The UK's retail segment
The UK’s retail segment has been defined by the performance of dominant players such as Tesco and Next PLC. Nonetheless, the current financial challenges witnessed by Tesco and the operational stability of Next PLC called for the evaluation of the factors that impacted the successful management of the enterprises.
The analytical and methodological approach
The dissertation was limited to secondary literature, and the appraisal was confined to the review of the corporate cultures in the respective entities. The analytical and methodological approach was limited to the determination of the specific cultures in the corporations of interest, sustainability, and the advancement of potential solutions to the cultural limitations. Based on the literature appraisal, it was deduced that there were four organisational cultures namely adhocracy, clan, hierarchy and market.
Next PLC and Tesco
Next PLC and Tesco had adopted the adhocracy and market cultures, respectively. On the one hand, the adoption of the adhocracy culture enabled the Next PLC management team to safeguard its niche market through innovation, discretion and external focus. On the other hand, the market approach propelled Tesco to become the leading retail store by market share; however, diversification of operations compromised the control of the company's process; it also contributed to the decline in ethical practices and more significant exposure to risks attributed to imprudent management (Sadgrove 2016: 243).
Potential solutions to the threats faced by the companies
Potential solutions to the threats faced by the companies included a review of the cultures with the aim of transitioning to other cultures that exposed the company to lesser risks. In specific, it was recommended that Tesco should consider the adhocracy culture. The findings reported in the present dissertation had significant managerial implications. For instance, the conclusions would guide administrative practices in the two companies and other companies in the UK's retail sector. In brief, organisational cultures impacted sustainable management.
Keywords
Keywords: Tesco, Next PLC, organisational cultures, successful management, United Kingdom
Purpose of the Study
The central aim of the dissertation to undertake a critical review of organisational cultures and their impact on the successful management of an organisation. The analysis was limited to Tesco and Next PLC in the UK retail sector. The choice of the two companies was justified given that the enterprises had a dominant market share in the UK retail sector.
Background Information
The term organisational culture had a dual meaning; it denoted the value system that was unique to a group of persons – a culture which remained static despite the changes in the group structure (Kotter 2008: 4). Moreover, organisational culture represented the natural behaviours and the mode of operations that the employees were encouraged to adopt (Kotter 2008: 4). Therefore, organisational culture, strategy (Jeston and Nelis 2010: 78) and structure were three distinct elements. In brief, corporate cultures could be categorised into behavioural norms or shared values. Such cultures represented principles of the company. For instance, some company cultures were defined by technological innovation (such as Apple and Intel) while the relentless pursuit of profits characterised others.
The focus on organisational cultures was informed by the fact that traditions contributed to the sustainability, strategic orientation, and profitability of the enterprise. The argument was justified given that business cultures determined whether a business would adopt an innovative or imitative strategy (Barczak, Lassk and Mulki 2010: 333). Organizational cultures were grouped into the clan, adhocracy, hierarchy and market (Hartnell, Ou and Kinicki 2011: 679).
The choice of one culture over another was informed by diverse factors including the national and the market dynamics. Besides, the success of the organisational culture was dependent on the leadership approach (Schein 2009: 3) and corporate commitment (Yiing, Zaman and Ahmad 2009: 53). According to a survey by Tellis, Prabhu and Chandy (2009: 6), it was established that the national culture mediated organisational culture. Barczak, Lassk and Mulki (2010: 332) observed that in the recent past, most companies had adopted collaborative work cultures to exploit the synergy between the different team members in the attainment of the organisational objectives. Besides, collaborative cultures facilitated the exploitation of the creative potential of the individual employees. The current dynamics in the 21st-century business environment had necessitated companies to adopt new approaches to remain relevant in an increasingly competitive market.
Organizational Culture at Tesco and Next
The current literature contained scant information regarding the organisational culture at Next. Nonetheless, the company's annual report indicated that the company had adopted a centralised culture in which the company's board monitored the adherence to the corporate governance system. The company had also emphasised on accountability on all aspects of the business operations. Besides, the enterprise had adopted an innovative culture that advocated for the refinement of the design capabilities and quality of the fabrics used to make the apparels (Next PLC 2017: 5). Innovation had enabled Next PLC to reduce the cycle times between product development and delivery to the retail outlets; this was an indication that the company had adopted a lean approach in the supply chain (Lambert 2008: 218). In addition, the company had also employed a collaborative organisational culture that fostered partnerships between the company, and other stakeholders in the fashion apparel industry such as suppliers and competitors (Next PLC 2017: 37). The organisational culture had enabled the business to report positive sales margins (Next PLC 2017: 7). In contrast, Tesco Company’s corporate culture was defined by retailing products at an affordable cost and the need to capitalise on the economies of scale and the delivery of value to the shoppers (Tesco Plc 2018). Less innovation and more imitation defined such an approach. Therefore, the company was imitating the strategies employed by other retail outlets.
