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Tesco Organizational Structure

Tesco is a large UK-based global supermarket chain founded in 1919. It has over 7817 shops worldwide and more than 517,000 employees. In 2015, Tesco had sales of £69.7 billion but made a net loss of £6.4 billion due to market saturation and scandals involving overstating income and mistreating suppliers. Tesco has a highly hierarchical organizational structure with multiple management layers in stores, but is working to streamline this structure.

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Ardi Yusnar Bin Md Nasir
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2K views3 pages

Tesco Organizational Structure

Tesco is a large UK-based global supermarket chain founded in 1919. It has over 7817 shops worldwide and more than 517,000 employees. In 2015, Tesco had sales of £69.7 billion but made a net loss of £6.4 billion due to market saturation and scandals involving overstating income and mistreating suppliers. Tesco has a highly hierarchical organizational structure with multiple management layers in stores, but is working to streamline this structure.

Uploaded by

Ardi Yusnar Bin Md Nasir
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Tesco Organizational Structure

 By John Dudovskiy


 May 18, 2016
Tesco Board of Directors comprises 10 members and there were significant changes in the
Board during the financial year 2014/15. These changes include the appointment of John Allan
as the Chairman of the Board, the appointment of a new CEO Dave Lewis and new Chief
Financial Officer Alan Steward, the retirement of four Non-Executive Directors and the
appointment of three new Non-Executive Directors. In 2015, Mr. Lewis announced the reduction
of costs across head office functions by 30 per cent with direct implications on the management
structure.

As it is illustrated in Figure 1 below, Tesco governance structure comprises five committees


reporting to Tesco PLC board. There are 11 members in Tesco Executive Committee led by
Group Chief Executive Dave Lewis.

Figure 1 Tesco Corporate Governance Structure

Tesco organizational structure is highly hierarchical reflecting the large size of the business. 
Even in store level, there are as many as four layers of management in some large stores. The
Figure 2 below illustrates a typical organizational structure within Metro, Superstore and Extra
formats. It is important to note that the structure below is not rigid for all Tesco stores and some
stores operate with a slightly different structure reflecting their location, size and a range of other
store-specific factors.
Figure 2 Tesco organizational structure at store level

It can be argued that three or four management layers within a single store may create
unnecessary bureaucracy with a negative implications on the flow of information across the
management layers. Therefore, the senior level management needs to consider delayering
opportunities i.e. increasing the flexibility of operations and changes within store and accelerating
the flow of information via reducing the layers of management.

Tesco PLC Report comprises a comprehensive analysis of Tesco. The report illustrates the
application of the major analytical strategic frameworks in business studies such as SWOT,
PESTEL, Porter’s Five Forces, Value Chain analysis and McKinsey 7S Model on Tesco.
Moreover, the report contains analyses of Tesco’s marketing strategy and discusses the issues
of corporate social responsibility.

Tesco PLC is a UK-based global supermarket chain and it has 7817 shops and 517,802
employees around the world. Founded in 1919 by Jack Cohen, Tesco has emerged to become
the biggest retailer in the UK and more than 80 million shopping trips are made to Tesco stores
each week (Annual Report, 2015). Tesco’s mission statement is “to be the champion for
customers – to help everyone who shops with us enjoy a better quality of life and an easier way
of living”.
Tesco business strategy can be described as cost leadership with a focus on availability, range
and customer service. During the financial year of 2015, the group sales amounted to GBP 69.7
billion with the group trading profit of GBP 1.4 billion, however, the company made a net loss of
GBP 6.4 billion during the same period (Annual Report, 2015). Along with market saturation,
such a poor financial performance has been caused by a series of scandals that include an
overstatement of commercial income by GBP 208 million (Rigby, 2015) and the cases of supplier
mistreatment. It has been revealed that the supermarket chain demanded a payment of GBP 1
million from one of its suppliers, L’Oreal (Ahmed, 2015) and the company has been found to
delay payment to suppliers in order to improve its operational profit margins in 2014 (Simpson,
2016).

These scandals caused a severe damage to Tesco’s brand image and replacement of the
leadership at the top level. The new leadership headed by a new Chairman of the Board John
Allan and new CEO Dave Lewis pledged to restore the trust towards the brand via focusing on
the core values that had made Tesco popular in the first place.

Tesco PLC Report contains the application of the major analytical strategic frameworks in
business studies such as SWOT, PESTEL, Porter’s Five Forces, Value Chain analysis and
McKinsey 7S Model on Tesco PLC. Moreover, the report contains analyses of Tesco’s business
strategy, leadership and organizational structure and its marketing strategy. The report also
discusses the issues of corporate social responsibility.

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