Strategy for Change Management
Executive Summary :
The UK Retail Industry is the largest and most competitive industry. Tesco is an international retailer and the leading supermarket in the UK. It controls 31.6% of the UK’s market share. Its main rivals are ASDA, Salisbury's and Morrison’s. In every organization there are macro and micro environmental factors that influence its decisions and operations. SWOT, PEST and Porters five forces are used to analyse the industry to gain competitive advantage. Tesco differentiated itself by introducing Self checkout in 2003 in its Dereham, Norfolk store. The success of the self checkout trial in Dereham store led to its implementation in other Tesco outlets. This work seeks to explore the self checkout system in Tesco and its impacts on the organization. A manager at a Tesco store in Essex was interviewed on the self checkout system to determine the reasons for the change, how it took place and the benefits to the organization. The manager purports that the self checkout has added value to the organization. It has enhanced the customer shopping experience by speeding up processes. The self checkout has helped to reduce queues at the checkouts and also boosted sales in the UK. In the UK alone, 25% of Tesco transactions can be accounted for by the self checkout. Inspite of the few challenges facing the self checkout which include minors using the self checkout to purchase alcohol, the self checkout has been successful to the organization.
UK RETAIL INDUSTRY:
The retail industry in the UK is the most competitive and fast growing one. By the end of 2008, 11% of all VAT registered businesses in the UK were retailers, with the total number currently at 180,875. UK retail sector generate almost 8% of the GDP, accounting for one-fifth of the UK economy. Retail industry employs 11% of the total UK workforce. Total combine sales of this sector in UK were £265 billion in 2007, larger than the combined economies of Denmark and Portugal.
TESCO:
Tesco is the UK’s largest retail chain and has outlet in every post code of the country with 2,115 stores and 280,000 staff. Internationally it is the third biggest chain in the world, employing 440,000 people in 4,000 stores across 14 countries. Tesco operates its retail outlets business operation in six formats namely; Express (961 stores) Extra (177 stores), Metro (174 stores), Superstore (448 stores), Home plus (10 stores) and One Shop (512 stores). Tesco.com is the online arm of the business operations to facilitate the delivery of products, mainly grocery, to customer’s door step. Tesco direct is online shopping mall for non-food items.
Tesco’s Competitors:
Tesco overtook Salisbury's as biggest UK supermarket 14 years ago. Tesco’s main operation is sales of grocery and household appliances. Four major retail supermarket chains in UK have following market share as of August 2008.
SELF CHECK OUT MACHINES:
The focus of this assignment is to investigate the self checkout machine in Tesco. This introduction of the self checkout was a strategic change. It was first introduced in Dereham, Norfolk in 2003. The purpose of the self checkout was to accelerate the check out processes and reduce labour cost associated with point of sales. This work will further explore the triggers of the change, the process involved and the benefits to the organisation. A diagram of the self check out can be seen in the appendix.
CHANGE MANAGEMENT:
Change management is the study of why organisations need to change, how change affects, how to response to changes in the environment. All stakeholders of change play a full role in the successful implementation of changemanagement. Routines associated with effective change management are: 1. Establish a clear change management strategy at top level and communicate this shared vision to rest of the organisation.
2. Communication is the most effective key to successful implementation.
3. Managers often resist the idea of participation to reach a decision during early involvement. There are two important benefits for allowing participation to take place as early as possible in the change process. Without this even if attempts are made to consult or to inform, people will not develop a sense of ‘ownership’ of the project or commitment.
4. Creation of an open climate to express individual anxiety and concerns and the use of positive effects of ideas and knowledge held within the organisation.
5. With major change programmes it is especially important to set clear targets for which people can aim.
6. Successful organisational change depends on viewing training far more as an investment in developing not only specific skills but also in creating an alternative type of organisation.
TYPES OF ORGANIZATIONAL CHANGE:
There are many different ways of categorizing organisational change, Understanding the nature of the change an organization wish to undertake is important in determining an appropriate strategy. The following are some types of organizational changes:
Incremental change:
Incremental change may be major and highly significant change but is gradual and repetitive. Incremental change may stop employee resistance.
Transformational change:
Transformational change usually helps an organization regain strategic alignment with its environment. If an organization loses touch with its shifting marketplace, more fundamental transformational change may be needed for survival.
