Introduction
Tesco Plc is considered as the king of supermarkets in Britain. Its business is related to the small grocery stores under the Tesco Metro brand name, big supermarkets outside cities (Tesco Extra) and 24-hour stores. Its stores are not limited to food sector but also to provide books, CD/DVD/mini-discs, hi-fi and household appliances, household equipment, flowers, wine, apparel and many other items. In January 2003, Tesco takes over its key competitor in the British Territory, T & S Stores. Currently, it employed 270,800 fulltime employees worldwide. Tesco has adapted rapid technological changes to boost its sales. Such as its on-line sales site – Tesco.com, is now heavily contributing to its profits in recent years. The Group currently holds almost 1,988 stores in the UK and 1265 stores outside UK (Annual Report, 2007). Today, its market capitalization has reached £36.60 billion. (Reuters, 2007)
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Tesco plc is a British – based grocery and general merchandise international retail chain. It is the largest British retailer by global sales and domestic market share with profits exceeding £2 billion. In 2008, the company achieved German retail giant Metro AG to make the third largest retailer in the world, the first movement among the top five since 2003. Originally specializing in food, has diversified into areas such as clothing , consumer electronics , consumer financial services , retail selling and renting DVDs , CDs , music downloads , Internet service , consumer telecoms , consumer insurance , consumer dental plans and software .
Part 1: Project Objectives and overall research approach.
Tesco Background.
In 1919, Tesco Plc was established by Jack Cohen, by utilising the bonus which he achieved for his services in the World War I army. Then in 1924, he purchased a tea consignment from the company TE Stockwell. He decided to put the initial three alphabets of TE Stockwell and the initials of his name Cohen collectively to name his brand ‘TESCO’.
In 1929 Cohen opened the very first Tesco store in Edgware, London. Originally, Cohen’s formulated the strategy of “Piling it high, selling it cheap”. Despite the fact that this strategy assisted Tesco in attracting a great amount of consumers, it also assisted Tesco in branding itself as a store for average class consumers and even earned an image as a low-end store.
When Imperial Tobacco Company decided not to acquire Tesco because the company thought that the deal could damage its reputation, after considering of buying the company, Tesco’s brand image was further thrashed. Throughout the seventies, numerous analysts recommended the Tesco to transform the name of the company.
Tesco obtained several companies during the seventies such as Williamsons, Burnards, John Irwins, Harrow Stores, Victor Value and Charles Phillips. However, all these businesses were not incorporated appropriately with Tesco, and a large number of these stores were not well organised.
Furthermore, Tesco had small and poorly equipped stores as well. The only competitive edge Tesco had was the price. The products that were available at the store seemed to be of ordinary. Due to the rise in the income of customers in Britain, the customers did not want to look for bargains. They were now seeking high quality products.
In order to cater these changing demands of the customer, Tesco decided to close down its numerous stores to focus on superstores to provide improved quality.
Brief data & Aims and Objectives.
Tesco is one of the biggest food retailers in the world, functioning over 3,200 stores. The assembly is furthermore one of the biggest online food retailers.
The objective of this study is to investigate the Tesco’s business ethics and corporate social responsibility. The business analysis will be conducted through PEST analysis and SWOT analysis. The target is to have an analysis of Tesco’s corporate social responsibility policies including business ethics and their impact on its business practice and its key stakeholders.
Industry Activities.
Tesco is one of the biggest food retailers in the world and biggest food retailer in the UK. It functions round 3,300 stores. In supplement to food, it furthermore functions in the non food segment. The company functions through multiple shop formats encompassing Extra, Superstore, Metro, Express and hypermarkets. The company functions in three geographical segments: the UK, Rest of Europe and Asia. The organisation is one of the biggest online retailers in the world. Tesco has a long period strategy for development, founded on four key parts: development in the Core UK, to expand by increasing internationally, to be as powerful in non-food as in food and to pursue clients into new retailing services.
