MN6066: The Practice Of Management Report Assignment Sample

Exploring the Practice of Management: Report Assignment Insights

  • 54000+ Project Delivered
  • 500+ Experts 24x7 Online Help
  • No AI Generated Content
GET 35% OFF + EXTRA 10% OFF
- +
35% Off
£ 6.69
Estimated Cost
£ 4.35
14 Pages 3413Words

Introduction Of The Practice Of Management Report On Corporate Performance and Governance

Tesco and Morrisons are the largest supermarket chains in the United Kingdom. Tesco dominates the UK supermarket market, while Morrisons ranks fourth. The UK supermarket industry is characterized by intense competition, with a few large corporations holding significant market share. The top four supermarket chains control 60% of the grocery market. Asda, Sainsbury's, and Aldi are firms' main competitors. The companies mentioned above provide similar products and services and engage in intense competition to gain a larger portion of the market. Mohd Ghazali (2020) has reported that there exist a number of smaller supermarkets and e-commerce suppliers that are in direct competition with Tesco and Morrisons. Waitrose, Ocado, and Iceland are examples. Both companies have different customers across age and income categories.

Feeling overwhelmed with your academic workload? New Assignment Help is here to lighten your load! With our expert assignment writing services in the UK, you can stay ahead of the curve. Dive into our free assignment samples for valuable tips and tricks.

Morrisons has more rural customers than Tesco, while Tesco has a higher market share among younger people. Significant trends are discussed below. Trends shape the UK supermarket industry. Discount shops like Aldi and Lidl have gained a lot of market share recently (Shahbaz et al., 2020). E-commerce is growing, especially in food purchasing. As consumers become more aware of their purchases, healthy and environmentally friendly products are becoming more popular. Food delivery services have been widely adopted by consumers who are constrained by time and seek to reduce the duration of food preparation. The decision to leave the European Union, commonly referred to as Brexit, has resulted in an increase in the cost of food and has caused disruptions in supply chains. The UK supermarket industry is characterized by intense competition and ongoing evolution. In order to maintain competitiveness, corporations must conform to five pivotal trends and fulfil the demands of their customers.

Figure 1 which products are being limited at Tesco and Morrisons and why?

 which products are being limited at Tesco and Morrisons and why?

(Source: Jack Slater, 2020)

Compare and analyze Tesco and Morrison

Financial and market performance

Financial and market performance refers to how well a corporation performs in terms of its financial consequences and its position in the market compared to its competitors. Various metrics are used to compute financial and market performance, including profitability, revenue growth, market share, and return on investment. The UK supermarket industry has undergone major changes in recent years, shifting towards online shopping and increased competition from discount supermarkets like Lidl and Aldi. Moreover, changing customer preferences towards healthier and more environmentally-friendly products have also impacted the industry (Bhagat and Bolton, 2019). The case companies' financial and market performance analysis can be conducted by analyzing key financial metrics such as profitability, revenue, and stock performance.

Tesco's revenue and market analysis

Tesco's sales (excluding VAT and fuel) improved by 3.5% on a constant-rate basis to £28.17bn in the six-month era. Though, the firm's operating profit dropped by 43.6% to £736m compare with the resultant period of the previous year. Company's adjusted operating profit for H1 decline by 9.8% on a constant-rate basis to £1.33 bn, and its profit before tax dropped by 62.9% to £413m for H1 2022/23 compare to the previous year. Moreover, the company's diluted EPS decrease by 66.9% to £0.03. Company's CEO, recognized the challenges customers face and emphasize the company's efforts to stay the cost of the weekly shop reasonably priced. Despite cost inflation challenge in the market, Tesco kept its profit leadership within its preceding range and expects a retail-adjusted operating profit of among £2.4bn and £2.5bn for the full year.

Figure 2: supermarkets market share year 2022

supermarkets market share year 2022

(Source: kantar.com, 2023)

Morrison's revenue and market analysis

Morrisons' revenue, counting fuel, was £4.79bn during the 13 weeks to 31 July 2022, which represent a 4.5% increase from £4.58bn in Q3 2021. Though, the company's like-for-like sales (excluding fuel) decrease by 3.1% in the quarter, and its attuned EBITDA declined from £356m in Q3 2021 to £177m. Morrisons' CEO, recognized the significant impacts of cost and power price increases, as well as the continuing war in Ukraine. They emphasized the company's efforts to keep prices down for clientele through price-cut campaign, popular schemes, and fuel promotions. It is significant to note that company is currently under examination by the UK's Competition and Markets Authority over its attainment of convenience chain McColl's, which raise concerns about the lessening of competition in the market.

