HRM302 Managing Change

With increasing globalization, it is significant to hold a right and clear concept about the management of business. In totality, the business environment of every factor creates influence on the working, innovation, and decision-making of the company (Humby, Hunt and Phillips 2004). Business is referred as the commercial enterprise, which is ventured in the highest possible profit and provide best services to their customers. There are things, situations and events, which happen in the way operations of the business are handled, either it can be positive or negative. It is known as the driving forces for the company (Humby, Hunt and Phillips 2004). Internal driving forces are the situations or events, which take place inside the business, and are basically in control of an organization (Sorooshian, Aziz, Ahmad, Jubidin and Mustapha 2016). External driving forces are the one, which happens outside the company, and sometimes it not controlled by the enterprise (Humby, Hunt and Phillips 2004).

Tesco one of the most popular retail company of UK is based on its staff and customers, and various growth opportunities (Lowe and Wrigley 2009). The mission of the company is to build best quality products for their clients and bring achievements for their partners. For the future of the company, the continuity and innovation are evident (Lowe and Wrigley 2009). Tesco holds solid strategy, and a strong team, which support them in every risk, whether it’s in the context of trade diversification (Sorooshian, Aziz, Ahmad, Jubidin and Mustapha 2016). Though, certain changes are required, as they know that improvements can be made, as the customer demands are changing (Lowe and Wrigley 2009).

External and Internal Environment drivers at Tesco for implementing innovation and make changes

External Factors

Below is the PESTEL Analysis, which supports in understanding external factors influencing the company in both positive and adverse way.

Political factors- Performance of Tesco is highly controlled through the ongoing political situations of the country, in which company is operating its business (Ma, Ding and Hong 2010). In the UK, traditional stores are enforced to reduce the cost; where else big stores offer various job opportunities, as well as government, also initiate the retailers to create different growth opportunities (Ma, Ding and Hong 2010). Therefore, new store opening is due to political effect.

Economic factors- Economic factors are in direct relation to the profits, as its one of the crucial elements that bring changes in the company (Ma, Ding and Hong 2010). The high unemployment rate enhances the chances to minimize goods demand; therefore, Tesco is generating employment opportunities through its new store (Ma, Ding and Hong 2010).

Social factors- demands of the customers towards having massive shopping, has resulted into offering non-food items at Tesco, along with electronics, clothes, mobiles, which are provided to customers at convenient shopping (McTaggart 2006).

Technological factors- Technology is considered as a huge factor, which drives all the organizations to adopt the changes and bring innovation (Sorooshian, Aziz, Ahmad, Jubidin and Mustapha 2016). If the customers will get enhanced, and they are satisfied, and attracted, it will be in benefit for the company (McTaggart 2006). To do so, Tesco has come up with electronic shelf labelling as well as ‘self-check-out system.'

Environmental Factors- Less production waste, less resource consumption, as well as less damage to an environment, are few problems that had lead Tesco to bring change (McTaggart 2006).

Legal factors- Policies of government also impact Tesco, such as monopoly, licensing, and policy of pricing (McTaggart 2006).

Internal Factors

Business expansion- Business expansion often comes with huge opportunities for growth of the company and development of the product (Wolk, Dholakia and Kreitz 2009).

Profit earning- the key motive behind the company is to make maximum profit, and the same had lead Tesco to focus towards expansion and business diversification (Wolk, Dholakia and Kreitz 2009).

Competition- Tesco face huge competition from many companies like Sainsbury and ASDA. To service in the competitive market, it is required to come up with new technologies and ideas (Wolk, Dholakia and Kreitz 2009). Tesco is expected to emphasize over the competition for the price, products they will sell to the customers and services that will be provided by them. To do so, they will require bringing change in the business, as the competition is increasing in the market (Wolk, Dholakia and Kreitz 2009).

The position of the market- Market position is related to what companies emphasize over like various companies hold a different position in the market. For instance, TK Max emphasizes over bargaining, where else Primark emphasize over cost; Lidl supermarkets stress over cost, where else Tesco focuses on both price and quality.

Entry barriers-it depicts, how easy it has become to take entry in the market. For instance, it is quite easy to enter the market, while it is challenging, as many competitors are running a supermarket, where else headdress is led by the partnership or either sole traders.

Product development- it implies that more items are developed for Tesco, and the same requires to keep up with items, which are sold by other supermarkets for the reason, if the clients fail to explore the items at Tesco store, then customers will start shopping at ASDA, because they think that ASDA will have up-to-date items (Sorooshian, Aziz, Ahmad, Jubidin and Mustapha 2016). It is important that Tesco should be updated with products, and they should offer new items to customers so that they don’t move to other supermarkets to purchase their desired product (Sorooshian, Aziz, Ahmad, Jubidin and Mustapha 2016).

New items and service- this implies that through having new items as well as services like, Tesco has come up with insurance that is a new service (Sorooshian, Aziz, Ahmad, Jubidin and Mustapha 2016). It’s a good idea for Tesco and their customers, who can easily signup insurance; it is also important that Tesco should need to maintain its products and services.

New retailing ideas- it implies that holding new section in the supermarket like Tesco has an open new cafeteria for their customers, who come to shop at stores (Sorooshian, Aziz, Ahmad, Jubidin and Mustapha 2016).

Pricing- it’s quite significant in business, as there are many customers, who only look towards the cost of the product; therefore, Tesco requires to focus on cost, if they are interested in keeping their customers and want to gain new customers (Sorooshian, Aziz, Ahmad, Jubidin and Mustapha 2016). Cost is also significant, as Tesco can look towards supermarket for the price and then sell its products.

