Individual Reflection

Individual Reflection

I researched on the importance of the annual report of a company as an essential tool in the assessment of the company’s performance. I observed that the most distinguishing and necessary component is the report from the entity’s Chief Executive Officer. In my findings, I learned that the CEO’s report is functional in updating the shareholders on the performance of the company in the preceding year with the outlining of the achievements within that period. I focused on Tesco plc annual report as an example because the CEO’s report is exclusive in its content ranging from, the handling of the customers to the role of the suppliers. I found out that the report is also set out to explain the sustainability strategies that have been employed, briefing shareholders on the current state of the strategies and the intended achievement if the goals have not been met. The shareholders will then make decisions based on the report majorly concerning the finances, while the investors will also keep an eye on the performance to determine whether or not they can increase their stakes.

I settled on the Tesco plc CEO’s report as an important learning example as it demonstrates the actions taken by the leadership in the event a specific part of the company is not performing as expected. For example, in the event that a certain chain or branch is not delivering the intended purpose, the leadership of the company chips in to improve its profitability, and when the branch continues to make losses, the company then closes down the branch. I also noted that the employees are another important part of the business, and at all times, the CEO’s report touches on it because their continued contribution is essential in the achievement of the set goals. I concluded that the employees are the major connection between the shareholders and the customers because they try as much as possible to work in accordance with the preference of the customer while ensuring that the demands and desires of the shareholders are attained.

I learned that the Chief Executive’s Report has brought about advancement in the accounting profession such that major lessons are learned from the market experiences. The greatest lesson from the Tesco plc CEO’s review is that the major aspects for a prosperous business entity are; to ensure that the customers are satisfied, the cash profitability is maintained, free cash flow, and earnings growth. To ensure that these metrics are achieved, the major stakeholders, that is, the customers, colleagues, suppliers, and the shareholders, should mutually coexist. In the report, I learned that the company has set out the preference of the customers as a measure while making improvements to their products; hence this should be employed by other firms. For example, the company is introducing the ‘Exclusively at Tesco’ brands from the CEO’s point of view is receiving a positive response from the customers. I learned that the investors in any sector should always mind the reaction of the customers when making key company decisions.

Similarly, I observed that the suppliers have also contributed a lot to the success of Tesco plc since there is a close relationship with the supplier. For example, they take part in assisting the suppliers in investing in their products and advise accordingly in the improvement of quality. This improvement has been through instances such as the reduction of sugar content for the soft drinks in Thailand and the removal of the fats in the bakery items. In the UK, the company has also significantly worked with the supplier to ensure the hard to recycle materials are reduced through the removal of 2,900 tonnes. The lesson I learned from this was that for effective business performance to be achieved, the business entity should work closely with the suppliers as they form an important part in ensuring that the products are available for the customers and the community safety is guaranteed in the quality they provide.

The other lesson I learned from the report was that the shareholders play an important role in the performance of the firms as they keep the leadership in check; hence the CEO will at all times ensure that their investments give the promised returns. To assure the shareholders of the steps being taken, I noted that the Tesco plc CEO illustrates the merger with Booker as a strategy to increase their customer base, and in doing this increased profitability. The merger has made the company realize €79m in the first year serving as a proof to the shareholders that the company is working in their interests. To demonstrate their continued ability to manage the firm, the company has closed the Tesco Direct in Central Europe due to unprofitability, and they have countered this closure with an acceleration of the transformation plan in Asia.

Despite the various lessons that I learned from the role of the CEO’s Report, there are challenges that I encountered. The most outstanding was the inadequate information provided on the challenges that the company faces. The CEO stipulates that the market in Thailand has had somewhat unfavorable conditions on the performance, stating that it affected 1.2% of the 2019 sales but could not provide the specific figures and amounts involved. The other scenario is the inadequate provision of information on the Poland issue of changes to the Sunday Trading regulations stating a mere percentage rather than the actual figures involved. Although the information was somewhat insufficient, I noticed that there are more strengths to the CEO’s review than there are the shortcomings.