Transparency in Corporate Governance: A Case Study of Tesco
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This document analyzes the issue of transparency in corporate governance and its impact on organizations, using a case study of Tesco. It discusses the importance of transparency, its impact on stakeholders, and provides recommendations for improving corporate governance.
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CORPORATE STRATEGY AND GOVERNANCE
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Table of Contents AIM.............................................................................................................................................................3 INTRODUCTION.......................................................................................................................................3 LITERATURE REVIEW............................................................................................................................3 CONCLUSION AND RECCOMENDATIONS..........................................................................................5 REFERENCES............................................................................................................................................6
AIM To analyze the issue of transparency in corporate governance and its impact on the organizations- a case study of Tesco INTRODUCTION Corporate governance is basically the method and system of the rules and processes through which the organization is controlled as well as maintained. The major issues which has been faced by Tesco is the failure of corporate governance and transparency. Transparency forms the basic and core element of the corporate governance and thus mainly relates to the disclosure of the all information to their shareholders and other stakeholders. The issue of transparency has affected Tesco to a great extenet and thus has impacted its overall financial position(Filatotchev, Poulsen and Bell, 2019). Transparency is one of the major issue within this corporate governance. Transparency is highly important within each and every organization as shareholders and investors invest their money with the reason that company will remain transparent to them regarding all the decisions. Ensuring transparency not only helps to gain the trust and confidence of stakeholders but also helps the organization to minimize the loses and gain more profit. Tesco in the year 2014 faced a great and massive failure of corporate governance where the company misapprehended their shareholders and investors by showing higher profit margin. In the subsequent year, Tesco overstated the profit to its shareholders by £250m and this affected the financial position of Tesco to the high extent. Thus, this lack of transparency is one of the major issue which affects the organizations to a great extent. Therefore, it is highly essential to indentify and understand the importance of transparency as the major pillar of corporate governance. Along with this, the lack of transparency in Tesco has also affected its stakeholders to a great level and most of the shareholders claimed a handsome fine on company for misleading them. LITERATURE REVIEW The major issue of corporate governance which is transparency affects the position of the organization in a way.Corporate governance is all about working towards the interest of the
stakeholders and thus incorporating the various mechanisms and processes within the business for conducting it in ethical manner.The problem of transparency has always surrounded the firms and has impacted them. Transparency is one of the major pillar of corporate governance which predominately relates to the fact that stakeholders who have the direct interest within operations of company should be informed about the various activities and decisions which company has undertaken(Flammer and Luo, 2017). Transparency basically means openness as well as willingness of company to provide the clear information and data to shareholders as well as other stakeholders. This issue of transparency and failure to disclose the information has been a major concern and the main result of this is the loss of confidence and trust of stakeholders in the organization. When the management of an organization fails to disclose the financial information and activities then this often leads to low return on investment and also gives rise to ineffective decision-making. The importance and significance of transparency within organization is that it helps to maintain the confidence of investors as well as poses a great image in the market. The lack of transparency basically involves companies intentionally not revealing the information to their shareholders and investors in order to increase their profit ratio and get more funds(Glass, Cook and Ingersol, 2016). Data collection methods For this study, both primary and secondary methods have been used. Primary data is basically the data which the researcher collects for the first time. In short, primary data is the first-hand information being used by researcher for gaining the in-depth knowledge of topic. The major advantage of primary method is that it helps in gathering reliable and genuine information as researcher collects it by themselves(Formentini and Taticchi, 2016). There are various methods in collecting primary data. In this study, questionnaire has been used for collecting primary data. The major advantage of questionnaire is that it that it enables the researcher to collect information from the larger audience. On the other hand, secondary data is the data which has been collected b y someone else in past and researcher uses already established information. For collecting secondary information, researcher seeks the support of books and Journals. The major advantage of secondary method is that is generally inexpensive as well as time effective as in this method, researcher do not have to search for new information and gets the already available information(Lutsenko, 2018).
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Gantt’s chart TasksWeek 1Week 2Week 3Week 4Week 5Week 6Week 7 Selection of topic Background study Literature review Data collection Data analysis Conclusion and recommendation Final report CONCLUSION AND RECCOMENDATIONS It has been summarized that transparency is one of the major issue which the organizations are facing within their corporate governance. Transparency forms the integral part of corporate governance and relates to disclosing all the information and activities to their shareholders and investors. In order to solve this, organizations should develop a strict policies as well as procedures within their organization regarding corporate governance. Besides this, organization should also have a proper auditing system in order to have a strict look on the various aspects of corporate governance like transparency, disclosure etc.
REFERENCES Books & Journals Filatotchev, I., Poulsen, A. and Bell, R.G., 2019. Corporate governance of a multinational enterprise: Firm, industry and institutional perspectives.Journal of Corporate Finance.57. pp.1-8. Flammer, C. and Luo, J., 2017. Corporate social responsibility as an employee governance tool: Evidence from a quasi‐experiment.Strategic Management Journal.38(2). pp.163-183. Formentini, M. and Taticchi, P., 2016. Corporate sustainability approaches and governance mechanisms in sustainable supply chain management.Journal of Cleaner Production.112. pp.1920-1933. Glass, C., Cook, A. and Ingersoll, A.R., 2016. Do women leaders promote sustainability? Analyzing the effect of corporate governance composition on environmental performance.Business Strategy and the Environment.25(7). pp.495-511. Lutsenko, S.I., 2018. Corporate governance: inside.Strategic decisions and risk management.