Influence of Good Corporate Governance on Tesco's Performance

This report delves into the influence of good corporate governance on Tesco's organizational performance, focusing on the UK perspective. It begins by outlining Tesco's background and the issues it faces, particularly the accounting scandal. The research aims to evaluate the impact of corporate governance, with objectives including understanding corporate strategy and governance, examining the impact of corporate governance on performance, and determining strategies for addressing governance-related issues. The report reviews literature on corporate governance and strategy, exploring the conception of corporate governance, main challenges, and the impact of good governance on organizational performance. It also presents a research methodology, including secondary and primary research analysis, data interpretation, and recommendations with an action plan. The findings emphasize the importance of corporate governance in ensuring transparency, accountability, and ethical practices, ultimately contributing to Tesco's long-term success and stakeholder satisfaction. The report concludes with recommendations and an action plan for improving corporate governance within Tesco.

Corporate strategy
and governance

Table of Contents
Research topic: The influence of good corporate governance on organisational performance in
context of Tesco: UK perspective....................................................................................................1
INTRODUCTION...........................................................................................................................1
Background of the organisation..............................................................................................1
Issues or problems faced........................................................................................................1
Research aim and objectives..................................................................................................2
Significance of research.........................................................................................................2
Research questions.................................................................................................................2
Literature review..............................................................................................................................3
Conception of corporate strategy and governance.................................................................3
Main issues and challenges associated with and arise during the management of corporate
governance..............................................................................................................................3
Impact of managing good corporate governance over organisation’s performance..............4
Strategies which are used to deal with corporate governance related issues.........................5
Research methodology to undertake secondary and primary research............................................6
Analysis and interpretation of data..................................................................................................8
Secondary research (discussion).............................................................................................8
Analysis of Primary research..................................................................................................9
Interpretation of data............................................................................................................11
Recommendation and action plan..................................................................................................19
CONCLUSION....................................................................................................................19
Recommendation..................................................................................................................20
Action plan...........................................................................................................................20
REFERENCES..............................................................................................................................22

Research topic: The influence of good corporate governance on organisational
performance in context of Tesco: UK perspective
INTRODUCTION
Background of the organisation
The organisation which is selected for current investigation is Tesco plc that is a well and
very famous British multinational groceries and general merchandise retailer which us having its
main headquarter situated in the Welwyn Garden City, Hertfordshire, England, United Kingdom.
A range of products and services are offered by Tesco at various location of world comprises of
Food, Pet care products, Beverages, Frozen food, Bakery products, Technology and gaming
products, Home electrical products, Home and garden products, Toys, car products, Sports and
leisure products, Baby and toddler products, Party and gift products, Health and beauty products,
Clothing and jewellery along with all other Entertainment products and books.
Thus, Tesco is a large size multinational orgnisation which employees a large number of
employees thus, an effective governance and management becomes more important and vital for
this organisation. A Good corporate governance mainly set out and incorporates a set of rules
which particularly defines the existing relationship between stakeholders, management and the
board of directors of a company which directly influence the way of operating and
communicating with an company. Thus, the main aim and principles of corporate governance
within in Tesco is related with leading out a high level of transparency and accountability
through leading better control and check on all activities and action undertaken by this firm.
Issues or problems faced
Managing good corporate governance is a complex and difficult task for a company as
there are many issues and challenges associated with management of corporate governance with
a firm. For instance, a major corporate governance failure is faced by Tesco in form of an
accounting scandal associated with the voluntary disclosure of the misrepresentation of financial
statements by the management (Tesco scandal – the perils of aggressive accounting, 2020).
Thus, the problem statement for current investigation is based on the main reasons and causes
that lead to failure of corporate governance within a company that is reflected in form of
accounting scandals and other unethical scams and wrong doing of a company.
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Research aim and objectives
Research aim
Management of corporate governance has become vital and important for an orgnisation
to keep check on accounting frauds and other scandal through maintaining and creating
transparency and accountability within a company. Thus, the main aim and reason behind
leading out current investigation is, “To evaluate about the influence of good corporate
governance on organisation’s performance”. A Case study on Tesco.
Research Objectives
Following aim are set out for current research project on Tesco company:
 To understands the conception of corporate strategy and governance.
 To examine the impact of corporate governance over organisation’s performance.
 To determine the strategies that is used to deal with corporate governance related issues.
