Tesco Company Culture

TESCO is a company that was founded in 1919 by JACK COHEN. It is presented usually as a big international retailer which is based essentially in Great Britain but also in China, Republic Czech, Hungary, Japan … It means this firm is as well in Europe, Asia and the United States. It represents 3 956 stores and over 440 000 employees worldwide (Tesco.com, 2009). In the context of globalization it is therefore appeared vital for TESCO to develop a corporate culture and an organization for the various stores located in different countries. But how the company can have good performance as we know it is established in different countries and therefore different cultures? To answer at this question we will study in the first part of this essay, the TESCO’s culture with the theory of Schein, “Surface manifestations, values and basic assumptions” and the Johnson’s theory “The cultural web”. First we will use Schein’s theory using the “surface manifestation” especially with the “mottoes”, “norms and “heroes”.

The fourth point of the theory of Schein we will tackle in this analysis is the “organizational values”. To show how the culture of the company Tesco is important we will use in fifth point another theory: the theory “cultural web” which is a theory of Johnson. In this theory we can use Rituals and routines. In the second part we will analyze Tesco through another issue. This issue is: But how the culture of Tesco, makes this company an important and competitive retailer? Indeed this company as recently made a new record. It made up by 8.8 per cent to £3.1bn regarding retail. Tesco’s sales rose 13.5 per cent to £59.4bn for the year (J. Thompson, 2009). Throughout its history, Tesco has made incredible figures since 1998 to 2009. Indeed Tesco has a turnover of £ 16.452 million in 1998 and it made £ 54.300 million in 2009. This represents an increase of 230.05%. Its profits increase also. It made £ 532 million in 1998 while in 2009 the company made £ 3.090 million. This represents an increase of 480.83%. We can analyze the Basic earnings per share. In 1998 it was £ 8.12 and in 2009 they were £ 28.92. This represents an increase of 256.16%. (Tesco.com, 2009 and D-E. Yoruk and S.Radosevic, 2000)

To answer at this question we will study the TESCO’s culture with the theory of Hellriegel D and J Slocum with their explanation about “ Dimensions of organizational culture and their Definitions”.

First Section

In this first section we will expose the Tesco culture with the theory of Schein, “Surface manifestations, values and basic assumptions” and the Johnson’s theory “The cultural web”.

Schein’s theory: Surface manifestation

Mottoes

In the first paragraph we are going to talk about Tesco’s motto. We can see everywhere on the website of TESCO this motto: “EVERY LITTLE HELPS” (Tesco PLC, 2009). Here is the sentence we can be heard several times when we go to TESCO. This sentence is qualified motto by Schein because according to his definition “mottoes are maxims adopted as rules of conduct. Unlike slogans, mottoes are rarely, if ever, changed” (Schein E.H.,1992). In undertaking this company, this phrase is used as well for employees as customers of the brand. Indeed, according to the site of the great chain of distribution this motto means that in this enterprise you can find “plenty of support, encouragement and opportunities to grow” (Tesco.com, 2009). To be more explicit, by this sentence the company wants to convey a message to all its employees and all those customers. This means that each employee of the firm will do its best to help every person who meets and who needs help.

For example, the British newspaper THE INDEPENDENT explains that Tesco has developed a new strategy to help its clients to overcome the global economic crisis. Tesco set up a “discount strategy to consumers struggling with the effects of the credit crunch”. It creates the “pay day” strategy (Evans S., 2009). In fact, it tries to simplify the lives of its customers and of its employees. In conclusion, TESCO through its motto is trying to circulate an idea; a habit and a behavior to address face each person; each employee is a sort of flagship of the enterprise; one person is enough to give a bad image, in order that many people think that TESCO is a bad company, all of this is due because of the word of mouth. TESCO has created a corporate culture in order that does not happen with another surface manifestation.

Norms

Secondly in this second paragraph we talk about the norms of TESCO. In fact Mottoes have concerned the way in which employees should act within the company in relation to clients and colleagues. But the company also uses a strategy to boost its employees. In this case the Schein’s theory calls this a Norm. According to Schein “Norms are expected modes of behaviour that are accepted as the firm’s ways of doing things, thereby providing guidance for employee behaviour”. In a Case Study published in “The Times 100” and untitled “Recruitment and selection at TESCO” Tesco uses another strategy what it calls “talent planning” (The Times 100, 2009). This allows employees to excel in the enterprise; to reach the goals that each employee was set at the beginning of the year. And at the end of the year they have an “appraisal” (The Times 100, 2009) to see if they achieved. Tesco has implemented this strategy to develop the “skills and competencies” (The Times 100, 2009) of its employees. Indeed, in this planning they must complete several points: “for employees, they have to set out their ambitions, targets and training goals.

