Organisational Design and Performance Management Report

Introduction

This paper is based on the topic of organisational design and performance management. It seeks to explore the topic by looking at two companies namely Tesco and Marks & Spencer (M&S).

The paper is divided into two parts. Part one looks at the two companies in terms of organisational design and how the various aspects of organisational design are integrated with the companies’ business strategies.

It also evaluates the e-business models and approaches adopted by the two companies and how the models and approaches have enhanced innovation, growth, and service provision of the two companies.

Part two looks at how Tesco can incorporate mobile phone technology in its business strategy to enhance its performance both internally and externally. It also looks at some Key Performance Indicators (KPIs) which can be used for assessing the improvement of Tesco’s business.

The paper uses various reading materials from the internet and the companies’ websites. Other specific references include the Aberdeen’s group report and IBM’s guidlines on creating a compelling mobile user experience.

Part I

Overview of Organisational Design

Organisational design is a synonym of organisational structure. However, in the literature of organisational behaviour, organisational structure is commonly used. According to Sims, organisational structure refers to how various units of an organisation relate to each other (Sims 2007).

The purpose of organisational structure is to make sure that organisations get their work done, which is made possible by division of labour. All the jobs in an organisation taken together form the structure, where each job relates to others either in horizontal or vertical manner.

The structure of an organisation greatly influences its culture. The reason is that organisational structure is about how various jobs relate to each other. For instance, if employees of an organisation fear their managers, then the organisation is likely to have a rigid organisational culture.

On the other hand, if employees and managers interact with each other without fear, then the organisation is likely to have a flexible organisational culture (Jeremy & Steve 2012).

Some organisational structures are horizontal and are associated with line management. In organisations with horizontal structures, there are several managers working under a senior manager. These managers are presumed to be at par in terms of power and as a result, none of them can give orders to the rest.

Instead, they are in charge of specific departments but work in collaboration with each other. Under the line managers, there are project or program officers who are charged with implementation of the core activities of the organisations (Schermerhorn 2010).

One distinct form of organisational structure is the entrepreneurial structure. This structure encompasses a centre of power that is dominant in an organisation. In organisations with entrepreneurial structures, the behaviour of employees is a true reflection of the behaviour of the managers.

In an entrepreneurial structure, the Chief Executive Officer (CEO) of an organisation has good relationships with all departmental heads and team leaders of the organisation (Pearce & Robinson 2011).

Another common form of organisational structure is the bureaucratic structure. This structure is mostly associated with strict rules and regulations, which are commonly associated with red tape.

Some characteristics of the bureaucratic structure include hierarchical authority, written rules, and regulations which specify the exact nature of relationships among the employees and how tasks are carried out.

The opposite of the bureaucratic structure is the independent structure, which is characterised by a centralised support system that enables various organisational departments to work independently without supervision and coordination (Fox 2009).

In the literature of organisational design, the concept of specialisation refers to a situation where different employees are assigned different tasks which they are qualified for based on their training, education, and experience.

Specialisation enables employees to work efficiently and effectively due to their ability to focus on specific areas which they are passionate about (Stanford 2007).

Comparison of Tesco with M&S

Tesco is a multinational company dealing with grocery and general retail merchandise. Its headquarters are at Cheshunt, United Kingdom (Tesco 2014). According to information posted on its website, it is the third largest retail merchandise in the world after Wal-Mart and Carrefour.

Its main market is in the United Kingdom but it has grocery stores in more than 13 countries across the globe (Tesco 2014).

Tesco’s mission is to be acknowledged by its customers as the premier drilling Services Company while the vision is to become a customers’ strategic partner in elimination of non-productive time. The core values of the company include compliance to work ethics and provision of a safe work environment.

Tesco’s expansion strategy is coined to respond to the needs of all its customers, both in the United Kingdom and in other countries where it has operations (Tesco 2014).

The challenges associated with entering new markets abroad were the key determinants of Tesco’s expansion strategy, where it used mergers and acquisitions to penetrate those markets.

