University Ethics Assessment 2: Tesco PLC Risk and Operations Analysis

This report provides a comprehensive analysis of Tesco PLC, a UK-listed multinational retailer. It examines Tesco's risk management policies, including customer proposition, economic model transformation, liquidity, market competition, brand reputation, technology, data security, compliance, safety, and people management. The report also assesses the auditor's evaluation of Tesco's financial statements, highlighting key risks like store impairment and inventory valuation, and the importance of the going concern assumption. Furthermore, the report explores Tesco's whistleblowing policy, known as "Protector Line," emphasizing its role in addressing misconduct and promoting ethical conduct. Finally, the report touches upon Tesco's international operations and the application of Hofstede's cultural dimensions model to understand cultural differences impacting the firm's global success.

Running head: ETHICS ASSESSMENT 2
Ethics Assessment 2
Name of the Student:
Name of the University:
Author Note

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Table of Contents
Introduction......................................................................................................................................2
Risk management policies of Tesco Plc..........................................................................................2
Audit assessment of Tesco...............................................................................................................4
References........................................................................................................................................6

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Introduction
The issue that has been presented in the question is that a UK Listed company that has
been listed on the London Stock Exchange with international presence has been asked to analyze
in order to present the required information in regards to the risk management policies adopted
by the company and the major risks faced by the listed corporate entity. Moreover, the particular
way in which the assessment of risks have been presented to the company’s stakeholders and
potential investors have been asked to analyze. Furthermore, the auditor’s assessment of the
potential risks, the whistle blowing policy of the particular company and the international
operations in regards to the particular selected corporate entity also has been asked to analyze in
this study.
The UK listed company that has been selected for the purpose of analyzing in this
particular study is Tesco PLC. Tesco PLC is a multinational grocery and a top retailer that deals
in general merchandise and has its headquarters in Welwyn Garden City, Hertfordshire, England,
United Kingdom. Moreover, Tesco is the third largest retailer in the world in terms of profit.
Risk management policies of Tesco Plc
The systematic and the robust review of the risks that the particular corporate entity of
Tesco Plc is exposed to has reflected the fact that the operations of the British giants face certain
principal risks and uncertainties. The risk process that has been adopted by the management of
the firm results in the inclusion of the liquidity risks, economic risks and other associated risks.
The principal risks that has been faced by the corporate entity are as follows:
 Proposition of the customer – the failure in regards to listening to the customers and
proper understanding of the changing trends in regards to the marketplace might lead to
the loss in the market share by the corporate entity. Moreover, the corporate entities being
unable to sustain loyalty of the customers is a potential risk. The particular step that has
been adopted by the management of Tesco is that the firm has been considering the
development of strategic plans for studying the changes in the customer needs. Moreover,
these particular strategies are have been founded upon the customer insights and have
been customer focused strategies (Hopkin 2017).

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 Transformation in regards to the economic model – the transformation of the economic
model restrict the particular corporate entity to make the to a proper response to the
changes in regards to the external economic environment. The transformation of the
economic model also facilitates the decrease in the operating margin of the firm which
might lead to the generation of sufficient cash for the purpose of meeting up to the
objectives of the business. The much needed transformation programs have been
undertaken by the management of the corporate entity (Ittner and Keusch 2016).
 Liquidity – the liquidity refers to the particular situation when the essential business
activities are not able to provide the required that is needed in the regular course of
business. The particular risk management policy that has been undertaken by the
corporate entity is that the key financial elements like the cash resources, debt
instruments, availability of the credit facilities and the forecasts revealed by the cash
flows (Ittner and Keusch 2016).
 Markets and competition – the existence of a consistent strategy for the purpose of
responding to the competitors and the changing markets is very essential. The absence of
such a strategy will result in the loss of market share. The Board of Directors of the Tesco
Plc maintains a continuous review of the strategies of the corporate firm (Hopkin 2017).
 Brand, Trust and Reputation – the management of the components like the goodwill,
brand, trust and reputation is an essential feature and the failure to manage it results in the
loss of the potential band of customers. The management of the Tesco Plc have updated
the brand guidelines. Moreover, the policies and procedures in regards to the affairs of
the corporate entity have also been updated. The media releases and other external
communication means include external stakeholder engagement (Lasserre 2017).
 Technology – the required investment in the field of IT landscape is a necessity of
business and the failure to which might result in the loss of crucial information. The
controls that have been adopted by the corporate entity in regards to technology strategy
refers to the fact that the British giant has increased the investment in IT along with a
development plan that aims to cover a range of customer systems (Lasserre 2017).
 Data Security and Data Privacy – the aspect of data security and data privacy is a major
risk that should be considered. Tesco have facilitated the protection of the systems with