Figure 3 LFL sales performance (ex-VAT, reported in accordance with IFRS 15)

LFL sales performance (ex-VAT, reported in accordance with IFRS 15)

(Source: Morrison's-corporate, 2022)

While Tesco has a stronger financial and market performance than Morrisons, both companies face challenges in the highly competitive UK supermarket industry. These challenges include:

  • Increasing rivalry from discount retailers: Both companies face increasing competition from discount retailers like Lidl (Al Muhaissen and Alobidyeen, 2022). These retailers have gained major market share in recent years by contributing lower prices and a smaller range of products.
  • Changing customer preferences: They are shifting towards well again and more environment-friendly products, which have led to enlarged demand for plant-based, organic, and locally-sourced products. Both companies must adapt to these changing preferences to remain competitive.
  • Online shopping: This has become increasingly popular, with more clientele choosing to buy groceries online. Both companies have had to invest in their online platforms and logistics to meet this demand.
  • Brexit: The impact of Brexit on the UK supermarket industry has been major, with higher food prices and supply chain disruptions distressing both companies.

This differentiation in financial performance can be credited to several factors, including Tesco's superior market share, a wider variety of products and services, and more extensive international presence. It is worth noting that both firms have faced challenges in recent years, essentially due to the COVID-19 pandemic (Khatib and Nour, 2021). However Tesco's revenue and profit have remained relatively stable, Morrisons has decline in both measures. This is partly due to Tesco's more diversified business model, which includes a major online presence, while Morrisons has historically relied more on physical store sales.

Morrisons has been focusing on expanding its online presence and investing in supply chain improvements to respond to these challenges. Morrisons have also introduced new product lines to meet altering consumer preferences, such as its "Wonky" line of flawed produce and its expanded plant-based product offerings. Likewise, Tesco has focused on expanding its product offerings and improving consumer service. Tesco has also invested in its online platform and logistics to meet the rising demand for online shopping. In addition, Tesco has expanded its international operations to diversify its revenue streams.

While Tesco has a stronger financial and market performance than Morrisons, both companies must adapt to changing consumer preferences and market conditions to remain competitive in the UK supermarket industry (Nguyen et al., 2021). It is important to note that both firms have faced challenges in the highly competitive UK supermarket industry, with rising competition from discount retailers and changing consumer preferences.

Staff, shareholders, customers, and other key stakeholders (either internal or external)

Stakeholders are persons or groups that have an interest or are impacted by the actions and decisions of an organization. Internal stakeholders are those directly involved with the group, including employees, shareholders, and management. They are vested in the organization's achievement and can impact its operations.

External stakeholders are not directly involved with the group but can still be impacted by its actions and decisions. This can include customers, suppliers, local communities, government agencies, and regulatory bodies.

Effective stakeholder management involve identify and considering stakeholders' requirements and prospect and developing strategies to deal with their concerns and priorities (Puni and Anlesinya, 2020). This can help organization reduce conflicts, build positive stakeholder relationships, and improve their performance and reputation.

Staff: Both companies are major employers in the UK, with Tesco employ over 490,000 people and Morrisons employing over 80,000. Both companies offer a range of job opportunity, from entry-level to professional positions.

  • In the past, Tesco has faced censure for its staff treatment, including allegations of low pay and poor working circumstances. In recent years, Tesco has tried to get better employees satisfaction by increasing pay rates and causal to more flexible working arrangements (Nicolo et al., 2023).
  • Morrisons has been praised for its treatment of staff, including its completion of a "Living Wage" and it does assure to worker growth and training.

Shareholders: Both supermarkets are openly traded firms with various institutional and individual shareholders. Both companies have faced challenges in recent years due to changing market situation and increased competition. Regarding shareholder returns, Tesco has outperformed Morrisons in current years, with a higher share yield and stronger stock performance.

Customers: Both firms have served a wide range of clientele, from budget-conscious shoppers to those looking for premium products. They have faced changing consumer preferences in recent years, including a shift towards enhanced and more environmentally-friendly products.

  • Tesco has responded to these changing preferences by expanding its product offerings and introducing a new initiative, such as its "Food Love Stories" campaign, which focuses on the importance of the stories following the food it sells (Bruna et al., 2022).
  • Likewise, Morrisons has introduced new product lines to meet changing customer preferences, including its "Wonky" line of imperfect create and its expanded plant-based product offerings.

Other key stakeholders: Both firms include regulators, suppliers, and local communities. They have faced criticism for their treatment of suppliers, including allegations of unfair pricing practices. In recent years, both firms have made efforts to improve relationships with suppliers by introducing more translucent pricing policies and increasing support for local producers (Huang, 2021). Companies are also subject to regulatory oversight, including in areas such as food safety and employment practices.

The companies have supported local communities through initiatives such as food banks and community outreach programs. While there are differences in how both companies interact with their shareholders, staff, customers, and other key stakeholders, they face similar challenges in meeting changing consumer preferences and adapting to a highly competitive market.