Rationale
The present study was justified given that the current body of research evidence had not exhaustively addressed the organisational culture at Tesco – a market leader in the retail segment. Recently, it was estimated that Tesco controlled at least 40 percent of the retail market in the UK (Yamoah and Yewson, 2014: 102); therefore, an analysis of the organisational cultures in the company would provide a representative picture of the national retail sector. Besides, the variable market conditions necessitated the adoption of flexible cultures (Cameron and Quinn 2011: 9). Next is a leading fashion company with at least 540 retail outlets in the UK and Ireland (Next PLC 2017: 2). Based on the news reports it was evident that the organisational cultures adopted by Tesco Company were not congruent with the market dynamics. A report by The Guardian
indicated that Tesco's management was fixated on the bottom line – such an approach was not consistent with the consumer and employee expectations. For instance, the plan was characterised by less transparency, unethical dealings, and fraud – as indicated in the inaccurate payments to the company’s suppliers (Butler and Farrell 2014).
The company’s management had also acknowledged the limitations in present organisational culture after the company reported a four and 16 percent decline in sales and share value (Butler and Farrell 2014), respectively. Based on the above facts, it was evident that the organisational culture and management approach had a substantial impact on the profitability of the enterprise. The findings confirmed that a paradigm shift in the company’s culture was required to safeguard the business operations. The challenges facing Tesco were linked to lack of information regarding the best practices; a recent study by Dillon (2015: 52) established that empirical research on the company was limited. A literature search of organisational culture in the Next Company did not yield relevant outcomes – a proof that the present body of research evidence in the UK retail sector was insufficient. Therefore, the findings derived from the present study would address the gaps in the literature.
Study Questions
1. What were the organisational cultures among companies in the UK retail segment?
2. Did the organisational cultures impact the sustainability of the enterprises?
3. What were the potential solutions to the challenges facing modern organisational cultures?
Research Objectives
1. To determine the organisational cultures adopted by selected companies in the UK’s retail segment
2. To establish whether corporate cultures had an impact the sustainability of the business
3. To highlight feasible solutions to the challenges attributed to weak organisational cultures.
Structure of the Research Study
The present dissertation was subdivided into five sections namely chapter one, two, three, four and five. The first section outlined the principal elements that guided the study namely the study aims, purpose and rationale. Moreover, fundamental aspects regarding organisational cultures were elucidated in the study. A critical review of the available research was presented in the second chapter. In particular, models and theories associated with organisational cultures were discussed in the subsection. The approach employed in the collection of the secondary sources of information was elucidated in chapter three including the inclusion approach for the references and the quality and reliability of data. The fourth chapter outlined the outcomes reported from the selected literature sources. A synthesis of the literature results was presented in the final section. In addition, the study limitations, conclusion and summary were introduced in the fifth chapter.
Chapter Two
The review aimed to provide a critical analysis and interpretation of the findings regarding organisational cultures in the selected studies. The literature review elucidated the different organisational cultures adopted by the two organisations. The theories and models related to corporate cultures were interpreted in the literature review subsections.
Organizational Cultures
The influence of organisational culture had increasingly become apparent following the adoption of information technologies that had enhanced business efficiency while at the same time augmenting the relationship between business enterprises (Tellis, Prabhu and Chandy 2009: 7). Wang and Noe (2010: 127) postulated that healthy organisational cultures facilitated knowledge sharing and operational management. Nonetheless, the most significant impact of the organisational culture was in mediating corporate sustainability. Sustainability, in this case, encompassed a minimalist approach to resource use and safeguard of the environment. The association between sustainability and organisational culture was extrapolated using the competing values framework (Wang and Noe 2010: 359).
Based on previous research studies, it was deduced that organisational cultures developed out of the alignment observed in the workplace. In particular, there were two types of alliances at the workplace namely group alignment and within group alignment (Bezrukova et al. 2012: 77). Each form of alignment had its limitations and strengths. For instance, the group-organisation alignment facilitated the development of the organisational cultures given that the execution of workplace responsibilities was founded on cultures. However, based on the researcher’s point of view, it was deduced that the in-group alignment was not necessarily a predictor of the ability of the employees to buy into the organisational culture. The two forms of alignment were a predictor of the extent to which the employees were culturally aligned to the organisation (Bezrukova et al., 2012: 78).
