Issue of Lack of Transparency and Accountability in Corporate Governance: A Case Study on Tesco Plc

Corporate Strategy and
Governance
(Summative)

Table of Contents
Research Topic: Issue of lack of transparency and accountability in corporate governance. A case
study on Tesco Plc. .........................................................................................................................1
Introduction......................................................................................................................................1
Background of the organisation..................................................................................................1
Review of the problem faced .....................................................................................................1
Aim and objectives .....................................................................................................................1
Rationale for selection of topic...................................................................................................2
Research questions......................................................................................................................2
Literature Review.............................................................................................................................2
To review about the concept of corporate governance along with analysing its need and
importance...................................................................................................................................3
To evaluate about the impact of issue of lack of transparency and accountability on overall
performance of firm. ..................................................................................................................4
To explore suitable strategies for Tesco Plc that would be needed for better management of
corporate strategy along with overcoming the lack of transparency and accountability............5
Research Methodology for secondary and primary research undertaken........................................6
Review of Results of the Research ...............................................................................................10
Analysis of collected facts........................................................................................................10
Interpretation of data.................................................................................................................11
Recommendation and Action Plan ................................................................................................18
REFERENCES..............................................................................................................................21

Research Topic: Issue of lack of transparency and accountability in corporate
governance. A case study on Tesco Plc.
Introduction
The concept of corporate governance is mainly related with the specific laws and process
that are followed and going on within a company that are taken as basis to operate and control a
business firm (Davies, 2016). The corporate governance mainly aim at and associated with
leading an enhanced level of transparency and accountability within an organisation along with
meeting and taking care of interest of all shareholders.
Background of the organisation
The organisation selected for current assignment is Tesco Plc which is a well known
British Multinational groceries and general merchandise having its main headquarter in Welwyn
Garden City, England. Tesco is a multinational organisation which is having a larger number of
stakeholders across the world thus, it is facing many issues and problems in maintaining an
effective communication and proper interaction between them (Tesco fined £129m for
overstating profits, 2017). Therefore current investigation is lead out on Tesco company to have
better understanding about the concept of corporate governance along with analysing its needs
and importance.
Review of the problem faced
The most vital issues faced and encountered by Tesco is associated with lack of
transparency and accountability within its management and key shareholders. This, issues of lack
and transparency and accountability has lead to recent accounting scandal and fraud which was
related with miss-presentation of facts to to show higher profits in order to attract larger number
of investors (Tesco Scandal- the perils of aggressive accounting, 2018). Therefore, current
investigation is carried out on Tesco Plc to analyse about the concept of corporate governance
along with analysing about the impact of issue of lack of transparency and accountability on
overall performance of firm.
Aim and objectives
Research aim
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To evaluate about the concept of corporate governance along with analysing the issue of
lack of transparency and accountability within a firm. A research project on Tesco Plc.
Research objectives
 To review about the concept of corporate governance along with analysing its need and
importance.
 To evaluate about the impact of issue of lack of transparency and accountability on
overall performance of firm.
 To explore suitable strategies for Tesco Plc that would be needed for better management
of corporate strategy along with overcoming the lack of transparency and accountability.
Rationale for selection of topic
The selection of current research topic is rationale and significant for a firm as the
concept of corporate governance has become vital for all organisation as it bring more efficiency
within a company. Further, many legal provision are also there which has made compliance of
corporate governance essential for companies to bring transparency and accountability in their
operations. Beside this, selection of current research topic also meet and accomplish the personal
interest and educational background of researcher along with facilitating better skill
development.
Research questions
 What is meant by the concept of corporate governance along with analysing its need and
