Tesco's Unethical Practices And Impact Assignment Sample

Tesco's Unethical Practices and Their Impact on Business Ethics

Introduction

Business ethics studies the policies behind businesses, and practices in terms of subjects like, bribery, corporate governance, insider trading, CSR, fiduciary responsibilities, and discrimination. Business ethics provide business guidelines to the company and help to gain public attention. Tesco is a global leader in retail in everyday commodities. Tesco operates in two formats one is online and another is through multi-format. Tesco offers a wide range of different products such as frozen food, fresh food, drinks, grocery, health & beauty, bakery, home essentials, clothing, baby products, electrical appliances, and many more. In the UK it also gives insurance and banking services via Tesco Bank. Also, its financial services exist with the help of Tesco personal Plans and delivery services online. In this particular report, the discussion is based on the unethical performance of Tesco in various scandals. It will also shed light on how concerned unethical practices affected the suppliers, consumers, stakeholders and others. Report also presents Tesco's moral practices and its philosophical bases with regards to business operations. In the end, recommendations are given to improve the performance and brand image as well.

Reason for choosing Tesco

The reason behind choosing Tesco is that it is the favorite company in the UK despite the horsemeat scandal. The company has several strengths that are unique and worth elaborating on a broader scale. Other than its unethical practices, it has maintained a simple approach to reaching out to its customers (Mohanty, 2022). This in turn selling goods at pocket-friendly prices, customer services, and availability of commodities on websites and in-store. Tesco's vision is to maximize its revenue by increasing its value among its shareholders. To reach the goals, Tesco implemented many strategies discussed above. Hence, the internal and external performance of the company is accurate enough to target its long and short-term objectives.

Another reason is that the company is involved in litigation. It is involved in matters like dismissal from the workers, supply chain issues, and some other commercial problems (ZXhang, et. al, 2023). Tesco has survived criticisms from different people like suppliers, farmers, consumers, competitors, etc. Even the company received claims from labour relations as well. Apart from the unethical practices done by Tesco, these are some other things which the company is involved in.

Unethical practices done by Tesco

To maximize its revenue earned, the company started to pay low prices to its suppliers. This unethical practice was a strong statutory step taken by Tesco. By abusing small farmers, businesses, and traders Tesco is involved in damaging the environment, selling cheap products, and killing the local and small merchandise (Ermasova, 2021). In February 2013, the company serves horse meat instead of beef in their stores. The test report done by the Food Safety Authority of Ireland reflects that Tesco has served 29 per cent of horsemeat in its frozen burger patties instead of beef. By this time the company made a notable promise that it will tighten its supply chain and will concentrate on its logistics.

In the year 2014, Tesco was involved in an accounting scandal, in which the company submitted £250 million generated overstates. Another unethical thing was done by Tesco when it adopted strategies to avoid taxes. It has several subsidiaries in the US, China, Guernsey, and Cyprus where it performed tax avoidance practices. In Cyprus and China, the company stated that they are responsible to taxpayers by processing liquidation. With this practice, Tesco received a negative rating from Ethical Consumers for using tax avoidance strategies. A fiduciary obligation is an obligation to act in a way that is reliable (Ferrell and Fraedrich, 2021). Shareholders and other authorities of publicly listed companies are required to give honest and unbiased financial data in order to fulfil their obligations to the business's ownership. Tesco, a British grocery chain, instructed its financial employees to "pull forward" anticipated payouts from vendors in reaction to falling sales, which resulted in hidden accounting errors.

Due to these unscrupulous fiscal practices, which included falsely reporting cash when it was actually created, the company became mired in a serious dispute (Kim and Loewenstein, 2021). Tesco quickly became the subject of a misbehavior charge after deceiving creditors and the broader public about the business's value. Any subsequent payments from sources should be "pulled forward" by entering them on the financial records prior to receiving them, as indicated to the accounting department. Because of this, there was a growing gap between the corporation's expected performance and the actual outcomes.

