What Contributes to Tesco’s Problem?

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As the biggest retailer in Britain, Tesco was found that there is a £250m ($410m) black hole in its accounts because Tesco’s British arm had been booking discounts on goods it had not yet sold as income, while simultaneously understating the costs of the sales it had actually made. It is seems that it’s really a obvious mistake in company operation and strategy making. What happened to Tesco?
It can be find that Tesco over estimated its profit this year and made a higher announcement to the public. That put Tesco in a dilemma which the company must prusue profit while keeping the customer loyalty. In that apparent situation pressure, Tesco chose a “trick” which actually a financial statement fraud to the public. Therefore, it comes out a consequence of deficit in Tesco’s accounting.
The “turning orange” situation push us to think about financial statement fraud (although maybe Tesco was not make financial mistake on purpose). Whether this operation measurement is benefit to the company? In my point of view, regardless the dishonest and the irresponsible to government and public, it is a vicious cycle for decision making in promotion and other activities aiming at the reputation and customer loyalty. The company will sacrifice their revenue to gain public support, which is dangerous to a depreciating corporation.
Furthermore, back to Tesco, as more competitors dropped in and expanded their marketing, Other companies like Waitrose and Marks & Spencer have squeezed the giant’s share of the grocery market. Moreover, managers of Tescothe ignore the quality of service. The dirty, messy stores on the internet, stories of management incompetence at both headquarters and branch level, as well as chronic supply-chain problem have all damaged the brand’s reputation. These two factors have interacted mutually and cause Tesco’s disadvantages in the market competition.
It seems that Tesco is on the same recession way as Sainsbury’s, the managers must take their responsibilities to figure out strategy which is more befitting for the market and pay more attention on customer service as well as reputation maintenance.

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