Introduction
The dynamic and ever-changing business environment requires organizations to implement appropriate changes that conform to the prevailing environment. The managers are responsible for the implementation of changes and adopting an appropriate culture in companies to cope with the changes in the business environment. Notably, there is a high level of competition in the retail store sector as many companies enter this market segment while the existing companies engage in expansion programs to gain a competitive edge in the market. As a result, organizations in this market segment should ensure that they develop an effective business strategy to ensure that they prosper in both local and international markets. Currently, Tesco is experiencing a high level of competition in the retail industry. The report provides a comprehensive diagnosis of an organization in order to develop the necessary strategies that can enable it to become competitive in the business environment. The reports will provide an overview of the company, its diagnosis, Kotter's 8 step approach, and conclusion.
Overview of the Company
Tesco Plc is a UK multinational general merchandise and groceries company headquartered in Welwyn Garden, Hertfordshire in the UK. The company is the third largest retailer in the globe in terms of gross revenues. Tesco operates several shops across the world and it has the highest market share in the UK grocery market (Tesco, 2018). The company was founded by Jack Cohen in 1919. Initially, Tesco operated as a group of market stalls in the UK. Since its establishment, the company has experienced a rapid growth in both the domestic and foreign market and remains as one of the leading retailers in the global market. The company has a diversified product portfolio that it sells to its customers and includes books, electronics, clothing, toys, furniture, software, petrol, internet services, telecoms, and financial services. Currently, the company employs approximately 476,000 employees and has annual revenue of £ 55.9 billion (Tesco, 2018). Although the company continues to make a huge profit, it faces some significant challenges due to the dynamic business environment. The company needs to regularly evaluate its internal and external environment to determine the appropriate strategies that it can implement to improve its competitiveness in the global retail sector.
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Organizational Diagnosis
Organizational diagnosis examines the activities and business process that can either hinder or facilitate its operation in the business environment. The organizational diagnosis is important since it informs the managers of the necessary change or changes that should be implemented to ensure the competitiveness of companies ( Cameron & Green, 2015) . The diagnosis of an organization should consider a range of factors such as its operation, business environment, competencies, and key resources.
One of the key challenges evident in Tesco operation is its inability to enact appropriate strategies to cope with the growing need of online business. It is evident that Tesco relies primarily on its physical stores. However, in the current business environment, online shopping is preferred by many customers in the retail sector. Companies that include Amazon have entered the online retail store segment and offers direct competition to Tesco. Also, the retail store such as Walmart has started a comprehensive plan to expand its online store across the globe. The effort of Walmart to operate online retail stores has started to impact positively on its financial performance. In essence, the revenue generated by Walmart retail stores has been increasing over the years since its implementation.
Tesco has tried to operate an online retail store without success. The failure of the company to come up with an effective online store can hinder its performance in the market and reduce its competitiveness. The current trend in the global retail business environment shows the increased attention and focus of companies in online marketing ( Cameron & Green, 2015) . The online retail store market segment is rapidly expanding and this provides an opportunity for many companies in the retail market segment to increase their performance.
It has also been noted that there has been declining sales revenue of Tesco over the years. The decline in sales revenue of the company is due to the increase in the number of firms entering the retail market segments. As many companies enter the retail industry, Tesco continues to lose its market share. Furthermore, many consumers shift their loyalty to firms with online market presence and this affects the business of Tesco since it does not have an effective online market presence.
Another notable element that is apparent in the Tesco business is the ever increasing cost of operation. It is noted that physical stores are normally associated with a high cost of operation that reduces the profit margin of the firms (Tesco, 2018). The company reliance on physical stores increases its cost of operation and this eventually leads to a decline in its profits and sales revenues. This implies that the implementation of an appropriate online retail store can enable the company to reduce the cost of operation and improves its profit margin. In essence, operating physical stores is associated with a high cost for the rental space, a high number of employees and other transactional costs.
There is a high potential for online retail growth in the retail industry. The overall percentage of online retail sales stands at approximately 9 % of the sales in the United States and 17 % of the total sales in the UK (Tesco, 2018). However, with sustained growth in the retail market segment, it is estimated that the percentage growth of retail sales will significantly increase. The graph below shows the forecast for the growth in online retail revenues.
