Corporate Governance and Strategy Report: Tesco Plc Case Study

This report examines the corporate governance of Tesco Plc, focusing on the critical issues of lack of transparency and accountability. It begins with an introduction to corporate governance, its importance, and the background of Tesco Plc, followed by an overview of the problems the company has faced, including accounting scandals. The report outlines the research aim, objectives, and rationale for the topic selection, followed by the research questions. A literature review is conducted, exploring the concept of corporate governance and its significance, the impact of a lack of transparency and accountability on firm performance, and potential strategies for Tesco Plc. The research methodology, including both secondary and primary research, is described, and the results are presented and analyzed. Finally, the report provides recommendations and an action plan for Tesco Plc to improve its corporate governance, transparency, and accountability.

Corporate Strategy and
Governance
(Summative)

Table of Contents
Research Topic: Issue of lack of transparency and accountability in corporate governance. A case
study on Tesco Plc. .........................................................................................................................1
Introduction......................................................................................................................................1
Background of the organisation..................................................................................................1
Review of the problem faced .....................................................................................................1
Aim and objectives .....................................................................................................................1
Rationale for selection of topic...................................................................................................2
Research questions......................................................................................................................2
Literature Review.............................................................................................................................2
To review about the concept of corporate governance along with analysing its need and
importance...................................................................................................................................3
To evaluate about the impact of issue of lack of transparency and accountability on overall
performance of firm. ..................................................................................................................4
To explore suitable strategies for Tesco Plc that would be needed for better management of
corporate strategy along with overcoming the lack of transparency and accountability............5
Research Methodology for secondary and primary research undertaken........................................6
Review of Results of the Research ...............................................................................................10
Analysis of collected facts........................................................................................................10
Interpretation of data.................................................................................................................11
Recommendation and Action Plan ................................................................................................18
REFERENCES..............................................................................................................................21

Research Topic: Issue of lack of transparency and accountability in corporate
governance. A case study on Tesco Plc.
Introduction
The concept of corporate governance is mainly related with the specific laws and process
that are followed and going on within a company that are taken as basis to operate and control a
business firm (Davies, 2016). The corporate governance mainly aim at and associated with
leading an enhanced level of transparency and accountability within an organisation along with
meeting and taking care of interest of all shareholders.
Background of the organisation
The organisation selected for current assignment is Tesco Plc which is a well known
British Multinational groceries and general merchandise having its main headquarter in Welwyn
Garden City, England. Tesco is a multinational organisation which is having a larger number of
stakeholders across the world thus, it is facing many issues and problems in maintaining an
effective communication and proper interaction between them (Tesco fined £129m for
overstating profits, 2017). Therefore current investigation is lead out on Tesco company to have
better understanding about the concept of corporate governance along with analysing its needs
and importance.
Review of the problem faced
The most vital issues faced and encountered by Tesco is associated with lack of
transparency and accountability within its management and key shareholders. This, issues of lack
and transparency and accountability has lead to recent accounting scandal and fraud which was
related with miss-presentation of facts to to show higher profits in order to attract larger number
of investors (Tesco Scandal- the perils of aggressive accounting, 2018). Therefore, current
investigation is carried out on Tesco Plc to analyse about the concept of corporate governance
along with analysing about the impact of issue of lack of transparency and accountability on
overall performance of firm.
Aim and objectives
Research aim
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To evaluate about the concept of corporate governance along with analysing the issue of
lack of transparency and accountability within a firm. A research project on Tesco Plc.
Research objectives
 To review about the concept of corporate governance along with analysing its need and
importance.
 To evaluate about the impact of issue of lack of transparency and accountability on
overall performance of firm.
 To explore suitable strategies for Tesco Plc that would be needed for better management
of corporate strategy along with overcoming the lack of transparency and accountability.
Rationale for selection of topic
The selection of current research topic is rationale and significant for a firm as the
concept of corporate governance has become vital for all organisation as it bring more efficiency
within a company. Further, many legal provision are also there which has made compliance of
corporate governance essential for companies to bring transparency and accountability in their
operations. Beside this, selection of current research topic also meet and accomplish the personal
interest and educational background of researcher along with facilitating better skill
development.
Research questions
 What is meant by the concept of corporate governance along with analysing its need and
importance?
