Annual Report and Financial Statements †MyAssignmenthelp.com

Question: Discuss about the Annual Report and Financial Statements. Answer: Introduction Tesco Public limited company is a British multinational general merchandise and grocery retailer. The company has its head quarter at Hertfordshire, England located in United Kingdom. If measured with respect to profit, Tesco is considered to the third largest retailer and if the overall revenue of the company is considered, it is the ninth largest retailer across the world. The organization has it store across 12 crucial countries located in Asia and Europe and UK. Tesco was founded by Jack Cohen in 1919 and from being a UK grocer initially, with the advancement of time the company diversified its area that includes retailing cloths, books, electronics, petrol, software, toys and furniture (Kotab and Helsen 2014). During the 90s the company repositioned itself from a down market, high volume retailer to an organization that offers consumers the finest range of goods. The chief aim of the mentioned organization is to stay the leading retailer by gaining competitive. In order to make this goal successful, the primary objective of Tesco is to provide finest quality products as well as services to the consumers at a very reasonable price much lower than their potential competitors. According to the board of directors of the mentioned company, Tesco was built with the mission of serving the consumers by assuring them a better quality of life and easier way of living (Dalkir 2013). The company understands that the consumers across the world want high quality products at low cost which can be bought easily and thats why the management of Tesco Plc. has taken the oath of pushing their service towards betterment little by little, each and every day for the satisfaction of the consumers. According to statistical data, Tesco serves nearly 66 consumers in every second only in the UK, and the goal of the company is to ensure that each and every consumer experience a highly enhanced service (Burrell and Morgan 2017). In this report, organizational analysis of the above-ment ioned company has been performed with the help of four perspectives that include Bureaucratic perspective, Contingency perspective, cultural perspective and finally political perspective. This analysis is done to understand the techniques, internal environment and teamwork performed by the organization. The organizational structure of the company is hierarchical due to the vast size of its business. In large stores, there are four layers of management. However, this organizational structure of Tesco is flexible and varies with respect to the geographical location and size of the store. The flowchart given below describes the organizational structure of the given company: The board of directors of the company is comprised of 10 members. However, in the year 2015, the company evidenced several changes that include the appointment of John Allan as the new director of the board, the appointment of Dave Lewis as the new CEO and Alan Steward as the Chief Financial officer of the company (Brannen, Moore and Mughan 2013). Apart from that, that year the company had also evidenced the retirement of four non-executive directors and the appointment of 3 directors in their place. The governance structure of Tesco is comprised of five committees that include Audit Committee, Corporate responsibility committee, Remuneration committee, Nomination committee and disclosure committee (refer to Appendix). Assessment of formalization of Tesco Being a vast and well-reputed organization, Tesco is highly formalized and follow a fixed set of intra-organizational rules and structure. The organizational civilization and construction of Tesco are characterized by friendly civilizations, high employee authorization, decentralized construction, flexible work environment, shared beliefs and values and decentralized determining to devise. For instance, one formal rule of Tesco includes weekly face to face communication between the employees (Hatch 2018). This, in turn, enables the employees to remain well informed about the crucial happenings in the company along with providing help to serve the consumers in a more satisfactory way. Product differentiation can be defined as crucial marketing processes since it builds the competitive advantages of the company. Horizontal differentiation refers to product distinction based on the quality of the product. The horizontal product differentiation of the company is low and the level of vertical differentiation of Tesco is high. In contrast to that, in case of vertical differentiation, distinctions between products are objectively measurable. The own-level product of Tesco which includes 50 percent of its overall sales has three levels, namely, value, normal and finest (Shafritz, Ott and Jang 2015). Considering the fact that several stores of Tesco had gas stations attached to it, Tesco has also become one of the largest petrol gas retailers. Tesco follows decentralized decision-making structure that includes involvement of lower-level employees while a crucial decision is taken by the company. For example, the store managers of each of the stores of Tesco located in different parts of the world has the capability to take certain decision associated with the respective stores. Each store manager is only answerable to the regional manager of the company. Considering the fact that decision making can be termed as a form of empowerment, this empowerment enhances the responsibility of the employees of the organization. This, in turn, enhances the productivity and the loyalty of the employees. The enhanced motivation of the employees enables Tesco to maintain its high revenue and reputation in the global market. Differentiation is mostly seen in a large organization where individual departments, branch offices or section adopt their own corporate culture which is different from the culture of the parent organization (Kim et al., 2014). For instance, The Sales department of Tesco has a different approach to corporate culture compared to that of the finance department of the same organization. Integration, on the other hand, can be defined as the ability of an organization to coordinate their operation. Since the vertical differentiation