Corporate Strategy and Governance: Tesco's Challenges and Strategies

This report provides a comprehensive analysis of Tesco's corporate strategy and governance. It begins with an introduction to Tesco, outlining its background, rationale for research, and the problems it faces, particularly concerning ethical compliance and management efficiency. The report establishes the aims, objectives, and research questions, followed by an extensive literature review examining the importance of corporate governance, ethical compliance, and its impact on Tesco's growth and brand reputation. The literature review explores the core principles of corporate governance, including accountability, fairness, and transparency. It also delves into the impact of strong corporate governance on Tesco's performance, including ensuring a suitable board, reduced operational costs, and ethical compliance. The report further analyzes Tesco's competitors, aiming to suggest effective strategies and ways for Tesco to react efficiently for better business success. The research methodology, covering both secondary and primary research, is detailed, followed by a critical review of the research results. Finally, the report offers recommendations, an action plan, and concludes with a list of references.

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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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
With respect to the information provided by the Lakshna Rathod. 2018, it has been find out
that the a positive and most optimistic kind of impact is lead out by strong corporate governance
and management in enhancing the growth and success level of Tesco along with improving its
brand reputation as it leads to a healthy corporate culture by the way of leading better control
over legal risk through straining and consistent procedure based on principle of accountability
and transparency. Further, implication of good corporate governance insecure and leads out to
more efficient processes and operation within a firm lead out by repeatability and leading out of
consistency of tasks. Apart from this, adoption of principles of corporate governance also leads
to more better visibility of errors by the way repeatability and consistency in business operation
which quickly highlight nonconformities and misappropriation in the business processes which
lead a positive impact success of a firm by the way of error detection of error and frauds. Further,
the other positive impact of good corporate governance in performance of a firm consists of the
fact that it leads to reduced costs of operation by the way of repeatability and consistency in
activities along with elimination of waste by the way of effective control from scrap, rework and
other costly inefficiencies (Jacoby, 2018). Beside this, a high level of legal and ethical
compliance is also assured by corporate governance through leading and brining a culture that
supports ethical working with compliance of accountability and transparency along with meeting
the intended specifications and works correctly in accordance with legal framework and ethical
provision.
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Figure 1: Impact of good Corporate Governance, 2020.
Further, as per the view point of Davies, A., 2016, the positive impact of strong corporate
governance and management in enhancing the growth and success level of Tesco along with
improving its brand reputation can also be evaluated and analysed with the help of below
provided points:
Ensure more suitable Board- The main positive aspect of good corporate governance on
the success and performance of Tesco comprises of the fact that it lead to a more competent,
balanced and a diverse boards of director who have better knowledge and understanding about
various crucial aspects thus, leads to enhanced success of a firm. The implication of corporate
governance is directed and aim at having a more qualified directors who thoroughly and
completely understanding all the aspects of business along with offering fresh perspective and
complying with set all legal and ethical framework that ensures its optimistic impact in the
performance and success level of Tesco (Kabir and Thai, 2017).
Regular review of board activities- The success and performance of any orgnisation is
greatly dependent on the performance and understanding level of its board of directors who are
responsible to take all vital decisions and strategy formulation. Thus, implication of corporate
governance leads a positive impact on success and performance level of a firm through regular
review of composition and efficiency level of board which helps in identifying all possible
shortcomings on timely and quickly manner which allows and leads to timely improvement of
operation and activities to keep things in track of success and better performance.
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Financial sustainability- The another positive impact of corporate governance comprises
of the fact that it lead to better check on the misappropriation and error in accounting which
reduces the chances of frauds and scandal within a firm. Thus, implication of good corporate
governance leads to better trust and higher commitment level in stakeholders of the company
comprises of investors, employees and customer that ensures better success and performance
along with improving the reputation of brand in target market (Kamil and et. al., 2016).
Therefore an analysis can be made out that the implication of good governance reduces the
chances of frauds and accounting standard along with reduces the threat of safety, legal,
performance and warranty concerns that can severely impact an organisation and its stakeholders
and/or interested parties. Thus, leads an enhanced commitment and test level in customers,
directors, staff, suppliers, shareholders and even whole communities which ensures better brand
reputation for Tesco to lead a positive impact in its overall success and performance level.
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
Tesco is an multinational retailer that has successfully maintain its brand image in the
market. But there are various competitors of Tesco that have an impact on its marketing
strategies such as Sainsbury’s, ASDA, and Morrison’s. Below is the explanation of strength and
weakness of each competitor.
