Management

1. Table of Contents
1. Introduction ............................................................................................................................ 2
2. Organizational culture ............................................................................................................ 2
2.1 Definition of organizational culture .................................................................................... 2
2.2 Organizational culture model of Schein ............................................................................ 3
2.3 Organizational culture model of Deal and Kennedy .......................................................... 4
3. Organizational culture change theories .................................................................................. 5
3.1 Organizational culture change through model of Balanced Scorecard of Kaplan and
Norton .................................................................................................................................... 5
3.2 Organizational culture change through model of Lewin ..................................................... 7
3.3 Organizational culture change through 7-S model of McKinsey ........................................ 8
4. Conclusion ............................................................................................................................ 10
References ............................................................................................................................... 11
1

2. 1. Introduction
This report reviews the literature regarding organizational culture and organizational
culture change. In particular, this report will define organizational culture and will review
models regarding organizational culture like the organizational culture model of Schein,
and the organizational culture model of Deal and Kennedy. In addition, this research will
review organizational culture change theories like the organizational culture change
through the model of Balanced Scorecard of Kaplan and Norton, the organizational
culture change through the model of Lewin and the organizational culture change
through the 7-S model of McKinsey. Through this report, main theories regarding
organizational culture and organizational culture change will be analyzed critically.
2. Organizational culture
2.1 Definition of organizational culture
In terms of organizational culture, it is defined as behaviors and values which have the
positive contribution to the valid and unique psychological and social environment of a
company. The organizational culture includes values, philosophies, experiences and
expectations which make all organizational members to become a united body and it is
expressed in the interactions of the company with the outside world, its self-image of the
company, and its inner activities (Shahzad et al., 2012). According to Xiaoming and
Junchen (2012), organizational culture is based on unwritten and written rules, shared
customs, shared beliefs and shared attitudes which have been created over time and
have been regarded as valid factors.
Organizational culture reflects the way that a company performs its business
operations, and treats its customers, its employees and the wider communities;
indicates the level of freedom of leaders and managers in decision-making process;
reflect the way that the organizational information is communicated; indicates the
hierarchy of power; and reflects how committed staffers are toward common
organizational goals (Tsai, 2011). The organizational culture influences the performance
and productivity of a company and offers guidelines on product safety and quality,
2

3. customer service and care, punctuality and attendance and concerns for the
environment (Cacciattolo, 2014). When an organization has a positive organizational
culture, the solidarity between organizational members is very high and the employee
commitment to the achievement of organizational goals is very high (Lapina et al.,
2015).
2.2 Organizational culture model of Schein
Schein (1984) indicates that there are three various levels in organizational culture, that
is, (1) artifact and symbol, (2) espoused value, and (3) assumption (see figure 1).
Figure 1: Organizational culture model of Schein
Source: Schein (1984)
In terms of artifact and symbol, the artifact marks an organization’s surface and it is
visible element in the organization like organizational uniform, organizational processes,
organizational structure, organizational architecture, and organizational logos (Schein,
1984). Regarding espoused value, it reflects value, rule and standard of an organization
and it expresses shared philosophy, goal and strategy of the organization (Kokina and
3

4. Ostrovska, 2013). Problems can occur in a company when ideas of leaders and
managers are not suitable with basic assumptions of the company. The basic
assumptions are experienced as unconscious and self-evident behavior and are greatly
embedded in the corporate culture (Ehtesham et al., 2011). In terms of the three levels
of the organizational culture, the first level is easy to change while the second level and
the third level are more difficult to change (Kong, 2003). According to Schein (2010), it
is necessary for an organization to discuss with its employees about the basic aspects
of its organizational culture and this will increase the process of cultural change. When
a difference occur amongst prevailing and desired cultures, the responsibilities of
managers and leaders become important to increase the effectiveness of organizational
change process.
2.3 Organizational culture model of Deal and Kennedy
For organizational culture, Deal and Kennedy (2000) indicate that there are four
organizational culture types, namely, (1) work-hard and play-hard organizational culture,
(2) tough-guy macho organizational culture, (3) process culture and (4) bet-the-
company culture (see figure 2).
Figure 2: Organizational culture model of Deal and Kennedy
4