 What possible impact could be seen and lead out by the lack of transparency and
accountability associated with the lack of proper corporate governance on overall
performance of firm.
 Which could be the most suitable strategies for Tesco Plc that ensures better management
of corporate strategy along with overcoming the issues of lack of transparency and
accountability?
Literature Review
This forms a vital part of every study and research work as it facilitates better information
and analysis of secondary form of data that leads to better base and framework for investigation
(Fink, 2019). The current literature review is based on analysis of online articles and journals
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based on the topic of corporate governance, an analysis and discussion of which is provided as
follows:
To review about the concept of corporate governance along with analysing its need and
importance.
As per the view point of Fremeth, A.R. and Holburn, G.L., 2020, an analysis can be made
out that the concept of corporate-governance is associated with the set of rules and process which
are implicated and opted within a business organisation through which all its functions and
operations are being governed and managed. Beside this, an analysis can be made out the the
concept of corporate-governance provided information about the ways and strategies which
define the existing relationship and way of interaction with stakeholders. Further, corporate-
governance consists of a set of process and combination which covers and reflects social and
institutional aspects of a business firm that are vital to meet and set coordination among interest
of all stakeholders (Habbash, 2017). Therefore an implication can be made out that compliance
of provision of corporate-governance are need and important for a business firm to set out a
better coordination among organisational interest and expectation of all other key stakeholders.
Further, with respect to information provided by Lakshna Rathod. 2018, corporate-
governance is a vial and important concept to have higher level of business accountability and
transparency by the way of protecting and safeguarding rights of all stakeholders comprises of
managers, employees, customers and other social aspects. The other key benefits and advantages
of corporate-governance within a firm that made it important and essentially needed are
discussed and analysed as below:
Better reputation- The implication and adoption of effective corporate-governance
strategy leads to and ensures improvement in the brand reputation by the way of developing
improved trust and loyalty among stakeholders. An analysis can be made out that corporate-
governance is directly associated with meeting all the set accounting and ethical norms that plays
a vital role in improving the brand reputation and create an enhanced goodwill for a firm that is
important for enhanced business performance (Jacoby, 2018).
Investor interest rising- An analysis can be made out that corporate-governance are
associated with creating improved transparency and accountability at workplace which would
lead to presentation of true accounting facts and financial position that plays a vital role in
improvising confidence of stakeholders like investors and customers. Thus, corporate-
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governance plays a vital role in improving and attracting the interest of larger number of investor
that meets all the provision of accountability and transparency and ensures true information and
factual presentation of facts for its stakeholders.
Reduction of legal risk through compliance of legal provisions- Adoption and use of
corporate-governance leads to meeting and fulfilment of all the set rules and regulation thus,
mitigate and reduce the chances of legal consequence and issues. Further, enhanced level of
accountability and transparency also leads to reduction in chances of accounting frauds and
scandals by the way the better check and control over the performance and business activities of
top management and broad of directors (Lutsenko, 2018). Therefore, mitigate and reduce the
chances of legal risk and threat for a firm that is needed and important for better business
performance.
To evaluate about the impact of issue of lack of transparency and accountability on overall
performance of firm.
With respect to the information provided by the Habbash, M., 2017, it has been evaluated
that a negative impact is lead out by the issue of lack of transparency and accountability on
overall performance of firm. An analysis can be made out that lack of transparency and
accountabilities lead to many issues and causes many challenges for a business firm which
comprises of breach of investors and other stakeholders trust based on miss-presentation of facts
and accounting position which would hamper the brand image and reputation of a firm. A better
analysis of the factors and issues caused by the lack of transparency and accountability which
lead to negative impact on the business performance of a firm are discussed and provided below:
Conflicts of interest among boards- Lack of proper transparency and accountability
leads to enhanced chances of conflicts among boards members as they lack proper
communication and interaction. Further, having different perceptive and interest regarding a
topic or concept also hampers the decision making and strategy formulation by the directors that
were not based on the provision of accountability and transparency that is a big issues which is
encountered because of lack of corporate-governance (Mkandawire, 2019).