Competitors Strength Weakness
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Sainsbury’s Company is one the most successful
retail brand of UK. Organization is
used various strategies that help the
company to grow in the industry. The
major strength of the company is they
use innovative promotion strategies
that help them to attract more
customers and increase the customer
base. Their offerings is for every type
of customer which is more beneficial
for the brand (King and Mackey,
2016).
Company well established in the
retail industry but there are some
weakness in the market for the
respective brand such as the brand
switching rate of customers could
be high because of the high level
of the competition in the market.
With growing competition the
company also face low rate of
margins that could be affect the
growth if firm.
ADSA Company is offering high rang of
product and services and financial
service in the market. ADSA also has
high level of employee turnover in
their firm there are 150,000 workers
are working in approx 500 stores
which make the strong brand rate for
the company. Organization is also
using online services to connect with
the customers and it is a biggest
strength of the company.
The company is growing
organization in the market but
there are various weakness of the
company which they are facing.
ADSA has less global presence in
the industry in compared to other
competitors. Their ability of
selling prices is restricted in few
countries as they are having fear
for their local vendors (Krall and
Peng, 2015).
Morrison’s Company has an efficient and
effective supply chain distribution
network which helps the company to
grow in the market. Morison’s is one
of the largest super market company
in UK. It has 500 stores and having an
strong employee turnover of over
130,000. Company is also listed in
Morrison’s have limited
geographical reach compared to
the other brands which could be a
weakness for its brand image.
Company was having some issues
with the farmers which could
impact its brand image in the
market.
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London stock exchange (Lone, Ali
and Khan, 2016).
Effective strategies and ways for Tesco to reach on the competitors in efficient manner for
better success of business.
Tesco is well established and wee known of retail business. Company is effectively
competing with their competitors with various strategies and effective management of resources.
Below is the detail explanation of way Tesco is better than their other competitors and how
company is gaining competitive edges in the market.
 Eco friendly strategies: Tesco use various strategies that make their organization better
than other competitors. Company is proving environmental friendly products to their
customers such as low energy light bulbs and many more. Tesco also make littlie plan of
eliminating deforestation products by 2020 and making their packaging fully recyclable
by 2025. These strategies could give though competition to their competitors and attract
more customers in market. Thus, with these strategies Tesco can ganin more competitive
advantages in the market (Lutsenko, 2018).
 Good corporate governance: Tesco is always focused on making more customers base
in their company and give those customers effective satisfaction level from the product
and services of the company. they use various strategies to reach to high level of target
audience and make them aware about the offerings of the company. Thus, with the right
corporate governance strategies company can deal with the competitors in the market.
Research methodology for secondary and primary research undertaken
This section forms a vital part of a project or study which determines and facilitates about
the set of method which are used to perform primary and secondary research consists of
collection and analysis of relevant set of data for meeting set objective and addressing a business
issues. To ensures, selection of most suitable and vital set of research method and approaches for
current investigation use and implication of research onion model is made a description and
analysis of which is provided below:
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Figure 2: Research Onion, 2020.
Research philosophy- Basically there are four man forms of research methodology which
are provided by the research onion model which consists of positivism, realism, pragmatism and
interpretivism which set out principles for leading and conducting an investigation. From the
these four main type of research philosophies use and implication of Interpretivism research
philosophy is most viable and suitable for current investigation on Tesco as it support better own
perception and understanding of reality (McCahery, Sautner and Starks, 2016).
Research approach- It is represented by the secondary layer of research onion that is divide
into two main parts comprises of inductive and deductive form of research approach. Implication
of inductive approach is more viable and suitable for current investigation as it support
interpretivism research philosophy along with leading better scanning of in-depth and theoretical
form of data.
Research strategy- This layer forms out to be a vital part of research methodology section
that provides a complete base and framework for leading out an investigation that comprises of
many data collection tool and forms i.e. action research, interview, survey, observation,
experiments, etc. Out of these forms of research strategy, use of qualitative semi-structured
interview is made as research strategy for current investigation for collection of data as it
facilitates better understanding and implication of theoretical data (Muller, 2017).
Choices of method- There are two main types of research method comprises of quantitative
and qualitative out of which use of qualitative method of research is made as it facilitates
collection of theoretical and in-depth information to have better analyse of human attitude and
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