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the help of the access controls. The particulars of the IT security program have also been
improved (Ittner and Keusch 2017).
 Compliance and regulation – the regulatory and the financial obligations should also be
met by the corporate entities. The management of Tesco ensures that the company
continuously meets the financial and regulatory standards (Ittner and Keusch 2017).
 Safety – Safety of the work place is a major consideration that is facilitate by the
corporate entity by the continuous testing of the organizational environment in regards to
the degree of safety provided by the infrastructure of the company (Ittner and Keusch
2017).
 People – the people refer to the major stakeholders who are essentially related to the
business and the management of Tesco by the establishment of the standardized
regulations ensures the welfare of such entities.
The risk assessment of the firm is conveyed to the stakeholders of business by issuing a
particular disclosure in regards to the risks that have been faced by business and the initiatives
taken by the management of the firm for the purpose of managing the issued risks.
Audit assessment of Tesco
The audit assessment of Tesco PLC that has been carried out on the basis of the financial
statements of the firm has revealed the fact that the accounting statements or that has been
included in the financial report of the company for the financial year of 2017 represents the true
image of the financial position of the firm. Moreover, it has been asserted by the auditor that the
financial statements have been prepared on the basis of the International Financial Reporting
Standards (Barnes 2015).
Furthermore, the key risks that have been identified in the financial statements of the
company are as follows:
 Review of the store impairment
 Method of recognition in regards to commercial income
 Valuation of the inventory
 Valuation of the obligation in regards to pension
 Contingent liabilities

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 Management in regards to the override of the controls
 Technology environment of the firm
Along with the risks, the materiality that has been utilized was £50 million that has been
based upon a 5% normalized profit before tax. Furthermore, it has been mentioned in the
auditor’s report that the adoption of the type of accounting in regards to going concern by the
director of the firm has been a right approach as no material uncertainties have been identified by
the auditor. In addition to this, the description of the potential risks and the scope of the risks
have been identified along with the key observations from the perspective of the auditor has also
been included in the auditor’s report of the firm (Hay 2015).
Therefore, it can be deduced from the report of the auditor that the financial performance
of Tesco has been satisfactory and ethical in regard to the established accounting standards for
the financial year of 2017.
Whistle blowing policy of the company Tesco Plc
As rightly put forward by Sharif (2015), whistle blowing policy refers to the reporting by
employees of various assumed misconduct, illegal actions or failure to act within particular
council. The main intention of the policy is to inspire employees as well as others who have
serious concerns regarding any aspect of the work of the council to come forward and voice the
concerns.
Background of the policy
Management of the firm takes protection of the colleagues, businesses as well as
customers very critically. Nevertheless, similar to any major corporation, there are diverse
occasions where management of Tesco plc encounter the risk of doing wrong things and remain
unaware of misconduct taking place. As per the Code of Business Conduct of Tesco Plc, the
company intends to adhere by the regulations wherever the company functions (Tesco plc 2018).
Essentially, the internal policy of the company intended towards “Solving Problems at Work”
upholds the Personnel policies along with procedures (Vandekerckhove 2016).

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Whistle Blowing Approach of Tesco plc
In order to make certain that the management is aware of any kind of wrong doing;
administration of the firm delivers a free, professional, secret and secure service. This can enable
employees, suppliers along with other staffs to raise their respective concerns. Particularly,
within the firm this whistle blowing approach is referred to as “Protector Line” (Tesco plc 2018).
This is a confidential telephone as well as email service that permits concerns to be raised at the
early stage. In this regard, it can be said that it is crucial that management of the firm and
suppliers operate together to inspire a culture of honesty and responsibility (Lee and Fargher
2017).
Advantages of the whistle blowing policy of Tesco Plc
The whistle blowing policy of Tesco plc also known as “The Protector Line” is said to be
beneficial for the company as it is way for colleagues, members of the staff of the firm along
with supplier to disclose requisite information (Tesco plc 2018). In essence, divulging
information can help in relating to various suspected wrong doing or else dangers at operations
(Caillier 2015). Therefore, the whistle blowing policy can help management in remaining aware
of illicit actions and accordingly take measures to address the issues. The situations might
include unauthorised disclosure of various secret information, criminal actions, issues of human
rights, violation of internal policies, financial fraud or else mismanagement and many others.
Colleagues and Suppliers
For the company Tesco Plc, the service of Protector Line can be handled regionally by
the Loss Prevention as well as Security Team subsequent to the Protector Line Blueprint. Again,
for the suppliers as well as members of the staff of the corporation, management of the firm
Tesco Plc have a separate dedicated worldwide Supplier Protector Line Service run by an
autonomous third party (Tesco plc 2018). Here, all calls that are associated to the provision of
company’s goods/services are transmitted to the Group Team for review and requisite actions are
taken (Saleem and Larimo 2017). Again, calls that are not associated to Tesco plc are not passed
on to the company. However, the Provider of Protector Line Service tries to reach the callers
firm to send alerts regarding probable concerns.

