Reputation Management Plan for Tesco - Example

REPUTATION MANAGEMENT PLAN FOR TESCO Contents table Table of Contents Contents table 1 Introduction 2 Situation analysis of Tesco PLC 2 Problem Statements 3 Research 4 Target Publics 5 Goals and Objectives 5 Strategy and Tactics 6 Ethics and Reputation Management 8 Evaluation 8 References 9 Wallop, H 2011, Tesco now employs half a million people around the world, making it Europe's biggest private sector employer. 11 Introduction The normal progress of business and any other organisation operating in public requires a positive Public Relations Image. This dictates the manner in which the surrounding society views the organisation regarding its operations and services. The public image costs an organisation the ability to succeed or fail in the normal running of the business organisation. Therefore, nearly all organisations aim at promoting a positive public image as success assets in the modern dynamic environment. Public Relations Management is one of the ways through which an organisation seeks to maintain a positive image in its interactions with the public (Watson & Noble 2007, 6). This process entails the identification of a factor that causes bad reputation to the usual progress of the organisation and operating all relevant services towards alleviating the conditions. This paper seeks to develop a Reputation Management Plan for Tesco PLC which is one of the multinational business organisations based in the UK (Ndungu 2014, pg. 1). The Reputation Management Plan targeted in this paper consist of the development of the problem statement, research about the company and the problem stated, goals and objectives of the plan, strategies and tactics to alleviate the identified problem and the evaluation of the plan. Also, this plan addressed to the Chairman of the Board of Directors seeks to develop a more strategic solution as opposed to contingent outlook to the problem identified. Situation analysis of Tesco PLC Tesco Company stands out as one of the largest retailer businesses in the world. The company which is based in Britain is a multinational food retailer which runs about 1900 stores (Ndungu 2014, pg. 1). Besides, the company is known for operating supermarkets and grocers both in the UK and beyond. Presently, the company runs about 2300 supermarkets which give it a great competitive edge in the market. Tesco Company currently stands out as the largest private sector employer in the entire Britain employing about 326,000 people (Wallop 2011). This has widened the perception and the reputation of this company and given it a more global approach in the manner of operations employed in the recent past. The retailer shop has extended beyond the boundaries of Britain and extended to regions such as Taiwan, Japan, Malaysia, Poland, Hungary, and the Czech Republic among many other nations (Brannen, Moore and Mughan 2013, 1). Besides the food retailer operations, Tesco runs financial services using the banner of ‘Tesco Financial Services’. The company runs both the credit card services and the car insurance policies that have expanded its dominion in the financial services within the country. Besides, Tesco stands out as the largest seller of gasoline in the entire Britain. Scholars argue that the business network and strategies created by the company has brightened its dominion and niche both in the Britain market and beyond (Sapriel 2003, 58). Problem Statements Tesco has been hit by reputation problems in the recent past. This has occurred due to the persist profit warnings, horse-meat scandal, questionable black hole of £263m in its profits and a Serious Fraud Office Investigation which was realised in the company’s accounting practices (Ndungu 2014, pg. 3). Since 2011, the company has remained intertwined within the bounds of these problems. This has Tesco Company a questionable and negative reputation in the recent past. Many buyers still retain suspicion regarding the element of horse meat within the products of the company. Therefore, this has threatened a great market share earlier commanded by the company especially those who suspect that the products they purchase may contain the horse meat. Also, the financial crisis in which the company is plunged continues to scare the investors and the trade partners if the company. Most of them are threaten by the poor accounting and financial practice maintained by the company which further threatens the going concern and the profitability strategies (DuBrin 2009, 21). Therefore, this paper seeks to come up with a Reputation Management Plan that will provide a strategic solution to the problems mentioned above. This plan will seek to identify the best management practices which will restore the good reputation of the company be providing a solution to the existing challenges and loopholes in Tesco Company. Research Companies which have succeeded to command a multinational operation base automatically attract a great public image and following. Such companies have a great global market share with a large customer base depending on their product. Therefore, any single challenge affecting the company of any magnitude impacts negatively on the reputation of the company. Scholars argue that any single deviation from the expected good reputation of such a company impacts negatively to its public perception and ultimately its profitability. This remains as one of the challenges that continue to affect Tesco Company (Roberts & Scapens1985, 47). The major challenge which has resulted in reputation crisis for the company relates to the profit black holes and the poor financial and accounting practices. The challenge presented in this case regards the potentialities of other trade partners such as suppliers, lenders and other financial authorities to maintain financial trust in the company (Child 2002, 113). Normally, a company with multinational roots and a global image such as Tesco requires the participation of other trade partners as a way of maintaining much relevance and successful business operations. Many business analyses argue that the questionable financial losses in the company regarding the potential profits and poor accounting–practices have reduced financial confidence in the company. This challenge started in 2011 just when the company reached its peak in the manner of operations and success (Wood, Wrigley and Coe 2016, 13) The disclosure by the company of the black holes in profits resulted into the biggest reputation damage in the history of the company. This situation implied that the company was utilising its resources while there were no returns yielded form such resources. This implies an operational loss. The self-confessed black hole in the profits of the company amounting to £263m implies a great reputation crisis in the sight of the esteemed trade partners, public investors and the potential trade partners of the company (Palmer 2005, 32). This has affected the manner in which the company handles most of its financial activities. Relevant financial journals and analysts estimate the total reputation loss suffered by Tesco Company since 2011 to £13.5b (Ndungu 2014, 3). The greatest bulk of this loss has been attributed to poor accounting practices that have also opened a loose hole for profit loss in the company. Essentially, the