Executive Summary
This analysis explores Tesco’s transformative journey, highlighting its leadership and technological transformation. Having identified change as a crucial driver of organisational development, the study analyses Tesco’s strategic reaction to shifting market needs. With historical roots in 1919, Tesco had difficult times in the early 2000s, requiring a change management program and a leadership change in 2019. Tesco’s switch to technology reveals that it values innovation. The use of advanced technologies makes the operations more efficient and the experience of the customer more pleasant. However, Challenges result from resistance at the individual and organisational levels. A thorough SWOT analysis reveals the strengths, weaknesses, opportunities, and threats of Tesco, pointing out the need for constant innovation. John Kotter’s Change Process model is recommended for use as an efficient framework for change implementation. Tesco’s strategic initiatives thrive on industry trends, which makes the company a resilient and competitive retailer.
Introduction
Change is ever present in organisational life in structural, process, organisational climate, or strategic terms, designed to increase organisational effectiveness or to address sources of environmental change. In the dynamic and competitive business environment, businesses must actively embrace change to remain relevant, innovative, and sustainable. This essay deals with the notion of change, highlighting its essence and advantages, and discusses Tesco, a multinational retailer with a dramatic leadership change.
Define Change
Change is the development of change through which an organisation changes in order to improve its performance, adapt to new conditions or achieve goals (Philip2021). Internal or external drivers of change may include technological advances, market forces, or customer demands. It involves strategic planning, proper dialogue, and understanding the effects of change on individuals and the organisation as a unit.
Benefits of Change
According to Hillmann and Guenther (2020), change is in the nature of organisational development. Firstly, there is great importance in equipping organisations to handle dynamic market demands and foster innovativeness. Accepting that change is inevitable, organisations increase efficiency, resulting in improved productivity. Additionally, change initiatives help in boosting employee morale and motivation leading to a culture of changeability and continuous improvements (CIPD., 2021). The development of the sustainability of organisations in the long term depends on their ability to change and adapt to the change of conditions. Change is the key that opens the door to new opportunities, effective risk management, and competitive advantage in dynamic environments. The advantages include enhanced agility, maximisation of resource utilisation, increased customer satisfaction, and strengthened ability to overcome obstacles, maintaining organisational vitality and success (Pinheiro, Frigotto and Young, 2022).
Background information of Tesco Organization
Our case study should be conducted with the organisation of Tesco. However, Tesco was established in 1919, and it is also a British multinational grocery and general merchandise retailer. Tesco has a worldwide presence and serves millions of customers every day in various countries. Tesco has been one of the major players in the retail industry, whose evolution is influenced by competitive demand and market trends. Tesco was established in 1919 by Jack Cohen as a market stall to sell surplus groceries from London’s East End (Abbas, 2023). It grew in the 1920s having opened its first shop in North London’s Burnt Oak. After its 1947 IPO, the firm grew throughout the United Kingdom. By the early 1990s, Tesco was widely recognised as the biggest grocery retailer in the United Kingdom. In the early 2000s, there were even more challenges to overcome despite the early market success, namely intense competition from other cost-effective shops, changing consumer preferences, and economic instability.
According to the case study by Abbas (2023), Tesco suffered a loss of revenue and a shrinking market share. Recognising the imperative to undertake transformative action, Tesco’s management embarked on a change management program to address these challenges and regain its position as a market leader. A leadership change in Tesco is remarkable in that a new CEO was appointed to reflect the company’s steadfastness in competitiveness despite the difficulties that exist in the fast-moving retail industry (Sharma & Sharma, 2021). Tesco has proven its commitment to adjusting to the changes in the industry by innovating the company, making its decision-making process effective, which will ensure Tesco is a global giant retailer.
Tesco’s Strategic Shift Towards Technological Advancements in Retail
Tesco has recently undergone a significant transformation towards innovation that serves a strategic imperative (Buchanan and Huczynski, 2019). This change signifies Tesco’s determination to be on the cutting edge of the retail sector and to respond effectively to altering consumer preferences and market patterns. Innovation in Tesco is characterised by the incorporation of revolutionary technologies and original methods to improve the overall customer shopping experience. This innovation cuts across several aspects of the business, ranging from supply chain management and inventory tracking to individual customer engagement through digital platforms. For instance, Tesco has adopted data analytics and artificial intelligence to understand customer behaviour, anticipate trends, and personalise promotional campaigns, making the journey through the store even better for customers.
