Tesco plc and its international communication

1. Introduction

Tesco plc is the fourth largest retailer in the world after Wal-Mart, Carrefour and Home Depot, and the largest supermarket retailer in the UK, McLoughlin & Aaker (2010, p126). The company was founded after WW1, and is widely recognised for having expanded its services during the 1990s away from groceries. In the last quarter of 2009 the company had a 31% share of the entire UK grocery market, with a reported gross turnover of 59.4 billion for the fiscal year 2008/2009.

Cornelissen (2005, p32) provides an alternative synopsis of corporate communications via a historical perspective, defining five central or core themes. The realisation by the 1990s that organizations so as to ‘stay afloat’ had to practice and engage through communications with a number of groups in the environment. For the larger part of the 20th century, managing communications had been defined predominantly via public relations and marketing divisions, this being an intrinsically limited approach, thus contemporary forms of communications management have integrated these divisions into the wider corporate communications function. Furthermore the shift from rigid to flexible market landscapes, and increasingly competitive marketplaces, ‘this together with a greater call from society for ‘corporate citizenship’, pushing many organizations into stakeholder management strategies’, and finally the relationship of corporate communications with the stakeholder era, and the ‘need to build and manage relationships with stakeholder groups upon which the organization is economically and socially dependent’.

External and Internal communications

Hargie D & Tourish D (2004, p3) outline the scope of communication strategy and organizational success with an emphasis on internal communications proposing ‘a systematic approach to the construction of a seaworthy communications strategy and the rigorous evaluation of all steps taken along the way’. In the same way that Cornelissen J (2005), in the context of a historical understanding defines a shift in communications strategies and practices, the authors spell out a contemporary paradigm. Quirke, (1995, p76) is cited to have defined the traditionally bound or understood terms of organizational communication, such as the announcement of management conclusions, and the ensuring of consistent information, ‘making messages easily comprehensible, and easy to disseminate’. The authors go on to cite Quirke’s further suggestions relative to the attempt to widen organizational participation and involvement, inclusive of the stimulation of thinking, participation and ideas, the networking of know how and learning across the organisation, the involvement of all employees in improving processes, the identification of ways of providing additional value to customer and lastly the expansion of what all employees believe is possible, Hargie D & Tourish D (2004, p19), also see Quirke, (1995, p77). Quirke is further cited in so as to summarize this contemporary view of communications, ‘the role of communication becomes not the top-down dissemination of management thinking, but the bottom-up means of connecting those who know what needs to change to those who have authority to make change happen’.

With respect to issues of external communications a number of fundamental questions are defined; who is communicating with whom? Which issues receive the most attention and arouse the most anxiety? How much information are people are receiving and sending on crucial issues? how much interpersonal trust exists; and how the overall quality of working relationships can be characterized? ‘such issues are among the core concerns of efforts to establish what has been termed ‘organisational climate (Lammers, 1994)’. The authors go on to outline the way in which a communications audit can be implemented citing a five stage sequential model devised by Baker, (1999) beginning with the selection of a topic, followed by an outlining of desired performance in relation to criteria and standards. The third stage entailing collection of objective data, fourthly the implementation of appropriate changes to improve performance, and lastly the collection of data to check for changes induced by the model.

Van Riel suggests a framework for the coexistence of a number of communications functions in a single organization, this being particularly relevant to a company such as Tesco which as a result of its product and market diversification is concerned with a number or varying communication channels. Van Riel’s framework relates to internal concerns of an organization or company, as described by Barker & Angelopulu (p371), ‘Van Riel proposes a framework for organizations to stimulate cooperation among all relevant communication functions by defining the baseline of corporate communication’. Three ultimate stages are devised by Van Riel, the definition of common starting points, the use of common operational systems and lastly the coordination of decision making.

Figure 1, Van Riel, Internal Communications Framework

Identity, reputation and image

McLoughlin, & Aaker (2010) define Tesco’s success and growth over the past three decades directly in relation to its strategy and image, further relating it to market segmentation. The authors outline a number of strategic initiatives such as its managed range of four differing level brand product, finest range of premium products, Tesco healthy living, value range and Tesco organic range and furthermore describing the way in which the company changed customer perceptions of the brand itself, ‘Secondly the company mantra has shifted form maximising shareholder value to maximising customer value. While the underlying objective is naturally to make higher profits this is specifically done while focusing on customer service’ (2010, p127). The third term which Damien McLoughlin, David A define is that of its diversification strategy which as outlined is based on four key principles, these being the innovation and expansion into the core UK grocery market and into areas like convenience stores; innovating through expansion into non food business like consumer electrics, clothing health beauty CDs and DVDs and even developing its non food finest and value ranges; expanding into retail services like personal finance telecoms and utilities by entering into joint ventures with major players in these industry sectors; finally, expanding internally which accounted for more than 25% of sales in 2008/9 with plans for further expansion in international markets including India and China, Damien McLoughlin, David A. Aaker (2010)