of Tesco is low, the company can be regarded as highly integrated and has a strong connection between its product lines and departments. In order to manage the structural tension between integration an differentiation, Tesco follows the below mentioned strategies: Each department of Tesco sorts its priorities in order to manage the tension of diffraction and integration. For instance, while the sales department of Tesco focuses on enhancing the revenue of the company, the accounting department of the organization focuses on reducing the overall costs of the company. Thus, the chief purpose of the company that is to enhance the yearly profit is served. When it comes to managing the time constraint of the organization, the product development staffs of Tesco work in terms of years and months, while the consumer support staffs work on the basis of days and hours (Kotabe and Helsen 2014). In order to deal with differentiation in the external environment of the company, Tesco has takeover Booker in order to increase its market. Merging with Booker will enable the company to grab the out-of-home food market that includes Cash and carry a network of Bookers along with click and collect home or business delivery capacity of Tesco (Scott and Davis 2015). Like any other well-reputed multinational company, Tesco also posses a written code of business conduct and ethics. The cultural value tree of Tesco provides an ideal guide to demonstrate the commitment of the company to ethical business conduct. The board of directors of the company has adopted the written code of ethics and business conduct as a guideline which will help the company to promote ethical and honest conducts, accurate, fair , timely, understandable and full disclosure along with providing effective guidance to the officer, directors and employees that will help them to deal with ethical issues. According to Tesco, the mentioned code of ethics though is not for covering every ethical situation or issue of the employees, officers or directors but should be used as an additional guidance while dealing with the issue (Tescocorp.com 2018). Contingency Perspective Description and assessment of technologies used by Tesco with respect to Charles Perrows theory According to the American sociologist, Charles Perrow, technologies used by the organization can be classified into 4 chief categories that include Routine, Craft, Engineering and Non-routine technology. Being a retail organization, the technologies used by Tesco falls under craft and engineering technologies (Scott and Davis 2015). Engineering technologies though has a lot of exceptions can be managed in systematic and rational manner. The technologies used by Tesco in order to construct retail stores across the world falls under this technology. Technologies used by the mentioned company in order to restore its furnitures and other products fall under craft technology. The RFID project of Tesco falls under the engineering technology. In order to make the task of the employees who are in charge of the stock counting department, the organization has introduced a barcode which is RFID enabled to their new FF clothing range. With the help of this technology, the products get automatica lly counted and removed while entering and leaving the stores. Not only that, this technology also enables the suppliers to backtrack the information (Mollah 2014). Thus, the RDIF technology not only enhances the overall experience of the shoppers but also provides the suppliers with accurate replenishment of the stock. Apart from that, the company has recently co-joined If This Then Than (IFTTT), in order to provide its consumers with the ultimate shopping experience. This application enables the consumers of Tesco, to connect other actives app with each other and use them all at a time. Assessment of key factors in Tescos Environment by identifying elements of change as well as elements of stability The chief purpose of Tesco is to satisfy its consumers and its stakeholders along with other individuals involved with the organization. Tesco's environment can be classified into the external and internal environment. In order to identify the element of change as well as the stability of the organization, PESTLE Analysis of Tesco can be considered as an effective tool. A crucial element of change evidenced by the company is to separate the confectionery from the retail stores in order to help the consumers to make a healthier choice. Although the company had taken out confectionary stores from checkouts and large stores two decades ago, now this change will be implemented in Tesco Express convenience stores and Tesco Metro stores too. Some of the elements of stability of the company are diverse and wide consumer base across the world, a wide range of patents and patent license agreements and a strong product portfolio (Oied.ncsu.edu. 2017). On the other hand, some of the major eleme nts of changes that act as a threat to the mentioned company are seasonal variations, potential risks associated with the gas and oil industry and uncertainty in the global economic condition. The degree of fit between organization's structure and organizations environment The organizational structure of Tesco is found to be highly beneficial for the company. Considering the fact that the global unemployment rate has increased over the last one decade, the organizational structure of Techno provides huge opportune to recruit huge labor force at an optimum cost. The job opportunities at Tesco are much higher than that of any of its competitors. This proves to be beneficial for both the company and the global economy since in one hand, the recruitment of labors at a cheap rate helps the company to enhance its overall revenue, it also reduces the global unemployment issue to a little extent (Tescocorp.com 2018). Secondly, since the company provides employees with the freedom to make decisions for the company, the loyalty and productivity of the employees got enhanced. This acts as a beneficial factor for the company since it helps the company to obtain a competitive advantage in the global environment by satisfying the consumers. Thirdly, the organization al culture of the company encourages beliefs and values associated with ethics and interaction between the employees and the