Tesco Stakeholders Analysis

Every corporate organization in existence has individuals and organizations that have an impact on its operation and existence either directly or indirectly. These individuals or organizations are commonly referred to as stakeholders.

Tesco stakeholders include its employees whom they refer to as colleagues, shareholders, company board, customers, suppliers, pressure groups, the communities in which they operate, and the government of the countries where Tesco exists.

Tesco PLC is a global retailer of groceries and merchandise which was started in 1919 by Jack Cohen in the east end of London. The brand was first floated on the stock exchange with a share price of 25 pence in 1947.

When it started, it was mainly a grocery retailer but it has since expanded to sell other items such as toys, books, electronics, telecoms, financial, and internet services.

In 2021, the brand was the fourteenth largest retailer in the world by revenue according to Statista. Tesco reported an annual revenue of £61.344 billion for the fiscal year ended 2022.

Currently, in 2023, the brand employs over 336,000 individuals and has over 4,400 stores scattered across the Czech Republic, the United Kingdom, Hungary, Slovakia, and Ireland.

In this article, we shall discuss Tesco stakeholders as well as their impact on the company.

See also: Strengths of Tesco Plc

Stakeholders are important because they can have a positive or negative influence on the business or project with their decisions. Generally, a stakeholder can have a direct or indirect influence on the activities or projects of an organization.

The support of stakeholders who directly influence the business is often required for the business or project existence while the support of stakeholders that indirectly influence the business is needed for the continuous existence of the business.

The term, stakeholder originates from the world of horse racing. In a stake race, the prize money is generated from the entry fees that horse owners pay to enter the race. These entry fees are commonly referred to as stakes, which are essentially synonymous with the term risk.

The stakeholder, who is typically responsible for taking care of the entry fees until the prize money is awarded, is traditionally not financially invested in the race’s outcome.

See also: Tesco Competitive Advantages and Strategy

Tesco stakeholders

1. Internal stakeholders
2. External stakeholders

The stakeholders of Tesco are broadly classified in 2 as specified above, we shall look at the individuals and groups that belong in either of these categories below:

Tesco internal stakeholders

Internal stakeholders refer to individuals or groups within a company whose interest in the business stems from direct employment, ownership, or investment in the company.

These stakeholders are also referred to as key or primary stakeholders. This is because they play an important role in the success of a project or business.

The internal stakeholders of Tesco include:

1. Company board
2. Tesco colleagues
3. Shareholders

Company board

Tesco’s Board consists of the Chair, Group Chief Executive, Chief Financial Officer, Senior Independent Director, and a number of independent Non-executive Directors.

These individuals oversee the implementation of various decisions and policies within the company, hence they are quite powerful and extremely important for the company’s function.

The Board believes that understanding its stakeholders and what
matters to them is key to its success. Thus, they gain valuable insights into Tesco stakeholders through the results from colleague, customer, and supplier engagement surveys that they analyze. The results from the analysis are used to develop action plans for the company.

Tesco’s board is a diverse combination of individuals with different perspectives, insights, and viewpoints geared towards benefiting the brand’s stakeholders through better business performance.

Tesco colleagues

Employees are an important part of every organization because they play a key role in the daily activities that take place within any organization. Tesco calls its employees, colleagues.

The brand has over 336,000 colleagues who work in different capacities daily to ensure that the company’s customers continue to have access to the brand’s products while enjoying excellent customer service.

As the company states in its 2022 annual report:

We cannot deliver our purpose without our colleagues’ dedication;
they are at the heart of everything we do.

Tesco

Without a dedicated team of workers, various activities such as the purchase, distribution, storage, marketing, sales, and delivery of products to consumers cannot take place.

Hence, Tesco has initiated different programs to ensure that its colleagues are adequately taken care of and compensated to do their duties effectively.

For instance, the brand offers free annual health checks for its colleagues. This ensures that they are in proper health to carry out their duties.

Additional factors that influence the output of Tesco colleagues include the clean and safe working environment, opportunities for upskilling, promotions, and job security.

Shareholders

Tesco stakeholders include individuals and organizations who have invested money in the business by purchasing its stocks. These are commonly referred to as shareholders. As of September 29, Tesco has a market capitalization of £18.99 billion.

Shareholders of Tesco are a key part of the company’s functioning as they provide the company with part of the capital needed for the purchase of inventory, assets, equipment, and business expansion.

In turn, these shareholders hope to get a return on their investments in the form of dividends. Some of the top shareholders of Tesco include Schroders PLC, BlackRock Inc., Fidelity International, and Norges Bank.

External stakeholders of Tesco

External stakeholders refer to individuals, groups, or organizations who do not directly function in a company and are indirectly affected by the company’s decisions and outcomes.

These individuals or groups may be also referred to as secondary stakeholders. This is because they do not have a direct stake in the business, instead, their stake is often representational.

Tesco’s external stakeholders include:

1. Customers
2. Suppliers
3. Government and government agencies
4. Labor unions
5. Pressure groups and community

Customers

Being a global retailer of groceries and general merchandise, customers are one of the most important stakeholders of Tesco. This is because, without consistent patronage from people, the brand will not have survived this long.