Strategic change:
Strategic change deals with broad, long term and organization-wide issues. The capacity of the firm to identify and understand the competitive forces in play and how they change over time, linked to the competence of a business to mobilize and manage the resources necessary for the chosen competitive response through time. (Pettigrew & Whipp; 1991).
TRIGGERS OF CHANGE:
Internal Triggers:
The triggers for change in a rational organisation may be the continuing search for efficiency. Alternatively they might arise as a result of:
• Ratio monitoring as a result of external bench marking exercises
• Tensions that exist especially at senior levels within the organisation
• Where employee – management conflicts is rife Within the organisation, the systems approach emphasis the importance of the inter relationships between the key internal sub systems, namely,
• Tasks
• Technology
• People
• Structure
• Management
External triggers:
Change is often necessary because of external developments. It is clear that there are a number of external factors that organisations must come to terms with. These include the implication of a global market place, a wider recognition of environmental issues, health awareness and demographic change (Paton & McCalman; 2007). The far or general environment of an organisation can be usually characterized under a ‘PESTLE’ framework:
• Political implications of a new government.
• Economic changes such as exchange rates, level of macro economic activity and global competition.
• Social or demographic changes such as levels of education and changing values/ expectations.
• Technological changes such as inventions and developments, in both products and process.
• Legal implications of likely government policies.
• Environmental implications of legislation, agreements of widely held values.
Force Field Model:
In accordance with Lewin’s Force field model this equilibrium must be disturbed in a planned way in order to bring about change. This is done by strengthening the forces to change or weakening the forces against change. Lewin postulates a model that consists of the following:
• Unfreeze – the process that awakens a system to the need for change
• Change -- developing new responses based on new information.
• Refreeze – stabilizing the change by introducing the new responses into the personalities of those concerned.
Continuous Change Process Model:
A model of managing change is called the continuous change process model. This model states that top leaders are influential in articulating the company’s vision and setting the agenda for major change. The changes which are crucial in the realization of corporate objective are to discuss with employees the alternatives available and what the outcome is likely to be. (Bhuiyan et al, 2006; & Kotter; 1995.
Emergent Approach:
Management plays an important part in managing change. According to Tsoukas & Chia, (2002), “This view is encapsulated in the ‘emergent approach’ to managing change”. It is agreed that there is scope for initiating and implementing change from the bottom up rather than from top down. (Sminia & Van Nistelrooij; 2006).
Kotter’s Model:
In Kotter’s model of change process, there are eight stages that can be used to successfully implement a change. (Kotter & Cohen; 2002). The stages are following:
1. Establish a sense of urgency.
2. Establish a coalition.
3. Create a vision and strategy for change.
4. Communicate the vision and strategy through a combination of words, deeds, and symbols .
5. Remove obstacle.
6. Produce visible signs of progress in the form of short-term victories.
7. Stick to change process and refuse to give up when condition get tough.
8. Nurture and shape a new culture to support the improvements and innovations that are taking root.
Low tolerance to change:
Low tolerance for change is defined as the fear that one will not be able to develop new skills and behaviors that are required in a new work setting. According to Kotter & Schlesinger (1979), if an employee has a low tolerance for change, the increased ambiguity that arises as a result of having to perform their job differently would likely cause a resistance to the new way of doing things.
Employee resist change:
Employees resist change because they have to learn something new. In many cases there is not a disagreement with the benefits of the new process, but rather a fear of the unknown future and about their ability to adapt to it.
The shock of the new:
People are suspicious of anything which they perceive will upset their established routines, methods of working or conditions of employment. They do not want to lose the security of what is familiar to them. Armstrong, M. (2006), A Handbook of Human Resource Management Practice, (10th edn), Kogan Page, London, pages 25, 345, 346 Employee resistance to change is a complex issue facing management in the complex and ever-evolving organization of today. The process of change is ubiquitous, and employee resistance has been identified as a critically important contributor to the failure of many well-intend and well-conceived efforts to initiate change within the organization.
ORGANIZATIONAL ANALYSIS:
Porter's five forces analysis are the external factors impacting on a company. Porters Diamond suggest that some companies in an industry are more competitive that others. It was designed to show the attractiveness of an industry hence spotting the where competition is at its most in an industry. Tesco has the most market share in the retail industry hence uses Porter’s five forces to its advantage to deter others from taking market share from it. Fig 1 below illustrates the Porter’s five forces.