Significance of research
The selection of current research topic is significant as it lead to better understanding about
the conception of corporate strategy that is vital for a company to bring enhanced control and
more transparency in its work. Further, an analysis of the issues and challenges associated with
the management of corporate governance is also provided by current research project that is
helpful and significant for a firm to ensure more transparency and accountability at its workplace
to overcome these challenges. Further, better understanding and implication of corporate strategy
also leads an enhanced check and control on management of a company to minimize and
eliminate the chances of frauds and accounting scandal that lead a positive and better impact on
performance of an organisation. Apart from this, the selection of current topic based on corporate
governance is also significant and important from view point of researcher as it meet personal
interest and academic perception along with leading enhanced development of skill and
knowledge.
Research questions
The main research questions that are analysed and evaluated through current investigation
are listed as follows:
 What is meant by the conception of corporate strategy and governance?
 What are the main issues and challenges associated with and arise during the
management of corporate governance?
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 What overall impact is lead out by corporate governance over the performance of an
organisation?
 What is the best set of strategies that can be used by Tesco company to deal with
corporate governance related issues?
Literature review
It firms a most vital part of any study or investigation as it lead to review and analysis of
secondary form of data to develop better understanding and knowledge about a specific research
topic. Literature review is mainly associated with a systematic way of analysis and evaluation of
data collected from the past records and facts available in form of articles, books and journal to
set a base and support for further investigation. The current literature review is based in the topic
of corporate governance and its objective for which a range of online article and journals are
reviewed, an evaluation and discussion of which is provided as below:
Conception of corporate strategy and governance
As per the view point of Jane Muir, (2016), Corporate governance can be defined as a
system through which the organisations direct and control. In order to ensure governance in
company, board of directors are responsible. The main purpose of corporate governance is to
provide effective, prudent and entrepreneurial management which can deliver long-term success
to organisation. In governance, the role of stakeholder is to appoint auditors and directors as well
as to satisfy themselves by ensuring appropriate governance structure in place. The board of
directors has responsibilities to set the strategic aims of organisation, administering leadership to
put the aim into effect, supervising the business management and reporting to shareholders on
stewardship (Tuck and McKenzie, 2014). The concept of corporate governance is very effective
in bringing transparency in the policies and procedures of organisation so that ethical working
can be ensured. Apart from this, the model of corporate governance has four pillars including
board of directors, internal auditors, management and external auditors. There are some
principles of corporate governance in accordance to which governance code of company. These
principles include transparency, responsibility, fairness and accountability. It is the responsibility
of board of directors and management to ensure that all the employees work ethically within the
organisation an effective decision will be taken regarding the strategic planning and financial
planning of the company. On the other hand, the corporate strategy is defined as the
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hierarchically the highest strategic plan of company which defines overall directions and goals of
the corporate and the way it accomplished within strategic management activities
(Psacharopoulos, 2014).
As per the opinions presented by Puranam and Vanneste, (2016), The corporate strategy of
the organisation is long term and clearly define the vision of direction of organisation. At
corporate level, there are four major types of strategies which organisations use including
expansion strategy, combination strategy, retrenchment strategy and stability strategy. These
strategies are executed by management in order to ensure the growth and success of business.
The main elements of corporate strategy of the company includes the mission statement, vision
statement, objectives of company, resources and scope and the strategies that help in reaching the
objectives. Thus, both the corporate strategy and corporate governance are significant concepts
for organisation and highly contribute in leading the organisation towards growth and success
(Puranam and Vanneste, 2016).
Main issues and challenges associated with and arise during the management of corporate
governance
As per the information provided by Jane Muir, (2016), corporate governance is a term that
is used to represent the strategies and norms used by a company to set a balance among various
associated participants and stakeholders of a company. Thus, maintaining a proper and efficient
corporate structure is a complex and difficult task as meeting out of expectation of all members
like staff, shareholders and community is not easy which directly impacts the profits and
reputation of company. The major issues and challenges that get arise during the management of
corporate governance are discussed as follows:
Conflicts of interest- one of the major issues based while forming of corporate strategy is
associated with having diverse expectation and needs of all stakeholders that are mainly in
conflict with each other. Further, conflict of interest in the framework and structure of corporate
governance has a negative impact on efficient formation of corporate strategies. Thus , conflicts
in interest among directors, managers and other stakeholders could lead to deteriorate and breach
of trust of shareholders and other customers and could also made a company vulnerable to legal
litigation.