Violation of accounting and ethical principle- The another challenge associated with
lack of transparency and accountability comprises of that fact that it is lead to breach and
violation of accounting and ethical principles. Proper transparency and true presentation of fact is
a vital concept of accounting principles and proper bifurcation of rules and regulation is directly
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associated with ethical compliance. Thus, lack of transparency and accountability lead to breach
and mitigation of set accounting and ethical principles.
Higher chances of accounting frauds and scandals- The most vital and common issues
related with lack of transparency and accountability comprises of enhanced level of accounting
frauds and scandals. An analysis can be made out that if there is no proper transparency and
accountability with an organisation than it become hard to keep a check and control over the
operations and performance of top managers and directors which raise the issue of accounting
scandals and frauds (Oliver and Picard, 2020).
Thus, an analysis can be made out that lack of transparency and accountability leads to
many issues and consequence for a firm in form of violation of accounting principles and
enhanced chances of frauds which hampers and reduce the brand reputation and goodwill of a
firm. Thus, it can be analysed that lack of transparency and accountability lead to a negative
impact on overall performance and productivity of a firm.
To explore suitable strategies for Tesco Plc that would be needed for better management of
corporate strategy along with overcoming the lack of transparency and accountability.
According to the view point of Kraus, S., Rehman, S.U. and García, F.J.S., 2020, it has
been analysed that corporate-governance become vital for all firms thus, some more effective
and suitable strategies are required by Tesco Plc that to have better management of corporate
strategy along with overcoming the lack of transparency and accountability. Some of these key
strategies and ways that can be adopted by Tesco Plc to have better management of corporate
strategy along with overcoming the lack of transparency and accountability are provided and
discussed below:
Formulation of independent audit committee- It is one of the key strategy that facilitates
a better check and control on the business activities and performance of board of directors and
other top management that is vital to reduce the chances of frauds and scandals within a business
firm. Further, setting out of an independent audit committee would ensures and leads to better
analysis of financial statements and business transaction along with the analysis of true financial
position to have enhanced level of business transparency and accountability through prevailing
better check and control (Tanriverdi and Du, 2020).
Formulation of a competent board of director- Another vital strategy that leads to better
management of corporate-governance comprises of a formulation of a more competent board of
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directors that have better knowledge and understanding about various aspects of business. A
competent boards ensures better compliance of accounting and other ethical norms that is vital to
reduce the chance of accounting frauds and scandal and also lead to enhanced level of
transparency and accountability during presentation of financial position and other relevant
information about a business firm (Watt and Schwartz, 2018).
Effective communication- The another vital way that can be adopted by a firm to
mitigate and overcome the issue of lack of transparency and accountability comprises of
ensuring effective communication among all stakeholders. Effective communication would lead
to better bifurcation and division of role and responsibilities among employees and also enhance
the level of accountability along with leading transparency in flow of information. Beside this,
leading effective communication also ensures better interaction with key stakeholders like
managers, investors, clients, business partners, customers and all other that leads and brings a
positive attitude and relationship among them that is vital and important to have enhanced
business performance and success (Schmidt and Fahlenbrach, 2017).
Research Methodology for secondary and primary research undertaken
This forms out to a vital and core part of every investigation that facilitates enhanced
information about the proposed method that could be used or applied by a researcher for
conducting a research work in a more better and vital manner. Utilisation of research onion
model has been made for current investigation to select most appropriate and suitable form of
research method and approaches a discussion and justification of which is provided below:
Figure 1: Research Onion, 2020.
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Research philosophy- This section of research methodology is divided into four main
categorises consists of realism, pragmatism, interpretivism and positivism out of which one is
elected by the researcher on the basis of nature of investigation. Use of positivism research
approach is made for current investigation as it justifiable and appropriate to support objective
nature of investigation that is more systematic and practical form of study (Davies, 2016).
Research approach- This forms out to be the second layer of research onion that is
divided into two forms i.e. deductive and inductive from which selection of one is made on the
basis of opted philosophy. Therefore, use and selection of deductive approach is suitable and
justifiable it properly coordinate with positivism philosophy and also support better analysis and
viable scanning of numeric and objective set of data.