level of operations and public trust invested in the company has gone down to a great extent affecting the level of operations. Other financial analysts also attribute the financial crisis to the management’s commitment towards adopting better and modern financial and accounting practices. The kind of accounting practice adopting within a business determines the kind of activities and operations which take place regarding financial management and application (Toms 2002, 94). Target Publics The Reputation Management Plan at this moment developed for Tesco Company targets the management which is in charge of introducing and managing policies in the company. All policies depend on upon the adoption and authentication from the Board of Directors. This plan intends to suggest a more tactical and operational manner in which the company can regain from the lost reputation crisis and improve its financial activities. Besides, the plan targets the financial department which is under the oversight of the company (McLoughlin & Aaker 2010, 28). The role of executing financial and accounting operations remain within the financial department of the company. Therefore, this plan seeks to aid the accounting department, through the management in coming up with the best solutions to the prevailing crisis challenges affecting the company (Van Riel & Balmer 1997, 59). Goals and Objectives 1. To promote sound accounting and financial practices in the company. 2. To involve the management in the implementation and management of better accounting practices to alleviate the financial crises in the company. 3. To empower the financial department with better financial policies as a means of achieving better accounting practices in the company. 4. To restore the good public reputation of the company as a bridge towards better and profitable future performance. Strategy and Tactics Strategy: Overhaul the existing Accounting Practices and introduce more Acceptable and Modern Practices Tactics: One of the greatest challenges which affect the manner in which the company handles and manages its financial resources concerns the manner in which it handles it financial departments. The multinational organisation operates several stores in other countries besides Britain. This automatically requires a flexible and a robust set of accounting g practices which accommodates the changes in the regions within which the business operates and also recognises profits in a more acceptable way (Lam 2002, 14). One of the convenient tactics to achieve this is to have the Generally Accepted Accounting Practices (GAAP) and the International Financial Reporting Systems (IFRS) operate within the company (Glückler & Armbrüster 2003, 71). The global perspective given to the activities of Tesco makes it has a more global and acceptable set of financial practices. The relevance of applying the globally accepted code of practice is to ensure that the company has a uniform manner of operations. For example, the store opened in Hungary needs to be uniform to the main office in the UK. Therefore, replacing the existing system of accounting with the GAAP and the IFRS helps in achieving uniformity in the manner of reporting and accounting (Gray & Balmer 1998, 45). The other tactic relevant in this case is to have the Generally Acceptable Auditing Standards in all the outlets operated by the company. Internal audit function normally depends upon the existing financial policies and auditing standards to issue the reports. Therefore, a faulty or inefficient accounting system affects the kind of results and efficiency expected in the auditing procedures (Wrigley 1998, 108). Tesco requires an internal audit function which uses a similar set of auditing practices and principles across all the outlets. This helps in evaluating and assessing the kind of practices done in the outlet operated within one country and evaluates its conformity with the main office. This is one of the ways of ensuring that the company institute common practices to solve the possible loss of profits and the problem of poor accounting practices (Coombs 2014, 232). Strategy: Recruit accounting professionals to manage the new changes in the accounting practices Tactic: a change in a financial system requires a corresponding change in the personnel behind the execution of the new system. In many cases, the introduction of new practices requires proper training of the existing staff and the introduction of well-skilled staff that have vast knowledge in the introduced system. Therefore, the first tactic is to ensure that the accounting departments are buttressed with additional accountants or financial managers with robust knowledge in the introduced accounting system (Bebbington et al. 2008, 300). The relevance of this is to guide the rest of the team through the use and the execution of the new accounting practices. It’s equally relevant to replace the previous accountants responsible for the black hole in the profits of the company with new accountants with required knowledge and skills (Mancuso 1974, 99). The other relevant tactic relates to performing appraisals and training if the existing employees in the company especially the accounts and the financial practitioners. The global business environment keeps on changing, and this requires consistent education and training on the changes within this department. For example, the accounting practices continue to witness the introduction of other ancillary policies to the GAAPs (Chenhall & Langfield-Smith 1998, 87). These policies help in managing any changes and the emerging issues within the accounting practice. It’s essential that the company ensure that that the company maintains regular appraisals on the accountants to determine the training needs. One significance of performing this role is to ensure that the accountants conform to the changes within the business environment and to remain relevant to the growing needs of the company. This further helps the company to achieve its goal and objectives (Gibbins et al. 1990, 26). Ethics and Reputation Management In as much as the organization is focusing on reputation management, ethics has to be put into consideration. The organization’s clients are a priority hence transparency, integrity and open communication is maintained between the organization and its clients. Under no circumstance will the quest for reputation override the importance of the clients to the organization. Evaluation Goals & Objectives Strategies Tactics Evaluation Method To improve the accounting practices Overhaul the existing accounting framework with new policies Adopt the GAAPs and IFRS More efficient accountability and recognition of the profits of the company To improve the financial departments and promote good public reputation Recruiting accounting professionals to manage changes in the accounting practices Appraisal, trainings and installing efficient internal audit function Restoration public image and a strong internal audit function. References Bebbington, J., Larrinaga, C., & Moneva, J. M 2008,“Corporate social reporting and reputation risk management”Accounting, Auditing & Accountability Journal, vol.21, no.3, pp. 337-361. Brannen, M., Moore, F.I.O.N.A. and Mughan, T.E.R.R.Y., 2013. 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