Introduction
This essay critically analyses and evaluates the current management practices at Tesco, a leading UK supermarket chain, with a focus on how these practices contribute to the organisation’s success. The discussion is structured into two key tasks: firstly, an examination of how management theories, concepts, and practices add value to Tesco, supported by evidence of their contributions to the company’s achievements; secondly, an evaluation of how Tesco’s management adapts to the dynamics of the global business environment across global, national, and local levels to create value. The purpose of this analysis is to identify strengths in Tesco’s management approaches and recommend potential improvements for sustained success. Drawing on academic literature, case study materials, and independent research, this essay aims to provide a balanced perspective on Tesco’s operations within the broader field of management studies.
Task 1: Key Management Theories, Concepts, and Practices at Tesco
Tesco’s management practices are deeply rooted in established theories and concepts that have significantly contributed to its position as one of the UK’s largest retailers. One prominent framework evident in Tesco’s approach is scientific management, pioneered by Frederick Taylor, which emphasises efficiency and productivity through task optimisation (Taylor, 1911). Tesco applies this theory in its supply chain management, using advanced technology such as automated warehousing systems to streamline operations. For instance, the implementation of data-driven inventory management has reduced stock wastage and improved delivery times, directly enhancing customer satisfaction and operational efficiency (Fernie and Sparks, 2014). This focus on efficiency has arguably been a cornerstone of Tesco’s ability to maintain low pricing strategies, a key competitive advantage in the retail sector.
Furthermore, Tesco’s adoption of contingency theory, which suggests that management practices must adapt to specific environmental conditions (Fiedler, 1964), is evident in its tailored approaches to different markets. The company customises store formats—ranging from large hypermarkets to small convenience stores—based on local consumer needs and competition levels. This adaptability has allowed Tesco to penetrate diverse demographics, contributing to sustained revenue growth, as seen in its reported £61.5 billion in group sales for the 2022/23 financial year (Tesco PLC, 2023). Such evidence highlights how contingency-based strategies add value by ensuring relevance in varying contexts.
Another significant concept is stakeholder theory, which prioritises balancing the interests of various stakeholders such as customers, employees, and shareholders (Freeman, 1984). Tesco’s ‘Clubcard’ loyalty scheme, launched in 1995, exemplifies this approach by rewarding customers with personalised offers while simultaneously gathering valuable consumer data for strategic decision-making. This initiative has not only fostered customer loyalty—evidenced by millions of active users—but also provided Tesco with insights to refine its marketing strategies, thereby enhancing profitability (Humby et al., 2008). However, while these practices have driven success, their long-term sustainability remains a concern, particularly in balancing stakeholder demands with cost pressures.
In summary, Tesco’s integration of scientific management, contingency theory, and stakeholder theory has played a pivotal role in its achievements. These practices have bolstered efficiency, adaptability, and customer engagement, as demonstrated by financial performance and market presence. Nevertheless, a critical perspective reveals potential limitations, such as over-reliance on technology and data, which may pose risks if consumer privacy concerns escalate.
Task 2: Management as a Value-Adding Universal Activity at Tesco
The global business environment is characterised by rapid change, driven by factors such as technological advancements, economic fluctuations, and evolving consumer expectations. Tesco’s management has demonstrated a capacity to adapt strategies across global, national, and local levels, thereby adding value to the organisation. At a global level, Tesco operates in multiple countries, including Hungary, Thailand, and Ireland, necessitating a nuanced approach to international management. The company employs a transnational strategy, combining global integration with local responsiveness (Bartlett and Ghoshal, 1989). For example, in Asian markets, Tesco has adapted its product offerings to include regional delicacies, aligning with cultural preferences while maintaining core operational standards. This dual focus has enabled Tesco to compete effectively with local retailers, contributing to international revenue streams, although challenges like currency fluctuations and regulatory differences persist (Tesco PLC, 2023).
At a national level, Tesco navigates the UK’s competitive retail landscape, dominated by rivals such as Sainsbury’s and Aldi. Management has responded by prioritising digital transformation, notably through the expansion of online shopping platforms. The COVID-19 pandemic accelerated this shift, with Tesco reporting a 77% increase in online sales during 2020 (Tesco PLC, 2021). This strategic pivot not only addressed immediate consumer needs for contactless shopping but also positioned Tesco as a leader in e-commerce within the retail sector. However, sustaining this growth requires continuous investment in cybersecurity and logistics, areas where lapses could undermine customer trust.
Locally, Tesco’s management adds value by fostering community engagement and sustainability initiatives. The ‘Bags of Help’ scheme, funded by carrier bag charges, supports local projects across the UK, enhancing brand reputation and customer goodwill (Tesco PLC, 2023). Additionally, Tesco’s commitment to reducing food waste through partnerships with charities like FareShare demonstrates responsiveness to local social issues. While these efforts strengthen community ties, their impact on profitability is less direct, raising questions about resource allocation in a cost-competitive industry.
Critically, while Tesco’s multi-level strategies generally add value, their effectiveness varies. Global expansion exposes the company to geopolitical risks, as seen in its withdrawal from China in 2020 due to unprofitable operations (Tesco PLC, 2021). Nationally, intense competition necessitates constant innovation, while local initiatives, though beneficial for branding, may not always yield immediate financial returns. Therefore, Tesco’s management must prioritise strategic alignment across these levels to optimise value creation.
Conclusion
This essay has critically evaluated Tesco’s current management practices, highlighting their contributions to organisational success through the lens of key theories and adaptation to the global business environment. Task 1 demonstrated how scientific management, contingency theory, and stakeholder theory underpin Tesco’s operational efficiency, market adaptability, and customer engagement, evidenced by financial performance and innovative initiatives like the Clubcard scheme. Task 2 explored how Tesco’s management adds value by responding to global, national, and local dynamics, though challenges such as geopolitical risks and resource allocation persist. The implications of this analysis suggest that while Tesco’s practices are broadly effective, improvements are needed in balancing short-term gains with long-term sustainability. Recommendations for future success include greater investment in cybersecurity for digital platforms and a more strategic focus on high-growth international markets. Further research into the long-term impact of local initiatives could also guide resource prioritisation, ensuring Tesco maintains its competitive edge in a dynamic retail landscape.
References
- Bartlett, C. A. and Ghoshal, S. (1989) Managing Across Borders: The Transnational Solution. Harvard Business School Press.
- Fernie, J. and Sparks, L. (2014) Logistics and Retail Management: Emerging Issues and New Challenges in the Retail Supply Chain. Kogan Page.
- Fiedler, F. E. (1964) A Theory of Leadership Effectiveness. McGraw-Hill.
- Freeman, R. E. (1984) Strategic Management: A Stakeholder Approach. Cambridge University Press.
- Humby, C., Hunt, T. and Phillips, T. (2008) Scoring Points: How Tesco Continues to Win Customer Loyalty. Kogan Page.
- Taylor, F. W. (1911) The Principles of Scientific Management. Harper & Brothers.
- Tesco PLC (2021) Annual Report and Financial Statements 2021. Tesco PLC.
- Tesco PLC (2023) Annual Report and Financial Statements 2023. Tesco PLC.