Threat of ew Entrants:
The UK retailers market is controlled by few competitors, including Tesco, Asda, and Sainsbury’s that possess a market share of 70% and small chains such as Somerfield, Waitrose with a further 10%. The more attractive an industry is the higher the percentage of new entrants. In the case of retail industry, the high profits makes it more attractive for others to enter but are deterred by the low price wars that take place within the industry. This makes it impossible for new entrant into the market as the exit barrier is high as well.
Power of Suppliers:
Every industry has got suppliers for their raw materials. The power of the suppliers in the retail industry lies with the retailers. The retailers are able to dictate low prices at which they get their raw materials making them also sell it at reasonable and profitable prices. Suppliers are not able to exert that much influence as there are other suppliers that can easily supply into the industry. The power of suppliers is influenced by the individual chains and their potential loss of business with the retailers. Therefore, Tesco being a market leader are able to negotiate better prices from suppliers than their competitors.
Power of Buyers:
The power of buyer in the retail industry lies with the buyers. This is because they have the power and resources to switch to other competitors who have better price value. This is as a result of other substitute that can offer the same value for money. There is a low switching cost that is incurred by buyers in the retail industry as they are more price sensitive than brand loyal. This has resulted in them having more power in the retail industry.
Threat of Substitutes:
Substitutes according to Porter’s five forces are the products that can be found in another industry and does provide the same sort of needs. If the consumer can easily have alternatives to their needs without compromising much, they will be willing to take it. In the case of the retail industry, substitutes to Tesco are not only the big retail giants like ASDA and Salisbury but also corner shops, market stalls, butchers among others. The easy availability of substitutes does result in price based wars making the consumer benefit from low prices.
Rivalry:
Firms in an industry compete against each other to gain competitive advantage. Price wars are often resorted to when there is low product differentiation in an industry. Because Tesco, ASDA and Salisbury do not have huge product differentiation other incentives like club cards are used to gain advantage and attract consumers. Because of the high exit barrier in the retail industry, firms would rather stay in and compete than abandon the industry if they are not doing well. The intensity of the rivalry resorted in Tesco introducing its first self checkout in its stores to improve services to consumers. To Read More Order Now
The UK Retail Industry is the largest and most competitive industry. Tesco is an international retailer and the leading supermarket in the UK. It controls 31.6% of the UK’s market share. Its main rivals are ASDA, Salisbury's and Morrison’s. In every organization there are macro and micro environmental factors that influence its decisions and operations. SWOT, PEST and Porters five forces are used to analyse the industry to gain competitive advantage. Tesco differentiated itself by introducing Self checkout in 2003 in its Dereham, Norfolk store. The success of the self checkout trial in Dereham store led to its implementation in other Tesco outlets. This work seeks to explore the self checkout system in Tesco and its impacts on the organization. A manager at a Tesco store in Essex was interviewed on the self checkout system to determine the reasons for the change, how it took place and the benefits to the organization. The manager purports that the self checkout has added value to the organization. It has enhanced the customer shopping experience by speeding up processes. The self checkout has helped to reduce queues at the checkouts and also boosted sales in the UK. In the UK alone, 25% of Tesco transactions can be accounted for by the self checkout. Inspite of the few challenges facing the self checkout which include minors using the self checkout to purchase alcohol, the self checkout has been successful to the organization.
UK RETAIL INDUSTRY:
The retail industry in the UK is the most competitive and fast growing one. By the end of 2008, 11% of all VAT registered businesses in the UK were retailers, with the total number currently at 180,875. UK retail sector generate almost 8% of the GDP, accounting for one-fifth of the UK economy. Retail industry employs 11% of the total UK workforce. Total combine sales of this sector in UK were £265 billion in 2007, larger than the combined economies of Denmark and Portugal.
TESCO:
Tesco is the UK’s largest retail chain and has outlet in every post code of the country with 2,115 stores and 280,000 staff. Internationally it is the third biggest chain in the world, employing 440,000 people in 4,000 stores across 14 countries. Tesco operates its retail outlets business operation in six formats namely; Express (961 stores) Extra (177 stores), Metro (174 stores), Superstore (448 stores), Home plus (10 stores) and One Shop (512 stores). Tesco.com is the online arm of the business operations to facilitate the delivery of products, mainly grocery, to customer’s door step. Tesco direct is online shopping mall for non-food items.
