Consequences Of Terry Leahy Resignation On Tesco Essay Example

knowledge and expertise he possesses are invaluable, particularly at this crucial juncture when Tesco is on the cusp of achieving global domination. Presently, Tesco finds itself in a critical phase as it strives to become the foremost retail company worldwide by conquering the US market. Sir Leahy's extensive experience would have been exceedingly valuable as Tesco confronts its strongest competitor, Wal-Mart, on their home turf.

Tesco requires maximum intellect and determination as it prepares to enter the American market and continues to be a leading retailer in the UK and globally. The upcoming CEO will face immense pressure to replicate their predecessor's successes and explore new territories. Time is crucial for Tesco to maintain its position, as delays in articulating a strategic direction would allow competitors to gain momentum ahead of them. To avoid this setback, it is vital to persist with the current strategy until necessary adjustments are made.

The popular saying advises against fixing something that is not broken. As the world gradually emerges from the global financial crisis and subsequent economic decline in major economies, Tesco must recognize that every decision made at this moment will strongly affect its future prospects. Sustaining momentum is simple when it exists but challenging to regain once lost. Tesco ought to acknowledge their path towards success and adhere to what has proven effective for them rather than implementing unnecessary alterations.

High Degree of Uncertainty

Sir Terry Leahy has been recognized for his ethical work practices, transparent approach, and participatory management style that encourages everyone to contribute to the growth and sustainability of the organization. He has developed strong relationships with stakeholders at all levels of

the company and actively listened to concerns from suppliers and customers. With the appointment of a new CEO, employees, suppliers, customers, and other stakeholders may feel apprehensive about the new leader's management style and ability to build connections. It is essential to promptly address any potential issues or concerns that arise in this situation. If the successor lacks industry familiarity, there could be negative reactions from the stock market due to uncertainty about their capability to replicate and enhance Sir Leahy's success story.

The CEO's initial statements and programs of action will greatly impact the trading floor and industry participants. It is important to address any fears and uncertainties amongst employees and some management members, who may not feel comfortable connecting with the CEO due to uncertainty about his attitude and approach to managing people. If he is more focused on tasks, staff morale may decrease. Therefore, he needs to maintain a balance that promotes both morale and sales results. Ultimately, prioritizing customer issues is crucial.

Customers were accustomed to Sir Leahy's way of interacting with them and showed high levels of loyalty. They will expect the new CEO and other management members to maintain a similar relationship.

Frontal Competitor Attack

Sir Leahy, who was seen as the leader of a successful team that played a significant role in the team's success, has become synonymous with achieving and even surpassing goals over the years. This has earned him numerous awards from both industry peers and outsiders. As the leader leaves the team, competitors will start re-strategizing to identify potential weaknesses and launch their own attacks (source: www.managementtoday.com).

In the UK, competitors such as Sainsbury and Wal-Mart (known as Asda) will

likely take advantage of any lack of continuity and period of uncertainty to launch frontal attacks. Other players like Safeway and other retail stores in both the food and non-food categories will be more confident in competing against Tesco. The management must urgently address any perceived weaknesses that may have arisen from Sir Leahy's departure. They should continue with the policies and plans initiated by the former CEO until new measures are implemented. It is crucial to prevent rivals from poaching skilled and experienced staff and causing customers to switch. To avoid this, the new CEO must promptly take decisive actions to demonstrate leadership.

As global economies recover from recession, companies are adjusting their strategies to drive growth. However, the resignation of Sir Leahy coincides with competitors making efforts to gain market share. The potential effects of Sir Leahy's resignation can be mitigated by identifying key stakeholders and understanding their motivations. This will be further explored.

According to Westwood (1992, p.), motivation can be described as an internal state that generates a desire or pressure to take action.

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Key Stakeholder

Motivational Tool

Employees are crucial for the successful execution of any scheme leading to sales growth and market dominance. Incentives, as described by Frederick Herzberg (Harvard Business Review, September-October 1987), are essential for employees to perform at their best. Examples of effective incentives include management by walking around. There has been extensive discussion on the role of specialist leadership in business administrations that have innovative and high-trust work relations. Accounts of successful leaders, heroes, and CEOs are widely available (Pettigrew and Whipp, 1991, p.

139), all of which advocate for

the resolution of tensions inherent in the employment relationship by replacing asymmetrical power, domination, and coercion with high trust work relations. It is recommended that senior managers continue to visit the shop floor regularly and engage with junior staff. Furthermore, greater efforts should be made to actively listen and understand their concerns (www.managementtoday.com). Additionally, opportunities for promotion should be provided with reduced bureaucracy and a clear pathway for advancement where junior staff are aware of their responsibilities and the available training programs enabling them to progress. Remarkably, up to 10,000 employees are given the opportunity to receive training and advance within a year.

( www.managementtoday.com ) The Save As You Earn scheme is a highly motivating incentive strategy, as it allows staff to become stockholders. Over 100,000 employees have become stockholders through this scheme, which gives them a sense of pride and satisfaction in being partial owners of the company. ( www.managementtoday.com ) Another important aspect is ensuring fairness for all employees.