Tesco is undoubtedly an entire shopping centre in itself. Everything is literally discovered in one roof. No longer restricted to food shop pieces, it boasts services that would permit a consumer to avail of everything in one stop. Besides the additional trading of publications, cds, digital melodies, videos, blossoms, sport and gardening they furthermore supply economic services (e.g. borrowing cards, borrowings, mortgages, savings) protection services (e.g. vehicle, house, life, travel) telecoms services (e.g. Internet, residence and wireless phone) and wholesome household services (through its Tesco eDiets and wholesome household club) .Tesco has evolved diverse types of Tesco shops extending from Tesco Extra, Metro Tesco and Tesco Express in its extending quest to correctly address the desires of their diverse clients when and where they desire it.
According to information gleaned from the web, the British retail group Tesco returns in recent weeks, an image blurring. It symbolizes the many facets of the reputation of a company facing a diverse audience, especially in times of crisis.
Like many entrepreneurs, the boss of the group, Sir Terry Leahy, is firmly committed to the greenway, including offering reusable bags, which allowed him to avoid the production of 2 billion bags plastic.
Tesco is also involved in the Global Social Compliance Programme (Global Social Compliance, GSCP), an initiative of distribution groups, which involves Carrefour. Created in 2006, the GSCP is to converge in terms of their supply chain standards for social audits, share best practices and contribute to the improvement of working conditions. The platform intends to issue a single message, consistent and shared based on ILO standards and the UN to all suppliers. She met 26 companies including Carrefour. GSCP’s Advisory Council is composed of the International Federation of Human Rights, the UNI Commerce, CSR Asia and the UN Office for International Partnerships. Although this initiative is not under ground, it remains unknown to the general public.
In addition, the group Tesco, which has 280,000 employees in Britain, has actively supported Marie Curie Care Centre, giving him 6.3 million pounds, twice more than expected. This sum is intended to fund over 315,000 hours of nursing care to more than 5,600 terminally ill patients and their families, all at home. Some £ 500,000 has been collected outside of Tesco stores, 2 million pounds were lifted further by the store staff, £ 500,000 by the distribution centre employees and the remainder from the rest of the group. The Tesco Charity Trust. The Tesco Charity Trust has brought its side 20% of the amount raised by staff. Yet, at virtually the same period, the website of UNI Global Union deals with social conflict in a Tesco supermarket in Douglas, Ireland, in which the union intervenes Mandate.
Moreover, Greenpeace believes that Tesco, Marks and Spencer but are complicit in the Amazonian deforestation by importing Brazilian beef. This breeding would have dramatic consequences for biodiversity and global warming. According to an AFP dispatch, other multinationals, major commodity in this region, are singled out: Adidas, BMW, Carrefour, Ford, Honda, Gucci, IKEA, Kraft, Toyota and Wal-Mart.
Faced with such a stream of positive news or disturbing, it appears that a company that cares about its reputation must advance on all fronts at the same time taking into account all its stakeholders, the difficulty being that they are extremely diverse for a group the size of Tesco.
Part 2: Information gathering and accounting/business techniques.
This study is established on both primary as well as secondary data. The study methodology utilised is the review of diverse literatures which are accessible online. This study engaged investigations from the brief reports, items from periodicals, and online material accessible on the web. Using the methodology checked in preceding investigations, this study started with a very broad review of the literature. The outcome and deductions are founded on the secondary data.
The methodology utilised for the purpose of this study is established on the secondary data. This study is more or less founded on the review of publications and the reasonings are drawn on the cornerstone of genuine assets recorded in the references. Financial facts and numbers will be accumulated from the yearly accounts of Tesco.
Primary data is mainly obtained through the annual report of Tesco 2010 which is available online. Primary data assemblage is essential when a investigator will not find the data required in secondary sources. Market researchers are involved in prime facts and figures about demographic/socioeconomic characteristics, attitudes/opinions/interests, awareness/knowledge, aims, motivation, and behavior. Three basic means of obtaining prime facts and figures are observation, surveys, and experiments. The alternative will be leveraged by the environment of the difficulty and by the accessibility of time and money.