5. Source: Deal and Kennedy (2000)
For the organizational culture model of Deal and Kennedy, it is based upon how quickly
employees in an organization receive rewards and feedback after they have conducted
something and the risk level that they can face. For the work-hard and play-hard
organizational culture, it reflects the quick reward/feedback and low risks that
employees of an organization receive after they have performed something. This type of
organizational culture leads to stress for its employees coming from the work quantity
rather than work risk and high-speed recreation is caused from high-speed actions
(Shahzad et al., 2012). The tough-guy macho organizational culture has quick
reward/feedback and high risks and it leads to the stress of employees in terms of
potential reward loss and high risks and makes the employees concentrate much on the
current period rather than the long-term period (Xiaoming and Junchen, 2012). The
process organizational culture reflects low risks and slow reward/feedback and it leads
to plodding work, security, comfort and low stress for the employees, develops
bureaucracies and retains the status quo. In this organizational culture, the stress of
employees is caused from system stupidity and internal politics (Deal and Kennedy,
2000). In addition, the bet-the-company culture, it reflects high risk and slow
reward/feedback and it leads to stress for the employees through delay of work and
great risks. In this organizational culture, the long viewpoints are conducted and the
majority of jobs are conducted according planned projects (Cacciattolo, 2014).
3. Organizational culture change theories
3.1 Organizational culture change through model of Balanced Scorecard of
Kaplan and Norton
For the Balanced Scorecard, Kaplan and Norton (1992) reflect that organizational
culture change can be conducted in aspects as follows: (1) customer aspect, (1)
financial aspect, (3) internal process aspect and (4) organizational capability in terms of
learning and growth (see figure 3).
5

6. Figure 3: Balanced Scorecard model of Kaplan and Norton
Source: Kaplan and Norton (1992)
To change an organizational culture, it is important for the organization to be interested
in customer aspect. In particular, the organization must investigate needs and
expectations of customers and must change its products/ services to meet such needs
and expectations (Kaplan and Norton, 1992). For the financial aspect, the organizational
culture change becomes more effective when financial transparency and financial
budget control must be conducted (Kaplan and Norton, 2000). For the business process
aspect, it is important for an organization to pay much attention to changing the
effectiveness of functions such as marketing, sales, management of human resources,
and business process control when it wants to increase the effectiveness of the
organizational culture change (Kaplan and Norton, 2000). In addition, to change the
organizational culture successfully, it requires an organization to change approach of
organizational learning to increase organizational innovation. Indeed, the organizational
6

7. learning decides the innovation capability of organizational members and creates good
conditions for all organizational members to gain the high knowledge regarding
business markets and changing needs of customers. The organizational learning also
decides the market position of the organization and the customer preference for
innovative products/services of the organization (Kaplan and Norton, 1996). All the four
aspects in this model are very useful for organizations to increase the successes in the
organizational culture change and to gain the sustainable business development
(Kaplan and Norton, 1992).
3.2 Organizational culture change through model of Lewin
In terms of organizational culture change, Lewin (1947) indicates that there are three
stages for an organization to conduct, that is, (1) unfreezing stage, (2) change stage
and (3) refreezing stage (see figure 4).
Figure 4: Organizational change model of Lewin
Source: Lewin (1947)
According to Lewin (1947), in the stage of unfreezing, it is important for an organization
to determine what it must change by surveying organizational members to know the
existing organizational situation, and to know the reason behind the organizational
culture change. In this stage, the organization has to ensure that there is strong support
from the top leaders, has to create the needs for organizational culture change by
7

8. creating an attracting message to indicate the reasons why organizational culture
change has to be conducted, using the clear vision and strategies as support tools, and
communicating the vision in terms of the organizational culture changes required and
has to manage and has to understand concerns and doubts in the working environment
by remaining positive exchanges to employees.
For the stage of change, there are four issues that an organization needs to emphasize,
that is, (1) constant communications and interactions with its employees for the goal of
describing benefits of the organizational culture change, explaining exactly how the
organizational culture change will affect all organizational members, and preparing all
organizational members for what are coming, (2) dealing with problems directly and
quickly and relating the needs for organizational culture changes back to operation
necessities, (3) action of empowerment of employees, and (4) involving organizational
members in the process of organizational culture change by generating short-term wins
to increase the organizational culture changes (Hussain et al., 2016). For the last stage
of the process of organizational culture change – refreezing, an organization must make
such change become successful, must develop the way to retain such change, must
offer training programs and supports to employees to ensure such changes successfully
and must celebrate the success in the organizational culture change (Burnes, 2004).
3.3 Organizational culture change through 7-S model of McKinsey
For McKinsey model, the researcher reflects that organizational culture should be
changed through main aspects as follows: (1) staff, (2) style, (3) skills, (4) shared
values, (5) systems, (6) strategy and (7) structure (see figure 5).
8

