Mission, Aims and Objectives of Tesco PLC - Case Study Example

?Mission, aims and objectives of Tesco PLC The mission ment guides the actions of the organisation, spells out its overall goal, provides a sense of direction, and guide decision-making. The Tesco Group’s mission is embodied in what the organisation refers to as its core purpose: to create value for customers to earn their lifetime loyalty (Tesco 2011a). In order to achieve this core purpose Tesco has delineated two core values to guide it, namely: “no one tries harder for customers” and “treat people how we like to be treated” (Tesco 2011a). Tesco has taken its mission statement and translated it into a four-part vision: to be the most highly valued business in the world, to remain a growth company; to be a modern and innovative company and to win locally by applying its skills globally (Tesco PLC 2012). This way, Tesco seeks to be valued not only by its customers, but also by the communities it serves, its employees and its shareholders. This vision is a qualitative long term target for Tesco as a business thus one could arguably state that it describes the Group’s aims. The company used the above stated mission and vision statements to develop seven corporate objectives. These seven corporate objectives are quantifiable medium to long-term targets that inform Tesco’s corporate strategy. The first objective for Tesco is to continue to grow its UK core market. The UK is the largest business in the Group and a key driver of sales and profit. In 2011, the UK contributed 68% of the Group’s trading profit (Tesco 2011a). The second objective is to be an outstanding international retailer both in stores and online. The company is currently in 14 markets outside the UK that contribute 25% of the Group’s profits. The third objective is to be as strong in everything the company sells as they are in food. This involves broadening their products and services offering. The fourth objective is to grow their broadening retail services in all the markets where the Group operates. Tesco has largely focused their retailing services within the UK market. The three remaining objectives are: to put the Group’s responsibilities to the communities it serves at the heart of what the organisation does; to be a creator of highly valued brands; and to build their team so that the organisation creates more value. Tesco’s organizational diagram Tesco is a large, multinational organisation. This naturally leads to the organisation adopting a huge and complex organisational structure that has to delegate roles and responsibilities across the world. The diagram shown above only covers the executive level of the Group and does not include the board of directors, to whom the Group CEO, Philip Clarke reports. Evaluate how the choice of structure of an organisation can affect the way the organization is run Organisational structure refers to the patterns of relationships between roles in an organisation and its different parts. Some define it as the system of organizational rules, divided into rules regulating the behaviour of people and rules regulating the functioning of machines (Scheidegger 1997). It deals with issues such as responsibility, authority, communication, coordination, and control. A more modern definition is suggested by McMillan (2002) who defined organizational structure as the visible and invisible architecture that connects and weaves together all aspects of an organisation’s activities so that it functions as a complete dynamic entity. How an organisation is run depends on the competitive strategy that is has adopted. For example pursuing a differentiation strategy requires the business to be run differently than when the business is pursuing a low cost leadership strategy. For this reason, Chandler (1962) argued that structure follows strategy in organizations. Strategy is the determination of long-term goals and objectives, courses of action and allocation of resources, and structure is the way the organization is put together to administer that strategy, with all the hierarchies and lines of authority that the strategy implies. Mintzberg supported Chandler’s work that postulated that there exists a relationship between an organisation’s strategy and its structure. According to Mintzberg (1992) organizations can be differentiated along three basic dimensions: the key part of the organization, its primary coordinating mechanism and the type of decentralization used. These three parts essentially depict the organisations structure. The key part refers to the part which plays the major role in determining an organisation’s success or failure. The prime coordinating mechanism refers to the main method the organization uses to coordinate its activities. Decentralization refers to the extent to which the organization involves subordinates in its decision-making process (Mintzberg 1992). Lunenburg (2011) summarized the three basic dimensions associated with each of Mintzberg’s five organisational structure configurations as shown in Table 1 below. From the table it is possible to identify how each organisation deals with issues such as responsibility, authority, communication, coordination, and control. It is important to note that even though in the long run organizational structure is ultimately driven by strategy, in the near term strategy is shaped by organizational structure, because structure provides a constraint to action (Shenkar & Luo 2008). Table 1: Mintzberg’s organisational structures (Lunenburg 2011) Organisational structure Key part of the organisation Prime coordinating mechanism Decentralization type Simple structure Strategic apex Direct supervision Vertical and horizontal centralisation Machine bureaucracy Technostructure Standardisation of work / processes Limited horizontal decentralisation Professional bureaucracy Operating core Standardisation of skills Vertical and horizontal decentralisation Divisionalised form Middle line Standardisation of outputs