Pay levels- Pay level holds high influence on Tesco, as they have to give pay to the employees at the standard of national wage and also enhances staff salaries, which work for them for long hours (Striteska 2012).

Domestic and global law- this implies that Tesco should try to follow the rules, which were established by the international as well as domestic legislation, like they have to adopt the one, set by United Nations that will leave a high influence on Tesco (Sorooshian, Aziz, Ahmad, Jubidin and Mustapha 2016). Tesco will now have to follow the rules, which are established by local government, and this will also impact Tesco by things like loading items in the store, for which there is no parking facility (Sorooshian, Aziz, Ahmad, Jubidin and Mustapha 2016).

Credit cost- this left a critical effect on Tesco, as there are different products which they take  for the purpose of running the business; therefore, in case rate of interest goes high, at the time of borrowing, then, in that case, they have to pay more money, which they want to purchase (Witcher and Chau 2008). It will result in spending a huge amount, which implies that the company might lose guaranteed money (Witcher and Chau 2008).

Price of energy- if the price of energy shoot up, then this can be a bad news of Tesco, as in that case, it will become more expensive for Tesco to transport their products and at the same time, it will cost more to the company, while transporting products to other countries (Wu 2009).

Broadband access increase- This might create high influence on Tesco, as the company also provides internet connections. It implies that people are purchasing internet service, due to the rise in the price of internet connection (Sorooshian, Aziz, Ahmad, Jubidin and Mustapha 2016).

The implication of resources in the company that doesn't respond to change:

People- the essential part of any change is individuals in the business, as they are the one, who will execute the change, and the same cannot be altered overnight (Sorooshian, Aziz, Ahmad, Jubidin and Mustapha 2016). People are quite resistant and rigid towards bringing change if they fail to respond and don’t agree to accept the change, then in that case change procedure might get fail.

Money- money holds power to bring change, as it can offer resources. For example, through the support of money, Tesco can quickly open their Fresh and Easy stores (Sorooshian, Aziz, Ahmad, Jubidin and Mustapha 2016).

Material- Material includes all details like audit report, company information, the requirement of the market, and it’s quite important because failure to have the same might fail the changes. For instance, the absence of accurate market analysis by Tesco can fail the company in capturing the market in the UK.

External factors might impact Tesco ability in attaining set aims and objectives. Internal factors also influence on how the business proper in both local and global market (Palmer 2005). Just like internal factors having no control, external factors try to adjust to the ongoing situation (Sorooshian, Aziz, Ahmad, Jubidin and Mustapha 2016). It is noted that good company will create provisions for the current external factor, for the purpose of enlightening the light, whenever they do any change, but it is true that no organization can ever ensure about the measure they will suffice (Plimmer 2010). External factors are the one that can fail the business, but they are also important as compared to internal factors (Sorooshian, Aziz, Ahmad, Jubidin and Mustapha 2016). Therefore, it is important that organizations should emphasize over the changes taking place in external factors and try to adjust accordingly or they might lose from the competition (Siddiqui, O’Malley, McColl and Birtwistle 2003).

Certain external factors might impact Tesco such as national holidays, legal problems, national income, unemployment due to the recession, wrong external publicity, the strength of pounds as compared to euro, moral viewpoints, locations, fair trade, change in climate, externally owned parking areas, and competition (Siddiqui, O’Malley, McColl and Birtwistle 2003). The main reason for the decline in the performance of Tesco in last two years is related to the companies’ ability in offering value to customers, and the same is also related to different factors, such as internal and external (Siddiqui, O’Malley, McColl and Birtwistle 2003). The relative significance is challenging to gauge, and its communication is also important.

Externally, 2008 financial crisis had a profoundly adverse effect on people earnings, and this had accelerated the increase in customs, such as high-end retailers, and discounters that rush towards the room to offer prominence of right value proposition, instead of overstressing the retail theatre like, promotion (Strategic Direction 2008). Changes taking place in consumer shopping habits, specifically increase in convenience and online holds importance. Internally, there are various factors, which highly contribute in Tesco from losing sight of clients (Chou 2004). It includes emphasis on the technological changes and stress over the extended supply chain, in which less price is highly chased by the efficiency of the cost of adequate provenance provision and core values erosion that undermines trust of customers (Clark and Chan 2014).

At a certain point, Tesco might lose its focus towards the growth source, and get exacerbated through several self-induced as well as external factors (Strategic Direction 2005). It also includes a rationale that becomes opaque and therefore, it hold less meaning, and technology-based priorities, which is viewed as crucial for delivering right customer service as well as the complacency of leadership (Clark and Chan 2014). It is noted that revolutionary changes taking place in the market are driven by the financial crisis, and the results of market polarization hold substantial impact, which exacerbated the impact of negative internal factors, which had occurred through the present challenges for Tesco (Clark and Chan 2014). It happens, when the necessary changes in the value of customer happen, and it's challenging to predict (Clark and Chan 2014). The corporate world litters the headstone of big organizations, but at a certain point, they might get fail in offering value to customers (Glavan 2011). Sometimes, this happens, due to the internal factors or either short lifecycle of the product. Sometimes the same happen, due to the external factors like economic, social, and dramatic technological changes (Morris 2004).

Conclusion

Internal and external factors create an environment of any company. The whole situation is analysed that generates forecasted and development factors for determining the success of the enterprise. The organizational strategy of Tesco supports in determining the opportunity for the enterprise, along with all the expected threats it might face. It is noted that internal scanning clearly observes the internal environment of the enterprise. Surveys, discussions, and interviews offer the data for the purpose of internal environment assessment. Plans for the long term are impacted by the changes taking place in the external environment. National, industry environment and macro environment are play important role in creating an influence of external factors on the company.

References

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