Even though Tesco claims to have decreased trash within its own organization, a significant amount of plastic is still produced and dumped on sites. As a result of failing to fulfil Tesco's strict requirements for form and appearance, fresh fruit is frequently thrown away. Tesco claims to be cutting back on carbon dioxide (CO2) emissions, yet the company's throughout the year quest for affordable food necessitates long-distance transportation of the goods, which contributes to contamination.

Moral philosophical bases affected by Tesco

The following are the moral ethics affected by Tesco due to its unfair practices:

• Environment: Environmental analysis is one of the most important external factors which determine the company's growth and survival. These environmental aspects are of two types first, the industrial environment factor which has control over the company and second the remote environment factor which does not have any sort of control over the company (Dacin, et. al, 2022). Social, Political, economic, and technological ethics are included in the remote environment factor.
• Social contract: When a company signs an agreement with society as a whole is called a social contract. This contract deals with the situation that the company will not damage the environment or it will not do any unfair practices by which society suffers. The company has to take care of the social environment in which it is operating (Endenich and Trapp, 2020). The organization has to make sure that it acknowledges society and does not neglect any environmental aspect attached in order to maximise its profits. Because of unethical practices done by Tesco society's morals get affected in a way that the society did not receive any social benefits regardless of their position as a shareholder in Tesco.
• Legal and ethical standards: Tesco affected badly the legal and ethical moral standards due to its unfair means of earning huge revenue. Tesco forgets that to run a good business moral ethics are important. Its unfair practices like tax avoidance strategies and not giving enough money to the suppliers affected the moral values of its employees. The company's mission of ‘good for others' were not reflected and because of this Tesco failed in serving its consumers.
• Goodwill: Maintaining goodwill is important for any company. Goodwill is not related to Tesco's liabilities and assets but still plays an important role in business ethics. Goodwill consists of Tesco's work culture, brand image, and attitude towards its working people all of this was ruined due to the unfair business ethics performed by it. Those practices highly affected Tesco's consumer base and its social responsibility towards society.

Assessing the impact of Tesco's unethical practices on decision-making

Tesco's aim is to maximize its profits and customer satisfaction rate. But the business entity suffered in reaching its aim (Chen, 2022). Due to Tesco's unethical means, the company compromised its customer value and process. The competition in the market is the main reason for Tesco's following the unfair practices. For making huge profits than others the company overlook its business ethics and the consequences on the decision-making process. Those consequences are as follows:

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• Losing consumer base: The consumer base, in the long run, gets impacted the most as Tesco completely forgets about the loopholes or bottlenecks being created while fetching success. When social factors like harming the environment, improper waste management, pollution, and others make the consumer leave the market for the company.
• Credibility: Tesco's credibility and reputation were crushed in front of its consumers. The management was not able to overcome this impact and was not able to make any decisions further. It takes a lot of time and money to bring back the older image and consumer's trust in the company again. Consumers shift towards other brands and this impact the company's revenue cycle.
• Employee performance: Generally, in earning more, the employees ignore the protocol and ethical processes of the company. A lack of business ethics affects a company's success rate and also its employee performance. Tesco's employees lacked motivation in work and due to this the employee performance at Tesco gets impacted.
• Relations between management and employees: Misbehaviour occurs when there is a lack of ethical behaviour in the entity. Management's decision-making process gets impacted when they face inappropriate relations terms between them and their employees. Employees get dishonest towards their management when they know about the unethical practices the company is doing (Hashim, et. al, 2021).

Presenting the impact of tesco's unethical practices on consumers, suppliers, competitors, and stakeholders

Consumer and suppliers

Tesco's paid their suppliers very low while buying raw materials from them. Because of this, the suppliers showed a lack of effort and integrity in Tesco. The suppliers distributed cheap quality raw materials to Tesco ahead of its unethical business practices. Those cheap quality products are then served to consumers which leads to a lack of trust between them. Consumer's innocence was harmed during this. To grab their consumer Tesco also performed kickbacks in intermediaries so that its consumer continue shopping.

