Mid-Term Examination

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Degree Program: BS A&F 3 Evening

Course: Principles of Management

Course Instructor: Ammara Akram Total Marks: 30
Date: 18/11/20 Time: 1 hour 30 mins

Instructions:
1. Please provide your answer as handwritten.
2. Write your name and roll number on top of the answer sheet, which must be
numbered.
3. Answer your question by providing an "answer to question 1," for example. Do not
reproduce the question, please.
4. Having finished the exam, scan it, save it with your name and roll no and send it by
email at
(1) dcomexam@gmail.com and cc to (2) ammara.akram1@gmail.com
5. Do not submit your paper in the group.
6. The answer sheet should reach within 15 minutes after the exam time is over.
7. Delay in submission would lead to a deduction of marks.
8. If the exam is not submitted within 15 minutes, you will be awarded zero marks
9. Teacher can penalize the students if any evidence of Unfair means is found.
10. Students are fully responsible for ensuring that all their exam scripts are sent to the
exam office's official email address and cc to the relevant course teacher. The same email
should be sent to both email addresses.
11. Students must use a black pointer so that the scan is more visible.
12. Page limit for the mid examination should be no more than 5 Sheets, i.e., ten pages

Q1: Considering strategic management process in mind explain how the process of strategic
formulation might, implementation and evaluation differ for (a) Large Businesses (b) small Businesses (c)
Non for profit organizations (d) Global Businesses? (Marks 10)

Q2 : Compare and contrast Traditional goal setting with MBO , which approach is preferable in a
particular organizational settings? (Marks 10)

Q3: Read the case study and answer the questions given at the end? (Marks 10)

Case Application
Founded in 1919, Tesco has been a business success story. With its core business focusin on food retail,
in just under a century, Tesco has grown from a market-stall in the East End of London into the largest
supermarket in the United Kingdom, and the third largest globally. In 2012–13, Tesco boasted group sales
of £72.4 billion, with £2 billion profit before tax. At the end 2014, Dave Lewis, who had been Tesco’s CEO
for only three weeks till then, sent an email to the company’s staff members saying that the organization’s
culture had to change. He said that Tesco needed to focus on its customers and work hard on being open,
honest, and transparent. Most people in his position would have probably waited more than three weeks
before recommending such sweeping changes, especially for something as significant as the
organizational culture. So what caused Mr. Lewis to make such a dramatic public announcement? Put
simply, a financial scandal. With significant issues, related to the drive for growth and positive market
results, being brought to light by a whistle-blower, at the end of September 2014, Tesco had to make an
embarrassing announcement—they had overstated their mid-year profits by £250 million, later revising
this to £263 million. The issues faced were twofold. In order to improve its own financial position, Tesco
delayed its payments to some of its suppliers and it had also been including payments from suppliers as
profit. It appeared that these payments were made against suppliers getting more favorable positioning
for their products and more shelf space. Tesco’s announcement resulted in an 8 percent fall in the share
price, wiping £1.5 billion off the company’s market value. A total of £3 billion was wiped off the share
price in the three weeks following the announcement. On top of this, both the Grocery Code Adjudicator
(an independent body set up to oversee the relationship between suppliers and supermarkets) and the
Serious Fraud Office (SFO), the section of U.K. law enforcement focusing on serious or complex fraud and
corruption, announced that they would be carrying out an investigation into the matter. When you look
at company documents from this period, this type of activity would seem out of step with the culture of
the organization. In 2013, the then-CEO, Philip Clarke, stated that the company should do all it could to
earn stakeholder loyalty and trust. In fact, the 2013 annual report identified poor relations with suppliers
as a reputational risk and reaffirmed the company’s aim to comply with the Groceries Supply Code of
Practice. However, the satisfaction of customers and other stakeholders was replaced by a drive to meet
financial targets and maintain share value. In January 2016, Christine Tacon, the Grocery Code
Adjudicator, released her report. It didn’t make for a pleasant reading for Tesco management. She found
evidence of internal emails that suggested staff members should not make payments to suppliers before
a certain date, in order to temporarily improve margins and ensure that the company was not seen to be
underperforming against targets. A list explaining how the staff could help Tesco reach mid-year targets
was uncovered, which included an instruction not to pay money owed. Some payments were delayed by
nearly two years and in some cases the supplier simply gave up asking! Following the overstatement in
2014, 125 institutional funds filed a joint lawsuit for £100 million, and Tesco is still under investigation by
the SFO. It may be some time before a new culture of trust and transparency will be allowed to flourish;
however, Tesco seems to have seen the error of its ways. The company has improved its communication
channels with suppliers, a majority of whom now say they have a more positive relationship with Tesco
than they did previously.

3.1. Which stakeholder groups are affected by the financial scandal discussed in the case?

3.2. How could the omnipotent and symbolic management perspectives explain Tesco’s financial
scandal?
3.3. How is the email sent to staff members linked to Dave Lewis’ view that the organization’s culture
needs to change?

3.4. Imagine you are looking to join Tesco. How would the organizational story of this scandal affect your
decision? Consider both the scandal and how it was managed. (Marks 10)