Examples encompass reviews, meetings, facts, and ethnographic research. Agood investigator knows how to use both prime and secondary causes in her writing and to integrate them in a cohesive fashion.
An important source of primary data is survey research. The various kinds of surveys (personal, posted letters, computer, and telephone), are described ahead. Experiments are another significant source of data for trading research tasks. The environment of experimentation, the types of untested designs, and the uses and limitations of this procedure of getting data are furthermore clarified ahead. Experiments are conducted in either a laboratory setting (most advertising exact replicate pretests) or in a field setting (test marketing). Electronic and computer technologies have revolutionized both these environments, which are recounted later.
Conducting prime research is a helpful ability to come by as it can substantially supplement study in lesser causes, such as periodicals, publications, or books. Primary study is an very good ability to learn as it can be useful in a kind of backgrounds encompassing business, personal, and academic.
The secondary data that are accessible are somewhat quick and cheap to get, especially now that computerized bibliographic search services and databases are available. The various sources of the lesser facts and figures and how they can be obtained and utilised are described ahead.
Tesco provides an inclusive offer. It describes Tesco’s ambition to cater its customers of top, middle and low income in the same stores. Tesco has invented a reward system known as the Club-card which collects the essential consumer data that is used to provide specific service to cater the needs and potential wants of consumer. When shoppers sign up for the Club-card, they initially submit their profile which includes gender, age and address. Tesco could divide their customers into segments by relying on these aspects. The information of the goods purchased is instantly uploaded into Tesco’s database the minute the consumer purchases it. Product information was used to sell cross-sell additional products and services such as delivery of groceries.
Beginning in 1997 when Terry Leahy took over as CEO, Tesco began marketing itself to using the phrase “the way to Tesco” to describe the purposes, values, principles, and goals of the foundation of the company. This phrase became the standard marketing speak for Tesco as it expands nationally and internationally under Leahy’s leadership, implying a change in the company to focus on people, customers and employees.
Corporate social responsibility (CSR) can be defined as the active and voluntary contribution to improving social, economic and environmental factors by companies, usually with the aim of improving its competitive position and its value . The performance evaluation system throughout the organization in these areas is known as the triple bottom line.
Under this concept of administration and management encompasses a set of practices, strategies and business management systems that seek a new balance between economic, social and environmental. The history of CSR can be traced back to the nineteenth century under the Cooperatives and Associations who sought to reconcile business efficiency with social principles of democracy, self-help, community support and distributive justice. Its leading exponents are now companies social economy , by definition Socially Responsible Companies.
Corporate social responsibility (CSR) aims for excellence within the company, taking with special attention to people and their working conditions and the quality of their production processes. Corporate social responsibility is the set of actions that take into account the companies so that their activities have a positive impact on society and affirm their principles and values that govern both in their own internal methods and processes in its relationship with other actors. CSR is a voluntary initiative.
It is the conscious and consistent commitment to comply fully with the mission of the company both internally, and externally, considering the expectations of all participants in the economic, human and social environment, demonstrating respect for ethical values, people, communities and the environment and to build the common good. The responsible management of the company implies that this act reconcile (balance point) between business interests and expectations that it is the community (particularly its stakeholders-stakeholders)
The main ethical responsibilities of business with the workers and the community are:
Serve the society with useful and fair.
Create wealth in the most effective way possible.
Respect human rights to decent working conditions that promote health and safety and human development and professional workers.
Ensure the continuity of the company and, if possible, to achieve reasonable growth.
Respect the environment wherever possible avoiding any kind of pollution minimizing waste generation and more efficient use of natural resources and energy.
Enforced laws, regulations, rules and customs, while respecting the legitimate contracts and commitments.
Ensure equitable distribution of wealth generated.
Business ethics and therefore business morality generally result from an individual’s own moral standards in the context of the political and cultural environment in which the organization is operating. Ethics are founded on moral principles that are themselves grounded in effects. This holds true whether you subscribe to the idea that a moral judgment must fulfill only formal conditions that are universal and prescriptive or whether you think it must also meet a material condition for the welfare of society as a whole.