Competing Value Framework (CVF)
The fundamental construct of the competing value framework was that competing demands defined organisational culture. For instance, it was virtually impossible for a company to realise both control and flexibility simultaneously (Wang and Noe 2010: 359). According to Hartnell, Ou and Kinicki (2011: 678) the CVF was also characterised by four facets namely hierarchy, market, adhocracy and clan. According to the theory, the organisational culture was partly distinguished by an exclusive focus on the internal competencies such as differentiation and orientation. In addition, the structural facet emphasised on flexibility while the means-end dimension elucidated why different organisational cultures afforded companies unique strategic benefits and efficiencies in the business operations (Hartnell, Ou and Kinicki 2011: 678). The link between the four facets of the competing value framework and organisational culture was elucidated in Figure 1. Based on the structure, it was evident that a focus on flexibility was associated with innovation, cohesion, agility and collaboration. On the other hand, stability was achieved through the adoption of capable processes, timelines, consumer-centric policies and the attainment of the established goals. Furthermore, it was deduced that adhocracy and market culture types were linked to differentiation and external elements.
Organizational Culture and Performance
Since 1951 when the existence of organisational cultures was first postulated by Elliot Jaques (Czarniawska 2012: 126), various theories have been proposed regarding the link between corporate cultures and the performance and successful management of businesses. Nonetheless, fundamental questions remain unanswered; for instance, does the adoption of a particular culture advance the attainment of the business objectives? Why do businesses with robust cultures still fail to meet the market expectations? Were organisational cultures adaptable to the variable business environment? Hypothetically, if the responses to the rhetorical questions were affirmative, then the claim that organisational cultures positively impacted business performance might be considered valid. The determination of the association between organisational cultures and the performance in Tesco and Next PLC was integral in determining whether the claims advanced regarding the impact of Tesco’s cultures on its financial mismanagement had merit.
In a research study undertaken by (Denison, Nieminen and Kotrba 2014: 5), it was noted that scientific evidence regarding the role of organisational cultures on the performance of an enterprise was inconclusive at best. The claim was informed by the fact that the quantification of the impact of the impact of organisational cultures was first necessitated by the need to develop a management tool and not out of research inquest (Denison, Nieminen and Kotrba 2014: 5). Additionally, the absence of substantial literature evidence affirming the link between performance and cultures was because previous cultural studies were founded on the superficial quantifiers based on assumptions and semiotics and pre-structured questions (Denison, Nieminen and Kotrba 2014: 6). Such an approach had failed to yield meaningful outcomes regarding organisational cultures and financial performance.
In contrast, Hogan and Coote (2014: 1610) adopted a different approach in the evaluation of the impact of the organisational cultures. Hogan and Coote postulated that the erroneous quantification of the organisational cultures could be attributed to the fact that previous researchers evaluated corporate cultures as a single element rather than an entity made of distinct layers. Besides, given the fact that the success and performance of any corporation were based on the extent to which the company was able to sustain innovation, it was deduced that the association between organisational cultures and production was mediated by change (Hogan and Coote 2014: 1610). The arguments advanced by Hogan and Coote were in line with the Schein's model. The model posited that organisational cultures were primarily made of three elements namely artefacts (Keyton 2011: 27), enshrined values and underlying assumptions as illustrated in Figure 2 (Gerras, Wong and Allen 2008: 5). The artefacts included the processes and structures that were invisible to the company outsiders. The espoused values were defined by philosophies and strategies that governed business operations; underlying assumptions included all activities that added value to the company. Horgan and Coore (2014: 1610) claimed that each facet of the organisational culture mediated innovation. For instance, the artefacts encompassed the physical infrastructure that facilitated innovation. The norms included an open culture that facilitated communication and collaboration among different team members as they developed new solutions to the challenges facing the company.