Consumers play a pivotal role by determining the amount of revenue the company generates from the sale of products. They can also influence the perception of individuals about the brand and its products based on their experiences, recommendations, and reviews about the company.

For example, in a bid to maintain consumer patronage, Tesco has reportedly removed more than 71 billion calories from its own brand ranges since 2018 through reformulation. The reformulation was done to provide consumers with healthier options at competitive rates.

Suppliers

Suppliers are also key Tesco stakeholders, they provide the company with all the products it sells to consumers. These products include clothes, groceries, electronic appliances, homeware, toys, and fuel.

Tesco depends on a significant number of suppliers to serve its customers with excellent quality, healthy and sustainable products. Some of these suppliers include 2 Sisters Food Group, African Blue, Bakkavor, and Daregal. These suppliers provide the company with the required products and also help in reducing food waste.

In the January 2023 Supplier Viewpoint survey, 86.6% of Tesco suppliers reported that they were satisfied working with the brand. 79.4% of the suppliers agreed that the company put sustainability at the heart of everything they do.

These high scores show that Tesco has a good working relationship with its suppliers which is an important factor in the company’s continuous ability to access quality products that it sells to its customers.

Government and government agencies

Government and government agencies are perhaps one of the most influential stakeholders of Tesco. Although they do not directly function within the company, the policies, rules, and regulations that they enact can have a positive or negative effect on the business.

As the policies, rules, and regulations of the government are constantly changing, Tesco must update its operations to comply with them. For instance, if the corporate tax rate gets increased, it will have a direct impact on the net profit of the company. This will consequently have an effect on the level of profitability of the company.

Changes in policies concerning employment, health, data protection, gender equality, safety, planning, sustainability, etc. can all impact the business in one way or another. For example, if Tesco fails to meet the standard government requirements for workplace safety, it could lead to the closure of its outlets.

The influence of government on the operation and existence of Tesco is far-reaching. Hence the company must comply with all policies, regulations, and rules in order to avoid getting sanctioned, fined, or even being closed down.

Labor unions

The labor unions are also part of Tesco’s stakeholders, this is because they represent the interest of workers and can negotiate with the company on behalf of these workers on various matters. Thus, they have a significant level of influence on the brand.

For example, trade unions are known to commonly engage with businesses in negotiations about overtime payments, wages, job security, and other work-related issues. This is done with the aim of securing the best working conditions for its members.

Trade unions also attend grievance and disciplinary hearings in support of their members. The relationship between a business and a trade union could become confrontational, especially in situations where an agreement is not reached on a particular matter.

For instance, when the trade union is advocating for better pay or working conditions for its members and the company refuses to accept, it could lead to industrial actions such as work-to-rule or strikes. The costs of either of these actions can be high and negatively impact Tesco’s reputation and profits.

It is therefore important that Tesco avoids such scenarios by ensuring they have cordial relations with the trade union. Additionally, Tesco has avoided such scenarios by ensuring that its employees are well compensated, have a good working environment, and have access to opportunities for skill enhancement and career growth. These keep the morale of the employees high and avoid actions that can impact the brand negatively.

Pressure groups and community

Pressure groups and the community are also part of the stakeholders of Tesco. Pressure groups are often concerned with issues such as conservative and responsible use of resources, genetically modified feed, supplier chain responsibility, etc. They usually engage with the brand through meetings, protests, or even lawsuits.

The community often benefits through the creation of jobs and the expansion of the community to accommodate an influx of people who may come to patronize the brand. The community can impact the business either negatively or positively.

For instance, if the community feels that the establishment of a Tesco outlet within their community will lead to the closure of smaller businesses that have been effectively serving the community, they may protest against the establishment. On the other hand, if they feel it will bring about development and jobs, they will support its establishment.

Tesco has shown a significant level of commitment to considering the views of pressure groups and bringing positive developments to the communities where they operate. In Ireland for example, Tesco has donated about €3 million to support over 11,000 local projects countrywide including schools, animal shelters, sports groups, elderly care centers, and health organizations.

Additionally, Tesco has shown its commitment to protecting the planet through its commitment to reducing the use of fossil fuels and hopefully reaching a net zero emission by 2050. One of the ways the brand is working toward this is by using electric vans for customer deliveries. They have also provided about 2,500 customer electric vehicle charging points in about 600 stores.

These initiatives show that Tesco is intentional about maintaining and enhancing a cordial relationship with pressure groups and the communities in which they operate and also protecting the environment from the debilitating effects of climate change.

See also: Weaknesses of Tesco

Colleagues impact the company through the work they do. Suppliers provide the various products the company sells while consumers ensure the continuous operation and existence of Tesco through their purchases.

See also: Stocks and shares differences and similarities

Conclusion

Tesco stakeholders include both internal and external individuals, groups, and organizations who have a direct or indirect influence on the brand. Over the years, the company has done its best to maintain a cordial relationship with all its stakeholders. This has contributed to the brand’s continuous success and existence.

See also: List of Assets, Liabilities, and Equity with Examples

Last Updated on November 2, 2023 by Nansel Nanzip Bongdap