Examples of mergers by Tesco include the partnership with Samsung in South Korea to form Samsung –Tesco home-plus merger and in Thailand where it went into partnership with Charoen Pokphad to form a merger called Tesco-Lotus. In 2005, the company acquired several companies in South Korea.

With the advent of globalisation, Tesco managed to move to China where the culture and values are completely different from those of the United Kingdom.

The company entered China in 2004 after acquiring about 50% of the Hymall. It also operates in various cities and towns in China such as Shanghai, Weifang, and Taizhou where it deals with imported wines, beers, and cheese products especially from Italy, Netherlands, and France (Tesco 2014).

M&S is a British multinational company which specialises in food products, clothing, home products, and other luxurious domestic products. Its headquarters are at Westminster in London. It was started way back in 1884 by Mark and Spencer.

In the United Kingdom, M&S has a total of 622 stores and 270 others in 34 countries. The company’s mission is “to make aspirational quality accessible to all” (M&S: the official board 2010).

As per the company’s mission statement, the company’s strategic direction is coined around meeting the needs of its customers by providing them with high quality products and services at affordable prices.

In terms of organisational design, both Tesco and M&S are structured in a bureaucratic manner, that is, they both have chains of command. It is through the chains of command that authority and power to make decisions are entrenched.

The two companies are therefore layered, with the boards of directors being at the top. Since the two are multinational companies, the bureaucratic structure is the most appropriate because it enables them to be guided by formal rules and regulations which are communicated well through the chains of command.

Both companies have rules of conduct at the workplace. Such rules govern things like working hours, holidays, and communication protocols within the companies.

The bureaucratic approach views organisations as being guided by rationality. Employees are selected not on the basis of friendship but on merit and qualification. The approach does not encourage the mixing of friendship or family issues with organisational business.

All employees are therefore selected through a transparent and competitive process. In terms of remuneration, employees are remunerated according to their positions and qualifications, meaning that those at the top of the hierarchy get higher remuneration than those at the bottom.

However, in terms of responsibilities, those at the bottom are mostly involved with daily activities of organisations while those at the top are mostly involved with policy issues and public relations activities.

The approach recognises positions in the hierarchy by their designations not by the individuals who hold them. It means that there is no personification of ranks within organisations and as a result, discipline and respect are able to prevail.

The idea of addressing positions by their designations in the hierarchy also ensures that there are no unnecessary arguments between different officials in the chain of command.

The bureaucratic structure is based on the bureaucratic theory, which is characterised by clearly defined rules and procedures at the workplace. These rules and procedures make things easy for employees because there is no ambiguity since the employees are able to focus on their duties and responsibilities.

The clear chain of command also ensures that there is proper communication because all employees know where to receive instructions from and as a result, there is no conflict of interest between various levels in the organisational structure (Osterwalder & Pigneur 2010).

The recruitment of employees based on merit and professional qualification ensure that the right people are employed for the right jobs. It also ensures that there is efficiency and high quality production in organisations.

The separation of employees’ personal issues and those of organisations enables employees to focus only on their duties and responsibilities at the workplace.

However, the organisational designs for the two companies vary to some extent, with Tesco having a more rigid structure than M&S. In the case of M&S, the managing director is at the top followed by the executive directors, then the general staff (M&S: the official board 2010).

This structure means that M&S is able to make decisions faster than Tesco because at Tesco, all decisions pass through a longer chain of command than at M&S. As a result, M&S has managed to move to more countries than Tesco.

The reason is that managers at M&S are given the leeway to make business decisions based on the situations on the ground (M&S: student information 2010). It is important to mention that M&S had a rigid structure just like Tesco.

However, in 2009, M&S was restructured after its top leadership experienced slow growth and stiff competition from its business rivals. The leadership attributed its slow growth to its rigid organisational structure, where the procurement of decisions took longer than necessary.

After restructuring, M&S has realised increased growth of business and improved customer satisfaction (M&S: the official board 2010).

