The United Kingdom retail industry
The United Kingdom retail industry is the most competitive and fast growing industry and is vital for the country’s economy. The industry in just 2015 alone generated approximately £340 billion worth of retail sales (Euromonitor.com 2017). In May 2017 there was an increase of 0.9% from the previous year in the quantity bought inside the industry (Ons.gov.uk 2017). 2016 saw an increase in retail sales by around 2.1% and the GDP increased by 2.2%. Among all the retail chain in UK, Tesco is the largest, with outlets in every postal codes in the country. They have an employee strength of 460,000 with 6,809 shops all over the world (Tesco plc 2017). Tesco carries out their business operation and operates their retail outlets in six formats namely: Extra, Express, Metro, Homeplus, Superstore and OneShop. Tesco.com is their business operations’ online handle for facilitating the delivery of their products to customer’s door step, which is mainly composed of grocery items. Tesco Direct is the online shopping for all the non-food products. Tesco was one of the first retailers to understand the significance of loyalty cards and introduced their Tesco Clubcard (BBC News 2015). Tesco mainly competes with ASDA, Sainsbury’s and Morrison’s, and together they are called the Big Four in UK (Statista 2015). Tesco also is in competition with convenience stores that are hugely gaining popularity with the shift in customer tastes and preferences towards more trips for fewer items. This assignment would be particularly focused on the changes brought into the self-checkout machines that has been installed at Tesco outlets all over. The installation of the machines back in 2003 were themselves a form of strategic change for the organization. The changes in the machines were brought after there were repeated complaints from the customers.
Change management is concerned with the study of the reason organizations change, how the change influences and how to respond to those changes. All the stakeholders of change play significant role inside the successful implementation of the change process (Hayes 2014). There are different types of organizational change. Understanding each of their nature is crucial in understanding and deciding upon an appropriate strategy. Incremental changes are simultaneously gradual, repetitive and significant. Transformational changes supports organizations in regaining their strategic alignment with the business environment. Strategic changes are more related with broader, long term and organization-spanning issues (Cameron and Green 2015).
Changes that take place for efficiency within an organization are triggered by some factors that can be categorized into two segments – internal and external. Internal triggers exist in the forms of relationships among key internal sub systems, like, tasks, people, management, technology and structure. Changes that take place in response to internal triggers might get adjusted to the sub systems. Changes at times becomes necessary due to certain external developments. There are certain external factors that is required to be come to terms with within and organization. It comprises of wider acknowledgement of environmental issues, insinuation of a global market place, demographic alternations and health awareness. The general environment of an organization can possibly be categorized under the PESTLE framework (Jacobs, van Witteloostuijn and Christe-Zeyse 2013). Inside this framework, political implications of a new government are considered. Economic changes like global competition, level of macro-economic activity and exchange rates have a significant influence. Social and demographic changes like education levels and changing values influence the business market. Legal implications like government policies and environmental implications like legislatives and widely held value agreements have an impact on business environment. Even technological changes like developments and innovation of products and processes impact the macro environment (Rothaermel 2015).
Tesco – The largest retail chain in UK
It is required of an organization to anticipate and manage change. The planning and managing of the organizational change is required to become an important part of the organizational strategy. To do so, change can be brought about and managed by following certain models and concepts. According to Lewin’s Force Field model the equilibrium in an organization must be distressed in a planned way for bringing about change. It can be executed by firming the forces for changing or weakening those for stopping the change. Lewin has postulated a model that is comprised of these stages: unfreeze (the stage in which the process of awakening a system for bringing in change takes place), change (the stage in which new responses are developed based on new information), and refreeze (the stage where the change is stabilized with the introduction of new responses into the dispositions of those who are concerned with the change) (Burnes and Cooke 2013). The Continuous Change Process model is a model in which change is managed. Inside this model the top leaders are supposedly the most dominant in the articulation of the company’s vision and setting the outline for bringing in major change. The changes that are vital in realizing the corporate objectives must be discussed with the employees for substitutes available and what are likely to be the alternatives. In managing change, management of an organization plays an important part (Cummings and Worley 2014). The Emergent Approach to Change encapsulates this view for managing of change. There is an agreement on the point that there is a scope for the initiation and implementation of change from the bottom up instead of from the top down (Burnes and By 2012). Inside Kotter’s Model of change process, eight stages are included that can be used for the successful implementation of any change. The eight stages are: establishment of a sense of urgency, establishment of coalition, creation of a vision and stratagem for change, communication of the vision and stratagem through an amalgamation of actions and words, removal of obstacles, production of noticeable signs of advancement in the form of short term wins, sticking to change process and refusing to give up in difficult situations, and nurturing and shaping a new culture for supporting the advancements and innovations that are getting established (Appelbaum et al. 2012).