Tesco’s Competitors:
Tesco overtook Salisbury's as biggest UK supermarket 14 years ago. Tesco’s main operation is sales of grocery and household appliances. Four major retail supermarket chains in UK have following market share as of August 2008.
SELF CHECK OUT MACHINES:
The focus of this assignment is to investigate the self checkout machine in Tesco. This introduction of the self checkout was a strategic change. It was first introduced in Dereham, Norfolk in 2003. The purpose of the self checkout was to accelerate the check out processes and reduce labour cost associated with point of sales. This work will further explore the triggers of the change, the process involved and the benefits to the organisation. A diagram of the self check out can be seen in the appendix.
CHANGE MANAGEMENT:
Change management is the study of why organisations need to change, how change affects, how to response to changes in the environment. All stakeholders of change play a full role in the successful implementation of changemanagement. Routines associated with effective change management are: 1. Establish a clear change management strategy at top level and communicate this shared vision to rest of the organisation.
2. Communication is the most effective key to successful implementation.
3. Managers often resist the idea of participation to reach a decision during early involvement. There are two important benefits for allowing participation to take place as early as possible in the change process. Without this even if attempts are made to consult or to inform, people will not develop a sense of ‘ownership’ of the project or commitment.
4. Creation of an open climate to express individual anxiety and concerns and the use of positive effects of ideas and knowledge held within the organisation.
5. With major change programmes it is especially important to set clear targets for which people can aim.
6. Successful organisational change depends on viewing training far more as an investment in developing not only specific skills but also in creating an alternative type of organisation.
TYPES OF ORGANIZATIONAL CHANGE:
There are many different ways of categorizing organisational change, Understanding the nature of the change an organization wish to undertake is important in determining an appropriate strategy. The following are some types of organizational changes:
Incremental change:
Incremental change may be major and highly significant change but is gradual and repetitive. Incremental change may stop employee resistance.
Transformational change:
Transformational change usually helps an organization regain strategic alignment with its environment. If an organization loses touch with its shifting marketplace, more fundamental transformational change may be needed for survival.
Strategic change:
Strategic change deals with broad, long term and organization-wide issues. The capacity of the firm to identify and understand the competitive forces in play and how they change over time, linked to the competence of a business to mobilize and manage the resources necessary for the chosen competitive response through time. (Pettigrew & Whipp; 1991).
TRIGGERS OF CHANGE:
Internal Triggers:
The triggers for change in a rational organisation may be the continuing search for efficiency. Alternatively they might arise as a result of:
• Ratio monitoring as a result of external bench marking exercises
• Tensions that exist especially at senior levels within the organisation
• Where employee – management conflicts is rife Within the organisation, the systems approach emphasis the importance of the inter relationships between the key internal sub systems, namely,
• Tasks
• Technology
• People
• Structure
• Management
External triggers:
Change is often necessary because of external developments. It is clear that there are a number of external factors that organisations must come to terms with. These include the implication of a global market place, a wider recognition of environmental issues, health awareness and demographic change (Paton & McCalman; 2007). The far or general environment of an organisation can be usually characterized under a ‘PESTLE’ framework:
• Political implications of a new government.
• Economic changes such as exchange rates, level of macro economic activity and global competition.
• Social or demographic changes such as levels of education and changing values/ expectations.
• Technological changes such as inventions and developments, in both products and process.
• Legal implications of likely government policies.
• Environmental implications of legislation, agreements of widely held values.
Force Field Model:
In accordance with Lewin’s Force field model this equilibrium must be disturbed in a planned way in order to bring about change. This is done by strengthening the forces to change or weakening the forces against change. Lewin postulates a model that consists of the following:
• Unfreeze – the process that awakens a system to the need for change
• Change -- developing new responses based on new information.
• Refreeze – stabilizing the change by introducing the new responses into the personalities of those concerned.
Continuous Change Process Model:
A model of managing change is called the continuous change process model. This model states that top leaders are influential in articulating the company’s vision and setting the agenda for major change. The changes which are crucial in the realization of corporate objective are to discuss with employees the alternatives available and what the outcome is likely to be. (Bhuiyan et al, 2006; & Kotter; 1995.