Firstly, these innovation makes Tesco an innovative technology-driven and customer-centered retailer that appeals to a wider consumer group. The implementation of new technologies also helps to optimise business processes, increasing productivity and cutting expenses. Tesco continues to remain competitive in its market by bringing out innovation that identifies the unmet needs of its target clientele. Retail trends such as resilience and relevance require digital transformation, which the company’s focus on innovation complies with.
Perception of Change in Organisation and Effects on Organisational Behaviour
The role of perception also emphasises the nature of organisational behaviour as a dynamic process of innovation. The behavioural responses are mostly based on how people understand and comprehend the innovation. The nature of perception is also dependent on factors such as experience, cognitive bias, and personal attitudes (Carr and Sequeira, 2007). Some employees may view innovation as a goal which will make work easier, more fulfilling, and lead to better careers. Conversely, others might interpret it negatively, being afraid of additional workload, job uncertainty, or the risk of mismatching their skill sets. This discrepancy in perception consequently leads to the different behavioural phenomena witnessed in organisational change.
The differences in personality and perception of employees contribute to the difference in behavioural reactions to innovation. Therefore, developing a deep understanding of these personality dissimilarities is crucial for organisations such as Tesco to personalise communication initiatives, training programs, and assistance systems through the awareness of personality traits and the individual perceptions that influence employees’ reactions. Tesco can prevent future concerns, promote a positive attitude towards innovation, and ease the transition process, thereby increasing the chances of success in the organisational change initiative.
Change in the use of technology and the benefit to the organisation
The adoption of new technology by Tesco has significantly transformed the functioning of the company, revamped its operational settings and improved its effectiveness. Integration of new technologies like data analytics, artificial intelligence, and automation has revolutionised various origins of operations by Tesco including supply chain management, customer engagements and the rest of the operations. Such a technological change has made workflows leaner, better decision-making, and more individual attention for customers.
The main advantage that resulted from the change in technology usage is the improvement of Tesco’s supply chain. The organisation is now able to predict better demand levels, track inventory, and provide timely restocking due to the use of data analytics and automation tools (Smith and Sparks, n.d.). This has eliminated stockouts, lowered waste and improved supply chain resilience in general. Also, the use of technology has improved Tesco’s ability to process customer data, providing targeted promotions and recommendations personalised based on individual choices. This leads to a more customised and effective shopping process for the customer, which promotes loyalty and satisfaction.
Furthermore, the use of technology has enhanced the operational responsiveness of Tesco, which has enabled the organisation to respond to market developments and consumer tendencies in a timely way (Handy, 1993). The digitalisation of many processes has not only improved the rate of operations but also enhanced the rapidness of decision-making in real-time situations, which has impacted the competitive ability of Tesco in the dynamic retail environment. All considered, the shift in the technological aspect has established Tesco as a technology-driven and consumer-oriented retailer, benefiting from greater operational effectiveness, improved customer satisfaction, and market sensitivity.
Cause of the Change
The change in technology usage at Tesco can be attributed to a combination of external and internal factors.
External Factors
Political Factors:
Tesco, being a prominent UK supermarket chain, is markedly influenced by government policies. Adherence to local and national laws, coupled with oversight from international bodies like the European Union and the World Health Organization, shapes Tesco’s operational landscape (PhDessay.com., 2018). Crucial decisions, including store expansion, undergo meticulous processes such as securing planning permission, reflecting the impact of political considerations on Tesco’s strategic moves.
Economic:
Economic considerations play a pivotal role in driving Tesco’s adoption of technology. The imperative for cost-effective technologies to enhance operational efficiency and sustain competitiveness underscores the influence of economic factors on Tesco’s technological initiatives (Teece, 2007).