Figure 1: Graph showing the future trend in online retail sales. Source: Rao et al., (2018).
The statistics as depicted by the graph above provide information re\garding the growth in the e-commerce retail sales on the global market as forecasted between 2014 and 2021. During 2017, the sales generated from the online retail were approximately US $ 2.3 trillion globally. The retail revenue from the online retail stores is expected to grow to about US $ 4.88 trillion by 2021 ( Rao et al., 2018) . It is also indicated that the top three online retail stores revenue was estimated at the US $ 100 billion in 2017. Ideally, online business is becoming popular in the global business environment where its usage varies based on the region.
The diagnosis of Tesco Plc shows that there is a need to implement some strategies to make it counter and comply with the changes in the business environment. Evidently, the online business division of Tesco has failed to meet its objectives and thus the company should embark on the strategies to change its online business model and make it become competitive in the market. The entry of many firms in the retail sector compromises the activities of the company and this requires Tesco to develop appropriate strategies to cope with the intense level of competition.
Kotter’s 8 Step Approach
Implementing changes in organizations requires firms to follow appropriate strategies to boost their performance in the business environment. It is evident that change is required in the online business division of Tesco to make it competitive and improves its sales and profits. In order to ensure the successful implementation of the change, the organization should use the appropriate strategic tool and mode. Kotter's 8 step model is one of the effective strategic management tools that managers often use when implementing change in their organization ( Small et al., 2016) . As a result, it is appropriate for the management of Tesco to consider using Kotter’s 8 step approach when introducing new changes in its online business strategy.
The Kotter’s 8 step model is a strategic tool that managers use to implement certain changes in their business models such as the structure and culture of an organization. The Kotter's 8 step model follows 8 steps when implementing changes in the organizations. The 8 steps in the Kotter's change model include creating a sense of emergency, creating a guiding coalition, creating a vision for change, communicating the vision, removing obstacles, creating short-term wins, consolidating change and anchor changes ( Small et al., 2016) . Each of the steps in the Kotter’s 8 step model is associated with a different set of activities and processes.
Creating A sense of Emergency
Creation of a sense of emergency is the first step in Kotter’s 8 step change model. It is one of the important steps when introducing new changes in companies. The step enables employees to become aware of the urgency and need of a given change. As a result, it makes employees consider that the change is desirable and should be supported. In this stage, the managers are required to convince the employees on the need to accept the change.
The management of Tesco should provide the employees with data that indicates the potential opportunity in the online retail market avenue. Besides, the management should prove to the employees of Tesco that the continued decline in sales revenue of the company is attributed to its failure to implement appropriate online sales platform to support its operation. As a result, failure to introduce an online sales platform can compromise the operation of the company and leads to low profits, losses or collapse of the company. This can eventually lead the loss of employment to many employees. In order to avoid such consequences, it is a must for the company to take immediate and urgent measures to help improve the performance of the company.
Creating a Guiding Coalition
The creation of a guiding coalition is concerned with the formation of a team that can help facilitate the implementation of the required change in an organization. The guiding coalition team should encourage all the employees to actively participate in the change management process and ensure that there are cooperation and coordination among all the stakeholders involved. In establishing a guiding coalition, the management of Tesco should consider employees from a different department and with varying professional backgrounds. The guiding coalition team should be headed by a person from the human resource departments who should design appropriate culture to help encourage the change. Also, the individuals from the online sales department and information technology should be included in the team to ensure that they develop a strategy that can help support the design and development of online marketing platform.
Creating a Vision for Change
A vision for change is necessary when introducing new changes in companies. The vision for change can include the objectives that should be accomplished when the company implements the specified change. The establishment of a clear vision makes it easy for all people to understand the objectives that a company is trying to accomplish by implementing the changes ( Small et al., 2016) . Also, the ideas of the employees can be incorporated into the vision statement to enable them to accept it. In essence, the linkage between the employee’s vision and strategies can prove important towards achieving the desired goals. In the Tesco Plc case, the vision for the change is to improve sales revenues and profitability of the company. The online retail market will enable Tesco to increase its online sales revenue and thus leads to an increase in the profit margin. This can help the company experience sustainable growth in the market and improve its competitive edge.
