Corporate Governance and Business Ethics - Case of Tesco - Assignment Example

Module Organization being reviewed: Tesco Question The term corporate governance seems to be a buzz word but its plays a very vital role in the operations and functioning of an organization. It is the process by which an organization is controlled and managed in order to retain its reliability and competitive advantage in the market among many other rival players. Thus, it might be stated that corporate governance comprises of the set of rules and principles with the help of which, the operations of the organization are governed (Bevan, 2007). Similarly, the corporate governance of the organization of Tesco Plc comprises of board committees and internal financial control committee. Board committees of Tesco Plc include five independent non-executive directors and eight executive directors to manage and control the affairs of the group in an effective way. Apart from this, these board members are also responsible for approving the financial statements, disposals, acquisitions, treasury policies, risk management, succession planning and many others. Other than this, the board of directors are also responsible for handling and managing the day to day operations and functions of the organization of Tesco Plc in an effective way in order to amplify its sustainability and position in the market among many other rival players such as ASDA, Sainsbury etc (Bolden, 2011). Apart from this, the organization of Tesco Plc also includes of an audit committee. The members of this committee are responsible to reviewing the financial policies and strategies of the organization of Tesco Plc in an effective way. Along with this, they also review the financial statements of the organization so as to analyse any sort of mistakes or defaults. Furthermore, a remuneration committee is also maintained, founded by Lord McLaurin. The responsibility of that committee is to recruit the experienced and talented staffs for the organization of Tesco Plc and determine their remunerations and many other fridge benefits. In addition to all these above mentioned committees, another important committee is internal financial control. It is responsible to manage and control the internal finances of the organization of Tesco Plc. The members of the internal financial committee along with the help of audit committee fix the approximate finance required in the coming financial year. Not only this, the board members of internal financial control also review whether the rules and regulations are followed effectively by the members or not. Other than this, apart from directors, remuneration, company, accountability and audit, relationship with shareholders is also extremely part of code of corporate governance. If the organization fails to maintain a proper relationship with its shareholders and stakeholders, then it may not prosper in this future era (Bass & Steidlmeier, 1999). Thus, the above mentioned information is the corporate governance codes of Tesco Plc and the combined image is presented below: (Source: Bolden, 2011) The regulatory framework of Tesco Plc comprises of, extreme value towards the trust, loyalty and honesty of the employees. Moreover, proper restriction of the operations of Tesco Plc as per the rules and regulations of the government of varied states and nations in order to amplify its business and brand image in the market among others. The organization of Tesco Plc always tries to adhere to the rules and regulations of the government, in order to retain its dominance and popularity in the market so that the organization of Tesco Plc might easily expand its chains and increase its range of customers (Brown & et. al. 2005). Question 2 In order to maintain an effective functioning of an organization, the most essential requirement is efficient selection and management of the codes of corporate governance. This is because if the members of any one of the departments present any sort of offensive or fraudulent work, then the organization may not work in an effective way. As, it is the board of members and the financial committee members, who are entirely responsible for making day to day decisions for the improvement of the organization. However, due to lack of proper decision making, varied types of conflicts arise within the organization that may reduce organizational portfolio and profitability. For example: in Tesco Plc, the board members are recognised as the custodian of the company’s values and policies. Moreover, they are entirely responsible for implementing decisions and ideas for the long run success and up-gradation of the organization of Tesco in the market among many other contenders (Tesco, 2013). Issue 1 However, in the year 2009 in the month of July, the board of members are not at all serious about the growth and development of the organizations in both domestic and international markets. The union members of United Kingdom presented a suggestion to improve the supply and distribution system of meat. This is done in order to enhance the level of reliability and dependency of the customers over the brand thereby amplifying the profitability and total revenue of the organization in the market. However, due to lack of decision-makings of the board of members of the organization of Tesco, the supply chain lacked its improvements. The prime cause behind it is that the executive members of the board failed to appoint of best suppliers of meat so as to improve the supply chain of United Kingdom. As a result, due to lack of attainment of the products, the inner trust and morale of the customers declined that hindered the total sale and profit margin of the organization to a significant