Business and Management
Submitted By dlk1998
Evaluation of the influence different stakeholders exert on Tesco plc
Tesco is the biggest supermarket in the United Kingdom; it now takes every £1 of every £8 spent in UK shops. The company has become increasingly dominant and has expanded into the convenience store and hypermarket sectors of retailing. Because of this Tesco has recently received a lot of criticism over its activities, which is of great interest to all of Tesco’s stakeholders.
Friends of the Earth (FOE) are a pressure group who point to Tesco’s policies of buying up large amounts of land in order to build new stores, the history of fighting battles with local authorities over planning and how it has bought the company’s brand into the high street through its purchase of small convenience stores. The opposition voiced by FOE is summarised in its report that ‘calling the shot: How supermarket get their way in planning decisions’. FOE is a stakeholder that is capable of exerting considerable influence over its customers’ interests.
Many local governments have expressed concern about the future impact of major supermarkets on their communities, but they are often unable to do anything about these concerns because the planning system and the strength of the supermarkets are against them.
Tesco also face resistance from smaller pressure groups, a good example of this is an online group called ‘Tescopoly’, which is aimed at exposing and limiting what they see as the market-distorting power of the company’s business. This campaign group points to cases where Tesco has overstepped its permission to build retail outlets, or where Tesco has admitted to having broken planning regulations.
Tesco also listens very carefully to its shareholders, who along with its customers are probably the company’s most influential stakeholders. Tesco appears to be committed to maintaining a good dialogue with its shareholders through organising meetings and presentations, as well as by responding to a wide range of enquiries. They seek shareholder views on a range of issues, from strategy to corporate governance and the environment. In addition to this, the company secretary’s office, investor relations and other teams within the business interact with shareholders on a regular basis, which most regularly with their institutional shareholders.
Tesco’s customers are probably their most important stakeholders and exert the strongest influence. Different types of customers have different needs, some customers working all day and night. There are other formats that have been developed to meet customers’ needs, such as Tesco online and Tesco express. All of these developments, says Tesco are the result of research among their customers. The company appears to respond to this stakeholder group’s interests very well. Without this group of stakeholders, Tesco wouldn’t have a business, so they respond very quickly to customers concerns about pricing, product range and quality.
Tesco has taken a number of initiatives as a result of customer influence recently. It has reduced the amount of in store waste going to landfill by one third in the space of a year. It has supported local community campaigns. It has also begun educating customers on the carbon footprint of what they buy. Tesco has set strict objectives on reducing its carbon footprint and making low carbon products accessible and affordable for consumers.
The British government fully supports Tesco in this strategy. The long running computers for schools programme have been very successful. New initiative on food content and the labelling; promoting exercise, balanced lifestyles and healthy eating; and extending efforts to reduce negative environmental impacts and maximise positive ones are further examples of their responses to stakeholders influence.
Some MPs have criticised Tesco for promoting binge drinking by heavily discounting alcohol in their stores. Tesco have since responded to this by agreeing to work with the government to make people more aware of the dangers of excessive drinking. The company is clearly influenced by the parliament and the government on a number of issues.
Tesco has recently been working with the government to help those without jobs. The venture with Tesco is part of the department for work and pensions’ ‘Pathways to work’ programme, which has found work for some 4,000 people on incapacity benefit. The programme is among the government’s reform initiatives aimed at ensuring that people who receive benefits do not do so doing nothing in return. The scheme allows willing people to be put to work at Tesco for a week to prepare them for a job. This will be followed by training and support to help them compete in the job market. Tesco will take some of them on in permanent jobs; others will go on to employment elsewhere. This is a good example of Tesco responding to the Government’s influence of wanting a British successful business to be seen to be helping those in need.
The influence of the government on Tesco is massive in terms of environmental and ethical issues. Tesco is committed to the principles of ‘reduce reuse recycle’ in tackling waste and too much packaging in their operations and for customers. They have targets to minimise the amount of waste sent to landfill, to reduce the amount of packaging on their products and to give out fewer carrier bags. They are also involved in initiative and trails to deal with other issues, such as helping customers to recycle more and to reduce food waste in their operations and by customers.
The way the company sources its products can have a significant environmental impact. Tesco has policies in place to ensure that the key suppliers are sourced responsibly. They aim to work with suppliers and others to ensure that their policies are sound and rigorously implemented. Where appropriate, they play an active role in cross industry groups that have the power to deliver wider change, which is necessary for them to deliver their commitments.
In conclusion, it appears that different stakeholders have conflicting interests and views. Supermarket suppliers want higher profit margins, faster payment and more warning of changes in purchasing. Consumers want lower prices, a wider range of products and easy access. Employees want better terms and conditions of employment, whereas shareholders want to keep costs down so that they can increase the profit. There are various activities that show that Tesco responds well to certain stakeholder influences and there are other areas, such as the huge reduction in small independent retail businesses due to the company’s growth, and the low prices paid for meat to some farmers, where perhaps they do not respond so well. It is a balancing act for them in making sure that no particular stakeholder is upset too much by the company’s decisions. In my opinion, it is understandable that Tesco responds quickly to important stakeholders, for example the customers, shareholders, some pressure groups and the government, but is less responsive to the business community and its employees.
Tesco relations with stakeholders- www.tescoplc.com/plc/ir/corpgov/relations/ Earth Archived Press Release- www.foe.co.uk/resource /press_releases/tesco_profits_just_not_cri_19092005.html
Tesco’s work with the government about jobs- www.personneltoday.com