Corporate Governance issues

Tesco is one of the major grocery chains in the UK, and it has recently experienced serious problems with its corporate governance. The following are the corporate governance problems that Tesco must deal with:

  • Tesco's accounting crisis in 2014 was a major problem for the company's corporate governance. Overstating profits by £326 million resulted in fines, legal action, and a significant drop in shareholder value, as the business revealed (Aybars et al., 2019). The issue cast considerable doubt on the reliability of Tesco's risk management, internal controls, and openness.
  • Some have questioned whether or not Tesco's board of directors is doing a good job of keeping an eye on the company's operations and risk management (Baran et al., 2022). The board's monitoring, particularly with regards to the veracity of financial reporting, was shown as lacking by the accounting crisis. Investors questioned the board's impartiality and expressed doubts about its capacity to carry out its fiduciary responsibilities.
  • Shareholders have voiced their displeasure with Tesco's CEO compensation policies. There have been worries regarding the level of executive pay and whether or not it is aligned with the company's performance; however the particular statistics listed above are erroneous. Investors have demanded more openness and scrutiny in the process of setting compensation for company executives.
  • Tesco has been criticized for its lack of diversity at the top levels of the company. While it's true that Tesco's board has made strides toward a more diversified representation, this doesn't change the fact that there are only three women on the board (Zhang and Lucey, 2022). Investors and other stakeholders have stressed the value of including a wide range of viewpoints and experiences in policymaking.
  • Tesco has pledged to become a net-zero carbon firm by the year 2035, which will have a positive effect on the environment. Tesco's stated goals of decreasing GHG emissions, increasing usage of renewable energy, and ending food waste by 2030 are all accurate. These pledges show that the corporation understands the significance of environmental and social responsibility.
  • Tesco has also made it a priority to better the lives of their employees and the communities in which they live as part of their "social responsibility." In reality, Tesco does have programs in place to lessen food waste and give back to local groups and charities. These actions reflect the firm's dedication to social responsibility and problem solving.

In conclusion, Tesco's accounting problem worries about board effectiveness, executive compensation practices, lack of diversity in leadership, and company's commitment to tackling environmental and social responsibilities are all accurate corporate governance issues. In light of these challenges, it is clear that strong corporate governance standards, transparency, and accountability are essential for the company's long-term success and viability.

Profiles of the CEO and Board of Directors:

Ken Murphy became CEO of Tesco in October 2020. He has widespread knowledge in the retail industry, having formerly worked at Walgreens Boots Alliance and Alliance Boots (Lagasio & Cucari, 2019). Tesco's board includes numerous members with retail and business knowledge, including a former CEO of Unilever and a former CEO of Marks & Spencers.

David Potts has been CEO of Morrisons since 2015. He has widespread experience in the retail industry, having beforehand worked at Tesco and Morrisons. The company's board includes several members with retail and business knowledge, including a former CEO of Kingfisher and a previous CFO of Tesco.

Both companies face similar corporate governance issues related to executive recompense, risk management, and diversity (Gillan et al., 2021). Both organizations have committed to CSR and ESG issues, such as reducing their environmental impact and behind local communities. While both companies have knowledgeable challenges in their governance practices, they have taken steps to concentrate on these issues and improve their overall performance.

Conclusion

Improving the case companies' corporate governance can help improve their future brand, financial, market, and strategic performance. The Board of Directors is crucial in supervising the company's performance and ensuring it operates ethically and responsibly. Both companies should consider appointing more independent directors with varied backgrounds and knowledge to strengthen the board to provide greater oversight and accountability. Transparency and discovery are critical to building trust with stakeholders, including customers, shareholders, and employees. The companies should aim to provide more comprehensive and accessible information about their financial and non-financial presentation, including their social and environmental impact, to show their commitment to responsible business practices. Corporate social responsibility (CSR) and environmental, social, and governance (ESG) practices are becoming increasingly significant to investors and consumers. The companies should focus on enhancing their CSR and ESG practices by setting measurable targets, reporting progress, and integrating these practices into their business strategy. Effective risk management is necessary to ensure the long-term sustainability of a business. Tesco and Morrisons should regularly access and direct risks related to their business operations, including operational, financial, reputational, and environmental risks. A strong corporate culture is significant to building motivated and engaged personnel and ensuring that the company operates with integrity and ethics. Tesco and Morrisons should focus on fostering a strong corporate civilization by promoting ethical values, encouraging open communication, and providing opportunities for worker development and engagement. By focusing on these areas, Tesco and Morrisons can improve their corporate governance and financial, brand, market, and strategic presentation while demonstrating their pledge to responsible and sustainable business practices.

