Stakeholders of Tesco (An analysis of Tesco’s stakeholders)

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Stakeholders of Tesco (An analysis of Tesco’s stakeholders)

This is a detailed analysis of the stakeholders of Tesco. It aims to examine both the internal and the external stakeholders of the retailer. It also aims to explore how they influence it and in what capacities. Tesco is a British retailer headquartered in Welwyn Garden City, Hertfordshire, England. Its journey started in 1919 with its founder, Jack Cohen selling groceries from a stall in the East End of London.

 

Internal stakeholders of Tesco

The main internal stakeholders of Tesco are employees, managers, board and executive committee, and shareholders. Like any other organisation, employees are very vital for Tesco, so are the managers. It has 360,000 ‘colleagues’ worldwide (Tesco, 2022). It puts human resources at the heart of what it does.

Tesco Board consists of the chairman, chief executive, chief financial officer, and a number of non-executive directors. They are very powerful and extremely important for the company, Likewise, shareholders are also very important stakeholders of Tesco. The major shareholders are BlackRock, Inc., Norges Bank, Fidelity International, and Schroders plc (Tesco, 2022).

It is worth mentioning that Tesco suffered shareholder revolts over executive pay in the past. Likewise, it had responded to shareholder demands for healthier food sales by announcing its commitment to improve the health profile of its products by 2025 (Cooper, 2021).

 

External stakeholders of Tesco

The main external stakeholders of Tesco are customers, suppliers, creditors, competitors, pressure groups, local communities, and the government. Tesco serves millions of customers every week. To server them with excellent quality, healthy and sustainable products, it works with thousands of suppliers and producers. These suppliers and producers not only provide Tesco with required products, but also help it reduce food waste.

There are a number of big competitors that challenge Tesco in the UK and abroad. ASDA, Sainsbury’s, Morrisons. Co-op, Waitrose, Lidl, Aldi, and Iceland are the main competitors of Tesco in the UK. Globally, it is challenged by big names such as Walmart, Amazon, Carrefour, and some other Internet giants. The article ‘Competitors of Tesco’ provides more and detailed information about the competitors of Tesco in the UK and abroad.

Pressure groups step up pressure on Tesco over many issues e.g. employees pay, suppliers pay, social responsibilities, genetically modified feed, and many more. Likewise, local communities are often impacted by the operations of Tesco significantly. If unhappy with any of its operations, it is unsurprising that local communities may come out in protest. Similarly, governments of the countries where it operates can also impact on its operations with new rules and/or increasing/decreasing tax rates.

 

Influence of stakeholders on Tesco

All the stakeholders are important for Tesco. However, they are neither equally important nor equally powerful. Some stakeholders are far more powerful than the others. For instance, the chairman, directors, and other senior executives chart the overall and strategic direction of the company. However, the shareholders must approve the major decisions. For instance, many shareholders were against the decision of Tesco’s takeover of Booker, a restaurant supplier. However, Tesco finally sealed its £4bn takeover of Booker as over 85 per cent of its investors had voted for the deal (Rovnick & Odell, 2018).

Competitors impact on Tesco heavily. For example, competitors such as Aldi and Lidl put significant pressure on the pricing policies of Tesco in the UK as the formers are widely known as discounters. Likewise, major suppliers have a huge influence of Tesco. It is worth noting that small suppliers cannot usually exercise any influence over the company.

 

Conflict of stakeholders in Tesco

Different stakeholders have different expectations. These differing expectations often become the sources of conflict. For instance, suppliers expect payment on time. However, in 2016, Tesco was found to have delayed paying money to suppliers in order to improve its own financial position (Simpson, 2016). This deliberate attempt angered the suppliers concerned. Tesco eventually apologised for the practices, admitting harms done to the suppliers.

Tesco hurts small and often indirect competitors severely. For instance, many small shops have closed down where Tesco operates. Likewise, the local community may not like another Tesco store to open in their area as it may increase the traffic, and house prices in the area.

Shareholders expect good returns on investment. However, the more Tesco pays to employees, managers, and others, the less is likely to go to the shareholders. Similarly, Tesco may anger ‘colleagues’ with pay cuts. For instance, in 2016, some workers took legal action against Tesco on grounds of age and gender discrimination after the company had decided to cut its pay rates for night and weekend shifts.

 

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Last update: 25 January 2022

References:

Cooper, B. (2021) Tesco responds to shareholder demands for healthier food sales, available at: https://www.standard.co.uk/news/uk/tesco-government-b922529.html (accessed 24 January 2022)

Rovnick, N. & Odell, M. (2018) Tesco wins shareholder backing for £4bn Booker’s takeover, available at: https://www.ft.com/content/1f7c68d4-1c94-11e8-956a-43db76e69936 (accessed 26 August 2019)

Simpson, E. (2016) Tesco knowingly delayed payments to suppliers, available at: https://www.bbc.co.uk/news/business-35408064 (accessed 27 August 2019)

Tesco (2022) Board and Executive Committee, https://www.tescoplc.com/about/board-and-executive-committee/board/ (accessed 25 January 2022)

Author: M Rahman

M Rahman writes extensively online with an emphasis on business management, marketing, and tourism. He is a lecturer in Management and Marketing. He holds an MSc in Tourism & Hospitality from the University of Sunderland. Also, graduated from Leeds Metropolitan University with a BA in Business & Management Studies and completed a DTLLS (Diploma in Teaching in the Life-Long Learning Sector) from London South Bank University.