9. Figure 5: 7-S model of McKinsey
Source: Adopted by Abbott and Booth (2014)
For the strategy factor, it reflects the plan created to build and retain competition edges
over competitors and the strategy needs to be changes to increase the effectiveness of
organizational culture change such as the strategy focusing much on maximizing values
of customers and respecting benefits of other stakeholders like suppliers, the
governments, employees, etc. (Alvesson and Svenigsson, 2008). For the structure
factor, the way that organizational structure is changed such as changing tall
organizational structure into flat organizational culture (Armenakis and Harris, 2009).
For the system factor, it reflects the changes in daily procedures and activities that
organizational employees engage in and such changes will lead to the high
effectiveness of organizational culture change (Bordia et al., 2004). In terms of the
shared values, changes core values of an organization so that the organization has
more positive organizational culture and the more organizational ethics (Bordia et al.,
2006). Concerning about skills, when conducting an organizational culture change, it is
important for an organization to conduct change in skills of employees by improving
current skills and enhancing competencies of employees (Lin, 2007). For the staff
factor, an organization must make its employees feel that the organizational culture
change is necessary and makes these employees more committed to the achievement
of goals of the organizational culture change (Huggins et al., 2003). In addition, the style
9

10. factor, an organization must change the leadership style of leaders and managers such
as changing the autocratic leadership style into the democratic leadership style (Abbott
and Booth, 2014).
4. Conclusion
This report has reviewed the literature regarding organizational culture and
organizational culture change. In particular, this report has defined organizational
culture and has reviewed models regarding organizational culture like the organizational
culture model of Schein, and the organizational culture model of Deal and Kennedy.
The organizational culture model of Schein reflects the three various levels in
organizational culture, that is, artifact and symbol, espoused value, and assumption and
the organizational culture model of Deal and Kennedy reflect the four types of
organizational culture, namely, work-hard and play-hard organizational culture, tough-
guy macho organizational culture, process culture and bet-the-company culture. In
addition, this research has review organizational culture change theories like the
organizational culture change through the model of Balanced Scorecard of Kaplan and
Norton, the organizational culture change through the model of Lewin and the
organizational culture change through the 7-S model of McKinsey. It is important for
organization to pay much attention of the factors and stages in the process of
organizational culture change.
10

11. References
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Essential theory for practice. London: McGraw-Hill Education.
Alvesson, M. and Sveningsson, S. (2008). Changing organizational culture: Culture
change. Work in progress. London, New York: Routledge.
Armenakis, A. A. and Harris, S. G. (2009). Reflections: Our journey in organizational
change research and practice. Journal of Change Management, 9(2), pp. 127-142.
Bordia, P., Hunt, E., Paulsen, N., Tourish, D. and DiFonzo, N. (2004). Uncertainty
during organizational change: Is it all about control? European Journal of Work and
Organizational Psychology, 13, pp. 345-365.
Bordia, P., Irmer, B. E. and Abusah, D. (2006). Differences in sharing knowledge
interpersonally and via databases: The role of evaluation apprehension and perceived
benefits. European Journal of Work and Organizational Psychology, 15(3), pp. 262-280.
Burnes, B. (2004). Kurt Lewin and the planned approach to change: A re-appraisal.
Journal of Management Studies, 41(6), pp. 977-1002.
Cacciattolo, K. (2014). Understanding organizational cultures. European Scientific
Journal, 2, pp. 1-7.
Deal, T. E. and Kennedy, A. A. (2000). Corporate cultures: The rites and rituals of
corporate life. New York: Basic Books.
Ehtesham, U. M., Muhammad, T. M. and Muhammad, S. A. (2011). Relationship
between organizational culture and performance management practices: A case of
University in Pakistan. Journal of Competiveness, 4, pp. 78-86.
Higgins, C., Judge, T. A. and Ferris, G. R. (2003). Influence tactics and work outcomes:
A meta-analysis. Journal of Organizational Behavior, 24, pp. 89-106.
11

