MN6098QA The Practice of Management (PoM) Assignment Sample

Introduction Of : Mn6098qa The Practice Of Management (Pom)

Corporate social responsibility of the organization refers to the attentiveness of business entity towards overall betterment and growth of the society. Financial performance depicts the organization’s ability in utilizing resources for generating effective amount of profits. Retail industry of UK is involved towards providing the large number of consumer goods within the country. The economic contribution of UK’s retail industry is 4.9% of total output which amounted to 112 million pounds in 2023. There are more than 31440 retail businesses within country among which Tesco and Sainsbury are leading supermarkets (UK’s retail industry, 2024). Cost conscious and variety seeking customers are being targeted by the Tesco. High income and Quality conscious customer has been targeted by Sainsbury. Tesco is having more than 4673 stores in UK and employ over 330000 workers. On the other side, Sainsbury is having 1442 stores and providing employment to over 162000 employees. Automation is the latest trend in the retail industry as the marketing, operational and financial functions of the industry performed through machines. The financial performance and CSR policy of the Tesco and Sainsbury within the retain industry will be described and compared in the current report. Further, this report will depict on the ability of the Tesco and Sainsbury’s CSR policies in meeting up UN sustainable policy 2030.

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MAIN BODY

Financial and market performance

Financial performance of the organization refers to the complete evaluation of firm’s overall liquidity, Solvency and profitability position (Hashim et al, 2021). This evaluation supports in identifying the positive and negative changes in the firm’s performance due to changes in the organization policy. Market performance of business entity indicates the effectiveness of organization in the industry and the increase in market share of the business entity. Below is the ratio analysis of the Tesco and Sainsbury that will help in effectively identifying the financial and market performance of the business entity.

Analysis of financial performance;

For identifying the overall financial performance of Tesco and Sainsbury, below is the in-depth evaluation of the ratio analysis:

Profitability position:

It has identified that gross profit ratio of Sainsbury is higher than the Tesco. This indicates the high efficiency of Sainsbury in reducing the cost of production (Financial statement of Tesco, 2024). This also presents that Sainsbury is able to attract the large number of customers that aid firm in attaining the high economies of scale and reduces the overall cost. While comparing both the ratio with ideal ratio, both the firms are unable to attain the ratio, denoting high need of firms to enhance their overall sales. Further net profit and return on capital employed are relatively same for both the organization. Both firms are having very low net profit ratio indicating poor pricing strategies of the business entities. Additionally, firms are not using capital effectively that has resulted in negatively impacting on firm’s performance (Upadhyay, Kumar and Akter, 2021). From the above analysis it could be depicted that Sainsbury’s profitability position is slightly better than the Tesco.

Liquidity position:

The current ratio and the quick ratio of Sainsbury are greater than the Tesco indicating high efficiency of firm in paying off all the short term obligations. These ratios also denote that firm will able to pay its liability by selling off all its current assets indicating higher liquidity position (Jones and Comfort, 2021). For enhancing the liquidity position, Tesco should emphasis over increasing sales that will help in improving the cash inflow. Further, unproductive fixed assets should be sold out and long term investment should be avoided at this time.

Solvency position:

Tesco’s debt to equity ratio is 1.27 which shows that firm is able to maintain an effective balance between the debt and equity. This also denotes that firm will provide higher returns which result in attracting large number of investors. Sainsbury’s solvency position is not effective which seems as the negative indicator for the lenders and firm will not be able to borrow more fund in future.

Efficiency position:

After evaluating the above table, it has been determined that efficiency position of the Sainsbury is better than the Tesco. Sainsbury is able to sell out all its goods in 16 days which indicates the high demand for the company’s product and services (Financial statement of Sainsbury, 2024). Further, both the firms are able to collect payment from debtor within eight days which denotes the firm’s efficiency in managing the overall cash flow. Sainsbury is paying its creditors after two months which helps firm in effectively utilizing funds that leads to improving overall efficiency. However, Tesco’s trade payable time is very less that denote that company’s funds are not optimally used.

Analysis of market performance:

For comparing the market performance of the Tesco and Sainsbury, return on investment, Price- earnings ratio and earning per share of the both the business entities has been calculated. From the return on investment ratio, it has identified that Tesco is gaining effective return on their investment that specify that firm is effectively using its profits and taken adequate investment decision (Jones and Comfort, 2021). In addition to this, the earning per share of Tesco is higher that helps in increasing the satisfaction of shareholders which results in effective market performance. Sainsbury is having optimum PE ratio which indicate that firm’s share are valued at the effective prices whereas the Tesco’s share are undervalued. This is the negative indicator for the Tesco’s investor and creates dissatisfaction among shareholder of Tesco.

After analyzing overall financial and market performance of both the company, it has concluded that Sainsbury financial position is effective whereas market performance of Tesco is optimum.

CSR policies and ability of firm in meeting UN SDGs

CSR policies of Tesco

CSR policy of Tesco is emphasis over reducing pollution within the country, creating healthy living environment, promoting inclusivity, providing effective working condition and focuses over promoting human rights.