extent among others (Tesco, 2013). Because of this reason the demand of meat products in the nation of United Kingdom reduced that significantly affected its brand image and popularity among other rival contenders such as ASDA, Sainsbury etc (Ciulla, 2006). Therefore, it might be clearly stated that due to lack of improper decision making and suggestions of the members of the board of directors, the supply chain of meat in the country of United Kingdom declined rapidly. Apart from this, due to improper following of the codes of corporate governance, the reputed retailer of United Kingdom also altered the remuneration payment policy of its executive members. In spite of best performance, the retailer failed to offer the exact remuneration at the end of the month. Not only this, the retailer also failed to offer him the performance award that declined his morality and inner motivation. As a result, the level of dedication and devotion of the executive declined that hindered his performance and motivation for work. Due to such type of remuneration relation issues, the brand image and reputation of the organization of Tesco Plc declined significantly in the market among many other rival contenders. Other than this, due to such type of allegations, the reliability and consistency of the brand declined resulting in downfall of its sustainability and competitive position. Issue 2 In spite of good performance and remarkable profit margin in the year 2012, the organization of Tesco Plc presented ill-treatment to its disabled workers. The organization of Tesco Plc declined their basic pay and the extra fringe benefits. Moreover, the organization presented impartial treatment with its workers that declined their motivation and devotion towards the assigned tasks. As a result, the brand value and productivity of the organization declined significantly in the market among many other contenders. This is the prime cause for which, the organization of Tesco Plc had to suffer a serious setback in the total demand of its product lines and total revenue (Holloway, 2001). Therefore, from these above mentioned facts, it might be clearly revealed that due to improper maintenance of the codes of corporate governance, such type of issues take place. However, it might be resolved only if the codes of corporate governance are followed effective and efficiently by its members and executive directors. Question 3 In this age, corporate social responsibility is extremely essential for an organization. This is because it is one of the most essential tools that may help an organization in improving its competitive position and sustainability in the market among many other rival players. Other than this, CSR is the sense of responsibility of the organization towards its community and society so as to enhance its reliability and dependency within the minds of the customers. By doing so, the loyalty and trust of the customers might get enhanced thereby reducing its rate of switch over costs in this age of aggressiveness as compared to others. However, in order to improve its CSR, the organization of Tesco Plc tried to develop and maintain extremely good relationship with its suppliers. This is done, in order to accomplish good materials at a cheap cost (Cooke, 2011). Tesco Plc might very easily present the good quality of products at a quite cheapest cost so as to retain the image and reliability within the minds of the customers. This might prove effective for the organization to enhance its sustainability and brand image in the market among many other rival contenders. Other than this, the organization of Tesco Plc also offered used to deliver all the products of grocery items directly from the carrier bags to the car washes in order to wash all sort of bad materials. This is done in order to offer healthy products to the customers so as to reduce the intensity of any disorders (Carmichael & et.al. 2011). Such an activity of the organization of Tesco Plc proved effective in amplifying its reputation and brand image in the market among many other rival players. This might also enhance the profitability and total sale of the grocery items thereby amplifying its sustainability and competitive advantage in the market to a significant extent. Other than this, in order to enhance the dependency of the customers, the organization of Tesco Plc implemented varied types of schemes such as loyalty cards and club cards for the customers (Tesco, 2013). By doing so, the level of purchase of the customers increased due to the presence of varied types of discounts. Apart from this, the organization also implemented internet facilities in order to offer an excellent shopping experience to its customers thereby enhancing its total purchase and total net income. Thus, from these above mentioned facts, it might be clearly revealed that CSR offers significant advantage to the organization fame and popularity among others (McKimm & Philips, 2009). In addition to this, in order to improve its sustainability, it tried to implement renewable lightings within the organization. By doing so, the rate of emission of harmful gases reduced to a significant extent thereby amplifying its brand image and reliability. Other than this, it also introduced packed grocery products in order the intensity of wastes. Moreover, in order to reduce the emission of harmful gases in the distribution system, it tried to appoint suppliers at short distances. By doing so, the brand value and dominance of the organization of Tesco Plc enhanced to a significant extent among others (Haslam & et al. 2010). Question 4 The corporate social responsibilities of the organization of Tesco Plc offered significant impact. Due to