Lack of accountability and transparency- Maintaining a considerable level accountability
is necessary is essentially required in corporate governance from top level executives to lower
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level staff through effective corporation and report which ensures and leads a proper balance in
there efforts along with keeping a check on internal working. Beside this, maintenance of
transparency in decision making and strategy formulation is also a big challenge that is
encountered by a company which is associated with the accurate and clear reporting of profit and
loss as overinflating of profits and minimizing of losses can negatively harm the relationship and
trust of company with other stakeholders. Further, a lack of accountability and transparency can
lead to fine from regulatory agencies and endanger success of entire company in form of
accounting scandal like in case of Tesco, the voluntary disclosure of the misrepresentation of
financial statements is made by the management which lead to accounting scandal because of
issue of Lack of accountability and transparency.
Ethical violation- The another issues that could be arisen in corporate governance and
leads to many challenges for a firm comprises of lack of fulfilment of ethical duties by boards
which is mainly associated with neglect of interest and needs of stakeholders when making
corporate strategy and other dictions. Further the corporate strategy should comply with welfare
of greater community along with ensuring minimizing of population and negative impact in
external environment that is difficult and challenging for a firm to set a balance between
corporate governance, ethics, and social welfare intertwine.
Impact of managing good corporate governance over organisation’s performance
According to the view point of Davies, A., (2016), corporate governance is essentially
needed within an orgnisation as it lead to creation of a transparency, consciousness and openness
culture which enables and support and orgnisation to maximise its long term value and
performance. Thus, a positive and optimistic impact is lead by corporate governance on the
performance of a company. The main points and reasons which are reflecting the positive impact
of managing good corporate governance on the overall performance of an organisation are
evaluated and discussed below:
Meet interests of stakeholders- The most crucial role lead by good corporate governance
consists of meeting and fulfilling the needs and interest of all stakeholders of the firm. An
orgnisation have a larger number of stakeholders which comprises of its employees, directors,
owners, customers, government and all other associated parties, thus it is difficult to meet all the
needs and interest of these parties (What is the impact of corporate governance in businesses?,
2020). Thus, implication of good corporate strategies facilitates a better way and effective
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strategy formulation that set a balance and coordination in all possible and viable needs of
stakeholders. Thus, it ensures higher level of satisfaction and commitment in both customers and
employees to have Enhanced trust and brand reputation that facilities and leads positive impact
in enhancing the performance of a firm.
Better managerial practises- Effective management of corporate governance ensures and
leads out a high level of accountability and transparency in all decision making and strategy
formulations which ensures and leads to better managerial practises to enhance the overall
performance of a company. Further, good corporate governance leads a better check and control
over the working of top level executives till the lower level employees through clearly defining
their roles and responsibility which remove the chances of all kinds of frauds and scams thus,
enhance the viability and success level of firm that have a positive impact on performance and
business operations.
Avoiding legal complication- Effective management of corporate governance also ensures
meeting and compliance of legal framework by the way fulfilling all corporate and social
responsibility. Therefore, good corporate governance also helps in avoiding the risk of legal suits
and complication which also improve its reputation and loyalty level in customers to have an
improved level of performance.
Strategies which are used to deal with corporate governance related issues
With respect to the information provided by the Michael Volkov, (2017), it has been
analysed that the companies needs to improve and have better corporate governance strategies as
in case of lack of corporate governance companies would have to face and suffer many legal,
financial and reputational harm which can ruined its business. Some of these effective strategies
that can be adopted by a firm or company to deal with corporate governance reflected issues are
analysed below:
Independent audit committee- The first and foremost step that can be taken by a firm to
overcome the issues is formulation of an independent audit committee as it ensures and leads to
better check and control in internal performance and operation of firm. Thus, independent audit
commit ensures and leads a timely deduction of any fraud or in-competencies that is going on
within a firm which leads to elimination of accounting frauds ad scams along with another
corporate related issues (Ocasio and Radoynovska, 2016).
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Appoint Competent Board Members and evaluate their performance- Appointing a
group of diverse and competent members in board of directors who are having considerable
knowledge and expertise and all relevant business areas is also vital and essential for a firm to
deal with the corporate governance issue in an effective manner. Beside this, regularly evaluating
the performance of directors leads to a better check and control on their activities along with
identifying skills and quality gap to educate them in relevant field would also leads to
meaningful results and deals with issue of corporate governance.
Compliance with norms and maintaining transparency- Maintaining transparency in
decision making process along with compliance of laws is also a viable way to overcome issue of
corporate governance through eliminating risk of legal suits and complexities. Further, meeting
of accounting and financial norms is essential to avoid accounting scandals and scam along with
fulfilment of corporate social reasonability to have better compliance with legal framework of
corporate governance.