For managers, they have to identify technical skills, competencies and behavior needed for the next step, help employees to develop a training plan and new targets.” (The Times 100, 2009). In fact, this planning is used to identify in some way the skills and behaviors of each employee. Then Tesco can classify them. According to the case study, it requires that each person has the right skills at each level. “There are six work levels within the organization. This gives a clear structure for managing and controlling the organization. That describes the key skills and behaviour for each job at every level in the company” (The Times 100, 2009). To conclude we can see that the firm is also trying to help employees. It helps to develop and enable them to evolve in TESCO. But the company through this strategy protected itself and allows it to have the best performance. Thanks to the strategy TESCO is now established in several different countries.

Heroes

Third, Schein’s theory talks about Heroes. For Schein heroes “are characters, living or dead who personify the values and belief” (Schein E.H, 1992) of one business. Tesco also needs to have role models, people who somehow show the way. In others words, show these people as examples for all employees. On Tesco’s website we can found several videos that show managers who are happy and have success within Tesco. For example there is Stewart who is the director for store systems. He has BSc chemistry and he works in Tesco. In this video he shares his experiences in this company, such as having to change his position several times, having different work. In fact in this video, he praised the firm. It really shows how the culture and values of TESCO have made him a good manager. And in any online videos show the same (Tesco.com, 2009). To conclude heroes of the enterprise are here to show; to prove and to demonstrate that values and corporate cultures of TESCO is good. The company encourages employees to follow the example of each hero. In fact the company put the videos online to be competitive on the retail market.

Schein’s theory: Organization values

In this paragraph we will analyze the Tesco’s organization Values. According to the Schein’s theory which is ‘surface manifestation, values and basic assumptions’ (Schein E.H.,1992) organizational values are the values that allow a company to distinguish itself from another. The main purpose of TESCO is to secure the loyalty of customers to its brand, as all major retailers. We can see that on the website of TESCO, it has established a culture: first “No-one tries harder for customers”, that is employees must “understand customers” or they have to “be first to meet their needs” (Tesco.com, 2009). Then they need to “treat people as we like to be treated” (Tesco.com, 2009). For example “listen, support and say thank you” (Tesco.com, 2009). This also allows each employee to be happy, to succeed in their job. Just love their job (Tesco.com, 2009).The previous point concerns the persons to other persons. What’s about the international strategy of TESCO? According to TESCO’s website (Tesco.com, 2009); its “strategy is based on six elements”. This Strategy is made to succeed abroad and to provide a common cultural base for all stores. First all stores have to “be flexible because each market is unique” (Tesco.com, 2009). Indeed the employees must be like this because each person is different and their needs too.

Each employee must adapt to each situation. They must know how to control all possible situations. Then they have to “act local because local customers, local cultures, local supply chains and local regulations require a tailored offer delivered by local staff” (Tesco.com, 2009). Third they must “maintain focus because we understand that customers want great service, great choice and great value” (Tesco.com, 2009). Indeed it is possible that an employee have a lack of concentration at the end of the day. Again this could harm the firm. Fourth they have to “use multi-formats because no single format can reach the whole of the market” (Tesco.com, 2009). Fifth they must “develop capability because they make sure they have capability through people, processes and systems” (Tesco.com, 2009). That mean if it decides to invest in a project, first it checks whether it has the capacity to do it. If it’s not the case, it trains people or it buys a new machine for example before it starts to invest. Finally they must “build brands because brands enable the building of important lasting relationships with customers” (Tesco.com, 2009). In conclusion all these values enable the firm Tesco to insure customer’s satisfaction. It also allows the business to develop loyalty of its customers and it allows the company to be unique.

