Impact of Corporate Strategy and Governance on Business Finance: A Case Study on Tesco

Corporate Strategy and
Governance
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Contents
INTRODUCTION...........................................................................................................................1
Background of research...............................................................................................................1
Research aim...............................................................................................................................2
Research objectives.....................................................................................................................2
Research questions......................................................................................................................2
Rationale of research...................................................................................................................2
LITERATURE REVIEW................................................................................................................3
Concept of corporate strategy and governance...........................................................................3
Corporate strategy influences the financial performance of Tesco.............................................4
Significance of managing corporate strategy and governance in the context of Tesco..............5
RESEARCH METHODOLOGY.....................................................................................................6
DATA COLLECTION..................................................................................................................10
RESULTS......................................................................................................................................13
RECOMMENDATION AND ACTION PLAN............................................................................22
REFERENCES..............................................................................................................................25
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Title: To examine the potential impact of corporate strategy and governance over the
business finance. A case study on Tesco.
INTRODUCTION
Corporate strategy is referring to the effective direction in which business organisation
can easily attain all the long term success. Mainly, it is taking into consideration and anticipating
completion that assist in executing entire activities of business in an appropriate way. One of the
main purpose of corporate strategy is to ensure that company is doing right things. In addition to
this, corporate strategy is referring to the different number of aspects that provide direction to
how company can manage other individual properties including physical assets, money, human
capital, corporate reputations and many more (Platonova and et. Al., 2018). In this regards,
owners of business and the concept of corporate governance to develop a strategic plan for
business organisation as it consists systems and procedures that is designed towards the structure
authority and also balance responsibility that provide accountability to stakeholders at each and
every level of business organisation. Current research is based on Tesco, is British multinational
groceries and general merchandise retailer that operate their business in over the world with the
aim of generating larger profitability level. Company also have its own corporate strategy that
affect its entire activities of company and also influence its financial performance. Thus, it is also
important for company to analyse all the aspects and strategies that assist in developing overall
performance of company more competitive and famous.
Background of research
Every business organisation wants to sustain in market place for longer period of time of
fulfilling its entire corporative goals and objectives. As Tesco, is also a famous business
organisation that operate their business in over the world with the aim of generating larger
profitability level. Company also face issues at the time of operating their activities at global
level related with conforming to corporate laws, prudent financial policies, HR policies, prudent
financial policies and many more. All these are directly affect the organizational activities and at
the same time also reduce its financial growth. This is the reason that, it is significant for
company to effectively manage all the corporate issue and also develop strategies accordingly
(Ben-Amar, Chang and McIlkenny, 2017). In relation to this, corporate procedures are
considered as an important aspect that assist in making an effective and compelling actions in
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order to promote the organisational image at market place. In addition to this, the main reason
behind undertaking the research is to analyse the influence of corporate governance strategy over
the financial performance of company.
Research aim
“To examine the potential impact of corporate strategy and governance over the business
finance”. A case study on Tesco.
Research objectives
 To explore and understand the concept of corporate strategy and governance.
 To develop the knowledge regarding the influence of corporate strategy to improve the
financial performance of Tesco.
 To explore and examine the significance of effectively managing the corporate strategy
and governance in the context of Tesco.
Research questions
 What is the concept of corporate strategy and governance?
 How does corporate strategy influence the financial performance of Tesco?
 What is the significance of managing corporate strategy and governance in the context of
Tesco?
Rationale of research
The main purpose of undertaking this research is to explore the potential impact of
corporate strategy and governance over the financial performance of business organisation. This
research provides wider scope to investigator in improving the possibilities of attaining reliable
and authentic outcomes. By carry out current investigation research improve their skills and
knowledge towards the specified topic and research area. Current investigation is highly
important because it provide the impact of corporate governance that support company in
improving their overall performance and at the same time also enhance its financial growth
(Adams, 2017). In addition to this, it can be further stated that current investigation is also
beneficial for researcher to develop their personal and professional knowledge that allow the in
enhancing their core understanding towards the actual impact of corporate governance strategy
over the organisation financial performance at market place. With the assistance of this,
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researcher can easily improve the possibilities of attaining authentic results that make overall
study more effective and successful in nature.
LITERATURE REVIEW
This is one of the important section within the research as it provides theoretical
framework on the basis of research topic. With the help of this, investigator gather detailed
information towards the different research objectives. Literature review is also based on
summarised form that help in analysing prospective of different authors towards the determined
objectives. This can be beneficial in attaining positive and reliable outcomes that contributes in
drawing a valid conclusion at the end of the investigation.
Concept of corporate strategy and governance
According to Kim, Kim and Qian, (2018), corporate strategy and governance is related
with the plan and framework in which company formulate their operational activities. Mainly, it
is also used as a management tool that provide support to organization in running their business
activities smoothly. In addition to this, corporate governance is a system that includes effective
rules, policies and practices that define how a board of directors of company manage and also
oversees each and every operational activities of business. As, it includes some principles
including accountability, transparency and security as well. One of the main purpose of corporate
governance is to facilitate appropriate, entrepreneurial and prudent management that can
contributes in delivering long term success to the company in market place. In this, the boards of
directors of companies are responsible for the governance of their companies that assist in
improving the positive performance in wider area. Furthermore, major role of the board includes
setting the strategic aims and at the same time also provide the proper leadership to attain the
same. For this, supervising the management of company is effective as it contributes in executing
all the task and activities. With the help of this, organization can manage their financial
performance by eliminating all the unwanted expenses. As good corporate governance has wider
impact over the business as it is all about improving transparency and accountability within the
existing system of firm. With the implementation of good and appropriate corporate governance,
organisation can maintain healthy relation with all the stakeholders. Positive interaction with
stakeholders and investors enterprise can build their positive corporate image in market place.
Due to this, profitability can be increased and also eliminate the chances of arising complexities
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in managing financial performance of business organization. On the other side, poor or bad
corporate governance is also shows as poorly structured, noncompliant that could be damage the
overall image of financial health of company in competitive market place. In this context, there
are some important principles of corporate governance within the business organization are:
 Each and every stakeholder should be treated fairly and equally as management is also
ensure that all the stakeholders are aware about their rights.
 The board of directors must be maintaining a commitment towards the governance
principles including accountability, fairness, transparency and diversity within the
company so that entire activities can be done properly.
 Organisation needs to define a code of conduct for all the board of members and
executives so that they can easily meeting set standard and improve overall performance
of company as well.
Corporate strategy influences the financial performance of Tesco
According to Goel, (2018), Corporate strategy is used as an organizational activity that
formulate as well as implement with the aim of effectively running entire operational activities.
Along with this, it aims at helping in proper monitoring and efficient control over the business
activities. Its essence lies in fairness and transparency within the operations that contributes to
enhanced disclosures in order to protecting interest of different stakeholders who involve within
the company. Thus, it is important for business to follow a good corporate governance structures
that expected to assist firm to perform better through appropriate quality decision making
activities. Furthermore, Corporate governance also includes as a set of relationships among
management of business organization, its board of members, its shareholders and its stakeholders
as well. This can be assist in improving the possibilities of maintaining proper balance among all
these aspects so that firm can improve their positive financial performance at competitive market
place.
According to Aggarwal, (2013), Good corporate governance confirms that organization
take into account the interests of different constituencies, as well as of the communities in which
they function, and at the same time their board of members are also accountable to the company
and the shareholders in context to executing as well as performing operational activities in an
effective and smoother way. Apart from this, corporate governance is also determining the major
role of directors and accountants towards shareholders and stakeholders because they are
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