Britain's Most Admired Companies: Another Twin Win for Tesco

Management Today, December 2, 2005 | Go to article overview

Britain's Most Admired Companies: Another Twin Win for Tesco


MT's annual peer review poll this year puts the mighty supermarket chain and its boss at the top of Britain's Most Admired Companies and Most Admired Leader awards. It's a repeat of the double they achieved two years ago.

Two years ago, Tesco swept the board in MT's poll - the firm took the top slot for Most Admired Company and its boss Sir Terry Leahy for Most Admired Leader. Now they have swept the board again, picking up both of the top gongs in this year's Britain's Most Admired Companies, brought to you in association with Mercer Human Resource Consulting. This is a feat unequalled since the survey's author, Professor Mike Brown of Nottingham Business School, first ran his slide rule over Britain's Most Admired Companies back in 1989. The Tesco story is one of unwavering success: it has more than 1,700 stores; it is the country's largest private-sector employer, providing a living for 237,000 people; and it makes nearly pounds 2 billion a year in profit. Tesco.com is the world's most successful online retail grocer.

Tesco is sure-footed, systematic and very tightly managed. Its competitiveness is exemplary: in 2003, the company was taking a remarkable pounds 1 in every pounds 8 spent in the nation's shops. Today, it's closer to one in seven.

It's not just Sainsbury's and Waitrose that view Sir Terry and his stormtroopers with dread - it's the management of Dixons, Boots, Woolworths and Marks & Spencer, too. The fear extends to those who run insurance companies, banks and mobile phone companies. Not even churches and registry offices are safe from the blue-and-white hoards. 'If anyone wants to get married in their local Tesco store,' says marketing director Tim Mason, 'we'd be all too happy to let them do it.'

The truth, say some in the industry, is that Tesco has seen off the local competition and is now operating on a wider global stage, its real rivals the likes of Wal-Mart and Carrefour.

But its power and extravagant success have not gone unnoticed at home, and Tesco is now attracting a degree of protest. There's an undeniable sense that some Brits - and not just members of the chattering classes - want to see Tesco's relentless advance halted. Witness the Schadenfreude contained in the public reaction to the collapse of the audacious bit of engineering that was going to be a new Tesco store, built over the railway tracks at Gerrards Cross. A more recent fly in the ointment is the news from the Office of Fair Trading that it is reconsidering its initial refusal to investigate competition between superstores and the convenience store sector. Along with all its rivals, Tesco now finds it extremely difficult to get planning and regulatory consent for new full-size stores, especially in urban areas. Much of the firm's recent growth has therefore come from buying up chains of smaller convenience stores and converting them to its Metro and Express formats. Any tightening of regulatory control in this area is potentially very bad news indeed for Sir Terry and his team.

The essence of the Britain's Most Admired Companies poll is peer review, for the respect of competitors is surely one of the hardest-won commodities in business. The 10 largest listed companies in each of 22 industry sectors rate each of their rivals on nine criteria - including Quality of Management, Financial Soundness and Value as a Long-Term Investment. Tesco wins two of these category awards outright and is joint winner of a third category (see table, p39). Within its own sector, Retailers (Food and Personal), it very nearly sweeps the board, beating its rivals on eight of the nine criteria.

And yet even mighty Tesco has an Achilles heel - the same one that knocked it off the top slot last year. The only category it doesn't win in its sector is Community and Environmental Responsibility, beaten in this increasingly significant aspect of business by both Sainsbury's and M&S. Its score of 6. …

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Britain's Most Admired Companies: Another Twin Win for Tesco
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