12. Hussain, S. T., Lei, S., Akram, T., Haider, M. J., Hussain, S. H. and Ali, M. (2016). Kurt
Lewin’s process model for organizational change: The role of leadership and employee
involvement: A critical review. Journal of Innovation & Knowledge, 30, pp. 1-7.
Kaplan, R. S. and Norton, D. P. (1992) The Balanced Scorecard: Measures that drive
performance, Harvard Business Review, 1, pp. 71-79.
Kaplan, R. S. and Norton, D. P. (1996). The Balanced Scorecard: Translating strategy
into action. Boston: Harvard Business School Press.
Kaplan, R. S. and Norton, D. P. (2000). The strategy-focused organization: How
Balanced Scorecard companies thrive in the new business environment. Boston:
Harvard Business School Press.
Kokina, I. and Osrovska, I. (2013). The analysis of organizational culture with the
Denison model. European Scientific Journal, 1, pp. 362-368.
Kong, S. H. (2003). A portrait of Chinese enterprise through the lens of organizational
culture. Asian Academy of Management Journal, 8(1), pp. 83-102.
Lapina, I., Kairisa, I. and Aramina, D. (2015). Role of organizational culture in the quality
management of University. Procedia – Social and Behavioral Sciences, 213(1), pp. 770-
774.
Lewin, K. (1947). Field theory in social science. New York: Harper & Row.
Schein, E. H. (21984). Coming to a new awareness of organizational culture. Sloan
Management Review, 25(2), pp. 3-16.
Schein, E. H. (2010). Organizational culture and leadership, 4
th
edition. New York:
Jossey-Bass.
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13. Shahzad, F., Luqman, R. A., Khan, A. R. and Shabbir, L. (2012). Impact of
organizational culture on organizational performance: An overview. Interdisciplinary
Journal of Contemporary Research in Business, 3(9), pp. 975-985.
Tsai, Y. (2011). Relationship between organizational culture, leadership behavior and
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Xiaoming, C. and Junchen, H. (2012). A literature review on organization culture and
corporate performance. International Journal of Business Administration, 3(2), pp. 28-
37.
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14. Marketing
Table of Contents
1. Introduction ..........................................................................................................................................................2
2. An overview of Tesco .......................................................................................................................................2
3. The rationale behind the initiation of the process of organizational culture change in Tesco .. 3
4. Key stages related to the process of organizational culture change in Tesco................................5
5. Challenges threatening to the process of organizational culture change in Tesco.......................8
6. The end result after conducting organizational culture change........................................................ 12
7. Conclusion......................................................................................................................................................... 13
References............................................................................................................................................................. 14
1

15. 1. Introduction
Tesco is a UK-based retailing company and it faced a problem in terms of negative
organizational culture. Indeed, this company required foreign students to work in many
hours at its stores in the United Kingdom in 2012 (Mason and Evans, 2015), offered
low-quality products to its customers in 2013 (Neate and Moulds, 2013) and conducted
fraud action in reporting its financial statements in 2014 (Walker and Paris, 2014). With
the negative organizational culture, this company faced the low business performance
in two years, that is, the year of 2013 and the year of 2014 (Mason and Evans, 2015).
This report is regarded as consultancy report that indicated how Tesco conducted an
organizational culture change to gain the positive organizational culture. In particular,
this report gives an overview of Tesco, indicates main rationales behind the initiation of
the process of organizational culture change in Tesco, presents key stages related to
the process of organizational culture change in this company, analyzes challenges
threatening to the process of organizational culture change in this company and
indicates the end results after conducting such organizational culture change.
2. An overview of Tesco
Tesco is regarded as one of the leading retail companies in the United Kingdom and
gains the high brand recognition of customers in the world. In 1919, this company was
set up and this company is headquartered in Hertfordshire, the United Kingdom. Since
the 1960s, its brands have become famous in the markets in the United Kingdom.
Currently, this company is operating in the global retail industry with the fierce
competition level (Phambuka-Nsimbi et al., 2015). This company is operating in more
than 15 countries all over the world and serves more than 10,100 customers daily. This
company is operating four store format types: (1) Tesco Express, (2) Tesco Metro, (3)
Tesco Extra, and (4) Tesco Superstore (Tesco, 2015).
In the business markets in the United Kingdom, a difficult economy of this nation has
greatly affected retail organizations and other organizations. In 2012, the net profit of
this company reduced for the first time in over the 100 establish years. As a result, this
2