Given the limitations in the approaches employed in the analysis of the association between corporate cultures on the successful management of the company in the Schein model, the Hatch model was developed. The fundamental aspects of the hatch model were depicted in Figure 3. Based on the figure, it was deduced that each of the three domains was interrelated. On the one hand, artefacts could be translated to values or symbols through realisation or symbolization, respectively. On the other hand, it was postulated that interpretation mediated the link between assumptions and symbols. Following the appraisal of the Hatch and the Schein models, it was evident that organisational cultures had both direct and indirect impacts on the performance of the company. The point of view was justified given that processes, structures, language and management practices adopted by any given company impacted organisational performance. For instance, the implementation of consumer-centric managerial approaches had augmented the consumer experience at Tesco (Zhao, 2014: 186). Nonetheless, the absence of collaboration between different domains compromised the services rendered. For instance, it was deduced that the inability to actualise the realisation phase; that is the transformation of goals and philosophies into visible processes undermined the long-term sustainability of the company. Zhao (2014: 187) argued that the inability to exploit the synergies between the different model domains had compromised the company’s supply chain system and by extension the performance of entire retail chains. For instance, in some of the Tesco’s depots, the fresh produce was delivered, but there were no trucks to transport the commodities to the stores. In other cases, it was noted that the strategies adopted at the local level were not suitable foreign markets owing to the variations in the market dynamics.
Innovation, Organizational Cultures and Successful Management
According to a model developed by Gumusluoglu and Ilsev (2009: 462), successful management of an enterprise was a product of robust organisational performance – a process that was augmented by innovation and transformational leadership. The model depicted in Figure 4 indicated that transformational leadership was the cornerstone of the performance and sustainability cultures. The argument was justified given that transformational leadership facilitated intrinsic motivation and the perception of support that in turn motivated most of the employees to contribute to the realisation of the artefacts to business values (Gumusluoglu and Ilsev 2009: 461).
Figure 4 A model depicting the association between leadership, organisational culture and performance. Adapted from Gumusluoglu and Ilsev (2009: 461)
The application of the three facets of the Schein model on Next and Tesco was elucidated in the subsequent sections. The organisational cultures adopted by the two companies were correlated with the underlying performance indicators such as return on investment for the shareholders, share price, annual growth in sales and employee turnover.
Chapter Three
The present section outlined the approaches used in the collection of data from secondary sources with the view of determining the association between organisational cultures and the success of enterprises in the UK’s retail sector. The successful management was determined based on the financial indicators (share price, net earnings, and ROI) of the company. A case study approach was adopted using quantitative and qualitative information. According to Noor (2008: 1602), the choice of the research approach should be guided by the research aims, objectives and study topics. In the present review, the case study approach was employed because it facilitated the evaluation of the organisational cultures in the selected organisations and it was the most appropriate methodological approach. In the following sections, the analytical procedures and reliability of literature sources were elucidated.
Analytical Approaches and Research Philosophies
The current study adopted both positivist and interpretivist analytical methods (Clarke 2009: 28) – the selection of the two was informed by the fact that the critical review was dependent on qualitative and quantitative data. For instance, quantitative data regarding the financial scandal at Tesco contributed to the understanding of the effectiveness of organisational cultures while qualitative data provided useful insights concerning management practices. In addition to the analytical approaches, the research was guided by ontological, axiology and epistemology philosophies. Personal opinions and traditional knowledge regarding the two companies did not compromise the attainment of the study objectives. Nonetheless, the researcher was alive to the fact that inherent assumptions and worldviews regarding the researcher’s speculation of the problem in question, might have subconsciously impacted the findings.
Research Methods and Analysis
As briefly indicated in the preceding sections, the study approach featured both qualitative and quantitative data (Siegle no date). On the one hand, the qualitative aspect of the research aimed at determining the historical performance, and variations in organisational cultures over time. On the other hand, the quantitative approach contributed to the understanding of whether there was a correlation between successful management of the corporations and the organisational cultures. In addition, the quantitative study approach enabled the researcher to establish causality between the corporate cultures and the performance of the businesses (Tacq 2011: 263).
Data Collection Approaches
The data collection approaches in the present study were dependent on academic sources (peer-reviewed journals and scholarly books), corporate data (annual reports and stock exchange briefs) and news reports from reliable publishers – because some of the information available in the news reports were not available in other sources. Nonetheless, the reliance on news reports was maintained at a minimum because it was not possible for the researcher to establish if the information was biased
Reliability and Bias
The reliability of the study findings was premised on the assumption that the source of the publication was a pointer to the impartiality of the study outcomes. The need to investigate the reliability of the secondary sources was also informed by the realisation of the fact that in most cases secondary research was devoid of the robust scientific rigour (Hair et al. 2015, p. 40) observed in primary research. Besides, the qualitative approaches to research were in some cases characterised by the absence of transparency and bias owing to the incorporation of individual opinions (Noble and Smith 2015: 1). Besides, unlike quantitative data in which the outcomes of the studies might be evaluated based on the statistical measures of reliability (Cronbach’s value), the determination of the reliability of secondary research is often limited to the analysis of the general markers for publication quality.
