Corporate Governance and Strategy in Tesco

Corporate Strategy and
Governance

Table of Contents
Introduction......................................................................................................................................1
Background of the organisation..............................................................................................1
Rationale and justification for current research......................................................................1
Review of Problem faced.......................................................................................................1
Aim and objective...................................................................................................................2
Research questions.................................................................................................................2
Literature Review.............................................................................................................................2
To evaluate about the need and importance of good corporate governance in terms of ethical
compliance..............................................................................................................................3
To determine the impact of strong corporate governance and management in enhancing the
growth and success level of Tesco along with improving its brand reputation......................5
To analyse about the competitors of Tesco in order to suggest effective strategies and ways
for Tesco to react on them in efficient manner for better business success...........................7
Research methodology for secondary and primary research undertaken........................................9
Critical review of results of research.............................................................................................12
Recommendation and action plan..................................................................................................16
REFERENCES..............................................................................................................................19

Introduction
Background of the organisation
Tesco is one of the largest British retailer which is providing a continue supply of groceries
and other general merchandise at a global and multinational level the main headquarter of which
is situated at Welwyn Garden City, England, UK. Tesco is a multinational orgnisation thus,
having many complex business operations and activities thus, strong management becomes more
vital and essential for this organisation (Davies, 2016). Further, Tesco also involves borrowing of
money form investors on a broad investment base from both national and foreign markets thus, a
positive brand reputation and good image has become more vital and essential for this
orgnisation that can be only achieved by a strong management and compliance with ethical laws
and corporate governance policies.
Rationale and justification for current research
Corporate governance has now become a vital part of every orgnisation in terms of
maintaining ethical operations at workplace. Apart from this, lack of effective management is
taken as the biggest issues and challenge for orgnisation who seemed to be in suffer in terms of
corporate governance. Thus, an efficient and strong management is require for overcoming all
the issues related with ethical concerns and values along with complying with ethical laws of
corporate governance. Therefore for conducting current research project is rationale and
justifiable as it facilitates better understanding about the need and importance of good corporate
governance in terms of ethical compliance along with impact of strong corporate governance on
growth and success level. Apart from this, current project is also rational from personal and
academic view point of researcher as it facilitates better understanding and improvement in
skills.
Review of Problem faced
Tesco is facing many problems and issues related with efficient management and
complying with provisions of corporate governance in form of lack of transparency and
accountability in its decision making and strategy formulation. Apart from this, many losses and
legal consequences are faced by Tesco because of misleading statement and accounting scandals
associated with overstating profits and misleading investors (Tesco fined £129m for overstating
profits, 2017). Therefore, to maintain the growth and success level along with having a good
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brand reputation in business environment it has become vital for Tesco to emphasis more on
strong corporate governance and efficient management. Furthermore, to overcome risks in terms
of management an effective strategic control and efficient corporate governance is required.
Thus, to resolve and overcome this issues and challenges faced by Tesco plc current research
project is undertaken the main aim and objective of which are provided as below:
Aim and objective
Aim
The main aim of current investigation is, “ To evaluate about the need and importance of
good corporate governance along with analysing its impact in enhancing the growth and success
level of a company.” A research project on Tesco plc.
Objectives
 To evaluate about the need and importance of good corporate governance especially in
terms of ethical compliance.
 To determine the impact of strong corporate governance and management in enhancing
the growth and success level of Tesco along with improving its brand reputation.
 To analyse about the competitors of Tesco in order to suggest effective strategies and
ways for Tesco to react in efficient manner for better business success.
Research questions
 Why corporate governance is needed and important for an organisation especially in
terms of ethical compliance?
 What possible impact is lead by strong corporate governance and management in
enhancing the growth and success level of Tesco along with improving its brand
reputation?