Johnson’s theory: Rituals and routines

In this last part we will analyze the rituals of Tesco. In the Johnson’s theory “the cultural web” we can compare the method of entry in a foreign country to a ritual. Indeed the theory of Johnson published in the Strategic Management Journal untitled “Rethinking Incrementalism” defined a ritual as “the daily behaviour and actions of people. This determines what is expected to happen in given situations” (Johnson G., 1988). Here is not a daily action, but how Tesco did to invest abroad and it does always in the same way. It means how the business is done to settle in a foreign country. In the case study of Tesco published on the website Emeraldinsight and untitled “Retail multinational learning” we can see how it did it (Palmer M., 2005). Indeed, whenever the company wants to establish abroad it does not directly. First it goes through the acquisition of another firm or it goes through a partnership with another company.

For example in 2003, in Japan Tesco did an acquisition of C TWO. This allows Tesco to know the culture of the country. Indeed the company is prepared to spend millions of dollars to settle in the country and to know the culture of a local company. In fact it allows Tesco to skip a step. With skipping this step, the company won a lot of time and money. More through an acquisition it would give a strong image to potential customers. Because when a company buys another, it shows that the buyer company has a good financial health. In conclusion we can see that the acquisition’s culture of Tesco can be assimilated to the Johnson’s theory. The way of the enterprise of settling is similar as ritual, it did always in the same way.

|Summary of acquisitions | |Year |Country |Method of entry | |1979 |Ireland |Acquisition of The Three Guys chain | |1992 |France |Acquisition of Catteau | |1994 |Hungary |Acquisition of 51 per cent of Global | |1994 |Czech Republic/Slovakia |Acquisition of K-Mart business | |1998 |Thailand |Acquisition of 75 per cent share of Lotus | |2000 |Taiwan |Acquisition of one Makro store | |2002 |Poland |Acquisition of HIT hypermarket from Gruppe | |2003 |Japan |Acquisition of the C TWO | |2003 |Turkey |Acquisition of the chain Kipa |

First section conclusion

As a conclusion, we can see that Tesco is completely in line with the five points of the theories of Schein and Johnson. The culture of the firm is to help each customer and each person who works for the group. The enterprise helps employees become more active in their work, to evolve, to promotions, to have an attitude to customers. It puts employees in good conditions to love their work and they enjoy helping customers. These have to stay within Tesco and this is the primary goal of the company. We can see also through the international strategy the efficiency and performance. So we can say that the corporate culture of Tesco is a good way to have success and performance within the retail market.

Second section

In this section I will explain how the culture of Tesco, makes this company an important and competitive retailer. As we can see in the following table which summarizes the last eleven years at the company’s turnover, profit before and after tax and the basic earnings per share. We can see that the firm gets incredible figures: |years |Turnover (£m) |Profit before tax (£m) |Profit for year (£m) |Basic earnings per share | |2009 |54,300 |3,128 |3,090 |28.92 | |2007 |46,600 |2,653 |1,899 |22.36 | |2006 |38,300 |2,210 |1,576 |19.70 | |2005 |33,974 |1,962 |1,366 |17.44 | |2004 |30,814 |1,600 |1,100 |15.05 | |2003 |26,337 |1,361 |946 |13.54 | |2002 |23,653 |1,201 |830 |12.05 | |2001 |20,988 |1,054 |767 |11.29 | |2000 |18,796 |933 |674 |10.07 | |1998 |16,452 |760 |532 |8.12 | |% change 1998 to 2009 |+230,05% |+311,58% |+480,83% |+256,16% |

Source : Tesco.com, 2009
To answer at this question we’ll use two different theories: Hellriegel and Slocum’s theory and

Hellriegel and Slocum’s Theory

This theory explains that there are several dimensions in a company. Its means in a company there can be four different cultural dimensions: Bureaucratic culture, competitive culture, Participative culture and learning culture. In that case we will study a participative culture. Indeed we can be observed within Tesco a participative culture. Firstly, to understand, we will define what a participative culture is. A participative culture is “a type of organizational culture characterized by low environmental adaptation and high internal integration” (Hellriegel and Slocum, 1994). We can see with the example we have given in the first section that this is quite Tesco’s culture. In addition, to reinforce the fact that this theory fits well within the corporate culture we can defined operational framework on seven points: “low flexibility, high integration, loyalty, personal Commitment, team working, high level of society acceptance, tendency to satiability”. (Hellriegel and Slocum, 1994). But now we can ask the following question: how Tesco has set up a participative culture?