E-Business Models and Approaches for Tesco and M&S

E-Business Models and Approaches for Tesco and M&S

Organisational Strategy

As shown in the diagram above, the success of any organisation is depended on three key pillars. The business strategy is equivalent to organisational mission. For organisations to achieve their mission, they must put in place proper organisational infrastructure in terms of organisational and information strategies.

The organisational strategy comprises both short-term and long-term goals, while the information strategy comprises internal and external communication channels. The three pillars are interwoven; meaning any change in one of them affects the others. In other words, the success of each pillar is depended on the other pillars.

However, business strategy is the key pillar which provides overall direction of the organisations (Pearson & Saunders 2013).

Since the start of the 1990 decade, Tesco emerged as a global leader in e-business. Through its Information and Technology (IT) department, the company developed a vibrant e-business model which has been described as very efficient and effective.

According to its IT director Mr. Mike McNamara, Tesco’s e-business model focuses on various business aspects namely marketing, e-procurement, e-training, supply chain management, customer relationship management, and online selling.

According to a survey done by an organisation known as Datamonitor, Tesco accounted for more than half of total sales done online in 2014 (Rogers 2015).

On its part, M&S has not been in the e-business for long like Tesco. However, it has incorporated technology in its business and as a result; it has been able to boost its revenues by 40% in the past decade. Just like Tesco, M&S’s e-business model is focused on marketing and sales (Strinfellow 2010).

The marketing strategies of the two companies involve advertisement on various platforms on the internet. Examples are explained below.

Facebook

The two companies have Facebook pages where they post information about what they do, the kind of services and products they deal with, their uniqueness, and how customers may get their products and services. Facebook has a function that allows people to ‘like’ the companies’ pages by clicking on the ‘like’ button.

When people ‘like’ the pages, they are able to access the companies’ business information such as services offered, physical addresses, companies’ mission and vision among other information. On the Facebook pages, the companies invite those who ‘like’ their pages to give their views regarding the companies’ operations.

In other words, the companies operate an online suggestion box, which they use to improve their services. Facebook is therefore not only used as an advertisement and marketing tool but also as a platform to improve the quality of products and services offered by the two companies (Bodnar & Cohen 2012).

Twitter

The two companies also have twitter handles where those who want to know more about them are requested to ‘follow’ the twitter handles. Once they ‘follow’, they are able to access the companies’ business information. The companies use their twitter accounts to advertise and market their businesses.

They also use them to update customers on new products and services. In other words, the companies use twitter for acquiring and retaining customers (Jones & Silverstein 2009).

Google +

It is a product of the giant search engine company called Google. Google + is among the latest forms of social media and has improved features compared to twitter and Facebook. The google+ application can be downloaded into mobile phones and computers.

Many people who use it prefer it due to its many features such as live videos, music, data storage functions, You Tube, google maps, and google play among other features. Just like Facebook and twitter, for people to join google+, they are required to register by creating their profiles.

Companies may as well create their google+ profiles and invite customers to be part of the events on their google+ profiles.

Both Tesco and M&S use the google+ feature to market their products and services. One of the interesting features of google+ is You Tube. This feature enables the companies to store videos and pictures of various products.

Due to its ability to store huge files, google+ enables the companies to share as mush information as possible with their customers, a feature which is missing on Facebook and twitter.

As a result, it becomes easy and convenient for the companies to reach many customers with comprehensive information about their products and services (Harman 2014).

Google+ has a high value when it comes to advertisement and marketing. It also has the advantage of having a huge data storage capacity, which ensures that the companies do not lose their confidential information due to various reasons such as natural disasters, vandalism, or sabotage by business rivals.

E-mail Lists

The electronic mail, popularly known as the e-mail is one of the oldest methods of communication via the internet. It is mostly used for confidential communication between people, and especially for official purposes.

However, the recent days have experienced an increased use of the e-mail, especially after companies started using it for marketing their products and services (Loomer 2013).

Companies do so by creating a function in their websites, where those who visit the websites are able to subscribe using their e-mail addresses and start receiving messages about different products and promotions in their e-mail inbox (Pearson & Saunders 2013).

