I carried out a research on UK supermarkets’ social responsibilities and business ethics, I decided I will use Tesco plc for this assignment. The reason being Tesco has a wide range of policies regarding their supplier, customers, shareholders and the community.
“At Tesco, we aim to make a positive contribution to society. Our CSR programme builds on this commitment and is backed by our ‘Every Little Helps’ approach.” John Gardiner, chairman, Tesco
Tesco adopted both the agency theory and the stakeholder theory and it has the intelligent self-interest (Mullins 2002).
Tesco uses a combination approach of deontology, utilitarianism, teleology and egoism (Boddy 2002) to the ethical of the society.
An ethical assessment will consider the position of the staff, the nature and interrelationship of activities, product and service ranges, mixes and balances, relationships with the community and the environment.
Stakeholder is defined by Mullins (2002:145) as “individuals or groups who have an interest in and/or are affected by the goals, operations or activities of the organisation or the behaviour of its members”.
Stakeholders can be categorised into three main groups:
All stakeholder groups have influence throughout the organisation. These influences effect the organisational performance and their existence within its market sector.
Any organisation needs to take its stakeholders’ interests into account. A good balance of the decisions is vitally important, we can see how the influences have impact upon the organisation and any unbalance decision will affect the existence of the organisation.
“Creating value for customers, to earn their lifetime loyalty”
We can see from the above statement that Tesco concentrates on the long-term relationship with its customers. Tesco focused on providing exceptional value and choice for customers to ensure that they continue to grow market share.
Tesco had expended significantly in the past 10 years, it started in non-food retailing in 1997 and now Tesco is creating value on a wide range of products from grocery to financial services such as personal loan, home and motor insurance and credit card services.
From these evidences we can see Tesco is working very hard to follow its mission statement to achieve its goal.
Tesco combined the agency theory and the stakeholder theory (Mullins 2002) when they make any ethical decisions.
Milton Friedman’s view (Mullins 2002:148) suggested the agency theory is that “…the social responsibility of business is to make as much money as possible for the shareholders, within the rules of the game.”
Mullins (2002:149) defined the stakeholder theory is that “…a business is for its stakeholders and its actions should be designed to balance stakeholder interest.”
Tesco uses the agency theory to decide its main objective, it is to provide excellent goods and services to earn their customers’ loyalty. This will ensure their existence on the market and to maximise the shareholders’ investment. On the other hand, Tesco uses the stakeholder theory to act on behalf on its stakeholders interests, such as contribution towards the society, care for the environment and responsible to the supplier chain.
Tesco also uses a combination approach of deontology, utilitarianism, teleology and egoism (Boddy 2002) to the ethical of the society.
“Deontology is based on the idea that we are morally obliged to follow fundamental rules of thumb or principles. (Frankena 1963)” Fulop & Linstead (1999:339)
Part of the Tesco strategy of “Treat people how we like to be treated” uses the deontology approach to the ethics of the people, the policies are as follow:
Tesco acts only on those principles so that they are not only “Treat people how we like to be treated”, but also wish others to do the same.
“Utilitarianism judges the moral worth of actions by the utility of their foreseeable consequences for each and every person affected by a certain set of actions.” Fulop & Linstead (1999:339)
Tesco aims to be responsible in their commercial and trading activities. Tesco is a member of the Ethical Trade Initiative since it was founded in 1998, on top of that, it also supports the work of Fairtrade Foundation. They sell and promote Fairtrade production such as tea, coffee, banana and chocolate. Fairtrade Foundation was set to give better deal for third world producers, regardless of the world market conditions.
There are several reasons why Tesco uses the utilitarianism approach to the ethics of the society. First it wants to build a strong relationship with its supplier and to maintain their reputation within the market sector. From the result of having strong relationship with its suppliers, they will have a stable supply for its goods and services.
“It considers whether the outcome of an action accomplishes the original goal.” Boddy (2002:133)
Tesco uses the teleology approach to consider whether the outcomes achieve the original goals. Boddy (2002) suggested that if an act ensures the continuation of the organisation then it is right.
From Tesco’s mission statement we can see that the original goal for Tesco is to keep its market share and continue to grow within its market sector by creating value for its customers. It is obvious that Tesco is performance very well in its industry, they keep expanding their services and products (from grocery to financial services), which indicates the continue growth for Tesco.
“This is the ‘ethics of self-interest, claiming that personal or corporate benefit is the only rational criterion for judging economic actions.” Boddy (2002:133)
Tesco is a financial contributor to the Fund for the Replacement of Animals in Medical Experimentation (FRAME), and they are seeking ways to end animal testing. Tesco also carries out the Computers for Schools vouchers, which support local school to improve their computer equipments, to create a better learning environment for children. Tesco is a national sponsor of Cancer Research UK’s Race for Life, this is only part of the charity works that Tesco has, there is also a Tesco Charity Trust which helps local and national charities as well as voluntary organisations to provide practical support for children, the elderly, and people with disabilities.
Tesco uses this approach to take above actions to contribute towards the local community. Boddy (2002) suggested that if people follow this principle it will result in general good. Because of the contribution Tesco made (Computers for Schools vouchers and charity’s activities), customers are more happy to shop in Tesco because they are able to maximise their personal self-interest towards the society.
Tesco has a wide range of ethical policies to cover different areas, they include the following:
These are only a small selection of Tesco’s policies which I can find on its website, there are many more policies to cover different area of the ethical aspect. Since we are in a dynamic business world and there is no set policy can cover all changes, Tesco should expand its policies and to improve and maintain its reputation.
Survival or long-term performance is the main ethical duty of the organisation, its staff, customers, community and other stakeholders. For this to happen, a long-term view must be taken. Organisation must distinguish between right and wrong. It is necessary for the organisation to recognise the nature and legitimacy of the interests of the different stakeholder groups and interested parties, and to take steps to see that these are widely understood and satisfied as far as possible.
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