The Organizational Failure of Tesco
Discuss about the Organizational failure of the company Tesco.
The aim of this report is to provide a brief introduction about the real organizational failure case and the way in which the company overcome the issue. It is difficult for the organizations to maintain their consistent image in the environment through their activities, resulting to which the companies fail in initiating such activities (Hennesssy 2013). The below mentioned report explains details about the real world business failure, the reason of such failure and its impact on the stakeholders. Further, it also explains the factors affecting the failure in the company. The latter part of the report evaluates the post event activities initiated by the organization and effectiveness of the decisions implemented by the company.
The given paper explains the organizational failure of the company Tesco under which they badly treated the workers of the company that subsequently reduced their interest in the organization and made the company pay heavy penalties as well. More details about the report are discussed below:
Organizational Failure
Allegations were imposed on the company Tesco for badly treating their workers in the market. The company’s name is defamed in the market because of their malpractices against the worker of the company. In the year 2013, the company made a pre-tax profit that is of £3.5bn. Some of the people also pointed out the issue that in the recent years, the supermarket Tesco has started receiving subsidies from the developmental agencies, central government, European money, local government and many more authorities. Apart from that, the tax credits have also helped the company to earn subsidies wage bill as well. The company initially in 2013 announced that they are aiming to build a large distribution plant in Dagenham. The employees working in US with the company asked to shift to another plant as they were shutting down the current plant. They sent all the employees at the Harlow hub of the company. The USDAW was told the same thing about the shifting of their job in the company Tesco. Further, the company then decided to pull out themselves from US and change various aspects as well. The Harlow depot of the company Tesco was working efficiently, still the company aimed to shut it down by making around 800 people unemployed (BBC 2013).
With the effect of shutting down of this process, the company served jobs to these people at other places thinking it as their utmost responsibility. Resulting to which, they transferred all these 800 workers to Dagenham. This gesture of the company was appreciated but half-heartedly as the agency workers were shut down directly by the company. Apart from the regular employees, the company used to provide employment to many other people like catering workers, agency workers, support workers etc. but soon after the closing of the depot the jobs were shut out for them and the terms and conditions were ripped off. Also, due to shifting their jobs the employees started having issues in sustaining their livelihood in diverse environment with little pay (Sparks 2014).
Factors Contributing to the Failure of the Organization
The company also badly treated to their disabled employees as well. An employee of Tesco was having degenerative back condition was allegedly threatened by the management of the company for losing his job if he continues to perform some activity. Another disabled employee whose retirement was approaching was asked to work some more days as he was being shifted to another unit. That disabled person contributed 24 years of this life to the company and in response to which, the organization treated him badly without satisfying his needs (Reason 2016). The company also eliminated the work of agency staff from the company; the management did not made these workers shift in the new process of the organization due to which they lost their jobs unexpectedly. The company did an unethical deed with the employees of the organization who demanded for their rights from the management. In response to such activities, the company harmed the interest of the stakeholders, specifically the employees of the company by taking their jobs and not providing fair working conditions to survive or other alternative jobs to some worker. The company did a wrong deed with the agency workers, disabled staff and many other employees (Quirke 2017).
The organizational behavior factors that contributed to the failure of the organization are discussed below:
- Ineffectiveness of management: It is one of the biggest reason due to which the decision of the company became ineffective. The organization faced difficulty in analyzing all the available circumstances and then initiating a specific decision that should satisfy all the stakeholders of the company. In order to succeed in the mission and earn optimum revenue from the market, the company initiated some actions that highly dissatisfied the employees in the company Tesco.
- Procrastination: The management of the company initiating the procrastinating activities called off every important action that is to be taken in the company. The top level management of the company lacked efficiency to take corrective decisions on time, whenever they faced difficulty in initiating something; they started shutting it down (Halfon 2013).
- Lack of emotional intelligence: A good managerial team is one that satisfies the interest of all the stakeholders of the company present in the environment. The management of the company lacked the aspect of emotional intelligence due to which they were unable to satisfy the needs and requirements of the customers present in the environment. The top level management did not understood the importance of the employees of the company due to which they faced difficulty in keeping the employees satisfied with the activities of the organization (Deeds, and Pattillo 2015).
- Conflicting objectives: It is the responsibility of the manager to align the interest of the stakeholders with the activities of the company. The management of the company defined some goals and objectives for the organization, lesser fact that was known was that the employee were playing major role in initiating their activities of the company (Finn 2018). But the company did not perform any function to satisfy the interest of the stakeholders in the company due to which there was conflicting interest between both the parties that failed the organizational functions (Kennedy 2013).
The SWOT analysis is an internal as well as external analysis of the company. Further, the SWOT analysis of Tesco is discussed below:
Strength
- The biggest strength of the company is its high brand image in the target market. Identified and diverse brand image of the company helps them in managing functions and increasing its market share in the target market. This aspect also helps the company in influencing the stakeholders of the organization.