managers in the workplace. friendly relation and flexible organizational structure motivate the employees of the organization. This, in turn, enhances employee retention and the brand equity of Tesco (Clark 2012). The structural problem of Tesco Being a globally known retail company, the organizational structure of Tesco is strong and effective. As a result, very few amounts of issues are faced by the company due to its organizational structure. Considering the fact that the organizational structure of Tesco is hierarchical, some of the advantages experienced by the company include a clear chain of command, clear path of advancement and specialization. A clear chain makes it easier to communicate during the time of crisis and generates clearly defined set of responsibilities (Scott and Davis 2015). The hierarchical structure of Tesco offers a clear path of career advancement for the employees either by replacing a superior or in another branch of the company in a better designation. Being the third largest multinational retail sector of the world, Tesco needs to manage a good number tasks ranging from marketing to Human resource and accounting. The hierarchical structure of Tesco enables the company to divide the areas of co ncern into various specialized departments. One of the chief ways by which the company has eliminated organizational issues is scrutinizing the disadvantages of its structure and working separately on them. Two of the major disadvantages of the Hierarchical organizational structure are communication barriers between the employees and the managers and disunity in the organization. In order to deal with communication gap between the employees and the managers, the company has implemented internal intranet technologies that have to ease the organizational communication to a great level. Besides that, by enabling the employees to take part in decision-making session, Tesco has provided its employee with the empowerment that also enhances the loyalty of the employees (Solomon, Russell-Bennett and Previte 2012). In order to prevent disunity among the employees and the managers, Tesco has implemented an effective organizational strategy that includes setting a common objective for all of i ts retail stores. Besides that, the HR management of Tesco organizes yearly activities and encourages teamwork. Considering the fact that Tesco is the founder member of Ethical Trading Initiative (ETI), the ETI base code is used by the company which includes freely chosen employment, right to bargain collectively and freedom of association (Volberda et al. 2012). Apart from that, the company pays special attention so that the working conditions of all the employees are hygienic and safe, child labor is not encouraged within the office premier, the working hours are not adversely affected the work-life balance of the employees, no discrimination is practiced, living wages are paid, no inhumane or harsh treatment is experienced by any of the employees and regulator employment is provided to reserved candidates. Any violation of the above mention factors results in punishment ranging from fine to imprisonment, depending on the severity of the unethical activity. Considering the fact that the company has approximately 472000 employees, Tesco holds a good number of financial and personal informatio n related to the employees (Solomon, Russell-Bennett, and Previte 2012). In order to keep all this information secure and well protected, the company uses data protection act 1998. The company is strongly committed to keeping the employee related data protected along with the providing the assurance of not selling the information to any organization or individual for personal benefits. Cultural Perspective Official corporate culture can be defined as the attitudes, standards, shared values and beliefs of an organization that characterized its members and defines the nature of the organization. The official corporate culture of Tesco is rooted in its goal, structure, strategies and the way it approaches its employees, investors, consumers and the greater community. Considering the fact that, like any other well-established company, each action of the senior managers of Tesco, is highly scrutinized by the employee, the managers of the institution maintain high cautiousness while taking decisions by ensuring that equitability and fairness are promoted. Besides that, the senior managers of Tesco also assure that ethical standards of the company are upheld on a continual basis (Clark 2012). The four chief elements of Tescos official corporate factors include trusting and respecting each other, working as a team, sharing experience and knowledge, listening to the issues of the employees and supporting them so that the issues get solved. One of the chief duties of senior managers of Tesco is to promote the above-mentioned elements (Volberda et al. 2012). The managers believe that establishment and maintenance of respect and trust among the employees is the key to success of Tesco. In order to promote the official corporate culture of the employees, the senior managers take effective steps so that the employees feel recognized and get rewarded for their performance, feel the unity while working as a team, are supported to develop their career by proving them with necessary opportunities. The mission of the company is to make the life of their consumers better and easier by serving high-quality products at a minimum cost. The values of the organization help Tesco how to put ethical norms in practice. The business ethics of the company includes understanding the consumers, be the first to meet their requirements and act responsibly for the community (Kim et al. 2014). The company emphasizes on not only understanding its consumers but also on understanding its employees and the communities in order to make their lives better. Besides that, the company also takes part in developing the environment by reducing global food waste and ensuring that their surplus food items reach to the poor. Considering the fact that the degree of integration in the organizational culture of Tesco is pretty high compared to the degree of differentiation, the position of Tesco with respect to Mary Jo Hatchs cultural integration-differentiation continuum is high (Hatch 2018). In spite of