Culture and its influence in corporate communications

Considering the expansion and diversification of Tesco’s services and products, in addition to the widening of its potential targeted market landscape, the initially defined terms of corporate communications devised by Cornelissen J (2005) and Hargie D & Tourish D (2004), central to which are ideas of integration, and the crossing of functional boundaries, seem most appropriate. Despite the broad range of services and products offered by Tesco, there are in existence a number of unifying terms to which the organization would need adhere to, such as Corporate Social Responsibility (CSR), and an overall brand value. The organizations present a number of terms which embody the core purpose of Tesco as a business, Value via competitive prices, product choice and high food quality, helpfulness via customer service, availability and customer communications, inclusiveness via the means of ensuring that the organization appeals to a broad range of customers, ‘something for everybody’, and innovation via new product development and retails services technology.

The role of technology in corporate communication

Chaffey et al (2009) outline Tesco’s strategy of diversification predominantly in terms of internet marketing and implementation, citing the chief executive of Tesco’s Terry Leahy from the Sunday Times, ‘we will be the worlds biggest online grocery retailer and we intend to become the UKs No.1 e-commerce business’ (Lorenz and Nuki, 1999), further defining the way in which Tesco’s affirmed expansion was aligned to its expansion in providing wider products and services, ‘in 2000, the online services diversified, offering many non food product ranges and financial services’. The terms of diversification are understood predominantly in relation to internet shopping and service innovations, ‘By 2003 96% of the UK population could shop online with Tesco.com giving the commonly 65% of the UK online grocery shopping market and further diversification of product ranges, e.g. financial services and telecoms’. Specific innovations such as DVD services to the door, a rental film DVD service, the provision of energy utilities whereby customers can save money on their house bills, initiatives and schemes to promote better health such as online -diet services which help customers to tailor their food shopping and diets, and telephone services, ‘Currently Tesco is focusing on the development of TESCO direct, which offers customers a wide range of non-food goods as well as launching a range of own brand computer software. Currently Tesco accounts for approximately 66% of the UKs online shopping market’. Dave Chaffey et al (640; 2009).

Oliver (1997, p128) suggests a communications framework in relation to IT technology which ultimately aligns terms of cultural values and beliefs of an organization with the organizations vision. The author presents a model devised by Goldberg & Sifonis (1993) titled ‘communication framework’, which relies on the assumptions of management which are adopted on an intuitive basis and that need to be communicated with internal and external stakeholders, as described by the author, ‘from that, a dynamic campaign plan or communication framework is produced which clearly represents the cultural values and beliefs of an organization aligned to its vision, Oliver (1997, p128).

Internal-the role of HR corporate Communication

It is widely referred to throughout literature that the role of HR in terms of wider communications strategies is immensely under emphasised, HR departments most often not being considered under the scope of a communications department. The U.S. society for HRM asserts the way in which communications and HR should be closely related within any organizational framework, specifying the role of HR in terms of communication as a way by which to assert any given culture as alive and healthy. HR is predominantly responsible for and concerned with internal communications in this respect. Turner (2003, p20) proposes a model which adapts the traditional framework of linking HRM and performance. Turner’s model incorporates communications into the entire model. For example at the stage of HR strategy, the author suggests good communication as a tool by which to join up HR policies and strategies. In terms of HR practices, the author outlines, ‘effective people management practices to be communicated to line managers’, and directly in relation to terms of financial performance, the author suggests efficient communication of a culture of good people practice, this being particularly important to an organization such as Tesco plc, which falls into the category of a dominant, large multi-national corporation, at risk of gaining a bad reputation for this very reason.

2. Conclusion

Pelsmacker P et al (2005, p228) define a number of channels adopted by the Tesco organization so as to communicate to as wide a consumer market as possible. For example the authors define the Tesco club card magazine, describing the aims as the creation of fun and information, managing the ‘communicated core Tesco brand values and services’. The authors further outline the engendering of lasting brand loyalty, ‘and contribute significantly to customer awareness of new areas’ and lastly the increase up take of other Tesco ventures particularly in non food, the authors go onto to describe, ‘At forward publishing, they realised very quickly that you can’t talk to someone in their twenties in the same way that you would to a person in their sixties’, resulting in various targeted, specific magazines. The organization identified five life stages from Club card data, creating five different copies of the clubcard magazine. This is defined as just one initiative amongst many more such as Tesco lifestyle scheme and the Tesco loyalty program which gave the organization the ability to customize and further optimize the customer expertise. As an international organization, concerned with such a diverse range of services the Tesco organization embody and epitomize the very need to diversify and integrate communications approaches, as described by Cornelissen and to implement the bottom up means of connecting those who know what needs to change to those who have the authority to make change happen as defined by Quirke (1995).

Recommendations

Further analysis of Tesco plc in terms of corporate communications would need to incorporate quantitative data in addition to a qualitative assessment, furthermore the role of a communications strategy would need to be discussed further, directly in relation to Tesco’s brand and product diversification.