We can see that Tesco has been able to develop such a culture just by having introduced at all levels of the company this motto “Every Little Helps” (Tesco.com, 2009). Indeed, as we said before, this currency enables the company to allow all employees in Tesco to feel integrated into the firm. Even if the employee is new one or if he was in the company for fifteen years, he still feels integrate with Tesco. Moreover we know that Tesco encourage employees to write objectives at the beginning of the year to allow them to evolve, to progress humanly and within Tesco. We can immediately do a relationship with this theory. Indeed, this annual plan of objectives enables employees to be personally engaged in society, they must validate their target by the end of the year. Moreover when the employee filled out the sheet and gives the objectives to be achieved, if at the end of the year he succeeds he will be satisfied and he will enjoy his job.

In some way the society by the fact to give to employees objectives which they choose themselves, it allows self-satisfaction and thus a tendency to satiability. Moreover, when employees reach to keep their commitments, that is to fulfill their objectives, it is normal to enable them to fulfill their personal goals. That is giving them a salary increase or a promotion within Tesco. The fact that Tesco gives them targets at the beginning of the years allows employees to fulfill their personal goals, and thus have a double self-satisfaction, and in this way Tesco is used to obtain the loyalty of its employees. In conclusion we can see that Tesco has a participative culture. We can affirm that thanks to the theory of Hellriegel and Slocum that the company is competitive and important retailer because of its organizational culture.

Denison and Spreitzer’s Theory

The theory of Denison and Spreitzer is the “development culture” (Denison and Spreitzer, 1991). It explains how the fact that a company wants to develop itself has made it a competitive and successful business. Indeed a company should not only look for its internal development but must also research to expand its capabilities beyond its walls. The theory focuses on the growth of resources of the company it’s means its own capital by making acquisitions of other companies. The theory states that it’s the “key to growth and stimulation” (Denison and Spreitzer, 1991). Executives must be able to be idealistic and have an entrepreneurial spirit. They must be prepared to take risks, and able to develop their business for what is still more profitable than before (Denison and Spreitzer, 1991). If one extends the vision thing, the leaders of society must have visions of new markets and invest outside their own country, for example, or in another industry. We can, therefore, apply this theory to Tesco. Indeed for many years the company acquires other companies in different countries like South Korea for example. This allows it to be more represented throughout the world.

Thanks to this it increases at the same time its reputation because of repurchase shows to competitors and customers that the company is financially healthy. Moreover, the fact of opening other stores in the world has several advantages. Indeed during the installation of a one store in a country where the company was not present before that, it allows the company in case of success of its first store to be able to penetrate more sustainable by installing others stores. This also allows the firm to reach a different type of customers. It also enable to expand the contacts of the firm within a country, and to work with local producers that give them the opportunity to export products that are unknown in other countries, that’s what Tesco does within the various countries where the company is installed. It also allows a cultural development within Tesco, because the culture from one country to another is not the same.

With this diversity of culture the company is competitive because thanks to the complementary of its executives, the company can cope with any situation provided they have good internal communication. In conclusion we can see that Tesco makes many acquisitions to increase its capital and be more competitive. Indeed during the last twenty years the company has made eight acquisitions and various capital participations, partnerships with companies around the world. This allows the firm to be more important and competitive in the world.

Conclusion Section two

At the conclusion of the second section, we could see through the theory of Hellriegel and Slocum and Denison and Spreitzer that the company through its organizational culture makes it a big retailer redoubtable, competitive and important in the world.

General Conclusion

In this essay we have analyzed through the theory of Schein, “Surface manifestations, values and basic assumptions” and the Johnson’s theory “The cultural web” the organizational culture of Tesco. First, using the theory of Schein with “surface manifestations” in particular with the “mottoes “,” Norms” and “heroes”. The fourth point of the theory of Schein that we used is the “organizational values”. and to finish the first part we used the theory of Johnson in particular “Rituals and routines”. All for show how the culture of the company Tesco is important. In the second section we have used two others theories to answer the following question: how the culture of Tesco, makes this company an important and competitive retailer?

For this we use the theory of Hellriegel and Slocum and Denison and Spreitzer to show it. Through this analysis we can say that Tesco has developed a corporate culture that allows it to be competitive and important retailer in the world. This is only a question of time before the company expands into other countries, for example France where it have only one shop, in the North. Indeed the economic crisis failed to undermine it. But this culture not only allows the company to be successful, it creates a good working environment and enables its employees and its executives to improve themselves and become as the best in all their cultures together. The company must not change its strategy to continue like that. Tesco must keep everything that characterizes it organizational culture.

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