan 91). If employees disobey they are said straightforward that they can lose job, no promotion and fired. This approach takes less time and no money is wasted o incentives and programs implemented to help employees to reduce the resistance towards change. Environmental-Adaptive change strategy is the strategy which is implemented to shift the burden of changes in the organization to the people and employees. This strategy is to build new organization. All the employees from old organization are transferred to new organization. The contemporary and management leadership style that can help to assist the process is visionary leadership style (Singh 82). Visionary leaders are chief organizers, charismatic and have good communication skills. During the time of change, people are in anxiety about the outcome of change. Visionary leader can verbalize the aim and goal of the change and can arouse loyalty among the employees. Visionary leaders are charismatic as they can draw the attention of people and incorporate ideas and thoughts about the positive impact of change management in organization. Conclusion and Recommendation The change management implemented by many organizations is mainly due to globalization, technological innovation and uncertainty. The lack of clarity and minimal communication is the factor for resistance to change. The adaptation of change management is to increase the efficiency of the performance of employees, increase customer satisfaction and cost effectiveness. Tesco implemented change management by the introduction of self-checkout system. The competitiveness in the global market enables companies to be more flexible and implement change management. Internal and external drivers are the forces that encouraging change in organization from within and outside the organization. Lewin’s force-field analysis helps to find out the forces that are against and for the execution of change management. Change management strategies can help to reduce the resistance to change. The involvement, effective communication, manipulation and coercion are the ways to restrict resistance. Looking into the above aspects following change management process can be recommended for Tesco. Empirical-Rational strategy is the best possible strategy that should be implemented for change management process. People are reasonable and they can be persuaded. The success of change in organization is based on the effective communication between the employees and incentives. Involvement and engaging employees through different communication methods can help to resist change (Kramer 23-25). The vision and plan are discussed to the employees. Some employees may still go through resistance, and then they are provided incentive to feel safe. This can gain trust of the employees. It is highly important for the organizations to take care of the personal as well as professional needs of the employees. Effective communication between the employees of different department, communication between employees and top level management can help an organization to meet the developed goals quite easily as this change management can ensure the aspect of employee motivation and effective workplace performance (Kneer 56). Work Cited Aladwani, Amish. “Change management strategies for successful ERP implementation”. Business process management journal 2011: 2. Print. Burns, Joe. “Management Change”. Management accounting research 2013: 13. Print. Craig, Tom. 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Appendix Figure 1: Lewin’s Force-Field Analysis New Product Introduction Complacency Lower Cost Maintenance Loss of Staff Overtime Skilled Workforce Negative Impact on Environment Improved Technology Resistance to change by customers Reduced Training Time Period High Implementation cost. Speed of Production Read More