16. company used GBP1 billion to develop its business capability and to improve its
physical aspects. However, the business efficiency of Tesco was not improved by the
number of investment money. In addition, the intense competition in the business
markets in the United Kingdom, the increased salary costs, the needs of customers for
differentiated goods with cheap pricing levels, the price war of rivals and the increased
raw materials’ pricing levels have made Tesco face many business difficulties (Curtis,
2012). Instead of choosing the positive ways for improving the business performance,
Tesco chooses unethical approaches to gain the high business performance. However,
the unethical approaches have made the business performance of this company
become worse.
3. The rationale behind the initiation of the process of organizational culture
change in Tesco
To save salary costs, Tesco decided to employ part-time foreign students to work at its
stores in the United Kingdom in 2012. However, this company violated the employment
law of the government of the United Kingdom because it required such part-time foreign
students to work many hours weekly (50-70 hours weekly). The employment law of the
UK government only allows the part-time foreign students to work at organizations with
the highest 20-hour time in a week. The goal of hiring the part-time foreign students of
this company was to reduce wage costs and to utilize their labor capability maximally.
With such action, the reputation of brand image of Tesco has negatively affected
(Mason and Evans, 2015). The wrong action was created by the negative organizational
culture focusing much on minimizing business costs without considering benefits and
well-being of its employees (Shannon, 2012).
In 2013, consumers in markets in the United Kingdom and other markets in European
nations felt too disappointed about Tesco’s unethical action because these consumers
had had the great trust in this company in the long-term period. That is, Tesco
manufactured beef products by using horsemeat rather than beef meat. The negative
criticism from consumers reduced its sales and net profit in 2013 (Neat and Moulds,
2013; Lawrence, 2013). The wrong action was created from the negative organizational
3

17. culture emphasizing the maximum of business profits without respecting the values of
customers and the well-being of customers (Harrison, 2014).
In 2014, because of the detection of the fraud in manufacturing of beef products, many
consumers in the markets in the United Kingdom and other markets in European
nations boycotted products of Tesco. As a result, the sales of this company reduced
significantly in 2013 and 2014. To retain the number of current investors and to attract
new investors, Tesco continued to conduct unethical action regarding the fraud in
reporting financial statements. Instead of reporting business loss situation in financial
statements in 2014, Tesco reported that its sales and net profit increased significantly in
2014. The unethical action continued increasing negative awareness of consumers in
markets in the United Kingdom and other markets in European nations and negative
perception of investors all over the world. Then, the government of the United Kingdom
offered many punishments to this company (Walker and Paris, 2014). The unethical
action was created from the negative organizational culture emphasizing attracting new
investors and retaining current investors without respecting the values of investors and
the well-being of investors (Forte, 2013).
From the unethical actions like requiring foreign students to work in many hours at its
stores in the United Kingdom in 2012, offering low-quality products to its customers in
2013 by using horsemeat to replace beef meat in its beef product manufacturing
process and conducting fraud action in reporting its financial statements in 2014, it is
clear that Tesco’s organizational culture was negative and it is necessary for this
company to change its organizational culture to gain the high business performance and
to gain the famous retailing brand in the world. In particular, this organization only
focused much on reducing business costs, maximizing business profits and attracting
and retaining investors without considering and respecting the benefits and the well-
being of its customers, its employees, and its investors. As a result, it could not gain the
great supports from its stakeholders like the governments including the government of
the United Kingdom, consumers, employees, investors, and the public (Walker and
Paris, 2014). Then, this is a main rational behind the process of conducting the change
in organizational culture of Tesco.
4

18. 4. Key stages related to the process of organizational culture change in Tesco
With the unethical actions in 2012, 2013 and 2014, Tesco applied the process of
organizational culture change with three main stages belonging to the organizational
culture change model of Lewin. The three main stages in the process of organizational
culture change in Tesco are indicated as follows:
Unfreezing stage
Tesco determined what it had to change to gain the effective organizational culture. This
organization surveyed all its organizational members to understand the organizational
situations and to know rationales why it had to conduct the organizational change. In the
unfreezing stage, Tesco ensured that there were great supports from its top
management, ensured that it created the demands for the organizational culture change
by creating a good message to describe rationales behind the organizational culture
change, applying the strategic vision and approaches as support techniques, and
communicating the strategic vision to each organizational member and ensured that it
understood doubts and concerns of its staffers (Phambuka-Nsimbi et al., 2015).
Through the unfreezing stage, Tesco identified that it had to change organizational
structure, leadership style, business strategy, and shared values. Indeed, this company
knew that organizational structure was not effective because its organizational structure
was tall organizational culture that there were disadvantages as follows: (1) slow
decision-making, (2) higher administration and compensation costs for various
management layers, (3) harming organizational innovation and (4) ineffective decision-
making. In the tall organizational structure of Tesco, decision-making was often slow
because of making centralized decisions. Any decisions must be approved by the
managers and leaders of Tesco and it reduced operational flexibility, the fast response
to changes in the external environments (Tesco, 2015). With the tall organizational
structure, Tesco had to suffer higher administrative and compensation expenses for the
various management levels. The additional expenses reduced the cash flow and net
profit (Mason and Evans, 2015). The tall organizational structure of Tesco harmed its
innovation capability because all organizational members conducted organizational
5