Given the challenges associated with the determination of the reliability in the present study, the applicability, neutrality, truthfulness and consistency of the findings were used to predict the reliability of the articles. For instance, the consistency of the study outcomes was judged depending on the congruency between findings reported by one study and the general evidence in other literature. The neutrality and lack of bias in the selected studies were ascertained based on the research approach, and the reporting of the outcomes; selective reporting was an indication of research bias. The claim was premised on the observations made by previous researchers (Dwan et al. 2008: 1).
Research Ethics
The university's ethical research policy guided the present research study. In particular, all data employed in the research were ethically sourced from publications and annual reports. Besides, the researcher purposed to use open access information in place of proprietary data because the former was associated with lengthy consent procedures. Moreover, the researcher maintained objectivity and impartiality in reporting of the research outcomes because the findings presented in the current study had the potential to influence the public perception of the individual companies.
Limitations
The present study was limited to secondary research and the synthesis of information in the secondary sources of data; no new knowledge was added to the general body of research evidence. Another critical limitation observed in the present study was the absence of scientific information regarding Next Corporation except the information presented in the company's annual reports and other non-scholarly sources. Therefore, the evaluation of organisational cultures in the company was limited.
Chapter Four
The primary outcomes derived from the literature appraisal were presented in this section, and the inference was drawn between the study objectives, issues and the literature review. The cultural models introduced in the literature review were applied to the selected companies to determine the suitability of the cultural models in the UK retail sector.
Tesco’s Scandals and Organizational Cultures
In the recent past, Tesco Company has been faced with two significant scandals. In 2013, the horsemeat scandal was exposed, and in the following year, the company was also accused of making up figures in its accounting system. The primary questions included whether the two scandals were coincidental, could the missteps leading up to the scandal be attributed to exogenous factors that were beyond the control of the company? Did the scandals represent the limitations of the organisational cultures? In particular, the horsemeat scandal came to light following the realisation of the fact that the company might have been selling horsemeat to customers (Reyes Gonzalez, Jose L. Gasco 2015: 1069).
The two cases were a predictor of the efficiency of organisational cultures. The financial scandal at Tesco proved that the company was engaged in unethical business practices that were diverse. For instance, the company had bribed an audit firm to approve its accounts despite the substantial discrepancies in the financial statements (Shil 2014: 74). The falsification of the company's reports was detrimental to the short-term success given that the company was forced to lower its growth estimates by approximately 30 percent (Shil 2014: 74). Despite the challenges faced by the company in the recent past, its market share was stable. The company's annual report indicated that at least 70 percent of its customers shopped on a regular basis. In the same period, there was a 30 percent increase in the number of new customers (Tesco 2014b: 16).
According to the company’s website, its corporate culture was defined by the need to meet the expectations of the consumer’s. However, what was the cost? The 2014 annual report, indicated that the company had aimed to grow its market share exponentially, and in turn achieve a better return on investment. Following the review of the company's financial performance, important concerns were made including the fact that there was no clear delineation of the company’s culture. Nonetheless, as part of its organisational culture, the company had initiated the women in leadership program (to enhance the ratio of women in senior management) and governance framework that aimed to enable the company’s employee to attain a work-life balance (Tesco 2014b: 38). Based on the annual report it was deduced that one of the successful aspects of its organisational culture was that it mediated the in-house development of human talents.
Based on the competitive value framework by Hartnell, Ou and Kinicki (2011: 678) and the financial outlook of the company, it was deduced that the company had adopted an external focus approach in which much emphasis was placed on the market and differentiation. The claim was justified given that in its 2014 annual report the company planned to achieve a significant improvement in the provision of the after-sales services; increase the number of products available in the company’s outlet and shareholder investment. Additionally, the company was also intent on sustaining its human resources through the total reward system that was defined by sustainable, competitive, and equitable remuneration (Tesco 2014: 42) in line with best practices in human capital management (Bolman 2008: 143).
During the tenure of the company's former CEO – Terry Leahy, the company's organisational culture and strategy were defined by market expansion and diversification (Nokali, Bachman and Votruba-drzal 2010: 93); the end goal was to attain better profits and improve consumer satisfaction. In particular, Sir Terry oversaw themomentous growth of the company as the company ventured into the Japanese, Thai, US, Turkish and Polish retail segments (Nokali, Bachman and Votruba-drzal, 2010: 93). In addition to opening international retail outlets, the company diversified its product offering to financial services, and telecommunications (mobile telephones). However, the broad diversification afforded the company less control and stability as evidenced by the recent scandals witnessed in the company.
