Tesco's 'Steering Wheel' Strategy

            
 
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Case Details:

Case Code : BSTR187
Case Length : 21 Pages
Period : 1995-2005
Organization : Tesco
Pub Date : 2005
Teaching Note :Not Available
Countries : UK
Themes: Growth Strategy | Balanced Scorecard
Industry : Retail

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.



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EXCERPTS

Tesco's Business Operations

After becoming CEO of Tesco, Leahy focused on each of the following areas: Tesco's core UK business, its international operations, its forays into the non-food sector and retailing services, and Tesco.com. The core UK business was an important part of Tesco's activities employing over 250,000 people in 1,779 stores as of February 2005. The UK business also accounted for 80% of Tesco's total sales. It operated through four different formats of stores - Express, Metro, Superstores and Extra, catering to the needs of different types of customers. Tesco continuously innovated and introduced new product lines to provide customers with a wider choice...

Tesco's Steering Wheel

Under the leadership of Leahy, Tesco implemented the Balanced Scorecard concept. This concept had been introduced by Dr. Robert S. Kaplan and Dr. David P. Norton in an article published by Harvard Business School in 1992. The Balanced Scorecard system aimed to change organizations from financially driven to mission driven organizations. Through four business perspectives - financial performance, internal processes, customer knowledge and learning & growth, the Balanced Scorecard converted strategy into an integrated management system. Tesco adapted the Balanced Scorecard approach to meet its own requirements renaming it the Steering Wheel...

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Earning Customer Loyalty

Through its baseline 'Every Little Helps,' Tesco wanted to convey its service philosophy to its customers. According to Leahy, "People often ask me what the secret is to our success, well, I'll tell you: we listen carefully to the customers, and try to give them what they want." To make shopping trips more comfortable, Tesco introduced several initiatives like price reduction, improved product availability and well trained staff. To provide optimal staffing at checkout counters, Tesco introduced automatic labor scheduling. It also provided customers with a wide variety of information through in-store handouts and on its website www.tesco.com...

Focus on Employees

In the 1980s, Tesco main focus had been on revenue generation and the work culture in the company was dominated by fear. The staff were scared of their managers. People were hired and fired indiscriminately. The staff were neither paid well nor managed well. With a workforce of about 45,000, Tesco's average employee turnover was 75%. About 1000 was spent per employee on recruiting and training which added up to 30 million per year. Leahy implemented a new strategy relating to Tesco's people as an integral part of the Tesco Steering Wheel, because he was convinced that Tesco employees were the key to success in organizational strategies and achievement of goals...

Excerpts Contd... >>


 

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