Change in organizations, in today’s economy, is all pervasive. It takes place continuously and most of the time at rapid speed. Since change has turned out as a part of regular organizational dynamics, change resisting employees are actually capable of crippling any organization. People do not change their outlook overnight. They take their own time to get adjusted to the changes and adopt new behavioral and workplace-related systems (Hayes 2014). Resistance is one unavoidable response to any form of major change in organizations. Individuals on an instinct rush to the defense of the status quo if they sense their security or situation to be at threat. Organizational change has the capacity to generate cynicism and resistance in the minds of employees, which in turn can make it difficult or impossible to employ organizational developments (Abrão and Torelly 2012). Symptoms of resistance are the exact behaviors that any individual display when they are resisting to change. It is important that there should be maintained a distinction between the indicators of resistance to change and the reasons behind it. These of kind of attitudes fall under two sections – active resistance or passive resistance. In case of low tolerance for change there is a fear that new skills and behaviours would not be developed as per the requirements in a new work setting. If employees have low tolerance for change then the resultant high level of ambiguity from performing their jobs in a different way would likely lead to resistance towards the new way of doing things (Bareil 2013). Resistance from employees arise due to them having to learn something new. In most of the situations the disagreement is not with the profits of the new process, but with the dread of the indefinite future and related with the ability for its adaptation. People suspect anything that they are perceiving as being upsetting towards their established routines, working methods or conditions of employment. They are not acceptable towards losing the security of what is similar to them. Resistance to change in employees is a complex issue that the management faces within a complex and ever changing organization of today. The change process is ubiquitous, and employee resistance has been recognized as a significant contributor to the failure of several well-intended and well-conceived exertions for initiating change inside an organization (Abrão and Torelly 2012).
Types of organizational change
Analyzing the internal and external environment of Tesco would help understand the situation that the organization is operating in. For analyzing the external environment of Tesco, Porter’s Five Forces analysis can be carried out. In terms of threats of new entrants, the UK retail market is already controlled by other strong competitors like Sainsbury, Asda, and Safeway, which comprises of the maximum market share. Over the last two to three decades the grocery market has shifted to being a supermarket-dominated business. Most of the large supermarket giants have become powerful because of their operating efficiency, major marketing mix expenditure and one-stop shopping. Due to that today it stands as a strong barrier for those new companies that are looking to enter the grocery market. Other barriers comprises of economies of scale and differentiation that Tesco achieved by their aggressive operational tactics (Yu, Ramanathan and Nath 2014). The force of bargaining power of suppliers represents the power that suppliers possess and can be affected by the major grocery chains and by the fear of losing market to larger supermarkets. Hence, this further consolidates the leading situation of Tesco in the negotiation for better marketing prices from suppliers that would be difficult to match for smaller individual chains. UK suppliers also face the threat of the growing capacity of large scale retailers for sourcing their products from overseas at cheaper deals. The association with dealers has the possibility of having same influence on restraining the strategic freedom of the company and affecting the margins. The forces reduced the profit margins for both suppliers and supermarkets. Porter theorized under the point of bargaining power of customers with the standardization of more products the switching costs would become lower and more power would be yielded to the customers. Clubcard, Tesco’s famous loyalty card, has till date been the most successful customer retention strategy that has largely increased the profitability of Tesco (Meyer 2015). Brands like Tesco has always focused on meeting their customer preferences, customization of services, ensuring low prices, offering better choices and maintaining constant flow of in-store promotions to make sure they can control and retain their customer base. With an increase in demand of supermarkets in the recent years, supermarkets have faced a greater need of selling non-food items. Supermarkets have received a chance of strategically expanding into newer markets of banking, pharmacies and so on. Consumer awareness regarding the issues that surround fair trade and influence of western consumers on the anticipations and objectives of Third World producers. Ecologically benign and ethically sound produce for consumers like coffee, tea or cocoa are viable and these kinds of products are now extensively available at the majority of large supermarket chains (Yu, Ramanathan and Nath 2014). General substituting has the capacity to reduce demand for any specific product, as there are threats of alternatives that consumers can switch to. Inside the grocery industry this situation can be visualized in the form of product-for-product or the substitute of need and it gets further destabilized because of newer trends, like the emergence of small chains of convenience store in the industry (Statista 2015). In this case Tesco is attempting to get hold of the existent small-scale operations and operate their Metro and Express stores in local towns and city centers. The grocery industry has experienced a huge growth in its dimension and the market dominance of the large scale players, by means of greater store size, improved retailer concentration, and the deployment of a range of formats that are a noticeable trait of the sector. In case of the bargaining power of competitors, the purchasing power inside this industry is completely under the control of a comparatively smaller number of retailer purchasers (Statista 2015). It is hard to operate in a mature, flat market because of the difficulty in growing, and the consumers are increasingly challenging and urbane. Large scale supermarkets lie Tesco are attempting to acquire huge amounts of consumer information that they can use for communicating with their consumers. This extremely competitive market has given rise to an increased level of development that has resulted in situations where UK grocery retailers have had to become innovative for maintaining and building market share. These types of innovation can be seen within the expansion of an array of trading formats, responding to the changes inside consumer behavior. The dominating and leading market giants replied by progressing on price and value, all the while strengthening the added value elements of service (Euromonitor.com 2016).