Reducing pollution: For creating an effective environment with the country, Tesco is aiming at reducing carbon emission by 41.6% and decreasing carbon by 61% at the end of 2025 (Tesco’s CSR policy, 2023). In this sense, firm has adopted various electric vehicle and new technology so that overall carbon emission could be reduced. Additionally, Tesco sources over 796000 tons of product from the local farmer as to reduce emission caused due to international sourcing. For transporting food across seas, Tesco has used rail services along with temperature controlled containers that help in protecting water resources.

Healthy living environment: For promoting the good health firm has introduced various healthier substitutions in the supermarket that encourage healthy living habits within individual and helps in improving the overall health condition.

Promoting inclusivity: Firm hire all type of individual and provide accurate compensation while ignoring all the discriminating factors (Lee and Hammant, 2023). Further, firm has adopted zero tolerance approach which indicates that discrimination, harassment and bullying is not accepted within the firm.

Education initiative: Along with the environment, Tesco has also focused over development of the society for which educational initiative has been undertaken by the firm. Under this, Tesco is providing education opportunity to the young people within the age of 11-30 for developing necessary skills and provide them job opportunity (Tian, 2021). Over 7 million pound of equipment and computers has been donated to schools for enhancing the student’s leaning. This helps in development of country’s population which initially results in over economic growth.

CSR policies of Sainsbury:

, Following are various CSR policy and activities that has been undertaken with the Sainsbury:

Reducing carbon emission: Sainsbury is targeting at attaining net zero carbon emission at the end of 2035. For achieving the same, firm has started removing natural gas resource and hydro fluorocarbons (HCF) from its stores (Xiao, Chen and Yu, 2021). Firm has introduced new and efficient refrigerator system and use the excess heat of refrigerator for the stores. Further, firm has reduces electric consumption by adopting 100% LED lighting through its stores.

Protecting natural resources: Sainsbury is working continuously towards protecting biodiversity, water, climate and soil of the country (Sainsbury CSR’s policy, 2024). Firm has decided to become water neutral at the end of 2040 and focuses over following all the biodiversity legislation.

Promoting inclusivity: Sainsbury is also working towards promoting inclusivity within company for which equitable remuneration and compensation has been provided to all employees (Oktaviyani, 2021). Further, firm has become member of strategic partner that are working towards promoting inclusivity within country. These organizations are aiming at creating an inclusive workplace by promoting diversity, disability, Carers UK and LGBTIQA+.

Charity: Sainsbury has created a trust “The Sainsbury Family Charitable trust” which is working towards tackling the food scarcity issue within the country. Firm is involved towards donating all the excessive food items to the homeless people and the poor people.

Create awareness: Along with protecting environment, Sainsbury is also working towards creating awareness within the society regarding environmental protection measures. This has been undertaken by partnership with Woodland trust that includes encouraging others to plant trees (Sasongko, Ilmiyono, and Tiaranti, 2021). Under this activity over 5.1million trees has been planted by the firm which helps in reducing pollution and protecting country’s environment.

Social issues: Sainsbury is also working towards raising fund for solving social issues and focusing over sustainable livelihood. Poverty and food scarcity are the major social issues that has been compacted by the firm as the company is the founder of the Fare share that work as the food banks.

Analyzing of Company’s policy in meeting SDGs goals

Sustainable development goals (SDGs) are the set of 17 goals which each country wants to attain for transforming the world and creating a healthy and sustainable environment (Sustainable development goal, 2024). The 17 goals of SDG includes the Zero hunger, good health and well being, Gender equality, quality education, Clean energy, Decent working, Innovation, clean water, clean energy, decreasing inequality, responsible consumption, climate action, sustainable communities, life on land, life below water, justice and partnership. Below analysis depicts the ability of Tesco and Sainsbury in meeting up the set objective.

Tesco:

From the analysis of Tesco’s CSR activity, it has determined that firm is able to meet the goals of quality education, good health, clean water and energy, climate action, gender equality, life below water and decent working environment. Tesco is focusing over promoting a healthy lifestyle among customers by providing large substitution of unhealthy food in their stores (Sheehy, Tuslian and Lie, 2021). Further; 23 million pound has been donated by Tesco for maintaining quality of water and natural resources. Tesco is also focusing over promoting innovation in the country as firm is providing effective session for developing skills of the employees and provides the opportunity to showcase their skills. Tesco is also emphasis over promoting gender equality and creating inclusive workplace environment by providing equal growth opportunity to all employees and providing remuneration based on employee’s calibre. This indicates that Tesco is able to attain some of the SDGs goals and need to work towards attaining all other goals.

Sainsbury:

After analysis the CSR policies of the Sainsbury, it has depicted that firm is only able to attain 5 SDGs goals that includes Zero hunger, gender equality, decreasing inequality, sustainable community and climate action. Firm is focusing over the donating excess food product and formed a trust for providing food to large number of needy. Further focuses has been paid on creating inclusive environment and promoting gender equality within the firm’s operations (Shkurti, Myftaraj and Gjika, 2021). Equitable remuneration, training session and growth opportunity has been provided to all the employees and all the decision are taken based on worker’s potentials and no discriminating factors has been adopted. Firm has also invested towards creating sustainable community by educating population regarding the importance of sustainability. Additionally, manager in Sainsbury has also focused over initiating measures through which carbon emission could be reduced and the positive impact on environment could be enhanced. From this analysis, it has determined that Sainsbury needs to initiate more CSR activities as currently firm is not able to attain large number of sustainable development goals.