19. tasks according to the decisions of managers and leaders without having any
participation in the decision-making process and having the contributions of innovative
ideas to the managers and leaders (Panava and Sehic, 2014). Because the decision-
making belonged to the rights of managers and leaders, they did not ask ideas from
their employees and then, the decisions were often ineffective (Sayli and Tufekci, 2008).
Through the unfreezing stage, Tesco identified that it had to change leadership style of
leaders because the leaders were applying the autocratic leadership style that all
decisions were made by the leaders and the abuse of leaders in Tesco often occurred
(Euromonitor International., 2016). Tesco also identified that it had to change its
business strategy because the business strategy was ineffective. Indeed, Tesco only
focused much on maximized its business profits without respecting the well-being and
the benefits of its stakeholders such as customers, investors and employees (Jolly and
Bray, 2016). In addition, shared values in Tesco were not clear and strong and then,
values like respecting benefits and health of customers, respecting benefits of
employees, respecting benefits of investors were not offered in the clear ways and then,
the leaders of Tesco had business strategies harming the benefits and the well-being of
stakeholders (Kamath, 2016).
Change stage
In the change stage, Tesco emphasized four issues. Firstly, Tesco conducted constant
interaction and communication with its staffers to describe the organizational culture
change benefits, to explain exactly how the change of organizational culture affected its
staffers, and to prepare all its staffers for what would occur. Secondly, Tesco handled
problems immediately and fast and related the demands for change of organizational
culture back to necessities of operation. Thirdly, Tesco conducted empowerment for its
employees so that its employees have enough power to conduct organizational tasks
immediately and fast. Lastly, Tesco involved organizational members in the process of
change of organizational culture through generating wins in the short time to enhance
the effectiveness of the change of organizational culture in the long time (Kasemsap,
2016).
6

20. Through the unfreezing stage, Tesco identified that it had to change organizational
structure, leadership style, business strategy, and shared values. In the change stage,
Tesco conducted changes in aspects including organizational structure, leadership
style, business strategy, and shared values. For the organizational structure, Tesco
changed the tall organizational structure into the flat organizational culture increase the
speed of decision-making, to reduce administration and compensation costs for various
management layers, to increase the capability of organizational innovation and to
increase the effectiveness of decision-making. For leadership style, Tesco changed the
autocratic leadership style into democratic leadership style so that all its employees
have the rights to offer ideas for the business approach and strategies and they have
the rights to affect the decision-making process of their leaders and managers. For
business strategy, Tesco changed the strategy from focusing much on maximizing
benefits of its shareholders into focusing much on balancing benefits of all its
stakeholders and respecting well-being of all its stakeholders. In addition, Tesco
changed shared values like high business profits and high sales into share values like
balancing benefits of stakeholders, considering values of customers as values of Tesco,
and having equal treatment for employees (Jolly and Bray, 2016).
Refreezing stage
In the refreezing stage, Tesco had to make the change of organizational culture become
effective and successful, had to develop the approach to maintain the change of
organizational culture, had to provide support and training programs to its staffers to
assure that the change of organizational culture was successful and had to celebrate
the successes in the change of organizational culture (Euromonitor International.,
2016). For Tesco, it made the change of organizational culture become effective and
successful because it developed the effective approach to maintain the continuous
change of organizational culture. This company’s flat organization culture started to be
used in the operation environment, the democratic leadership style started to be used
by leaders and managers to encourage innovative idea contributions from its
employees, the business strategy of creating innovative and differentiated products and
services to serve different needs of customers and respecting values of stakeholders
7

