Tesco Organisational Structure | Overview & FAQs BY Assignment Desk

Knowing Tesco's organisational structure is vital, as it reflects how responsibility, authority, and decision-making are distributed throughout such a large retail business. Do you know what Tesco's organisational structure looks like? If not, then you can read this guide to get a better insight!

Tesco's Organisational Structure

Tesco follows a hierarchical and decentralized organizational structure, and its management system comprises various levels of authority. This allows strategic decisions to be handled at senior levels, while operational decisions can be delegated to the relevant business and store management teams. The Tesco organisational chart can broadly be understood through three levels: top-level management, middle management, and operational or base-level management.

Top-Level Management

At the top level, Tesco PLC is governed by its board of directors. The current board comprises the Chair, Group Chief Executive, Chief Financial Officer, Senior Independent Director, and independent Non-Executive Directors. Ken Murphy serves as Tesco's Group Chief Executive, and Imran Nawaz is the Chief Financial Officer.

The board offers strategic oversight and holds responsibility for key areas such as corporate governance, business strategy, executive appointments, and major company decisions. Top-level management also includes specialist board committees, such as the audit, corporate responsibility, nominations and governance, remuneration, sustainability, and disclosure committees.

Middle Management

Below the board and executive committee, Tesco has senior executives responsible for diverse business functions and geographical operations. This executive committee assists the Group Chief Executive in managing the day-to-day operations of the business and implementing the Group's strategic plan.

This level consists of leadership positions covering different areas, such as UK operations, Central Europe, Booker, technology, people, strategy, and transformation. This division of responsibility allows managers with specialist knowledge to focus on specific areas of the Tesco business.

Operational or Base Level

At the operational level, management is responsible for implementing business strategies and managing everyday activities across stores and other operating units. Here, employees are divided into specific regions. At the top of this level is a regional manager, followed by a store manager and three other managers below them: food trading, non-food trading, and personnel managers. Each of these three managers has team members, such as fresh food section managers, ambient food section managers, electrical section managers, clothing section managers, and personnel assistants.

Store and regional management teams oversee employees, customer service, stock, sales, and other operational activities. This structure enables decisions to be made closer to the customer where appropriate. This decentralized approach gives managers greater flexibility to respond to local needs while operating within Tesco's wider policies and objectives.

Now you have a fair idea of what the organisational structure of Tesco looks like and how it supports its daily operations. Next, it's time to explore its pros and cons.

Key Characteristics - Tesco Hierarchical Structure

• Hierarchical Management: Tesco's hierarchy comprises several levels of management, creating a clear chain of command. Senior leaders establish strategic direction, while responsibilities are delegated through different management levels down to operational teams.
• Span of Control: Tesco's large scale means managers cannot directly supervise every employee. Different management levels have different spans of control across stores, functions, and business units, and each manager tends to manage a smaller, more focused group of individuals.
• Empowerment: The Tesco structure empowers employees and managers at all levels to take responsibility for their area of work. Giving appropriate decision-making authority enhances employee involvement and helps managers respond more quickly to operational issues.
• Decentralized Decision-Making: Tesco combines central strategic control with decentralized operational decision-making. Major business decisions are managed centrally, while local teams and store managers can respond to customer and operational needs within their area of responsibility.
• Functional Specialization: Tesco draws on functional expertise across different areas, including finance, technology, people, strategy, communications, and operations. This enables specialists to contribute their knowledge to particular parts of the business while supporting the wider organizational strategy.

Advantages and Disadvantages of Tesco Organisational Structure

The Tesco business structure consists of both advantages and disadvantages for a large multinational retailer. Below is the list. Keep reading to know more!

Advantages:

• Specialization: A functional structure enables departments and managers to specialize in areas such as finance, marketing, technology, human resources, and operations, improving expertise and efficiency.
• Clear Chain of Command: The hierarchical structure makes reporting relationships and responsibilities clearer, so employees know who is responsible for particular decisions, which improves accountability.
• Access to Capital: As a PLC (public limited company), Tesco can raise capital more easily by selling shares to the public.
• Economies of Scale: Being a large PLC, Tesco can negotiate more favourable terms with suppliers when buying products, managing distribution, and negotiating prices, helping reduce costs and improve operational efficiency.
• Career Progression: The tall hierarchy provides employees with opportunities to build their skills and progress into positions of greater responsibility, since it creates many management layers.
• Local Decision-Making: The tall structure allows local and regional managers to make decisions suited to their local areas, rather than relying on every decision being made at the highest level, which can improve customer satisfaction.
• Strong Strategic Control: The board and senior management provide central direction, while operational teams implement these strategies across various parts of the organization.

Disadvantages:

• Public Scrutiny: As a publicly listed company, Tesco operates under significant scrutiny from shareholders, regulators, customers, and the wider public, since its official statements are public.
• Slow Decision-Making: The long chain of command means decisions can take longer, as information and approvals may need to pass through multiple levels of management.
• Reduced Employee Motivation: Employees can feel less encouraged or involved if they are given limited authority over decisions affecting their work.
• Segregation and Lack of Coordination: Departments can become segregated, which might result in a lack of overall coordination.
• Poor Inter-Departmental Communication: The division of departments can lead to poor coordination and communication between them.

Frequently Asked Questions

1. What type of organizational structure does Tesco use?
Tesco uses a hierarchical and decentralized organizational structure. It has multiple levels of management and blends delegated decision-making with strategic control across its business operations.

2. What is Tesco's management structure?
Tesco's management structure begins with the board of directors, followed by senior executive management and operational management teams. The executive committee supports the Group Chief Executive in implementing strategy and managing day-to-day business operations.

3. Is Tesco's organizational structure centralized or decentralized?
Tesco can be described as decentralized with central strategic control. Operational responsibilities are delegated to managers across diverse business areas, while senior management sets the overall direction of the organization.

4. Why is Tesco's organizational structure important?
The organizational structure helps coordinate a very large and diverse retail business. The hierarchy provides clear responsibilities and accountability, while decentralization allows managers to respond to operational and local customer requirements.

Conclusion

In summary, the organizational structure of Tesco plays a significant role in its success. Decentralisation enables store managers to make decisions that are suitable for local customers, while the clear chain of command ensures accountability. The combination of control and flexibility undoubtedly enables Tesco to continue to be efficient and responsive in a competitive retail market. Comparing this to Sainsbury's organizational structure, it is evident that diverse types of management and decision-making affect the operations of each retailer, customer convenience, as well as performance throughout their stores.

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