Discussion 1 - Management''s Responsibility - Coursework Example

Management’s Responsibility Management’s Responsibility I have chosen to write on the Tesco’s failure in the US. Tesco is a British retailing giant that operates internationally including Europe and Asia. Fresh & Easy was initiated by Tesco in the US as its American subsidiary. However, in November 2013, Tesco had to shut down its business in the US and Fresh & Easy was sold to Yucaipa Companies. In addition, hundreds of employees had to be laid off and many of its stores located across the US had to be closed.

Although Tesco seemingly performed well in other parts of the world, it failed badly in the US. There are many reasons that are associated with their failure and the management had an important part in its failure as it could be circumvented. Firstly, the business environment was risky because the timing of its new venture corresponded with the recession of 2007 when consumer spending had reduced drastically. Secondly, Tesco’s management decision to pull out of the market rather than giving time for consumers to recover from the recession.

For Tesco, the external, macro-environment proved to be challenging when the firm decided to launch a new venture in the US. So, its decision making was crucially important for the firm to choose its course in the challenging environment. Many also blame the research and its analysis. Tesco’s interpretation of the collected data ignored the cultural context and the options consumers had if there were one-stop stores. However, the recession had greatly reduced their spending capacity of consumers and even though they had the time to shop at multiple stores, they had little money.

Three best practices for the industry could be:a. Understanding the cultural context and the consumer habits when deciding to operate internationally.b. Risk taking increases opportunities however appropriate amount of time should be given for the consumer market to increase.c. The business environment should be assessed to anticipate uncertainties so as to take the appropriate managerial action. (2) Caty has pointed out some important information regarding the credit industry. I agree with Caty that the management did not have much involvement in the decision for closing the branch.

In this case, the orders came from the head office. Usually, the most profitable branches provide little reason for the corporate management to shut it down however this is not the only criteria for closing down a branch. In BankFirst’s case, the branch location was generating enough revenues to sustain it in the long run however the decision to close it down came from the head office located in another state. Perhaps the bank was trying to cut down its branches in that particular state as part of its strategy to focus on reducing market penetration to allow for another growth strategy.

The credit card industry serves an important purpose as credit providers. Technology is one external factor over which the management has little control over although it can innovate. The advent of technologies such as PayPal, Skrill, AlertPay, and so on, have innovated the way financial transactions occur. In order to ensure a profitable share of the customers’ wallet, companies have to regularly innovate and provide the best customer experience including quick service. Failing to provide the customers with the right and timely services may result in closing down a business as a whole or few branches.

In short, many factors decide which branches will be closed. The top management may close down branches as part of its strategic tactics. This reduces the penetration of the market and may reduce growth. In any case, the managerial best practices may help direct decision making so that they serve the purpose of the organization’s goals. Caty has made valid points.