Organisational Insights                                                                200306529

After doing some research, I decided to choose two companies as the organizations to be compared in the written submission, which are Tesco and Panda.

In this log-book, the information I gather will be printed in italic, and my personal opinion will be written in 14 point font size with underline.

I get most of the information from the internet, besides, I get some information from the email which the companies’ official website, press and the magazines.

Tesco operates 2,291 stores around the world and employs 296,000 people. We have grown from a domestic retailer, to an International Group, through our organic growth programme. This year, all four parts of the Tesco strategy, the core UK business, non-food, retailing services and international, have increased in profitability.

Retailing services
Tesco personal finance, established in 1997, now has over 3.4 million customer accounts and 15 products and services. It achieved profits of £96m in 2003 (Tesco share £48m). is the largest grocery e-tailer in the world and achieved a profit of £12m in 2003. We announced recently that we would launch a fixed line phone service in the summer of 2003.

Half of our UK new space opened this year has been for non-food and the result has been to grow our market share to 5%.

By analyzing the above information, we can have an overview of the company. It is clear that Tesco is a large-sized organization, which has grown from a domestic retailer, to an International Group. How did Tesco make it? This is the question I have got after reading above information. This part shows some operational details of the company, for example, the employee numbers, age structure, the ownership of the firm, etc.

STATEMENT OF APPLICATION OF PRINCIPLES OF THE COMBINED CODE The Group is committed to high standards of corporate governance. This statement describes the manner in which the company has applied the principles set out in the Combined Code on Corporate Governance.

DIRECTORS AND THE BOARD The Board of Tesco PLC comprises eight Executive Directors and six independent Non-executive Directors. The Chairman, Mr. J A Gardiner, is an independent Non-executive Director who has a primary responsibility of running the Board. The Chief Executive, Sir Terry Leahy, has executive responsibilities for the operations, results and strategic development of the Group. Clear divisions of accountability and responsibility exist and operate effectively for these positions. In addition, Mr. G F Pimlott is the senior Non-executive Director. The Board ensures that no one individual or group dominates the decision-making process. Since the year-end, the Board has announced its succession plans for the retirement of Mr. J A Gardiner in March 2004.

The full Board meets at least ten times a year and annually devotes two days to a conference with senior executives on longer-term planning, giving consideration both to the opportunities and risks of future strategy. The Board manages overall control of the Group’s affairs by the schedule of matters reserved for its decision. In so far as corporate governance is concerned, these include the approval of financial statements, major acquisitions and disposals, authority levels for expenditure, treasury policies, risk management, Group governance policies and succession plans for senior executives.

To enable the Board to make considered decisions, a written protocol exists and has been communicated to senior managers ensuring that relevant information is made available to all Board members in advance of Board meetings. All Directors have access to the services of the Company Secretary and may take independent professional advice at the company’s expense in the furtherance of their duties.

The need for Director training is regularly assessed by the company.

The above information shows a part of operational details of the organization. This part explained the board of Tesco and its operation, for example, the full board meet at least ten times a year and have some more conference as well, this is very logical, All Directors may take independent professional advice at the company’s expense in the furtherance of their duties.

GOVERNANCE STRUCTURES The following paragraphs describe the key governance structures operating in the Group under the overall direction of the Board.

Executive Committee The Board delegates day-to-day and business management control to the Executive Committee, which comprises the Executive Directors. This meets formally every week and its decisions are communicated throughout the Group on a regular basis. The Executive Committee is responsible for implementing Group policy, the monitoring and performance of the business and reporting to the full Board thereon.

Nominations Committee Appointments to the Board for both Executive and Non-executive Directors are the responsibility of the Nominations Committee which is chaired by Mr. J A Gardiner and whose members are set out in the table at the bottom of this page.

As exemplified by the section on ‘Directors and their interests’ within the Directors’ report on pages 5 and 6 of the 2003 annual report, the company’s Articles of Association ensure that on a rotational basis Directors resign every three years and, if they so desire and are eligible, offer themselves for re-election.

Remuneration Committee The Remuneration Committee, composed entirely of Non-executive Directors, is chaired by Mr. C L Allen. The members are set out in the table at the bottom of this page. The responsibilities of the Remuneration Committee, together with an explanation of how it applies the Directors’ remuneration principles of the Combined Code, are set out in the report of the Directors on remuneration on pages 12 to 21 of the 2003 annual report.

Audit Committee The Board has an Audit Committee, chaired by Mr. G F Pimlott and consisting entirely of Nonexecutive Directors, which meets a minimum of three times a year. Membership of the Audit Committee is set out in the table at the bottom of this page. Its terms of reference are reviewed annually and represent current best practice. The Committee’s primary responsibilities include monitoring the system of internal control throughout the Group, approving the Group’s accounting policies and reviewing the interim and annual financial statements before submission to the Board. The Committee will be undertaking an assessment of the Group’s position in relation to the Financial Reporting Council guidelines for strengthening the Combined Code, issued recently as the ‘Smith Report’, although it is believed that the Group already comply substantially with the proposals. The review will also cover the role and effectiveness of the Non-executive Directors as set out in the ‘Higgs Report’.

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Compliance Committee The Compliance Committee ensures that the Board discharges its obligations to comply with all necessary laws and regulations. It has established a schedule for the regular review of the Group’s operational activities to ensure compliance with accepted practices and policies.

The Committee, comprising two Executive Directors and three members of senior management, normally meets four times a year.

Some functional details are given in this part: the structure of management. There are five kind of committee; each one has its own duty, and they operate very well when they work together. The logical structure is another reason of ...

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