When a supplier loses their trust in the company it tends to go to another one and shift their interest in serving others. The trust of the supplier gets anticipated. Consumers can file lawsuits against the company when they receive cheap products. Kickbacks are part of unethical practices performed by Tesco which leads to costly legal repercussions.

Stakeholders

Unethical business means having a great impact on the interest of the stakeholders of the company. Tesco could not make its stakeholders its priority. Tesco's stakeholders are customers, suppliers, regulators, and employees, who lack motivation in the company due to its mean practices (Casali and Perano, 2021). The working relationship between Tesco and its stakeholders was ruined when the company was running behind generating huge profits by ignoring its key people. Tesco did not prioritize its stakeholders which leads to its loss in the business as its sales drastically fall down after the crisis.

Competitors

In order to come forward ahead of the competition, Tesco practised some unfair advantages to bring the game in its favour. Tesco started using the backup strategy, false social media marketing, and false trademarks to attack its competitors. They simply started blaming their competition so that they can increase their consumer base (Trevino and Nelson, 2021). When Tesco was trapped in the crisis the consumers started to shift from Tesco to other similar brands which ultimately lead to losing Tesco's profit and an increase in the sales of its existing competition.

Defining employees and leader's response to the unethical practices of Tesco

Tesco's employees complained about the unethical practices done towards them. Tesco used to give them low wages in spite of the minimum wage rate decided. Tesco used to give £1.34 for doing overtime instead of paying them £7, holiday, and severance pay (About Tesco Plc, 2023). Also, overtime was hardly paid. The rent and immigration charges of the employees were deducted from their salary. The employees suffer from hardships like hard working conditions, financial penalties, and more. Because of these practices, the workers started leaving Tesco and moving to join a similar brand.

The connection between Tesco and leaders (government) was destroyed. The UK government has to force Tesco to practice more ethical and sustainable practices against its consumers and suppliers (Böhm, et. al, 2022). To operate sustainably, Tesco initially needed government support in the space in setting up the framework and policies to promote sustainable development in the organization. The government responded to Tesco by applying beseeching on the business for doing unethical practices.

On the basis of evaluation, I completely disagree with Tesco, because the company did not treat its employees in a good way. Workers worked hard conditions for long hours just because the company was involved in the maximization of profits. Also, the company was involved in scandals therefore as a result, some upper management is presently so focused on avoiding it that they are putting speculation and analysts ahead of the people they serve or the long-term aims of their company. Another reason is that the company is involved in litigation. It is involved in matters like dismissal from the workers, supply chain issues, and some other commercial problems. Tesco has survived criticisms from different people like suppliers, farmers, consumers, competitors, etc.

Conclusion

As a result of the Tesco issue, the needs and hazards of being a publicly traded company with a short-term emphasis have once again come to light. No of how it could affect the long-term viability of the business, the ability to innovate, or the connections with consumers, investors want more money back as a result of their investment. If benefits are large but less than expected, they could react in a way that has unfavorable outcomes. As a result, some upper management is presently so focused on avoiding it that they are putting speculation and analysts ahead of the people they serve or the long-term aims of their company.

Recommendations

To attain success in the dynamic and competitive business arena Tesco is required to work on the following aspects:

Promotion of ethical behaviour

Using sustainable resources in the company in production is a way to promote ethical behaviors by not damaging the environment. Another way can be protecting the right and interests of the employees and management so that they remain loyal towards the organization and can contribute to the company's success.

Training of employees

Training is important for employees to perform ethical business tricks. To maintain an ethical business environment it is the responsibility of the management to train their new employees with work ethics (DeTienne, et. al, 2021). It is required to teach employees the company's values and code of ethics by conducting workshops and live classes so that they could maintain the business integrity.