the implementation of canned products, the level of reliability and trust of the customers over the brand of Tesco Plc enhanced thereby amplifying its image and value in the market among others. By doing so, the rate of total sale and demand of the product lines of Tesco Plc increased that enhanced its total revenue and net income to a considerable extent among others. Other than this, in order to offer good quality of products, the organization of Tesco Plc tried to appoint reputed suppliers. By doing so, the organization of Tesco Plc became successful in offering good quality and hygienic products at a quite lowest cost so as to amplify the reliability and dependency of the customers. Not only this, the relationship among the suppliers also increased that proved extremely effective for the organization of Tesco Plc in the market of United Kingdom as compared to many other rival players (McKee, 2012). Other than this, the introduction of loyalty cards within the organization for the customers also proved extremely effective. Introduction of such schemes helped the organization to amplify its sales and profitability thereby enhancing its sustainability and competitive position in the market among others. In addition, introduction of club cards and festive discounting schemes enhanced the purchasing behaviours of the customers to a significant extent. Introduction of internet facilities increased the awareness of the product lines and total sale of the products as well (Bevan, 2007). Apart from this, introduction of renewable energy lightings within the super markets also proved extremely effective for the organization. The level of energy consumption reduced thereby declining the rate of emission of harmful gases. This strategy improved its image and reputation in the eyes of the government that amplified its prosperity and portfolio in future era (Tesco, 2013). Therefore, it might be clearly depicted from the above mentioned facts that, the implementation of CSR policies by the organization of Tesco Plc `not only improved its image and popularity in the market but also enhanced its demand within the minds of the customers, suppliers and government (Bass & Steidlmeier 1999). Question 5 CSR Recommendation In order to retain its image and position in the market, the organization of Tesco Plc might try to offer more concentration over its CSR. It needs to offer varied types of extra facilities such as discounted schemes to its customers (Mamic, 2004). By doing so, the level of reliability and trust of the customers might get enhanced. Along with this, the organization of Tesco Plc might try to offer entire deals of the ingredients on the packages of the products so as to enhance the inner trust over the product lines of the organization of Tesco Plc. This might help the customers to become well aware about the ingredients present so as to improve its health consciousness (Tesco, 2013). This might help the organization to improve its demand of products and total sale thereby enhancing its profit margin and net income. Other than this, the organization might try to use effective packaging facilities for its products so as to reduce the rate of wastages. This might amplify the rate of consumption of the product lines of the customers to a significant extent as compared to many other rival players in this age of competitiveness (Banerjee, 2010). Corporate Governance Recommendation Other than this, the organization of Tesco Plc might try to implement varied types of training and development programs for its employees in order to amplify their inner skills and morale (Tesco, 2013). By doing so, the level of dedication and devotion of the employees towards the assigned tasks might get increased. This might amplify the total sale and profitability of the organization of Tesco Plc in the market as compared to many other rival players. Apart from this, the organization of Tesco Plc might try to implement proper remuneration methods for its employees so as to amplify their dedication and commitment. Only then the organization of Tesco Plc might amplify its sustainability and corporate advantage in the market among other rival contenders. Moreover, by doing so, the level of retention of the employees might get enhanced thereby declining the rate of attrition to a significant extent among others (Avolio & et. al. 2004). This is extremely essential for an organization, operating in the segment of retailing, so as to improve its sustainability and competitive position in the market. In addition, such type of corporate governance policies might amplify the popularity and demand of the organization thereby enhancing its dominance in the market. Furthermore, the organization might try to offer proper share of profits to its employees in order to enhance their inner motives and desires. This might amplify their motivation and dedication towards the jobs that may improve the organizational profits (Alon & Higgins, 2005). Thus, it might be clearly revealed that implementation of such type of CSR and corporate governance policies within the organization of Tesco Plc might enhance their image and reputation in the market. Moreover, it might also improve its competitive position and sustainability in the future era that may improve its consistency and reliability. Hence, it might be depicted that CSR and corporate governance is extremely essential for an organization in this age so as to amplify its growth and prosperity (Visser & et. al. 2010). References Alon, I. & Higgins, JM. (2005). Global leadership success through emotional and cultural intelligences. Business Horizons. 48: 501-512. Avolio, B. & et. al. (2004). 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