Both Tesco and M&S use the e-mail for advertisement purposes. Through the e-mail, the companies have been able to increase their audience on the social media. The reason is that over 85% of people who have an e-mail account are also on social media.

For instance, Facebook has a feature for customising audience using the e-mail. Once Facebook users ‘like’ the Facebook pages of the companies, the feature directly connects Facebook to the users’ e-mail accounts.

Once that happens, the users are able to receive updates on various products and services in their e-mail inbox (Pearson & Saunders 2013)..

Just like Facebook, majority of people who are on twitter also have e-mail addresses. The reason is that many people use their e-mail addresses to register with twitter and Facebook.

In an effort to increase audience for various advertisements, twitter has a tailored audience feature which enables those with e-mail addresses to get updates from twitter via their e-mail addresses.

Part II

Advice to Tesco

The mobile phone technology is one of the most recent milestones in the telecommunication sector. As the name implies, it is a technology which is based on the mobile phone. When the first mobile phone was invented about two decades ago, it was viewed as a major discovery that revolutionised how people communicated with each other.

As opposed to earlier methods of communication, the mobile phone came with a unique feature of portability. The first mobile phone was used mainly for making calls and sending text messages.

As a result, people were, and are still able to move with their mobile phones from one place to another and communicate with others using various mobile phone networks.

Since then, the mobile phone technology has witnessed major improvements, which have been occasioned by continued innovation and creativity in the telecommunication sector.

The first feature to be added to the mobile phone was the internet. The manufacturing of mobile phones which were internet enabled was a major step towards making the mobile phone part and parcel of human life.

Currently, the mobile phone is equipped with a wide range of applications such as Facebook, twitter, WhatsApp, Bluetooth, wi-fi among other advanced applications.

In a nutshell therefore, the mobile phone is slowly rendering the computer irrelevant. The reason is that despite its small screen, the mobile phone is capable of doing any task which the computer can do.

In business circles, the mobile phone has not been left behind. As explained earlier, companies of different sizes and complexities have incorporated technology in their business strategies. However, many of the technologies are based on the computer. Due to globalisation, the business environment has become more competitive than ever.

The main driving forces of globalisation include the advancement in information and communication technology, improved transport systems, and liberalisation of trade and immigration policies.

As a result, companies are always thinking of ways of increasing their competitiveness so as to increase their revenues and expand to new markets. Companies have therefore been investing immensely in innovation with the aim of coming up with unique products and services which can be appealing to their customers.

As mentioned earlier in this report, Tesco’s expansion strategy is coined to respond to the needs of its customers irrespective of their locations and nationalities. Tesco has managed to incorporate technology in its business strategy to some extent.

However, it has not effectively utilised the mobile phone technology and as many commentators have pointed out, the company has a great potential of increasing its revenues if it fully integrates its business strategy with the mobile phone technology.

Tesco can borrow the example of IBM, which is one of the few organisations which have realised the potential of the mobile phone technology to grow businesses. According to IBM, the mobile phone technology is becoming the target of many companies which want to appeal to their customers as much as possible.

The reasoning behind the application of mobile phone technology in business is that there are more people who are able to access and use the mobile phone than those who are able to access and use the computer. The reason is that the mobile phone is portable and easy to use.

According to Facebook, which is one of the leading social media companies in the globe, over 350 million people use Facebook on their mobile phones daily for various activities such as posting updates, communicating with friends, and sending photos.

It therefore means that if properly used, the mobile phone technology has a great potential of growing businesses.

According to IBM, the overall objective of companies which use the mobile phone technology in their businesses should be what the customers want. If the companies can be able to accurately know the needs of their customers, then they can be in a position to design applications which may meet those needs.

As a result, such companies should follow IBM’s simple guidelines when using the mobile phone technology as a strategy for creating business advantage.

These guidelines are the ones which I would advise Tesco to follow if it aspires to succeed in its strategic objectives both at home and abroad (IBM global business services: White paper: creating a compelling mobile user experience 2012).