Research strategy- It tend to be a viable section of research methodology that provides
and facilitates base and framework for data collection and other activities of investigation
through facilitating and providing information about the way and tool of data collection (Fink,
2019). The various forms and tools comprises and included in research strategy are action
research, experiments, observation, survey, interview, etc. out of which utilisation of survey form
of strategy is seemed most justifiable and suitable for current investigation as it ensures and leads
to better collection of data through comprising use of questionnaire as data collection tool.
Choices of method- there are two common form and set of research method comprises of
qualitative and quantitative method of research from which selection of qualitative research
method is justifiable for an in-depth and detailed form of research where as implication of
quantitative research method support an objective and numeric set of research. The current
investigation tend to based on objective nature therefore, use and selection of quantitative nature
of research method is most suitable and appropriate (Habbash, 2017). The justification for
selection of quantitative research method comprises of fact that it lead to easy collection of data
in numeric and arithmetic terms that is easy to analysis and present through making use of
statistical graphs and charts. Apart from this, use of quantitative nature of research method also
support a specifies and measurable set of results to achieve set objective in more vital way.
Data collection- Implication of two main origin and sources of data are made or current
investigation comprises of primary as well as secondary sources of data. The justification behind
making use of primary data based on fact that it provides most authentic set of data that is
directly gathered from the respondents where as secondary form of data is also vital and needed
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to support present facts and investigation with the help of past data and research work (Jacoby,
2018).
Analysis of primary data would have been made with the of quantitative set of analysis
comprises of frequency table and pie charts. Further, analysis of secondary data has been made
and provided with the help of systematic literature review.
Sample size- Sampling basically represent the method of selection and choice of a pre-
determined number of units and observation from a larger and complex number of population
(Lutsenko, 2018). With respect to current investigation use of random sampling method has been
made for selection of a sample size of 50 participants from the employees of Tesco Plc. Use of
following questionnaire would be made for collection of primary data from the selected 50
participants from the employees of Tesco Plc:
Questionnaire
Q1) Do you having any implication or idea regarding the concepts of corporate
governance along with needs and importance within in current business scenario?
a) Yes
b) No
c) Neutral Implication
Q2) What are the factors and main reasons that are representing the due need and
importance of corporate-governance within an organisation?
a) Compliance of law
b) Encourage positive behaviour
c) Improve top level decision making
d) Better control over management
Q3) Which could be the main challenges and issues that could be encountered by internal
management of Tesco plc while managing and implicating corporate governance?
a) Getting right commination of board
b) Regular performance evaluation of directors
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c) Issue of maintaining transparency and accountability
d) All of the above
Q4) As per your view point, what overall impact would lead out by the issue of lack of
transparency and accountability on overall business performance of Tesco plc?
a) Positive
b) Negative
c) No impact
Q5) Which factor is representing the main cause and issues faced by Tesco plc due to lack
of proper transparency and accountability within this organisation?
a) Conflicts of interest among boards
b) Violation of accounting and ethical principle
c) Lack of commitment in shareholders
d) Breach of trust
e) Higher chances of frauds and scandals
Q6) Are you agreed with the fact that more effective management corporate strategy
plays a vital role in improving the business performance and success level of an
organisation through creating positive stakeholders relationship?
a) Agreed
b) Strongly agreed
c) Disagreed
b) Strongly disagreed
c) Neither agreed nor disagreed
Q7) What are the suitable strategies that can be adopted by Tesco Plc to have better
management of corporate strategy and also resolve the issue of lack of transparency and
accountability?
a) Appointing independent auditor
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b) Review of board performance
c) Meting accounting principles
d) CSR responsibilities
e) Effective communication
Q8) Any further recommendation for Tesco Plc to have better management of corporate
governance along with overcoming its associated issues?
Ethical consideration
Implication of BERA code of ethics and data protection act is made to met the ethical
consideration and maintain the safety and security of collected data.
Review of Results of the Research
Analysis of collected facts
Use of frequency table is made for systematic presentation of collected raw data:
Q1) Do you having any implication or idea regarding the concepts of
corporate governance along with needs and importance within in
current business scenario?
Frequency
a) Yes 46
b) No 1
c) Neutral Implication 3
Q2) What are the factors and main reasons that are representing the
due need and importance of corporate-governance within an
organisation?
Frequency
a) Compliance of law 12
b) Encourage positive behaviour 13
c) Improve top level decision making 11
d) Better control over management 14
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