Factors triggering changes in organizations
For analyzing the internal environment of Tesco, S-W analysis of the company is required to be performed. The strengths of Tesco comprise of their growing market share. Tesco holds a 27.8% share of the UK retail market (Kantarworldpanel.com 2017). Its multi-format capacity infers that it will continue developing share in food while extending space responsibility from hypermarkets will empower it to drive a higher share in non-food. Tesco has built up its non-food division to a huge degree and their widespread business partition is growing tirelessly. In case arrive spread continues building up, this will ensure Tesco’s continued with regional quality (Butler and Neville 2013). Having the greatest market share is a key quality paying little personality to the business and this position empowers Tesco to make liberal salaries. The association utilizes online sales channel with a strange condition of viability. Tesco was among the fundamental retailers in the UK to successfully execute online sales channel and by and by, livelihoods delivered by methods for online sales speak to a solid share of the total wages. The improvement of online sales before the market regardless of the quick abatement of general sales can be interpreted as an unusual condition of viability of utilization of online sales channel, which is a critical qualities in the contemporary marketplace. The association gets liberal points of interest from its Clubcard in multiple levels (Meyer 2015). Moreover, Tesco offers customer information onto FMCG suppliers and creators in this way making an additional salary channel for the business. The association has a strong property portfolio and this reality extends its general regard. In terms of weaknesses of the supermarket chain, in 2015 Tesco had statutory loss of GBP 6.4 billion and this had pushed the measure of its net debt to GBP 8.5 billion (Tescoplc.com 2015). Furthermore, the total leverage debt of the association has accomplished GBP 22 billion (Tescoplc.com 2015).Yet overall business is so far creating, and is depended upon to contribute more unmistakable indicates Tesco’s advantages all through the accompanying couple of years, the association is still significantly subject to the UK market. There is the danger of Tesco transforming into a serial acquirer, as this tends to diminish wage detectable quality and quality.
Coming to the main agenda of the change brought inside the self-checkout machines at Tesco, the main triggers that changed supermarket in the first place needs to be understood. Applying the strategies efficiently and effectively has changed the company into a global retailer. Part of Tesco’s strategy is to retain their customer base alongside attracting new one. Hence, the company focuses on the creation of more value for their customers. This approach resulted in the first place the implementation of the self-checkout machines and then led to the recent change in the vocals of the checkout machine robots. Tesco aimed to make shopping experience for their customers exciting, comfortable and less trying (Tesco.com 2017). In the first place the machines were installed to enhance their technological aspects and improve their operational efficiency. The change in the vocals were brought about to encourage more people to enjoy the comfort of the self-service line instead of the queue for the human-operated one (Collins 2015). Tesco’s success can be attributed to a number of factors, one of them being their fast growing customer base. To ease the congestion at checkouts the machines were installed. However, the shouty and irritating vocals of the machines frustrated the customers, souring their shopping trip (Davidson 2015).
Models and concepts for managing change
The change in the voiceover of the Tesco self-checkout systems could be said to be another strategic change, just like the installation of the machines itself. Customers are fond of the convenience that these machines provide, especially when they are just in the store to pick up lunch or a few items. The vocals at the machines are supposed to help and guide the customers so that they can smoothly pay for their items and save time from the longer queues. The voiceovers are supposed to make customers feel at home and a part of Tesco. Effective planning for any successful change is imperative within any organization. The Tesco management received a lot of complaints regarding the checkout machine vocals and they decided on changing them to something soothing. The new voices at the machines are using softer phrases, and interestingly the voice that has been substituted belonged to a woman, where the new voice is that of a male (Baker 2015). Customer feedback were listened to and the management opted for a kindlier, softer voice who most significantly is automated to say fewer phrases for improving customer shopping trips. The newer phrases are strikingly less instructionary and harsh. They convey the same meaning and efficiently put customers on the spot to a lower extent. It cedes more decision-making power to the customer and provides additional room for acknowledgment that an issue might be the error of the machine itself instead of the customer (Grosvenor 2015).
Conclusion
On a closing note, it can be stated that even though the self-checkout machines were well received by the customers of Tesco, they were frustrated with the irritating and bossy vocals of the machines. It was rude and frustrated the customers, pushing them towards the long human operated check-out queues. Repeated customer complaints made a dent on Tesco’s long history of success globally, even though the decision to implement those machines back in 2003 were a significant contribution to its success. Changing the vocals and managing the change process is an evident that Tesco is here to stay as one of the most successful retailers in the industry.
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