It is important for all employees to know the established rules and understand that fairness is guaranteed if they do not follow them. The company's vision and non-discrimination policy demand equal treatment of all staff, regardless of their background. Profit-making companies like Tesco are created to effectively cater to customers. Tesco has achieved success by having a loyal customer base around the world. Even in countries without physical stores, travelers recognize the Tesco brand and use their products.

In the midst of fierce competition, it is crucial for Tesco to prioritize customer retention and loyalty. As they venture into new markets, retaining their current customers becomes even more important in order to surpass their competitors. To

gain a better understanding of their customers' needs, Sir Leahy implemented strategies that included conducting a survey among 250,000 customers across the UK (Source: www.managementtoday.com). The findings from this survey played a significant role in shaping Tesco's retail approach, setting them apart from their main competitor, Sainsbury.

Based on the study's findings, several actions were taken by Tesco that should be continued and potentially improved. Initially, Tesco expanded its offerings beyond groceries to include electronics and financial services, aiming to provide convenience for customers. This shift allows families to shop together and enjoy quality time while benefiting all family members. Furthermore, Tesco introduced a loyalty program named Clubcard that rewards customers based on their frequency of purchases.

The accumulated points are available for purchasing at Metro stores. The presence of smaller, high street stores in various communities fulfills the clients' need for closeness and convenience. This allows Tesco to be closer to their customers and compete with Corner stores. Regular studies should be conducted by management to understand the changing demands of their customers and fulfill their needs.

The success of Tesco relies heavily on the gross brought in by its Farmers - Food subdivision, making farmers an essential part of the company. To ensure Tesco's survival, it is crucial to maintain a mutually beneficial relationship with farmers. There are several ways to motivate farmers, such as offering guaranteed prices for their produce to encourage them to maximize production. It is important for Tesco not to exploit its size and financial resources to pressure farmers into accepting lower prices for their goods. Fair prices should always be paid by the company to prevent farmers from becoming impoverished.

Mercantile establishments are located in localities where non all abode may be clients. Tesco should be aware of this fact and handle the remainder of the community as if they were direct clients. Effective societal duty plan will heighten the corporate image of the company within the areas of operation and beyond. The company should make conscious efforts to support good classes to deal with climate change and fair trade.

Government agencies enforce laws and regulations to promote fair competition and ensure companies meet their financial and other obligations to the province. The main source of revenue for the province is taxation. It is important for Tesco to fulfill their obligations promptly and accurately. The province's goal is to prevent any company from gaining a monopoly position in order to protect the public interest. Therefore, Tesco should keep this in mind when planning their expansion strategies in order to avoid being seen as obstructing competition, which could negatively impact their corporate reputation.

Consumer associations play a crucial role in shaping consumer behavior and are indispensable for businesses striving to thrive amidst competition. Their focus lies on vital matters including fair pricing, guaranteeing suppliers receive reasonable compensation for their products and ensuring consumers pay equitable prices for their purchases, along with appropriate product labeling.

Accurate information is essential for consumers to make informed choices. Sir Terry Leahy's leadership style, in contrast to British Airways' more autocratic approach, is better suited for guiding companies through crises like the recent economic recession. By using a participatory approach, leaders can build trust and encourage a sense of collective responsibility during challenging economic times. In such situations, employees rely on leaders who

understand their concerns and are willing to make sacrifices for the greater good, while also looking ahead to future improvements when economic conditions improve.

Schemes like the Save As You Earn are suitable for employees who are willing to participate in corporate recovery initiatives. This is because they perceive their future success to be tied to the company's success. Monetary incentives, which can be a temporary motivator, may not be effective in challenging economic situations because employees may perceive the goals as unattainable due to overall economic downturn. When goals are seen as unattainable, employees lose motivation to work harder.

Companies may face difficulties in meeting financial obligations when trying to reduce film editing steps. It may not be fair to compare the performance of British Airways and Tesco during an economic crisis, as they operate in different industries. However, they both compete for consumers' limited financial resources. While it may seem easier to give up travel instead of buying groceries, within the same context, consumers can choose to purchase from a cheaper retailer than Tesco. The fact that Tesco can outperform stores with lower operating costs and offer cheaper goods showcases the managerial skills of Sir Leahy. If British Airways had adopted a more open-door policy like Virgin Atlantic, it could have prevented the industrial actions employees directed against management, especially during times of crisis when employee support is essential.

The difference in how some concerns perform well during a global economic crisis while others do not can be attributed to the positive relationship that existed when times were good. When management views junior staff as partners for development and gives them the recognition they deserve, those

employees will reciprocate in difficult times. The financial performance of Tesco over the past three years is evidence of how proactively Sir Leahy managed the business and instilled confidence in the employees. This demonstrates that while future events cannot be predicted, their impact can be reduced.

Decision

From the above treatment, it can be deduced that if Tesco manages Sir Terry Leahy's resignation well, it may not have a negative impact on the company. The key factors for success in this situation are continuity and an open-minded approach from the new CEO.