Business is a complex web of human relationships, ethics may be defined as the study of what is good or right for human beings (Hoffman & Frederick, 1995). Laura Nash gives an excellent introduction to the Business Ethics which is the study of how personal moral norms apply to the activities and goals of commercial enterprise. It is not a separate moral standard, but the study of how the business context poses its own unique problems for the moral person who acts as an agent of this system.
(Drummond & Bain, 1994).
Today, the topic of business ethics is acknowledged to pervade every area of the corporation just as it is a recurrent issue in the media. Corporate code of conduct are now the norm rather than the exception. Corporate leaders have become more vocal about their own commitment to ethical standards. Many a respected corporation has embarked on an organized attempt to encourage ethical conduct among its employees (Drummond & Bain, 1994).
Corporate social responsibility (CSR) has recently been the subject of increased academic attention.
While social responsibility has figured in commercial life over the centuries, in the modern era increasing pressure has been placed on corporations to play a more explicit role in the welfare of society (Balabanis, G. et al, 1998). Johnson and Scholes (2002) defined corporate social responsibility as a concern with the ways in which organisations exceed the minimum obligation to stakeholders specified through regulation and corporate governance. Tesco was founded in 1924 by Sir Jack Cohen and had earlier roots from selling groceries in London’s East End markets.
The first store to be opened was in 1929 in Burnt Oak, Edgware. In 1947 Tesco Stores (Holdings) Ltd was floated on the Stock Exchange, with a share price of 75p. The first Tesco self-service store was opened in St Albans in 1948. Tesco opened its first supermarket in 1956 in Malden. In the 1960’s, Tesco started to sell fresh food, clothing and household goods in addition to groceries and opened stores in high streets of towns across England. In the 60’s Tesco’s started to grow by acquisition of other stores. In the mid 1970’s the company started to sell petrol through petrol stations.
In the 1990s, Tesco started to expand its operations outside the UK into Eastern Europe. In 1992 Tesco opened its city center stores under the branding of Tesco Metro. In 1995 Tesco introduced the loyalty card and by the end of the 90’s diversified further into banking. In the year 2000, Tesco is Britain’s leading food retailer with 845 stores. It prides itself on quality, customer service and a customer-friendly environment (source from http://www.faircomment.com/company/companyhistory). Tesco is one of Britain’s leading food retailers and has 586 stores though out Great Britain. From 1992 Tesco has grown greatly and has increased its market share from 10.4% to 15.2%. This increase in customers has also given Tesco a large amount of profit.
Tesco has 164,500 shareholders. Tesco’s profit is about 505 million pounds after the tax has been deducted; about 50%of this is then distributed to the shareholders as dividends. The rest ruffly 250 million pounds is held back for investment in stores and improving services for the customers. The average shareholder holds between one and one thousand shares, but also a large amount of shares are held by banks, pension funds and building sercertys. Tesco’s share prices have risen since February 1997 when it was 349p to 586p on the 21st April 1998. The shares have peaked a high price of 603p. With this growth Tesco’s is now the largest super market chain. (source from http://www.courseworkbank.co.uk/coursework/tesco)
Then, what is a code of conduct? According to Freeman (1996) “It is usually much more developed than a code of ethics, making more specific statements which apply ethical principles to situations which may commonly arise in the practice of the profession in question”(Rodger, 1995, cited by Freeman, 1996). A code of conduct essentially instrumentalizes a code of ethics, making clear the applications of ethical concepts in everyday professional practice; it outlines “how to be professional”.
A prominent sociologist remarked that: “A code is one way of making explicit the values implicit in the idea of service” (Chadwick, 1993, cited by Freeman,1996). This buttresses public confidence, helps professional accountability and makes clear the core values of the profession. Of course, a code can be just a cosmetic exercise to reassure the public, or it can be a “socializing” mechanism for new members of the profession, a recognized tool for enhancing the profession’s status or even a type of professional manifesto (Freeman, 1996).
Mission statement and code of conduct of Tesco As such an organization, it is very important to Tesco in its CSR. Tesco is committed to CSR. This means making a positive contribution to local communities, being a good employer and minimising our environmental impact. Tesco’s mission is ” to continually increase value to customers to earn their lifetime loyalty”. To this end, Tesco is committed to working with its suppliers to meet customer demand better, faster and at lower cost. Tesco has an ethical code of conduct based on international norms. The company cooperates with NGOs and trade unions for their implementation.
The Tesco website states that Tesco is committed to conducting business in an ethically and socially responsible manner. Tesco has a commitment to be a good citizen acting responsibly wherever we operate, and this translates into a Code of Conduct for Suppliers, a Code of Ethics for staff, a commitment to protecting environment, using commercial strength to put principles into practice and a commitment to playing a positive role in community. (refer to appendix 6)
Tesco’s ethical principles Ethical principles which is basic rules the individual can examine its moral regulations and its judgment value. Ethical principles do not change, and staying constant by culture and national groups and for historical periods. (Handout of CSR, 2004). Tesco’s is Britains leading food retailer and has gained this position in the market throw giving good value and services to the customer. Even thow they are this successful they still are committed to their principles and values.
This is shown by the fact that since 1997 the company has been at the top of the “Christian Aid league table for Ethical Commendments”. For Tesco, to keep this top spot as the leading successful retailer, it has to take in to consideration the concerns of each sector of the community; such as its customers , staff , shareholders, supplies and the local people who live close by. All of these have ideas they want to see happen and so Tesco has to meet as many of these which are practical.
How Tesco is perceived by internal and external stakeholders. Stakeholder is every one that influenced from corporation decisions, policy and acts (Frederick, 1992, cited by Handout of CSR, 2004) and Every group that influence on the corporation or to be influenced by the corporation. (Evan ; Freeman, 1993, cited by Hand out of CSR, 2004). Johnson and Scholes (2002) defined stakeholders are those individuals or groups who depend on the organization to fulfill their own goals and on whom, in turn, the organization depends.
Tesco as the UK largest supermarket chain, the range of stakeholders is very board. This report will adopt the “Owners model – stakeholders” to analyze the relationship between the Tesco and its stakeholders. Owners model – stakeholders (Freeman, 1984, cited by Handout of CSR, 2004) is the theoretical frame to describe the organization and to evaluate the relationship system between the organization and the social surrounding; the model represents the organization as a reciprocal with variety groups and individuals that influence on organization acts or influenced by them or both.
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