 What are the main strengths and weakness of competitors of Tesco in order to suggest
effective strategies and ways for Tesco to react in efficient manner for better business
success?
Literature Review
Following literature review comprises of analysis of secondary data which is collected with
the help of online article and journals to facilitate base and framework for current investigation
through leading better understanding on the topic of corporate governance.
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To evaluate about the need and importance of good corporate governance in terms of ethical
compliance
As per the view point of Margaret Rouse. 2020, it has been analysed that the concept of
corporate governance is basically associated and represent the combination and set of rules, laws
and processes according to which the operations and all function of a company are being
operates, regulated and controlled by its top authority and managers. Along with this, corporate
governance also leads out a framework that define the existing relationship of the business with
its shareholders, managerial teams, board of directors, employees, managers and all other key
stakeholders which covers both social and institutional aspects of a business firm. Thus, an
analysis can be made out that a good corporate governance is necessary and important for an
orgnisation to effectively achieve its goals through effective control over risks along with
assuring compliance with all set legal and ethical provisions (Engert and Baumgartner, 2016).
Beside this, with respect to the information provided by Cappa, F., Cetrini, G. and Oriani,
R., 2020, it has been analysed that the concept of good corporate governance is receiving much
more importance in today’s business environment because of many high profile scandals that are
recently seen in the corporate world. These scandals are mainly due abuse of corporate power or
involves some kind of alleged criminal activities and unethical behaviour by the corporate
officers. Therefore, many strict laws and legal regulation are set out an a business firm which
tends to be followed by corporate world in order to address these issues by the way of implying
components and principles of good corporate governance. The core principles of corporate
governance are discussed below that are presenting and reflecting the need and important of
good cooperate governance within a business organisation (Fox and Alldred, 2015).
Accountability- It is one of the core element of good corporate governance which provides
and leads to an enhanced level of accountability of the board directors of the firm to all
shareholders which leads an enhanced level of check and control over decision making. Further,
this principle of accountability is also vital and important in accordance with law that facilitates
and leads out to a effective monitoring and check over the activities of chief executive bodies of
a company to ensures ethical working (The Importance of Corporate Governance, 2020).
Fairness- Another vital principle of good corporate governance comprises of protecting
rights of all stakeholders along with leading a proper balance between interest of company and
all other stakeholders consists of its customers, employees and society at larger. Thus,
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implication of good corporate governance is also vital and important to protect the right of
shareholders and ensuring an equal treatment and value for all along with ensuring equal
opportunity for all to obtain effective redress and solution for violation of their rights which is
vital to comply with legal framework (Gnan, Montemerlo and Huse, 2015).
Transparency- This principle of corporate governance is associated with ensuring timely
and accurate disclosure of all the needed information about the relevant material facts related
with operations and activities of a company. This principle of good corporate governance is also
vital and important for compliance of legal law and ethical consideration as it leads to free access
to relevant information for all stakeholders associated with the financial situation of a firm along
with its true social and environmental indicators, performance, ownership structure and
governance of the Company.
Thus, on the basis of above discussion about the principles of good corporate governance
and analysis can be lead out that the it is vital and important to avid mismanagement of a firm
along with ensuring a more efficient operation and working of firm to improve access to capital
and also mitigate all possible legal and ethical risk. Implication of corporate governance makes
and leads out more accountability and transparency in business for investor in order to minimize
the expropriation and incidence of unfairness for shareholders (Goel, 2015). Thus, good
corporate governance is important to act as a vital system of the principles along with
compliance of legal policies and ethical procedures which clearly defined responsibilities, and
accountabilities of all board of directors and that can be also used by stakeholders in order to
work through and effectively management and set balance inherent conflicts of interest that exist
in the corporate form. Beside this, an implication can also be made that good corporate
governance is also vital and essential to set an appropriate control the interaction between
various participants for shaping a better performance and efficient working direction for a firm in
which it is proceeding. These participants involved and focused in good corporate governance
consist of Shareholder, a Board of Directors, and Company Management. Thus, good corporate
governance is important and necessary to determine the ways to reach the most effective
strategic decisions along with ensuring transparency, to lead a strong and balanced economic
development for the organization and also helps to keep the interest of all shareholders
safeguarded (Grennan, 2019).
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