Emergent Approach:
Management plays an important part in managing change. According to Tsoukas & Chia, (2002), “This view is encapsulated in the ‘emergent approach’ to managing change”. It is agreed that there is scope for initiating and implementing change from the bottom up rather than from top down. (Sminia & Van Nistelrooij; 2006).
Kotter’s Model:
In Kotter’s model of change process, there are eight stages that can be used to successfully implement a change. (Kotter & Cohen; 2002). The stages are following:
1. Establish a sense of urgency.
2. Establish a coalition.
3. Create a vision and strategy for change.
4. Communicate the vision and strategy through a combination of words, deeds, and symbols .
5. Remove obstacle.
6. Produce visible signs of progress in the form of short-term victories.
7. Stick to change process and refuse to give up when condition get tough.
8. Nurture and shape a new culture to support the improvements and innovations that are taking root.
Low tolerance to change:
Low tolerance for change is defined as the fear that one will not be able to develop new skills and behaviors that are required in a new work setting. According to Kotter & Schlesinger (1979), if an employee has a low tolerance for change, the increased ambiguity that arises as a result of having to perform their job differently would likely cause a resistance to the new way of doing things.
Employee resist change:
Employees resist change because they have to learn something new. In many cases there is not a disagreement with the benefits of the new process, but rather a fear of the unknown future and about their ability to adapt to it.
The shock of the new:
People are suspicious of anything which they perceive will upset their established routines, methods of working or conditions of employment. They do not want to lose the security of what is familiar to them. Armstrong, M. (2006), A Handbook of Human Resource Management Practice, (10th edn), Kogan Page, London, pages 25, 345, 346 Employee resistance to change is a complex issue facing management in the complex and ever-evolving organization of today. The process of change is ubiquitous, and employee resistance has been identified as a critically important contributor to the failure of many well-intend and well-conceived efforts to initiate change within the organization.
ORGANIZATIONAL ANALYSIS:
Porter's five forces analysis are the external factors impacting on a company. Porters Diamond suggest that some companies in an industry are more competitive that others. It was designed to show the attractiveness of an industry hence spotting the where competition is at its most in an industry. Tesco has the most market share in the retail industry hence uses Porter’s five forces to its advantage to deter others from taking market share from it. Fig 1 below illustrates the Porter’s five forces.
Threat of ew Entrants:
The UK retailers market is controlled by few competitors, including Tesco, Asda, and Sainsbury’s that possess a market share of 70% and small chains such as Somerfield, Waitrose with a further 10%. The more attractive an industry is the higher the percentage of new entrants. In the case of retail industry, the high profits makes it more attractive for others to enter but are deterred by the low price wars that take place within the industry. This makes it impossible for new entrant into the market as the exit barrier is high as well.
Power of Suppliers:
Every industry has got suppliers for their raw materials. The power of the suppliers in the retail industry lies with the retailers. The retailers are able to dictate low prices at which they get their raw materials making them also sell it at reasonable and profitable prices. Suppliers are not able to exert that much influence as there are other suppliers that can easily supply into the industry. The power of suppliers is influenced by the individual chains and their potential loss of business with the retailers. Therefore, Tesco being a market leader are able to negotiate better prices from suppliers than their competitors.
Power of Buyers:
The power of buyer in the retail industry lies with the buyers. This is because they have the power and resources to switch to other competitors who have better price value. This is as a result of other substitute that can offer the same value for money. There is a low switching cost that is incurred by buyers in the retail industry as they are more price sensitive than brand loyal. This has resulted in them having more power in the retail industry.
Threat of Substitutes:
Substitutes according to Porter’s five forces are the products that can be found in another industry and does provide the same sort of needs. If the consumer can easily have alternatives to their needs without compromising much, they will be willing to take it. In the case of the retail industry, substitutes to Tesco are not only the big retail giants like ASDA and Salisbury but also corner shops, market stalls, butchers among others. The easy availability of substitutes does result in price based wars making the consumer benefit from low prices.
Rivalry:
Firms in an industry compete against each other to gain competitive advantage. Price wars are often resorted to when there is low product differentiation in an industry. Because Tesco, ASDA and Salisbury do not have huge product differentiation other incentives like club cards are used to gain advantage and attract consumers. Because of the high exit barrier in the retail industry, firms would rather stay in and compete than abandon the industry if they are not doing well. The intensity of the rivalry resorted in Tesco introducing its first self checkout in its stores to improve services to consumers. To Read More Order Now
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