Impact of stakeholders on organisations Assignment Sample

Introduction:Impact of Stakeholders on Organisations

Due to extensive competition in today’s market, organisations including Tesco Plc understand the need to have effective engagement with their stakeholders to achieve their objectives in the long run. Stakeholders, including both internal actors such as employees and shareholders and external actors including customers and suppliers, have a great impact on the performance and strategy of the organisation. The report would look at how such stakeholders affect Tesco, a retail chain in the United Kingdom. Tesco is a well-known company that has its inception in the year 1919 and has a global presence in the grocery empire providing and dealing with many aspects of the business from groceries to financial services along with the focus on the customer and the innovativeness within the company (Tescoplc.com, 2024). A stakeholder is also pivotal in enhancing an organisation’s sustainability, success or failure depends on the level of interest the stakeholder has about the objectives of the organisation. This report would demonstrate how Tesco’s stakeholders are managed to illustrate the necessity of compromise between individuals to grow a business, operate better and remain competitive.

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Stakeholders in Tesco Plc

A stakeholder refers to an individual or group that has a stake in or is impacted by the business processes and results of the performance of the company. Stakeholders can be broadly divided into two types: internal and external (Graham, 2020). The interactions and involvement in a business by stakeholders are dependent on their varying distribution of interest and power. Tesco has several stakeholders who from the instruments of strategy and guidelines of operational procedures all contribute to the organisational success. For instance, employees enhance the performance of operations while shareholders help in the management system (Stojanovic et al. 2020). On the other hand, external stakeholders such as customers create demand in the market while suppliers maintain the optimal and effective sustainable supply chain of the business organisation (Ahmed et al. 2020).

In order to cope with these divergent interests, Tesco applies Mendelow's Matrix, an analytical technique enabling companies to identify their stakeholders according to their respective power and interest (Shcherbachenko et al. 2022).

Table 1: Mendelow’s Matrix

(Self-developed)

Using Mendelow’s Matrix for Tesco Plc identifies stockholders by power interest, which helps the company ascertain how important to engage. Employees, as the other major owners, and shareholders hold high levels of power and interest, and thus they are internal stakeholders who are classified as key players (DesJardine et al. 2023). As for the other external stakeholders, the interest of the customers is high while their power is low. Even though they have no authority over Tesco’s strategic development decisions, their contentment is important for the revenue of the company. Thus, Tesco should look for ways of effectively communicating with customers and responding to their concerns so as to retain them (Sharmaa et al. 2022). Suppliers on the other hand are more powerful, although they have less interest than the latter, since they are very important to Tesco’s supply chain but not so much to their day-to-day management.

Internal Stakeholders

Employees

Explanation: Tesco’s employees play an essential role within the operational structure of the company by participating in day-to-day routine activities in different departments. Because Tesco has 337,518 employees, the concern expects its workers to assist customers well, run shops effectively, and adhere to company standards (Statista.com, 2024).

Figure 1: Average number of employees at Tesco worldwide in 2024, by segment

(Source: Statista.com, 2024)

Workers are integrated into many processes – selling, delivering, supporting customers, or even managing which helps the company as a whole. Programs for training and development of employees are equally significant in improving the skills of the workers and their knowledge in accordance to the new technologies or market requirements.

Impact on the Organisation: By making certain that retail activities are carried out properly and efficiently, employees add great value to the hotel chain. Since it is well known that employee motivation and engagement are determinants of the quality of customer service, well-trained and satisfied employees are expected to increase customer satisfaction and customer retention. Engaged employees accelerate performance and build the people and culture that customers love and trust in the Tesco brand (Tescoplc.com, 2024). This alignment leads to better performance, higher sales, and customer retention and ultimately puts Tesco at the forefront.

Shareholders

Explanation: Another internal stakeholder group of particular influence for Tesco is the shareholders, which include both individual and institutional shareholders that hold shares in the organisation (Tescoplc.com, 2024). Their most important duty is to provide funds to acquire a stake and later receive returns in the form of dividends or possibly appreciation of future share value. This category of people seeks clarity from Tesco’s administration regarding the company’s financial performance and business plans.

Impact on the Organisation: Investors, by their control of the company’s shares, exert notable power in the business operations, strategy and financial performance of Tesco. It is this expectation that creates pressure within management to focused on achieving superior returns and becoming more efficient in operations as well as competition. Shareholders call for the adoption of good corporate governance policies by, for instance, encouraging ethical business practices and the implementation of sustainable growth strategies (Scherer and Voegtlin, 2020). This supervision and care is important in lessening dangers and in making it certain that Tesco is answerable to its shareholders. The positive reputation of the shareholders can improve the image of the company enabling it to raise more funds through other means to support growth or creativity projects (Li et al. 2020). On the other hand, there are situations when the shareholders are discontented with the output of the company or the way top management makes the decisions and they use their influence to induce management rotation or strategy modification.

External Stakeholders

Customers

Explanation: Of all the external stakeholders of the Tesco organisation, customers are considered to be the most important as they cover the individuals and households that buy the goods and services provided by the company. Due to the customers being the first revenue source, they greatly determine the operations and direction of Tesco (Keiningham et al. 2020). This category ranges from families and young professionals to the elderly who have different shopping patterns. Therefore, the company is quite aware of the importance of the customer – and what customers expect – since it would define their products, across which value, cost and marketing efforts would be deployed.