21. were conducted in Tesco and the shared values like balancing benefits of stakeholders,
considering values of customers as values of Tesco, and having equal treatment for
employees were greatly recognized by organizational members in Tesco (Kamath,
2016).
5. Challenges threatening to the process of organizational culture change in
Tesco
In Tesco, when conducting the process of organizational culture change, it faced many
challenges. The three main challenges threatening to the process of organizational
culture change in this company were resistance of its employees, lack of consensus of
leaders, and communication of information. The main challenges are critically analyzed
as follows:
Resistance of employees
According to Smid et al. (2006) and Tuncer (2011), resistance of employees to an
organizational culture change leads to the failure of the change of organizational
culture. For the case of Tesco, this company focused much on changing the negative
organizational culture by requiring its employees to work without the guidance of their
managers, and laying off its employees who cooperated with the leaders to conduct
unethical actions like fraud in reporting financial statements, fraud in producing
products, etc. Tesco required its employees to become more enthusiastic and more
committed to the process of changing the organizational culture and changed the work
process of all employees to increase the productivity of jobs. Heavy punishments would
be offered to employees who did not conduct the change of organizational culture well
(Zhao, 2014). Then, Tesco faced a challenge regard resistance of its employees to the
change of organizational culture because they felt comfortable with the approach that
Tesco was running. They knew their expectations and their roles within Tesco. When
the organizational culture change was conducted, it would disrupt their familiarity and
their comfort in their jobs and some employees became upset and low committed. The
8

22. employees in Tesco did not want to change the way they were conducting their jobs
(Jolly and Bray, 2016).
To overcome the challenge regarding resistance of employees to the change of
organizational culture, Tesco had close communications with its employees to indicate
the consequences for continuing the negative organizational culture such as low
business performance, negative brand image in thoughts of customers, and even
bankruptcy of business. Tesco also supported its employees by offering training
programs for the new work way and for the new responsibilities. Then, Tesco gained the
consensus from its employees for the process of change of organizational culture
(Pantano, 2015). In addition, Tesco also offered valid rewards for employees who had
high results in the process of conducting the change of organizational culture and that
encouraged more employees to participate in the process of the change of
organizational culture (Kasemsap, 2016).
Lack of consensus of leaders
According to Hill and Hill (2011), the consensus of leaders for the organizational culture
change is very important for deciding the success of the change of organizational
culture. Indeed, leaders are people offering the encouragement and the guidance for
employees to conduct the organizational culture change. For the case of Tesco, it was
very difficult to convince all leaders in the board of directors to conduct the change of
organizational culture that had existed in the long time. Tesco understood that the
change of organizational culture should start from its top leaders. The change of
organizational culture was only successful when it was supported from the top leaders
of Tesco. This company took the time about the first two months of 2015 to convince all
leaders in the board of directors to conduct the change of organizational culture. The
change of organizational culture of Tesco was conducted during two years (the year of
2015 and the year of 2016). Tesco showed the leaders how the change of
organizational culture would influence the business performance of this company and
the steps for conducting the change of organizational culture helped to enhance the
9

23. effectiveness of the process of conducting the change of organizational culture
(Kamath, 2016).
With the high efforts from Tesco, the challenge regarding lack of consensus of leaders
was handled and then, all leaders of this company focused much on conducted the
change of organizational culture. In particular, the leaders of Tesco conducted to
change the organizational structure, the leadership style, shared values and business
strategy. The leaders empowered their employees so that their employees could
enough ability to handle organizational tasks in the fastest and most effective ways. The
leaders offered job autonomy to their employees so that their employees could conduct
organizational tasks in the most innovative and the most responsible ways. The leaders
increased to investigate needs and expectations of their employees so that they could
try to satisfy such needs and expectations to increase the organizational commitment
and the satisfaction job of their employees (Euromonitor International., 2016).
When conducting the change of organizational culture, the leaders of Tesco changed
their business strategy that emphasized creation of health and innovative products and
responsive services to serve their customers and considered values of consumers as
values for Tesco to develop. All unethical actions such as fraud in producing products,
fraud in reporting financial statements, and requiring part-time foreign students to work
in many hours weekly would not be conducted and any violation regarding business
ethics would be handled in the serious punishments. The leaders encouraged their
employees to contribute ideas for developing innovative products, developing innovative
marketing strategies and developing effective and innovative business strategies and
they listened to such ideas to increase the effectiveness of developing new products,
developing new marketing strategies and developing new business strategies. Then,
the process of organizational culture became more effective (Euromonitor International.,
2016).
Communication of information
10