CONCLUSION

By summing up the report, it has determined that it is very crucial for each organization to manage its financial performance while fulfilling social responsibility. It has been determined that company should follow the SDGs policy which will help in reducing inequality and discrimination within company and support in creating an effective workplace environment. This goal should be attained as there are large numbers of challenges that are prevailing in the country such as hunger, climate change, environment degradation, poverty which is impacting on overall economic development. By fulfilling these goals, country will able to promote social and economy growth. It has further identified that Sainsbury is having effective financial position as firm is having high profitability and efficiency ratio. Sainsbury is able to attract large number of customer as the inventory turnover ratio of the company is lower indicating high demand for firm’s product. This increases overall profitability of the organization and results in better financial position. Further, Tesco is paying its creditors in shorter period which denote inefficiency of firm in utilizing is funds. Whereas Tesco is having higher market position as compare to Sainsbury as firm is providing high return to shareholder. It has also identified that Tesco is able to meet large number of sustainable goals whereas Sainsbury is incapable in attaining such goals. Tesco is working towards reducing inequality, promoting inclusivity and encouraging quality education within the country. Moreover, Sainsbury is aiming at reducing food scarcity issue within country and focusing over overcoming social issues. Both firms are donating high amount towards protecting natural resources and initiating various measures for decreasing carbon emission within the country.

REFERENCES

Books and Journals

• Hashim, M., Nazam, M., Abrar, M., Hussain, Z., Nazim, M. and Shabbir, R., 2021. Unlocking the sustainable production indicators: a novel tesco based fuzzy AHP approach.Cogent Business & Management,8(1), p.1870807.
• Jones, P. and Comfort, D., 2021. Animal welfare and UK food retailers.International Journal of Sales, Retailing and Marketing,10(1), pp.14-22.
• Jones, P. and Comfort, D., 2021. The sustainable development goals and leading European retailers.Athens Journal of Business and Economics,7(1), pp.105-122.
• Lee, C. and Hammant, C., 2023. Corporate social and community-oriented support by UK food retailers: a documentary review and typology of actions towards community wellbeing.Perspectives in Public Health,143(4), pp.211-219.
• Oktaviyani, R.D., 2021. Effect of profit management, financial ratio and corporate governance mechanism on bond rating.Jurnal Ekonomi,10(02), pp.42-49.
• Sasongko, H., Ilmiyono, A.F. and Tiaranti, A., 2021. Financial ratios and financial distress in retail trade sector companies.JIAFE (Jurnal Ilmiah Akuntansi Fakultas Ekonomi),7(1), pp.63-72.
• Sheehy, B., Tuslian, W. and Lie, L., 2021. The use of international soft law for corporate social responsibility reporting in the retail industry: A study of four major retailers in the Asia-Pacific.Canberra Law Review,18(1), pp.60-80.
• Shkurti, R., Myftaraj, E. and Gjika, E., 2021. Use of Financial Ratios in selecting entities for Tax Audit purposes–empirical study in Albania.WSEAS Transactions on Environment and Development,17, pp.297-313.
• Tian, Q., 2021. Analysis on the Business Strategy of Tesco in the Chinese Market. InModern Economics & Management Forum(Vol. 2, No. 1, pp. 33-36).
• Upadhyay, A., Kumar, A. and Akter, S., 2021. An analysis of UK retailers’ initiatives towards circular economy transition and policy-driven directions.Clean Technologies and Environmental Policy, pp.1-9.
• Upadhyay, A., Kumar, A. and Akter, S., 2021. An analysis of UK retailers’ initiatives towards circular economy transition and policy-driven directions.Clean Technologies and Environmental Policy, pp.1-9.
• Xiao, B., Chen, Q. and Yu, Z., 2021, April. Research on the Investment Value of Sainsbury’s. In2021 6th International Conference on Social Sciences and Economic Development (ICSSED 2021)(pp. 108-115). Atlantis Press.

Online

• Financial statement of Sainsbury. 2024. Online. Available through: < https://www.about.sainsburys.co.uk/investors/results-reports-and-presentations/results-reports-and-presentations>
• Financial statement of Tesco. 2024. Online. Available through: < https://www.tescoplc.com/investors/reports-results-and-presentations/annual-report-2024>
• Sainsbury CSR’s policy. 2024. Online. Available through: < https://www.about.sainsburys.co.uk/sustainability >
• Sustainable development goals. 2024. Online. Available through: < https://unstats.un.org/sdgs/report/2024/>
• Tesco’s CSR policy. 2023. Online. Available through: < https://tesco-bst.com/corporate-social-responsibility/ >
• UK’s retail industry. 2024. Online. Available through: < https://researchbriefings.files.parliament.uk/documents/SN06186/SN06

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