- Wide and diversified customer base also helps the organization in initiating its activities actively in the target market. The company serves different types of products to different types of customers present in the market. Also, the organization is settled approx. 6,553 stores in the market that helps them to highly satisfy the demand of the customers through their services (Bozic, Siebert, and Martin 2018).
Weakness
- Concentrated operations are one of the biggest weaknesses that are faced by the company in the external environment. Major activities of the company are organized and initiated in the market of North America. Resulting to which the company faces difficulty in the convincing other customers through their product and services.
- The company is also known for sharing many controversies with them. One such controversy is mentioned above resulting to which the name of the organization is defamed in the market. The company’s legal charges are increased also due to the increase in the controversies and penalties as well (Coe, Lee, and Wood 2017).
Opportunities
- The organization has a widespread target market, due to which they again the advantage to invest in the research and development technologies and increased the success ratio of the company. The company being placed in the market as technology based company needs to constantly innovate their activities so as to sustain their image in the target market.
- The company also earns the opportunity to strategically acquire the different aspect to earn reputable profits for themselves. The organization has also made substantial investments in different aspects so as to gain profits and technology to become competitive as well (Son, et. al., 2018).
Threats
- The company faces difficult in aligning the interest of stakeholders with the interest of many other people present in the organization. The problem of conflicting interest makes it difficult for the organization to adjust their profits in the external market. Resulting to which, dissatisfied stakeholders acts as a biggest threat for the company in the external environment.
- Further, seasonal variation is another threat for the company in the target market. The industry in which Tesco is placed keeps on changing its face resulting to which the company needs to make changes in itself in order to become competitive. So, the seasonal variation makes it difficult for the company to manage their growth (McKinley, Latham, and Braun 2014).
The company highly dissatisfied the interest of the stakeholder (employees) in the company due to which they faced failure in initiating organizational activities as well. For all the deeds that are done wrong by the company, they aimed to positively mitigate it in the following ways:
- At the initial level, the organization aimed to combine the managerial activities of the company with that of the motive of the employees present in the environment. The company aimed to increase the satisfaction level of the stakeholder from the other future activities that they initiate in the environment. The company later agreed to the mistake that they committed in the environment. The managerial bodies of Tesco openly issued the notice about the mistakes that they committed with the employees of the company. They also stated that they are aiming to provide thee satisfaction level to the stakeholders of the company (Hornstein 2015).
- Post occurrence of that event, the company reached into an agreement with the USDAW union of employees that fought for their interest with the stakeholders with the company in the environment. In response to which, voting was initiated in the company for implementing certain decision in the environment. Thus, with this event it should be noted that the company started following the democratic style to initiate an accurate decision making process in the company that subsequently increased the satisfaction level of stakeholders and initiated ethical activities as well.
- As the USDAW union fought for the rights of the employees of the company and the responsibilities of the organization towards the employees, the company started shifting their interest from number to qualitative outputs that means satisfaction level of the stakeholders of the company. Resulting to which the case resolved and the requirement of the employees adequately fulfilled (Chakrabarti 2015).
Apart from initiating adequate measures to resolve the case of organizational failure, the company implemented various other measures to integrate effectiveness in the company. Talking about the effectiveness of the activities implemented by the organization, it should be noted that the company adequately initiated activities that can help them to sustain their image in the target market (Ugboro 2016). It is important for every organization present in the current business environment to initiate their action in such a way that it creates identified brand reputation in the market. Even if the image of the company is damaged, they should aim to regain it by multiplying positive activities in the market. Further, focusing on the strengths of the company there are now expanding their scope of business worldwide due to which the stakeholders gain a better opportunity to attain the services of the company and gain satisfaction as well (Amankwah-Amoah, Boso, and Antwi-Agyei 2016).
Measures Initiated by the Organization to Address the Failure
The actions of Tesco effectively helped the employees to manage their conditions and overcome with the problems that they earlier had with the company. The management of Tesco adequately satisfied the stakeholders and specially the employees of the company by implementing good corporate social responsibilities towards them. Thus, it should be noted that due to the effective and efficient mitigations taken by the management, the company has regained such position in the market (Benos, et. al., 2016).
Looking at the unethical organization failure of Tesco, the below mentioned recommendations should be provided to the company to maintain their image:
- The management of the organization should create and implemented strict rules and guidelines for them to support and help the employees in attaining satisfaction in the target market. The company should evaluate the diverse conditions present in different countries and remunerate the employees accordingly. In a country is if their high cost of living then they should pay to the employee accordingly. The company should create contract with the agency workers and the support workers as well. All the terms and conditions should be cleared on prior basis so as to eliminate misconceptions (Heracleous, and Werres 2016).