Creating a code of conduct

It is important for companies like Tesco to create a code of conduct in order to engage with employees, customers, and suppliers. It helps the organization to find values, guide and train their employees and set up of organization's identity (Bowie, 2020). The code of conduct should be unique and empowering so that it will help in promoting ethical business practices.

Implementing policies

Management reviews and internal audits have a great influence on ethical business. Tesco should implement ethical policies to promote ethical business within the organization. The ethical policies should contain frameworks of internal audits and ethical values which can be used to practice employee and management performance. The effectiveness of such policies can be done by involving different stakeholders of the company.

The whistleblowing process

With the use of the whistleblowing process, Tesco can control unethical practices. To stimulate the exchange of data, businesses should make sure the procedure is uncomplicated and unthreatening and offers formal as well as unofficial report channels. Building trust will inspire brevity, honesty, transparency, and fairness. Tesco must have confidence in its staff to provide accurate information without ulterior motives (Ajibola, 2022).

References

Books and Journals

• Ajibola, E.B., 2022. An investigation into talent management in the Irish retail sector: a case of Tesco, Aldi and Super Valu (Doctoral dissertation, Dublin, National College of Ireland).
• Böhm, S., Carrington, M., Cornelius, N., de Bruin, B., Greenwood, M., Hassan, L., Jain, T., Karam, C., Kourula, A., Romani, L. and Riaz, S., 2022. Ethics at the centre of global and local challenges: Thoughts on the future of business ethics. Journal of Business Ethics. 180(3). pp.835-861.
• Bowie, N.E., 2020. Business ethics. In New Directions in Ethics (pp. 158-172). Routledge.
• Casali, G.L. and Perano, M., 2021. Forty years of research on factors influencing ethical decision making: Establishing a future research agenda. Journal of Business Research. 132. pp.614-630.
• Chen, J.J., 2022. Tesco Plc. In International Cases of Corporate Governance (pp. 27-44). Singapore: Springer Nature Singapore.
• Dacin, M.T., Harrison, J.S., Hess, D., Killian, S. and Roloff, J., 2022. Business versus ethics? Thoughts on the future of business ethics. Journal of Business Ethics. 180(3). pp.863-877.
• DeTienne, K.B., Ellertson, C.F., Ingerson, M.C. and Dudley, W.R., 2021. Moral development in business ethics: An examination and critique. Journal of Business Ethics. 170. pp.429-448.
• Endenich, C. and Trapp, R., 2020. Ethical implications of management accounting and control: A systematic review of the contributions from the Journal of Business Ethics. Journal of business ethics. 163. pp.309-328.
• Ermasova, N., 2021. Cross-cultural issues in business ethics: A review and research agenda. International Journal of Cross Cultural Management. 21(1). pp.95-121.
• Ferrell, O.C. and Fraedrich, J., 2021. Business ethics: Ethical decision making and cases. Cengage learning.
• Hashim, M., Nazam, M., Abrar, M., Hussain, Z., Nazim, M. and Shabbir, R., 2021. Unlocking the sustainable production indicators: a novel tesco based fuzzy AHP approach. Cogent Business & Management. 8(1). p.1870807.
• Kim, J. and Loewenstein, J., 2021. Analogical encoding fosters ethical decision-making because improved knowledge of ethical principles increases moral awareness. Journal of Business Ethics. 172. pp.307-324.
• Mohanty, J., 2022. Sustainable Marketing of Csr Through Employee Volunteering: The Tesco Experience. Academy of Marketing Studies Journal. 26(S2).
• Trevino, L.K. and Nelson, A., 2021. Managing business ethics: Straight talk about how to do it right. John Wiley & Sons.
• ZXhang, Y.X., Haxo, Y.M. and Mat, Y.X., 2023. Analyzing Tesco PLC Stock: A Comprehensive Evaluation of Growth Potential and Investment Opportunities. AC Investment Research Journal. 220(44).

Online

• About Tesco Plc, 2023. Online. Available through: <https://www.tescoplc.com/>, <https://en.wikipedia.org/wiki/Tesco>