Impact on the Organisation: Customer satisfaction and customer loyalty determine the level of revenue and market position of Tesco Company. The customers who are satisfied with the service and products are likely to revisit to make repeat purchases, refer the brand to friends and relatives or use loyalty programs offered by Tesco especially the Clubcard (Tesco.com, 2024). This implies high customer loyalty leads to steady sales and even growth in the market share. Thirdly, the products offered by Tesco, as well as its operational processes, are greatly impacted by consumer trends such as buying organic products or shopping online. It is this adaptability that gives Tesco a competitive advantage to survive in the world of retail business.

Suppliers

Explanation: Tesco relies on suppliers as a key component of its internal operations, sourcing for all the goods and services necessary for the company to conduct its operations effectively (Smith, 2023). This includes professional stakeholders such as farmers who supply raw materials, manufacturers, and distributors of goods from fresh produce to wholesalers.

Impact on the Organisation: The procurement practices adopted by Tesco must be built on strong relationships with their suppliers to ensure the efficiency of function in together with the quality and costs of the products. Engaging and developing consumers of the products as well as various stakeholders in the supply chain enhances negotiating terms and prices that yield high profit for the company and low costs for the customers. With strong partnerships, Tesco would ensure high product quality, which of course is necessary for customer satisfaction enhancements and a good brand reputation (Fernie, 2023). Besides dependable vendors, restore certain threats which result from the absence of stock and provide merchandise on time which is crucial in today’s retail market.

Critical Evaluation

Importance of Internal Stakeholders

Tesco’s internal stakeholders, employees as well as shareholders, have a tremendous effect on the firm’s performance. Employees are essential to the operations of the business as they impact customer service, operational efficiency and the organisational culture (Pathiranage et al. 2020). Participation and satisfaction of employees create what is known as their productivity which helps in rendering better services to customers which promotes all-round customer retention.

Shareholders, they are the ones who are in control of Tesco’s strategy and its finances. Providing the necessary funds for growth and development is one aspect of their investment. The other, which is more important, is that in exchange management must be able to generate profits and achieve sustainable development (Tescoplc.com, 2024). This is a quote, an increase in expectations for operational efficiency, governance and ethical behaviour would also be a primary reason for Tesco competitiveness and trustworthiness.

Importance of External Stakeholders

External stakeholders, especially customers and suppliers, are equally important in the successful pursuit of approaches. It is only through a customer’s purchase and loyalty that the company generates offerings and revenue. Customers pay for, and how they use a company’s services, a position that company in the market, hence total customer satisfaction is critical to repeat purchases and word-of-mouth marketing. Tesco understands which trends to follow to come up with appropriate product lines and marketing lines to keep a step ahead of the competition (Rosnizam et al. 2020).

The suppliers also play a direct role in ensuring the quality and reliability of Tesco product portfolio (Tescoplc.com, 2024). If Tesco has strong supplier relationships, they can acquire good prices from them and earn a supply of stock on customer needs. Also, strong partnerships with suppliers lead to better quality of products offered by Tesco to its customers, positioning the company to achieve its goal of offering quality products to its consumers and preserving the image of the business.

Balance of Stakeholder Influence

Tesco demonstrates its ability to resolve conflicts among its internal and external stakeholders through strategies aimed at open communication and collaboration. The organisation incorporates the employees in the development processes through feedback and development strategies that are designed to get their input in decision-making processes (Tescoplc.com, 2024). At the same time, financial performance together with other metrics is kept at reasonable levels while still prioritising customer feedback to improve products and services offered by the company in a manner that meets the appetite of the consumers.

Through consistent communication with shareholders on the financial results and future business plans, Tesco gains the confidence of shareholders and ensures that their interests are in line with themselves. Besides, there are programs at Tesco involving the suppliers which work to achieve cross-enterprise enhancement and create mutual benefits (Tescoplc.com, 2024). This well-coordinated approach therefore enables Tesco to manage the intricacies associated with stakeholder management which in the end enhances the viability and the overall performance of the organisation takin into consideration that the activity is being conducted in the highly competitive retail sector.

Conclusion

In conclusion, this analysis focuses on the significance of internal and external stakeholders in the operations and long-term operations of Tesco. Internal stakeholders such as employees and shareholders have a powerful impact on the operational and strategic performance of the company. Employees who are committed to the organisation enhance customer satisfaction and brand loyalty, while shareholders impel investment and impose direction on the expansion strategies at Tesco. On the other hand, consumers and suppliers are also important for Tesco on the outside as customers support the company’s overall business and suppliers support its supply chain. Loyal customers and feedback adapt the product and sales strategy while loyal suppliers guarantee delivery and standards of products. These groups of stakeholders are essential in terms of providing Tesco with a competitive edge over its competitors in the retail industry. As Tesco addresses the needs and interests of its internal and external stakeholders, it remains relevant to the market changes, promotes creativity and growth, and prepares itself on its pathway to success in the ever-changing business environment.

Recommendations

Implement Stakeholder Engagement Framework: There is a need for Tesco to implement a particular framework for stakeholder engagement, most probably the Salience Model, to assess the different stakeholders according to power, legitimacy and urgency (Shafique and Gabriel, 2022). The effectiveness of this model for Tesco would be seen in determining those stakeholders who need more resources and focusing their engagement strategies to these stakeholders for their effectively addressed concerns and expectations.

Enhance Employee Development Programs: One of the cost-effective ways, derived from Human Capital Theory, is to spend on developing various employee skills (Deming, 2022). Enhancing employee wages and improving jobs by offering further education helps Austin and Tesco deliver high level of customer service to the clients. This would enhance relations with the internal stakeholders and positively influence the organisational performance as well.

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