Social:
The evolving landscape of consumer behaviour, marked by a growing reliance on online shopping platforms, necessitates technological advancements at Tesco. According to Chaaya et al. (2019), meeting the changing needs of customers requires the integration of technology to provide a seamless and efficient online shopping experience.
Technological:
The rapid evolution of technology in the retail environment, particularly the ascendancy of e-commerce, propels Tesco to embrace technological advancements. Staying competitive in the market and ensuring a smooth online experience for customers are key drivers for the adoption of technology (Alkhatib, 2019).
Ecological:
Tesco’s commitment to sustainability and ecological responsibility plays a substantial role in its adoption of technology. The focus on innovating manufacturing processes aligns with Tesco’s dedication to eco-friendly operations, reflecting the influence of ecological considerations on technological choices.
Legal:
Tesco’s operations are intricately tied to various legal frameworks governing employment, waste management, and environmental protection. Legislation such as the Employment Act 2002 shapes Tesco’s employment practices, while directives like the Hazardous Waste Directive (1998) regulate the handling of dangerous waste, emphasising compliance with environmental laws from entities such as the European Union (Gov.uk, 2011).
Internal Factors
Design of New Products and Services:
Internally, Tesco strategically leverages technology to enhance its services. The adoption of digital solutions is driven by a commitment to innovate and improve customer offerings, reflecting Tesco’s internal focus on staying at the forefront of technological advancements.
Low Performance and Morale:
Internal challenges, such as low employee performance and morale, serve as catalysts for recognising the need for technological interventions at Tesco. The adoption of technology aims to streamline processes and boost morale, addressing internal issues through strategic technological integration.
High Stress and Staff Turnover:
HSE (2022) highlights that the challenges marked by heightened stress levels and frequent staff turnover, propel organisations to seek innovative solutions for fostering a healthier work environment. Internal factors like high stress and staff turnover prompt Tesco to invest in technology as a solution. Tesco aims to alleviate workplace pressures and create a more conducive working environment, demonstrating a proactive approach to internal challenges by leveraging technology.
New Management Team:
The introduction of a new management team triggers a strategic re-evaluation at Tesco, leading to the decision to leverage technology for transformative change. This internal decision reflects the organisation’s commitment to adapting and improving overall performance under new leadership (Schein, 2004).
Inadequate Skills and Knowledge Base:
Addressing gaps in skills and knowledge within the organisation, Tesco implements technology-driven training programs and upskilling initiatives. This internal focus ensures that the workforce is equipped to leverage advanced technologies, aligning skills with organisational needs.
Innovations in the Manufacturing Process:
Tesco’s internal commitment to sustainability drives the adoption of technology to innovate manufacturing processes. This strategic internal choice reflects Tesco’s dedication to eco-friendly and efficient operations, showcasing the integration of technology into core organisational practices.
SWOT Analysis
The change in technology used by Tesco is a strategic evolution that makes use of various strengths to improve its position in the rapidly changing retail sector. Boasting a well-known and internationally renowned brand, Tesco instils trust in and loyalty towards the company, and its market breadth, physical and virtual, is comprehensive enough. Strong technological infrastructure fortifies Tesco’s ability to handle data effectively, use analytics and introduce automation to streamline functionality. Further, the established Clubcard program ensures good customer retention and provides necessary data for targeted marketing, hence improving Tesco’s competitive position.
However, this technological transition is not without its challenges. The short-term profitability is also negatively impacted by the immediate investment required to integrate technology. Workforce training required for the implementation of advanced technologies may lead to disruptions and resistance from employees. Additionally, with such a range of suppliers, Tesco is vulnerable to supply chain disruptions that may impact product availability (Sharma, Jain and Pajni, 2022). However, these challenges do not stop Tesco from pointing out some promising opportunities. The development of online shopping trends provides an opportunity for growth through the growth of e-commerce (Hofstede and Bond., 1988). An opportunity for innovation is presented to Tesco by the immense amount of data created through technology that the company can use to tailor its services and perform specific marketing campaigns. The application of eco-friendly technologies is in line with market demand for sustainability; this provides Tesco with opportunities to stand out from the crowd.