Limited vertical decentralisation Adhocracy Support staff Mutual adjustment Selective decentralisation Justify the methods used to run Tesco and show how these processes meet the organisation’s goals and objectives Tesco is a multinational company and naturally has to find a way to balance the environmental pressures for responsiveness to the local markets its serves against its enterprise’s global integration needs. The organisation has to make its decision in light of the increasing importance of its multinational customers especially in Asia where it recorded revenues of ?11.0 billion in 2011, which surpassed revenues from Tesco’s Europe operations. In 2011, Tesco made some changes to its management structures in order to equip the business to deliver its strategy and vision. The company appointed CEOs for each of its main areas of focus namely: the UK, Asia, Europe, Retail services and Tesco Bank. This demonstrates the Group’s increased decision-making autonomy for each of its main business areas. This however does not mean that Tesco is run as a portfolio of rather autonomous national companies. Tesco is pursuing a transnational strategy where it seeks both high localisation and high integration. The Group CEO, Philip Clarke, acknowledges that all retailing is local. This is in line with the Group’s vision to win locally by applying their skills globally. On the other hand, Tesco is increasingly utilising the skill and scale of the Group to benefit the performance and competitiveness of each of its businesses around the world. This is manifested through its integrated functions such as IT and Finance which are centralised and headed by individuals who, like the regional CEOs, directly report to the Group Chief Executive. In summary, the regional division of Tesco and increased autonomy of each of these units allows the company to achieve three of the objectives it has set for itself. These are: growing its UK market, putting the Group’s responsibilities to the communities it serves at the heart of what the organisation does and to be an outstanding international retailer in stores. Tesco has a separate head for Retail services as well as a Director in charge of Internet retailing. Thisimplies that these as well are semi-autonomous departments which are focused on enabling the company to realise its three other objectives: broadening their products and services offering, widening their retail services in all the markets where the Group operates, and to be an outstanding international online retailer. Finally the integrated services divisions such as IT, finance, HR and marketing will allow Tesco to tackle its more integrated objectives which include three objectives: to be a creator of highly valued brands, to be as strong in everything the company sells, and to build their team so that the organisation creates more value. Explain quality issues within Tesco and evaluate the processes used to ensure quality outcomes As a large retailer, quality issues for Tesco largely fall within the sourced finished products. Quality here is controlled through responsible sourcing. Tesco seeks to ensure that everyone in its supply chain is treated honestly and fairly, and that care is taken to minimise the impact its products have on the environment. This is done through a number of ways such as: working with communities where products are sourced; establishing and monitoring animal welfare; and working to ensure products come from sustainable sources wherever possible – which in some markets includes having products certified as being responsibly sourced(Tesco 2011b).. The company also conducts regular supplier audits. For example in 2010, over 1,600 supplier sites were subject to independent ethical audits and Tesco staff made an additional 4,300 visits (Tesco 2011b). In addition to that, Tesco has deployed ethical trade managers in key sourcing countries. As one of the world’s leading retailers, quality issues for Tesco include protecting the environment. Currently, the company is making progress in becoming a low-carbon enterprise. Some of the technologies Tesco is pursuing at the moment to lower its carbon footprint include: making their stores low-carbon stores, increasing the use of renewable energies such s solar and wind energy for its processes, and using more rail than road transport to save on fuel and lower carbon emissions. References Chandler, A.D. (1962). Strategy and Structure. Cambridge, MA: MIT Press. Lunenburg, F.C. (2011). Organizational Structure: Mintzberg’s Framework. International Journal of Scholarly, Academic, Intellectual Diversity. 14 (1). p.pp. 1–8. McMillan, E. (2002). Considering organisation structure and design from a complexity paradigm perspective. In: Tackling Industrial Complexity: the ideas that make a difference. [Online]. 9 April 2002, Cambridge, UK: University of Cambridge. Available from: http://www.ifm.eng.cam.ac.uk/mcn/pdf_files/part5_5.pdf. [Accessed: 14 May 2012]. Mintzberg, H. (1992). Structure in fives: Designing effective organizations. Upper Saddle River, NJ: Prentice Hall. Scheidegger, A.-M. (1997). Organizational structures in multinational corporations from the perspective of global communication networks: Postmodern literature analysis and case study. Thesis. [Online]. Bern: University of Bern. Available from: http://www.ifm.eng.cam.ac.uk/mcn/pdf_files/part5_5.pdf. [Accessed: 14 May 2012]. Shenkar, O. & Luo, Y. (2008). International Business. 2nd Ed. Thousand Oaks, CA: Sage Publications. Tesco (2011a). Annual Report and Financial Statements 2011. [Online]. Hertfordshire, UK: Tesco PLC. Available from: http://www.abf.co.uk/uploads/abf-annual-report-2011.pdf. Tesco (2011b). Corporate Responsibility Report 2011. [Online]. Hertfordshire, UK: Tesco PLC. Available from: http://www.abf.co.uk/uploads/abf-annual-report-2011.pdf. Tesco PLC (2012). Our vision. [Online]. 14 May 2012. Tesco. Available from: http://www.tescoplc.com/index.asp?pageid=13. [Accessed: 14 May 2012].  Read More