having a good number of retail organizations across the world, the mentioned company has managed to develop low differentiation and high integration continuum. Each and every manager of the organization are entitled to report to the headquatr of Tesco before implementing a strategy. Evidence of subculture in Tesco Being one of the largest multinational companies, Tesco has a good number of retail stores across the world. Hence it is quite natural that each sector of the company will develop a subculture which is unique from that of the other branches of the company (Scott and Davis, 2015). As been discussed earlier, the organization has a dominant culture which provides the members of Tesco with guidelines and boundaries in order to shape their behaviour. However, the company evidences numerous subcultures that are consists of additional values along with the core values of the dominant culture. For instance, the subculture of Tesco India is quite different from that of a Tesco retail store located in the UK. This often creates several complexities and discrimination within the mentioned organization. Tesco has been suffering from a decrement of 16.2 percent in the Companys overall revenue due to the varying subculture. This factor can be regarded as a sign implying that the company should implement effective strategies to maintain the consistency of its corporate or dominant culture and subculture. Subcultures in Tesco are adding crucial layers of complexity and are becoming counter-culture in recent years, according to Dave Lewis, the chief executive of Tesco, the company needs to change its culture in order to cope up with the decreasing market value (Tesco 2014). The strategies taken by the company for maintaining consistency between the corporate culture and the subculture includes recognizing the specific issues and planning organization-wide initiatives.Planning organization wide initiatives includes transferring employees of one brand to another branch so that they can enhance their social acceptance. Since the organizational structure of the company is Hierarchical, the authority and power of the managers flow from up to down. However, has been discussed earlier, during the decision making process of the company does not follow the hierarchical structure (Tesco.com. 2018). Instead, the local managers of every store are approached by the company to take part in the decision making the session. Unlike a good number of its competitors, Tesco believes in the empowerment of the employees in order to enhance employee-company relationship and performance of the organization. Tesco follows decentralized decision-making strategies which enable the employees and the lower level managers of the organization to take part in the decision making of the company (Oied.ncsu.edu. 2017). In spite of the fact that, this practice sometimes results in consuming a larger time compared to traditional decision-making methods, empowering employees to make decisions for the company provides long-term benefits to the company that include employee loyalty and retention. Pluralism in an organization can be defined as a structure which enables the member of that organization with divergent perspective and diffused power to corporate at substantive problems. Tesco being a multicultural organization is a strong supporter of pluralism (Zhao 2014). The decentralized decision-making structure of the organization can be considered as one of the chief ways to encourage pluralism within the organization. The senior managers of the organization ensure that the no unilateral decision making in any of the Tesco retail stores is encouraged. Considering the fact that Tesco has implemented several organizational changes recently to enhance the overall revenue of the company, very few numbers of retail sectors of the organization has reported resistance to this change. According to researchers, several factors for this resistance can be pointed out that include overestimation of the managers from the employees due to inability to understand the number of changes that can lead the organization to a better position (Mollah 2014). Other sources of resistance encountered are insecurities of the employees as well as the managers to lose their status and job security due to the upcoming change and fear of the unknown changes that are about to happen. Since the mentioned organization believes in the empowerment of the employees, the majority of the employees in the organization are satisfied with the empowerment provided to them (Shafritz, Ott and Jang 2015). However, for employees who are facing unethical issues due to various reasons, the HR management of Tesco implements several measures like an emergency assessment of the situation, reorganization of the culprit an finally implementing the companys codes of ethics along with legal regulations to deal with the situation. Conclusion From the above discussion, it can be clearly understood that the organizational structure and culture of Tesco is highly effective and helps the organization to achieve the overall goal of the company to become the largest retail company of the world. The company also has written code of business conducts and ethics which helps Tesco to manage various unethical situations that take place within the organization. However, due to the changing global market and increment in differentiation due to the difference in culture in a good number of its retail stores situated in various parts of the world, the company has suffered from a loss of 16.2 percent of its revenue. Another challenge that is associated with above mention issue is the decrement in the quality of service of the organization. Increased differentiation has resulted in discrimination among the employees and as a result, has decreased the productivity of the organization. This, in turn, has company is found to be suffering fr om a decrement in revenue. This situation can be effectively handled by the senior managers of the organizations by shuffling the employees of the retail sectors across the world along with providing them effective training so that their social acceptance and ability to work as a team get enhanced. Reference list: Brannen, M.Y., Moore, F. and Mughan, T., 2013, September. 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