References

  • Ahmad, N., Mobarek, A. and Roni, N.N., 2021. I am revisiting the impact of ESG on the financial performance of FTSE350 UK firms: Static and dynamic panel data analysis—Cogent Business & Management, 8(1), p.1900500.
  • Al Muhaissen, R.A. and Alobidyeen, B.Z., 2022. Corporate governance and corporate performance: the case of the Jordanian banking sector. Int. J. Bus. Admin. Stud, 8, pp.105-112.
  • Aybars, A., Ataünal, L. and Gürbüz, A.O., 2019. ESG and financial performance: Environmental, social, and governance issues impact corporate performance. In Handbook of research on managerial thinking in global business economics (pp. 520-536). IGI Global.
  • Baran, M., Ku?niarska, A., Makie?a, Z.J., S?awik, A. and Stuss, M.M., 2022. Does ESG reporting relate to corporate financial performance in the context of the energy sector transformation? Evidence from Poland.Energies,15(2), p.477.
  • BBC news, 2020, Supermarkets market share. [Available on]. [Online]. :<https://www.bbc.com/news/business-54445399>. [Assessed on 10/05/2023].
  • Bhagat, S. and Bolton, B. (2019). Corporate governance and firm performance: The sequel. Journal of Corporate Finance, 58, pp.142–168.
  • Bruna, M.G., Loprevite, S., Raucci, D., Ricca, B. and Rupo, D., 2022. I am investigating the marginal impact of ESG results on corporate financial performance—Finance Research Letters, 47, p.102828.
  • Burke, J.J. (2021). Do boards take environmental, social, and governance issues seriously? Evidence from Media Coverage and CEO Dismissals. Journal of Business Ethics, pp.1–25.
  • Gillan, S.L., Koch, A. and Starks, L.T., 2021. Firms and social responsibility: A review of ESG and CSR research in corporate finance.Journal of Corporate Finance,66, p.101889.
  • Huang, D.Z. (2021). Environmental, social and governance (ESG) activity and firm performance: A review and consolidation. Accounting & Finance, 61(1), 335-360.
  • kantar.com, 2023. supermarkets market share year 2022, (Online).<https://www.kantar.com/uki/inspiration/fmcg/2022-wp-big-four-line-up-changes-as-grocery-price-inflation-accelerates-again> accessed on 13.05.23.
  • Khatib, S.F. and Nour, A., (2021). The impact of corporate governance on firm performance during the COVID-19 pandemic: Evidence from Malaysia. Journal of Asian Finance, Economics and Business, 8(2), pp.0943-0952.
  • Lagasio, V. and Cucari, N., 2019. Corporate governance and environmental social governance disclosure: A meta?analytical review.Corporate Social Responsibility and Environmental Management,26(4), pp.701-711.
  • Leeron Hoory, 2022. Stakeholders Anlysis. [Available on]. [Online]. :<https://www.forbes.com/advisor/business/what-is-stakeholder-analysis/>. [Assessed on 10/05/2023].
  • Mohd Ghazali, N.A., 2020. Governance and ownership in Malaysia: their impacts on corporate performance.Asian Journal of Accounting Research,5(2), pp.285-298.
  • Morrison's-corporate, 2022. LFL sales performance (ex-VAT, reported in accordance with IFRS 15),(Online).<morrisons-corporate.com/globalassets/corporatesite/investor-centre/financialreports/documents/2020-21/20210511rnsfinal.pdf> accessed on 13.05.23.
  • Nguyen, T.H., Elmagrhi, M.H., Ntim, C.G. and Wu, Y., 2021. Environmental performance, sustainability, governance and financial performance: Evidence from heavily polluting industries in China.Business Strategy and the Environment,30(5), pp.2313-2331.
  • Nicolo, G., Zampone, G., Sannino, G. and Tiron-Tudor, A., 2023. Worldwide evidence of corporate governance influence on ESG disclosure in the utilities sector.Utilities Policy,82, p.101549.
  • Puni, A. and Anlesinya, A., 2020. Corporate governance mechanisms and firm performance in a developing country.International Journal of Law and Management,62(2), pp.147-169.
  • Sarhan, A.A., Ntim, C.G. and Al?Najjar, B., 2019. Board diversity, corporate governance, corporate performance, and executive pay.International Journal of Finance & Economics,24(2), pp.761-786.
  • Shahbaz, M., Karaman, A.S., Kilic, M. and Uyar, A., 2020. Board attributes, CSR engagement, and corporate performance: what is the nexus in the energy sector?.Energy Policy,143, p.111582.
  • Zhang, D. and Lucey, B.M., 2022. Sustainable behaviors and firm performance: The role of financial constraints' alleviation.Economic Analysis and Policy,74, pp.220-233.
35% OFF
Get best price for your work
  • 54000+ Project Delivered
  • 500+ Experts 24*7 Online Help

offer valid for limited time only*

×