Communicating the Vision
Communicating the vision is an important step in the Kotter's 8 steps model as it helps create awareness of the change among employees and other stakeholders. Through effective communication regarding a change, organizations can attract the attention of the employees to support such initiatives and ensures its success in the global business environment ( Cameron & Green, 2015) . In the implementation of a change in the Tesco online business model, it is important that the coalition team and managers talk about the change and its vision to employees on a regular basis. This can make them get a sense that the change is a must and thus engage in the initiatives that can support the required changes.
Removing the Obstacles
The other step in the Kotter’s 8 step business model is concerned with the removal of the obstacles. Before the acceptance of a change within an organization, it is critical to identify and remove or change the obstacles that might hinder the efficient implementation of the new changes. A regular dialogue with the employees and other relevant stakeholders such as customers can help identify some potential obstacles to the desired change and develop strategies to remove or change them. In Tesco Plc, the major obstacles can be the resistance to change. Some of the employees might develop a perception that such changes can compromise their job and thus resits any attempts to enact the changes. As a result, the management and the guiding coalition should ensure to talk with employees and ensure that they accept the changes.
Creating Short-Term Wins
The creation of short-term wins is involved with the developing if the short-term goals that should be a change during the implementation of the change. The short-term objectives can enable the company to determine if it is achieving its established mission ( Cameron & Green, 2015) . Achieving the short-term wins can help motivate the employees to support the change. For example, Tesco can establish short-term objectives such as monthly online sales revenue targets. In this case, the managers should assess the monthly online sales to determine if it accomplishes the desired target.
Consolidate the Change
The consolidation of the change is a necessary step for the managers of organizations in their attempt to ensure that the changes are successful. It should be noted that change is a slow growing process that managers should incorporate as part of the organizational culture. Although quick wins can be achieved by firms, it should not be used as a measure of success by the company. In essence, quick wins are regarding as the beginning of the of the long-term change process. Tesco should consolidate the change process by ensuring by looking at areas that can enable it to improve its performance. It should ensure persistence in its sales performance to enable it to achieve its long-term objective of an increase in online sales revenues.
Anchor the Changes
The last step in the Kotter’s model is concerned with anchoring the implemented changes. It is argued that a change can become part of the organizational culture when it becomes a core strategy. In this stage, an organization is required to implement appropriate strategies that can ensure that the change is maintained at all times and remain sustainable. Tesco plc can anchor the change by aligning its organizational culture to conform to its core strategy. This can ensure that the online retail store implemented by Tesco is supported by all employees and continues to play a critical role in improving its sales revenue and profitability.
Conclusion
The Tesco online basis is on a crisis due to its failure to meet the objectives of the company. The management of the company has been reluctant towards implementing strategies that can help improve its online presence. As a result, it is appropriate for the company to consider developing appropriate strategies to support its online business. Currently, an online market segment is growing at a rapid rate while sales generated from the physical stores are in constant decline. This trend can compromise the business of Tesco and thus it is necessary for it to initiate a change management process to support online business. By using Kotter's 8 step business model, Tesco can succesful implement an online business model to suports its operation.
References
Cameron, E., & Green, M. (2015). Making sense of change management: A complete guide to the models, tools, and techniques of organizational change . Kogan Page Publishers.
Rao, S., Lee, K. B., Connelly, B., & Iyengar, D. (2018). Return time leniency in online retail: a signaling theory perspective on buying outcomes. Decision Sciences , 49 (2), 275-305.
Rosemann, M., & vom Brocke, J. (2015). The six core elements of business process management. In Handbook on business process management 1 (pp. 105-122). Springer, Berlin, Heidelberg.
Small, A., Gist, D., Souza, D., Dalton, J., Magny-Normilus, C., & David, D. (2016). Using Kotter's Change Model for Implementing Bedside Handoff: A Quality Improvement Project. Journal of nursing care quality , 31 (4), 304-309.
Tesco (2018). Tesco Retail stores official website page. Retrieved from https://www.tescoplc.com/ on October 16, 2018