- The company should state all the requirements of the job prior employing a person in the company. They should state the pay scale, growth, working hours and conditions to the employees before employing them in the company. There should be implementation of open door policy in the company. The management should encourage the employees to come and take part in the decision making process of the company. This policy should help the employees to directly communicate with the top level management of the depot if they are facing any issue at workplace or wants to give suggestion. In this way the employee will not go out to resolve their issue instead they will communicate to their supervisor regarding the problem that they are facing in the company (Connelly, et. al., 2016).
- Lastly, the organization should adequately follow the code of conduct formed by the management to eliminate various issues connected with the company. The code of conduct formed should be feasible and accessible by the company and its stakeholders.
Conclusion
Thus, in the limelight of above mentioned events, it should be noted that the above mentioned report explains the organizational failure issue with the company Tesco and the post event changes made in the organizational behavior. The report explained information about the company and its failure to meet the expectation of the employees. It explained reason of occurrence of the event, mitigations and recommendations as well. Thus, it should be noted that in order to keep the stakeholders satisfied with the activities of the company, the management should always aim to align their interest with the interest of the company. In this way they can easily succeed in the target market. The report adequately fulfills the requirements of the assessment.
References
Amankwah-Amoah, J., Boso, N. and Antwi-Agyei, I., 2016. The effects of business failure experience on successive entrepreneurial engagements: An evolutionary phase model. Group & Organization Management, p.1059601116643447.
BBC., 2013. Tesco Harlow depot deliveries to be halted from Monday [online]. Available from < https://www.bbc.com/news/uk-england-essex-23288145> Accessed on 25 May 2018.
Benos, T., Kalogeras, N., Verhees, F.J., Sergaki, P. and Pennings, J.M., 2016. Cooperatives’ organizational restructuring, strategic attributes, and performance: the case of agribusiness cooperatives in Greece. Agribusiness, 32(1), pp.127-150.
Bozic, B., Siebert, S. and Martin, G., 2018. A strategic action fields perspective on organizational trust repair. European Management Journal.
Chakrabarti, A., 2015. Organizational adaptation in an economic shock: The role of growth reconfiguration. Strategic Management Journal, 36(11), pp.1717-1738.
Coe, N.M., Lee, Y.S. and Wood, S., 2017. Conceptualising contemporary retail divestment: Tesco’s departure from South Korea. Environment and Planning A, 49(12), pp.2739-2761.
Connelly, B.L., Ketchen, D.J., Gangloff, K.A. and Shook, C.L., 2016. Investor perceptions of CEO successor selection in the wake of integrity and competence failures: A policy capturing study. Strategic Management Journal, 37(10), pp.2135-2151.
Deeds, V. and Pattillo, M., 2015. Organizational “failure” and institutional pluralism: A case study of an urban school closure. Urban Education, 50(4), pp.474-504.
Finn, C., 2018. Tesco worker with injured back fails in unfair dismissal case [online]. Available from < https://www.thejournal.ie/tesco-worker-back-injury-2171906-Jun2015/> Accessed on 25 May 2018.
Halfon, R., 2013. Tesco’s treatment of its workers shows why we must stop subsidising it [online]. Available from < https://www.newstatesman.com/politics/2013/05/tescos-treatment-its-workers-shows-why-we-must-stop-subsidising-it> Accessed on 25 May 2018.
Hennesssy, P., 2013. Labour accuses Tesco and Next of hiring foreign staff on the cheap [online]. Available from < https://www.telegraph.co.uk/finance/newsbysector/epic/tsco/10235442/Labour-accuses-Tesco-and-Next-of-hiring-foreign-staff-on-the-cheap.html> Accessed on 25 May 2018.
Heracleous, L. and Werres, K., 2016. On the road to disaster: Strategic misalignments and corporate failure. Long Range Planning, 49(4), pp.491-506.
Hornstein, H.A., 2015. The integration of project management and organizational change management is now a necessity. International Journal of Project Management, 33(2), pp.291-298.
Kennedy, S., 2013. Worker blows the whistle on Tesco’s recruitment tactics [online]. Available from < https://www.channel4.com/news/by/siobhan-kennedy/blogs/worker-blows-whistle-tescos-recruitment-tactics> Accessed on 25 May 2018.
McKinley, W., Latham, S. and Braun, M., 2014. Organizational decline and innovation: Turnarounds and downward spirals. Academy of management review, 39(1), pp.88-110.
Quirke, B., 2017. Making the connections: using internal communication to turn strategy into action. Routledge.
Reason, J., 2016. Managing the risks of organizational accidents. Routledge.
Son, J., Baek, J., Park, H. and Kim, C., 2018. The localized merchandising for international retailers: A study of Tesco’s failure in Japan. The Ritsumeikan Business Review, 56(5), pp.1-20.
Sparks, L., 2014. 07 tesco’s supply chain management. Logistics and retail management: Emerging issues and new challenges in the retail supply chain, p.149.
Ugboro, I.O., 2016. Influence of managerial trust on survivors’ perceptions of job insecurity and organizational commitment in a post restructuring and downsizing environment. Journal of Behavioral and Applied Management, 4(3).
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