Nonetheless, Tesco has challenges due to the highly competitive nature of the retail industry, meaning the company is always under pressure to innovate (Rosnizam, 2020). The reliance on technology leaves the company vulnerable to cyber security threats, and this requires strong implementation practices to protect customer information. Fluctuations in the economy, such as market downturns or trouble impacting customer expenditure, threaten Tesco’s revenue and profitability, highlighting the importance of strategic flexibility in an unstable economy.
Resistance to the chosen change
The resistance to the implementation of technological change at Tesco is a complex issue which is manifested at both Internal and external levels.
Individual
On the individual level, employees may have concerns about job safety, the unknowingness of new technologies, and changes in their roles, which increase anxiety and reluctance to accept the technological change (Hemans, 2020). It takes communicating the benefits of the change, well-structured training programs to improve digital literacy, and developing a culture of a learning and experimenting environment to address this issue.
Organisational
At the organisational level, sources of resistance may include structural stagnation, deep cultural biases, or refusal to spend resources on the change. Further, established power structures and routines provide challenges to adaptation, requiring intentional change management where the benefits of technological integration are highlighted, the changes align with the culture of the organisation, and the change supports the vision and values of the firm (Syakur et al., 2020). The leadership’s commitment is essential in overcoming resistance, signifying a dedication to the change and establishing a culture for the valuing of innovation and adaptability, subsequently enabling a more comfortable shift to the technological advancement of Tesco.
Influence of culture on the implementation of technology
Organisational culture’s impact on the implementation of technological change at Tesco, on the one hand, is a central aspect defining employees’ attitudes, behavioural disposition, and overall openness to the change on the one hand. Thus, Tesco’s workforce is highly diversified and operates in a dynamic cultural setting. When the organisational culture is in sync with the values linked to technological innovation, the transition is smoother (Mullins and McLean (2019). On the other hand, if the culture focuses on innovation, adaptability, and the acceptance of change, employees are likely to see the technological transformation as consonant with organisational values.
On the other hand, if there is a cultural opposition to change, fear of job loss or a desire for the old methods of operation, the proper adoption of technology is inhibited. Various cultural elements, including communication patterns, ways of leadership, and ranking structures, help either in the development of collaboration or in the formation of silos and, therefore, restrict the penetration of technological innovations (Alblooshi et al., 2021). Consequently, Tesco must deliberately analyse the cultural texture of the organisation, detect areas of resistance and use cultural strengths to ensure the positive reception and assimilation of technology effectively.
Recommendation Strategies
An efficient model for the process of change is John Kotter’s Change Process. Kotter’s model is an eight-step framework that offers a structured approach to organisational change management (Joshi, 2013). The urgency of change must first be created. This concerns open communication as to why the change is necessary and what the consequences can be if nothing is done with this change. Second, a strong guiding coalition means having a group of highly respected individuals that will guide the change process. Third, the vision and the strategy need to be developed. A clear direction for the change should be outlined together with specific actions to be undertaken for its realisation. These three approaches, based on Kotter’s model, form a solid platform for the change implementation and management at Tesco, acting as a guiding force for smoothing the process and ensuring alignment with organisational requirements.
Conclusion
The strategic change in leadership and subsequent technological changes adopted by Tesco can be associated with dynamic actions taken to address the challenges and opportunities faced in the retail industry. Tesco’s commitment to flexibility and strategic decision-making, which are a guarantee of sustainability in a competitive environment, is indicated by this leadership change. The incorporation of technology has placed Tesco as a technology-based and customer-focused retailer, ensuring the effectiveness of operations, the robustness of the supply chain, and increased customer satisfaction. Although these attempts faced challenges and resistance at both individual and organisational levels, they adhered to the patterns of the industry and consumers. The SWOT analysis draws attention to strengths, weaknesses, opportunities, and threats in an organisation, with a focus on the need for constant innovation and strategic adjustment. Utilising the Change Process model by John Kotter provides a systematic framework to handle the dynamics of organisational change, maintaining Tesco’s success in the dynamic retail field.
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