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Therefore, the benefit of this whistle blowing policy is that it reflects commitment of the
firm to design a culture that can essentially value all the employees. As such, this policy serves
as a crucial function that can expose unethical behaviour, provide legal protection to the ones
who report breaches of regulations regarding workplace safety, financial, environmental as well
as securities directives (Beugelsdijk et al. 2015).
International operations of the firm Tesco Plc
Tesco Plc is a transnational retailer and this is why various socio-cultural facets from
various nations exert immense impact on the success of international operations of the firm
Tesco. In order to analyse the cultural difference, the model of Hofstede can be utilized. This
model can help in comprehend ding the cultural variances of the employees of the company
when they are operating in two different nations (Degens et al. 2017).
Hofstede Cultural Dimension of the firm Tesco Plc

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Figure: Hofstede Cultural Dimension
(Source: Armstrong et al. 2015).
In essence, the cultural dimension can be necessarily segregated into six different criteria:
Individualism/Collectivism: In context of individualism, India has comparatively lower
rank than that of UK as Indian people have faith in collectivism whilst people of UK mainly
believe in individualism. The people of UK primarily believe in operating alone and have
confidence in individualism (Tesco plc 2018). The work culture of UK is entirely different as
they believe that employees can operate individually better than in the group. Contrarily, in
Tesco India, people are of the view that operating in a group is a better alternative to survive in
particularly communitarian (Armstrong et al. 2015).
Hofstede'sCulturalDimensionIndividualism/CollectivismMasculinity/Feminity:LongorShortTermInvestment:

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Masculinity/Feminity: The score of UK is high when the members of the staff are
evaluated and this indicates the level of competition among the employees. The people of UK are
highly competitive in comparison to employees of other nations namely India. The Indian
employees are not as competitive as that of the UK employees. At the time when the nation has a
high score, it can be said that dominance side of the corporation of that nation is very high
(Tesco plc 2018). On the other hand, at the time when the core is comparatively less, it can be
said that the dominance side of that nation is low (Degens et al. 2017). Therefore, it can be said
that the dominance side of the Tesco Plc in UK is comparatively high in comparison to that of
India.
Avoidance of Uncertainty: The people of UK are “happy go lucky” kind of people and
they tend to avoid stress and tension owing to uncertainty. Therefore, the score for this particular
dimension can be said to be extremely high. Contrarily, Indians always try to avert uncertainty
and have comparatively lower score (Degens et al. 2017).
Long or Short Term Investment: Both the nations UK as well as India have confidence in
long term investment and are of the view that long term investment can reap more benefits in the
upcoming period. Therefore, score in this specific dimension is nearly the same for both the
nations.
Indulgence: In context of indulgence, it can be said that the people of UK have trust in
humanity and positivism and get involved in various social activities. However, Indian people
think a lot before involving as economic strength of the nation is much behind that of UK
(Armstrong et al. 2015). Therefore, in terms of indulgence, Tesco Plc has a higher score.
Power Distance: This dimension shows the degree of comfort of people in exerting
influence upwards (Armstrong et al. 2015). In itself, acceptance of inequality in particularly
distribution on power in community explains the power of distance. In this regard, people of UK
are said to score higher in comparison to people of other cultural background.
Ethical Considerations: seeing that the cultures vary from one nation to another, it is vital for
management of Tesco to modify the design of products as well as services along with style of
administration as per the regional context (Beugelsdijk et al. 2015). Besides this, societal factors
also vary from one nation to another. Therefore, the management of Tesco have the need to take

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into account the ethical considerations and understand the effects of differences in cultural on
particularly ethical decision making. This is essentially important for averting probable business
pitfalls and for formulating effectual global marketing management agenda (Tesco plc 2018).
Conclusion
In conclusion, it can be said that the above study helps in understanding risk management
policies with special orientation to then company Tesco Plc. The study at hand helps identifying
the primary risks encountered by the firm and the way risk assessment is specifically presented
to the stakeholders of the firm. Thereafter, the current study helps in gaining deep insight from
the audit assessment undertaken based on pronouncements of the firm. Moving further, the study
explicates the whistle blowing policy of the firm Tesco Plc along with the benefits of the same.
In addition to this, the current study also analytically evaluates the international operations of the
firm in the context of Hofstede model and presents ethical considerations stemming from its
international operations.

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