Research methodology to undertake secondary and primary research
Research Philosophy
The philosophy of investigation is belief about way of collection of data about a
phenomenon. Positivism and interpretivism are the two types of research philosophies that
mainly used in researches. As per the interpretivism philosophy of research, it is based on
principle which represents that investigator do particular role in detecting social world. While,
the positivism philosophy claims that social world can be unstated in objective way (Ocasio and
Radoynovska, 2016). This study makes use of positive philosophy as it is based on the real
knowledge as well as the role of researcher is restricted to acquisition along with interpretation
of data objectively. Though, when set beside difficulty of social phenomena, its exploration for
perfect standards of systematic practice is too unrealistic.
Research Approach
The approach of research can be defined as a plan for research. The two common types of
research approaches are there named as inductive and deductive approach. The Inductive
approach purposes to develop theory, on the other hand deductive approach is utilized to test an
existing theory. In this specific investigation, investigator will use deductive approach as this
reasoning works from common to specific. The key reason of utilizing this approach is that with
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this, it is possible to elucidate causal relationship amid variables and concepts. Yet, this approach
deeply relies on primary premises being correct (Ocasio and Radoynovska, 2016).
Research Strategy
The quantitative survey, qualitative interviews, systematic literature review, action oriented
research, experimental research, case study research, etc. are diverse types of research strategies
that investigator can be utilized while performing investigation to collect data. In context to this
study, the investigator will make utilization of quantitative survey strategy. The chief reason of
utilizing this strategy is its representativeness is high as well as the strategy has good statistical
implication. Though, the probabilities of data errors are very high due to biasness (Patten and
Newhart, 2017).
Data Collection and Analysis Method
The data can be gathered through utilizing two methods including primary and secondary
data collection method. Fresh data is collected in primary research which is never gathered
before. In secondary method of Data Collection, the data which is previously gathered is used. In
relation to this study, it will make use of both the primary and secondary data collection
methods. In this, questionnaire will be used for collecting primary data and articles, books and
journals will be used for secondary data collection (Zhang and et. al., 2016). Use of both the
methods will enable researcher to collect information in large amount and reliability and validity
of research outcomes can be ensured. The questionnaire in relation to this study is as follows:
Questionnaire
Q1) Do you have ever analysed and evaluated the concept of Corporate strategy and
governance?
a) Yes
b) No
Q2) What thinking you are having regarding the need of effective Corporate strategy and
governance for better growth of a company?
a) Strongly agreed
b) Agreed
c) Disagreed
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d) Strongly disagreed
e) Neither agreed nor disagreed
Q3) Why a retail company like Tesco needed to implement Corporate strategy and
governance?
a) To have better managerial practises
b) To meet interests of all shareholders
c) Provide systematised framework
d) Avoiding legal complication
Q4) What are the main issues and challenges associated with and arise during the
management of corporate governance?
a) Conflicts of Interest
b) Accountability issues
c) Lack of Transparency
d) Violation of ethics and accounting principles
Q5) As per your view point the accounting scandal of Tesco which comprises of the
misrepresentation of financial statements is associated with lack of effective corporate
governance?
a) Yes
b) No
Q6) What are the main challenges that are faced by Tesco due to its accounting scandal?
a) Legal action and law suits
b) Decline in sales
c) Breach of investors and customers trust
Q7) How a crucial role can be lead out by effective Corporate strategy and governance in
improving performance of Tesco?
a) Ensure Ethical operation
b) Meet legal norms and standard
c) Enhance Trust in investors
d) Improved brand reputation
Q8) What is the best set of strategies that can be used by Tesco company to deal with
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corporate governance related issues?
a) Formation of independent audit committee
b) Evaluation of performance board
c) Transparency in Decision making
d) Complying with legal norms
e) Fulfilment of CSR
Q9) What overall impact would be lead out by corporate governance over the performance
of Tesco?
a) Positive
b) Negative
c) Neutral
Q10) Any further recommendation for Tesco to have better corporate strategy and
governance?
Sampling
Sampling can be stated as the process utilizing statistical analysis within which
prearranged sample size is in use from large population. The two sampling methods involves
Probability sampling and non-probability sampling which can be used to select sample. This
study makes use of simple random probability sampling method in collecting sample from large
population (Wang and Sarkis, 2017). The key reason of utilizing this method is its simplicity as
well as lack of biasness. Though, it is difficult to gain access to large populace. The sample size
associated to this research will be 30 respondents.
Analysis and interpretation of data
Secondary research (discussion)
A discussion can be made on the basis of secondary information that the concept of the
term corporate governance is related with enabling an organisations to achieve its goals and
targets in an effective manner through leading a better control over expected risks and also
assuring compliance of all responsibility and set of rules by a firm. Further, it has been analysed
that the conflicts of interest is a main concern related with the management of corporate
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