importance?
 What possible impact could be seen and lead out by the lack of transparency and
accountability associated with the lack of proper corporate governance on overall
performance of firm.
 Which could be the most suitable strategies for Tesco Plc that ensures better management
of corporate strategy along with overcoming the issues of lack of transparency and
accountability?
Literature Review
This forms a vital part of every study and research work as it facilitates better information
and analysis of secondary form of data that leads to better base and framework for investigation
(Fink, 2019). The current literature review is based on analysis of online articles and journals
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based on the topic of corporate governance, an analysis and discussion of which is provided as
follows:
To review about the concept of corporate governance along with analysing its need and
importance.
As per the view point of Fremeth, A.R. and Holburn, G.L., 2020, an analysis can be made
out that the concept of corporate-governance is associated with the set of rules and process which
are implicated and opted within a business organisation through which all its functions and
operations are being governed and managed. Beside this, an analysis can be made out the the
concept of corporate-governance provided information about the ways and strategies which
define the existing relationship and way of interaction with stakeholders. Further, corporate-
governance consists of a set of process and combination which covers and reflects social and
institutional aspects of a business firm that are vital to meet and set coordination among interest
of all stakeholders (Habbash, 2017). Therefore an implication can be made out that compliance
of provision of corporate-governance are need and important for a business firm to set out a
better coordination among organisational interest and expectation of all other key stakeholders.
Further, with respect to information provided by Lakshna Rathod. 2018, corporate-
governance is a vial and important concept to have higher level of business accountability and
transparency by the way of protecting and safeguarding rights of all stakeholders comprises of
managers, employees, customers and other social aspects. The other key benefits and advantages
of corporate-governance within a firm that made it important and essentially needed are
discussed and analysed as below:
Better reputation- The implication and adoption of effective corporate-governance
strategy leads to and ensures improvement in the brand reputation by the way of developing
improved trust and loyalty among stakeholders. An analysis can be made out that corporate-
governance is directly associated with meeting all the set accounting and ethical norms that plays
a vital role in improving the brand reputation and create an enhanced goodwill for a firm that is
important for enhanced business performance (Jacoby, 2018).
Investor interest rising- An analysis can be made out that corporate-governance are
associated with creating improved transparency and accountability at workplace which would
lead to presentation of true accounting facts and financial position that plays a vital role in
improvising confidence of stakeholders like investors and customers. Thus, corporate-
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governance plays a vital role in improving and attracting the interest of larger number of investor
that meets all the provision of accountability and transparency and ensures true information and
factual presentation of facts for its stakeholders.
Reduction of legal risk through compliance of legal provisions- Adoption and use of
corporate-governance leads to meeting and fulfilment of all the set rules and regulation thus,
mitigate and reduce the chances of legal consequence and issues. Further, enhanced level of
accountability and transparency also leads to reduction in chances of accounting frauds and
scandals by the way the better check and control over the performance and business activities of
top management and broad of directors (Lutsenko, 2018). Therefore, mitigate and reduce the
chances of legal risk and threat for a firm that is needed and important for better business
performance.
To evaluate about the impact of issue of lack of transparency and accountability on overall
performance of firm.
With respect to the information provided by the Habbash, M., 2017, it has been evaluated
that a negative impact is lead out by the issue of lack of transparency and accountability on
overall performance of firm. An analysis can be made out that lack of transparency and
accountabilities lead to many issues and causes many challenges for a business firm which
comprises of breach of investors and other stakeholders trust based on miss-presentation of facts
and accounting position which would hamper the brand image and reputation of a firm. A better
analysis of the factors and issues caused by the lack of transparency and accountability which
lead to negative impact on the business performance of a firm are discussed and provided below:
Conflicts of interest among boards- Lack of proper transparency and accountability
leads to enhanced chances of conflicts among boards members as they lack proper
communication and interaction. Further, having different perceptive and interest regarding a
topic or concept also hampers the decision making and strategy formulation by the directors that
were not based on the provision of accountability and transparency that is a big issues which is
encountered because of lack of corporate-governance (Mkandawire, 2019).
Violation of accounting and ethical principle- The another challenge associated with
lack of transparency and accountability comprises of that fact that it is lead to breach and
violation of accounting and ethical principles. Proper transparency and true presentation of fact is
a vital concept of accounting principles and proper bifurcation of rules and regulation is directly
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