24. According to Sayli and Tufekci (2008), communication of information regarding the
organizational culture change is very important for all employees to support for the
process of changing the organizational culture. For the case of Tesco, when decided to
conduct the change of organizational culture, Tesco faced a challenge regarding
communication of information. Indeed, the organizational structure in Tesco was the tall
organizational structure and then, communication of information became very difficult.
When informing employees about the change of organizational culture, they would like
to know what would occur, and whether it was negative news. The feeling of uncertainty
of employees of Tesco would occur in the working environment and the feeling of
uncertainty of the employees would be increased when the top leaders did not
communicate the information regarding the change of organizational culture effectively.
As a result, the employees in Tesco felt that they were not a part of Tesco (Ikinci, 2014;
Tesco, 2015). To overcome the challenge regarding communication of information of
change of organizational culture, Tesco kept its employees updated regularly about the
plans of the change of organizational culture and the progress of the conduction of the
change of organizational culture. In particular, the leaders of Tesco involved all their
staffers as much as possible through organizational meetings so that their employees
could present their viewpoints about the change of organizational culture and they could
indicate the benefits of the change of organizational culture to their employees (Penava
and Sehic, 2014; Euromonitor International., 2016).
In addition to the main channel for communicating information regarding the change of
organizational culture – organizational meetings, Tesco used other channels to
communicate information regarding the change of organizational culture to its staffers,
that is, (1) company email, (2) notice board in offices of Tesco, and (3) phone
communication. In particular, all important information regarding the change of
organizational culture would be offered to managers of functional departments and then,
the managers would exchange and share such information to each member in each
functional department. All main information regarding the change of organizational
culture would be offered on notice board in offices of Tesco so that all employees in all
functional departments could understand the process of the change of organizational
11

25. culture. In addition, all employees of Tesco had the rights to call phones for their leaders
to ask the information directly (Kasemsap, 2016).
6. The end result after conducting organizational culture change
Due to the change of organizational culture, Tesco gained many positive results such as
the transparency in reporting financial statements, respecting benefits and well-being of
employees, offering more innovative and unique products/services to consumers,
regaining organizational reputation, regaining customer trust, regaining customer trust,
having high employee commitment, and regaining high business performance. Indeed,
all financial statements must be tested and controlled by a third part in Tesco and then,
the financial statements became transparent and exact. Any fraud in reporting financial
statements would be punished by Tesco and this company would report such fraud to
governmental offices (Jolly and Bray, 2016). All needs and expectations of employees
were investigated and Tesco focused much on meeting such needs and expectations to
increase the well-being of its employees. Then, its employees became satisfied with
jobs at Tesco and become more committed to gaining the common organizational goals
(Pantano, 2015).
Tesco had the transparent manufacturing process that offered unique products to
consumers all over the world and conducted research and development (R&D)
operations to create responsive services to consumers all over the world. All
expectations of consumers were always investigated by Tesco so that it could create
valid and useful products to satisfy such expectations (Euronomitor International.,
2016). By respecting the benefits and well-being of its stakeholders and balancing the
benefits of all its stakeholders, Tesco made its employees committed to it, made its
customers put the great trust in it, made its investors put the great trust in it, and made
the government of the United Kingdom and other governments in nations in Europe
support its business operations. The positive reputation of brands of Tesco has been
gained by Tesco due to the positive change in its organizational culture (Kamath, 2016;
Euromonitor International., 2016).
12

26. 7. Conclusion
This consultancy report reflects how Tesco performed the organizational culture change
to gain the positive organizational culture. In particular, this report has offered the
overview of Tesco, has indicated main rationales behind the initiation of the process of
organizational culture change in Tesco, has presented key stages related to the process
of organizational culture change in this company, has analyzed challenges threatening
to the process of organizational culture change in this company and has indicated the
end results after conducting such organizational culture change. This report recognizes
that Tesco conducted the unethical actions like requiring foreign students to work in
many hours at its stores in the United Kingdom in 2012, offering low-quality products to
its customers in 2013 by using horsemeat to replace beef meat in its beef product
manufacturing process and conducting fraud action in reporting its financial statements
in 2014.
Tesco’s organizational culture was negative because this company only focused much
on reducing business costs, maximizing business profits and attracting and retaining
investors without considering and respecting the benefits and the well-being of its
customers, its employees, and its investors. Then, this is a main rational behind the
process of conducting the change in organizational culture of Tesco. There were three
stages in the change of organizational culture in Tesco, that is, (1) unfreezing stage, (2)
stage of change and (3) refreezing stage. Challenges threatening to the process of
organizational culture change in this company were resistance of its employees, lack of
consensus of leaders, and communication of information. Due to the change of
organizational culture, Tesco gained many positive results such as the transparency in
reporting financial statements, respecting benefits and well-being of employees, offering
more innovative and unique products/services to consumers, regaining organizational
reputation, regaining customer trust, regaining customer trust, having high employee
commitment, and regaining high business performance.
13

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30. 30
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