Tesco McKinsey 7S Model

Tesco McKinsey 7S model illustrates the linkage between seven separate elements of the business to increase the overall effectiveness. According to this model, businesses have hard and soft elements and shared values as soft element are the result of interaction of all elements with direct and huge effects on employee behavior and performance.

Tesco McKinsey 7S Framework

Hard Elements

Strategy. Tesco pursues cost leadership business strategy according to its marketing communication message Every Little Helps. The supermarket chain has been able to sustain this strategy due to the extensive exploitation of the economies of scale and the exercise of bargaining power in dealing with suppliers to secure low purchasing costs.

Currently, Tesco is dealing with a set of complex challenges such as restoring customer trust following profit accounts scandal, supplier payment delays scandal and dramatic decline of sales as a result of these incidents. Tesco strategy to deal with these issues as announced by its new CEO Dave Lewis include the reduction of capital expenditure to GBP 1 billion, replacement of the benefit pension scheme for all employees and the review of property portfolio with the aim of cost reduction. Moreover, a focus on availability, service and selectively on price emerged as a strategic priority for the new management.

Structure. Tesco’s organizational structure is highly hierarchical and comprises many layers of management from store sales assistant to the CEO.  The new CEO Dave Lewis eliminated the roles of deputy store managers in 2015 as part of attempts to simplify the organizational structure. There are 10 members in The Board of Directors and the company’s Executive Committee comprises 11 members.

Systems. The supermarket chain relies on a wide range of systems on a daily basis to sustain its operations. New management led by CEO Dave Lewis announced plans to simplify organizational systems in order to get business back on track. The reform of Steering Wheel performance appraisal system that contained more than 40 different measures can be referred to as an appropriate example. The new performance evaluation system has only six key performance measures, so that the overall process has been greatly simplified.

Tesco PLC Report contains a detailed discussion of Tesco McKinsey 7S framework. The report also illustrates the application of the major analytical strategic frameworks in business studies such as SWOT, PESTEL, Porter’s Five Forces, Value Chain analysis and on Tesco. Moreover, the report contains analysis of Tesco’s marketing strategy, leadership and organizational structure and discusses the issues of corporate social responsibility.