Analyzing Transparency in Corporate Governance: Tesco's Case Study

This report examines the corporate governance failures at Tesco, specifically focusing on the issue of transparency and its impact on the organization's financial position and stakeholders. The introduction highlights corporate governance as the system controlling and maintaining an organization and identifies transparency as a core element. The case study of Tesco illustrates the negative consequences of misreporting profits, leading to a loss of stakeholder trust and financial repercussions. A literature review supports the importance of transparency and the detrimental effects of information withholding. The methodology section outlines the use of both primary and secondary data collection methods, including questionnaires and academic journals. The conclusion summarizes the importance of strict corporate governance policies, auditing, and transparency. The report emphasizes the need for organizations to prioritize transparency to maintain stakeholder confidence and ethical conduct.

CORPORATE STRATEGY
AND GOVERNANCE

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).

Gantt’s chart
Tasks Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 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.