As per the IBM’s model, companies such as Tesco should focus on the mobile phone user’s experience with the aim of making it different from that of using the computer. Basically, a mobile phone application should not be a replica of a website because the mobile phone is remarkably different from the computer.

Tesco should therefore aim at designing mobile phone applications which are easy to use, bearing in mind that mobile phone users are more prone to interruptions than computer users.

As a result, there is no room for sophisticated applications on mobile phones because they only help in diverting the attention of the users elsewhere.

The user interface for the mobile phone should therefore be user-friendly and equipped with clear guidelines and steps which make the user’s experience hustle free (IBM global business services: White paper: creating a compelling mobile user experience 2012).

The other aspects which Tesco should focus on while integrating its business strategy with the mobile phone technology include making applications which take into account simplicity, rich experiences, sociability, innovativeness, and smart evolution.

All these aspects are focused on the customers; with the objective of making their mobile phone technology experiences enjoyable. If the applications are kept simple but of high quality, customers would be willing to use them for their shopping.

Since the goal is to make the customers use their mobile phones to make their shopping experiences easier, Tesco should ensure that the details which are given in all applications are valid and not confusing.

For example, if a customer wants to order a certain product using a mobile phone, then the application for performing that task should be equipped with adequate details about the product and its unique features.

Something else for Tesco to put into consideration is that applications for online shopping should also be sensitive to customers’ feelings.

In some cases, some applications may require customers to disclose their personal details such as age, name, location, and so forth. In such cases, the applications should clearly explain why such details are needed and have an option for accepting or declining to reveal such details.

That makes it possible for customers to give their personal details without fear of victimisation. If adequate explanations are not provided, customers may become suspicious when asked to disclose their personal details and abandon the whole thing altogether.

Mobile phone applications for business purposes should also focus on addressing customers’ key concerns. The reason is that all customers who use mobile phone applications have specific concerns which they expect to be addressed.

It should not just be a matter of making applications for the sake of making them, but rather, Tesco should first understand which applications are available in the market and what customers think about them. Once that is done, the company should invest only in applications which are completely different from those in the market.

The company may also make improvements on the existing applications and install them in mobile phones. The reason is that customers are always excited by the realisation that a mobile phone application has the ability of improving their mobile shopping experiences.

Something else of crucial importance when designing a mobile phone application is speed. The reason is that customers do not have all the time to wait for low-speed applications to execute a command. Low-speed applications also consume a lot of battery power and data bundles, something which does not go down well with customers.

The applications should therefore be of good speed and have the ability to open several windows at the same time.

I would therefore advise Tesco to be proactive and empower its IT department with the necessary equipment and resources for it to fully incorporate the mobile phone technology in the company’s business strategy.

If Tesco is able to advance its mobile phone technology by following IBM’s guidelines, then the potential of outperforming its competitors such as Wal-Mart would be increased.

Key Performance Indicators

If Tesco embraces IMB’s guidelines by incorporating them in its business strategy, it would realise significant improvements. Such improvements would include customer satisfaction, better work environment, and improved quality of products and services.

In order to asses the improvements, I have developed a group of KPIs which may be used to asses Tesco’s improvements. The KPIs are adopted from the Aberdeen’s group report and focus on three key areas namely internal business processes, customer satisfaction, and organisational learning. These are discussed and illustrated below.

As indicated earlier, Tesco’s mission is to be acknowledged by its customers as the premier drilling Services Company while its vision is to become a customers’ strategic partner in elimination of non-productive time.

The mobile phone technology relates to Tesco’s mission in that it would increase the customer base and lead to improved financial performance, which would in turn lead to reduction of prices.

It relates to the vision of becoming a customers’ strategic partner in elimination of non-productive time in that through it, customers would not waste time using computers to do their online shopping but would do it using their mobile phones at their places of convenience (Aberdeen group report: Enterprise mobility management 2012).

Through the mobile phone technology, Tesco would be able to initiate Corporate Social Responsibility (CSR) programs at the community level.

These CSR programs would comprise things like setting up foundations for helping the less fortunate in the society to attain education, establishment of healthcare initiatives, and environmental conservation.

These programs would not only make people live good lives but would also enable them to benefit from the profits made by the company. The programs would also lead to increased customer satisfaction due to improved efficiency.

Objective Indicator Target Initiative
Increase the customer base The number of new customers per week and the rate at which they purchase goods and services using the mobile phone technology The rural communities, the affluent, the African Americans, the suburbanite, the Hispanic Americans, and the so called ‘empty-nesters’ Design mobile phone applications which are user-friendly
Improve customer satisfaction Increased number of customers and improvement of sales All the categories of customers named above and any others Improve the quality of goods and services
Initiate CSR programs Number of CSR programs established and the number of beneficiaries The less fortunate in the society Establish CSR initiatives and create awareness about their existence and benefits using the mobile phone technology

The mobile phone technology would improve Tesco’s internal business processes through increased efficiency. The increased efficiency relates to the company’s vision in that through it, the company would be able to utilise its resources effectively.

The effective utilisation of resources would enable the company to provide goods and services which are of high quality at affordable prices, thus enable the customers to live good lives because they would be able to save money through purchasing goods and services at low prices.

The increased efficiency relates to the company’s mission in that it would increase the output of the company’s capital and lead to expansion to new markets.

The other objective of improving the internal business processes is the improvement of the quality of goods and services produced and sold by the company. This objective relates to Tesco’s mission in that improved quality of goods and services would lead to increased sales.

As a result, many people would save money and live good lives. The objective relates to Tesco’s vision in that the provision of quality goods and services would increase the competitive advantage of the company in the retail industry, and enable it to move closer towards being a world leader in the retail industry.

The improvement of the quality of goods and services is related to the company’s overall strategy because the high quality goods and services would enable the company to increase its customer satisfaction.

Consequently, the customers would increase the volume of their shopping and enable the company to improve its financial performance (Parmeter 2010).

Objective Indicator Target Initiative
To increase company’s efficiency Reduction of the time used for making one unit of production To reduce the time used for making one unit of production by half Develop mobile phone applications for various organisational processes such as supervision of staff
Improve the quality of goods and services Production of goods and services which are of high quality Improve the quality of all goods and services Use mobile phone technology for constant communication between various departments of the company

Conclusion

The success or failure of any organisation is determined by its structure. Different organisations are designed differently to conform to their social, economic, and political environments. Even though Tesco and M&S have bureaucratic structures, M&S has a less bureaucratic structure than Tesco.

M&S’s structure enables it to make decisions easily. Both companies have embraced e-business and have applied the latest forms of technology in their business activities. The incorporation of technology in their businesses has enabled the companies to boost their revenues and increase their global recognition.

For instance, Tesco has realised an exponential growth of customers who do their shopping online. However, there is need for the company to integrate its business strategy with the mobile phone technology.

If Tesco effectively integrates its business strategy with the mobile phone technology, it would be in a good position to effectively compete with its business rivals.

Through the mobile phone technology also, Tesco would be able to increase customer satisfaction because many customers would be doing their shopping using their mobile phones at their places of convenience.

For the company to be able to fully benefit from the mobile phone technology however, it needs to apply the guidelines provided by IBM and develop mobile phone applications which are user-friendly, easy to use, and able to meet customers’ needs and expectations.

Reference List

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Bodnar, K & Cohen, J.L 2012, The B2B social media book: become a marketing superstar by generating leads with blogging, linkedln, twitter, facebook, e-mail, and more, Wiley, Hoboken, N.J.

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Parmeter, D 2010, Key Performance Indicators (KPI): developing, implementing, and using winning KPIs, John Wiley & Sons, Hoboken.

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Pearson & Saunders 2013, Strategic Management of Information Systems, John Wiley & Sons, Hoboken.

Rogers, J 2015, Tesco.com leads the world, says datamonitor, viewed on < http://www.computerweekly.com/feature/Tescocom-leads-the-world-says-Datamonitor>

Schermerhorn, J 2010, Management, Wiley, Hoboken, N.J.

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