Social responsibility, another term for good citizenship, means producing sound products or reliable services that don’t threaten the environment and contributing positively to the social, political and economic health of society. It also means compensating employees fairly and treating them justly, regardless of the cultural environment in which you operate.
Corporate social responsibility (CSR) is a concept that describes the activities of companies beyond revenue; the term is increasingly used to describe the role of any business in society. CSR involves a wide commitment by companies to social health and the common good and policies that support them. This involves not only the products a company produces, but also be a good corporate citizen in terms of employees hired and how to find them. It also has to do with protecting the environment and participating in the local community and the wider culture in which the company engages in business.
Broadly speaking, CSR has three key components:
• The basic values, ethics, policies, and practices of a company’s business;
• The voluntary contributions made by a company to community development;
• The management of environmental and social issues within the value chain by the company and its business partners-from the acquisition and production of raw materials, through the welfare of staff, to product sale, use, and disposal.
Part 3: Results, Analysis, Conclusions and Recommendations.
This part discusses the corporate social responsibility initiatives of Tesco and its impact on the internal and external environment of the company. It details the activities undertaken by Tesco’s management and employees to contribute to the benefit of the society and the community in which the company operates.
It also discusses the active role played by Tesco in protecting and regenerating the environment and in extending the CSR initiatives to its suppliers.
It also highlights a few criticisms against Tesco including polluting the environment in some countries and not adhering to its CSR standards.
Issues:
Examine a company’s responsibility towards the society
Understand the importance of social and environmental issues
Determine how a company’s stand on social and environmental issues can contribute to enhancing the company’s image
Benefits of Corporate Social Responsibility
In the last decade, a large number of companies have recognized the benefits of incorporating basic practices and social responsibility policies. Their experiences have been backed by a series of empirical studies that show that the RS has positive impacts on business values, measured in several ways. Companies have also been encouraged to adopt or expand efforts of RS as a result of pressure from consumers, providers, community, investors, activist organizations and other stakeholders.
As a result of studies in recent years, the RS has increased dramatically in companies of all sizes and sectors that have developed innovative strategies.
These benefits are numerous and can be measured both quantitatively and qualitatively, is also found that the company may enjoy greater loyalty from consumers, employees work more comfortable, the shares have greater stability, and saves costs potential legal and administrative sanctions.
The advantages found are:
• Financial Performance Improvement
The study published in 1999, Business and Society Review, showed that 300 large corporations found that companies that made a public commitment to honor their code of ethics, performance showed a three times higher than those who did not, on the parameter value added in the market.
In another recent study by Harvard University found that companies with a balanced action between employees and shareholders showed a growth rate four times higher and employment growth rate eight times higher than those of companies focused only to shareholders.
• Reducing Operating Costs
There are several initiatives that can help a company reduce its operating costs and increase productivity, particularly those related to the environment and the workplace. By way of example are: programs for balance between personal life and work to help reduce absenteeism and increase employee retention as well as allow companies to reduce costs in recruitment and training or retraining initiatives aimed at eliminating scrap costs and generates revenue through the sale of materials.
There are several practical examples of significant environmental savings. For example, Dow Chemical Co. and the National Resource Defense Council established an alliance in order to reduce the production of 26 toxic chemicals to only one. For this reason they have managed to save 5.4 million a year, and as an added benefit the quality of their products.
• Improved brand image and reputation
In the global economy, brand image and reputation are among the most valued strengths. Responsible marketing practices, by nature, are highly visible to consumers and have the potential to strengthen or weaken the public’s opinion about a company or brand.
• Capital Markets
The latter continue to grow at high rates in most developed countries have begun to grow in developing countries.
• Innovation
Socially responsible organizations have an innate tendency to innovation in products and processes, which helps them to anticipate events allowing lead changes in the composition of their products, improve quality and human security of their production processes, improve security and quality of domestic activity, ahead of the competition in the launch of new products, the implementation of different types of future legal regulations, etc.
Corporate social responsibility: the internal dimension
The views that are considered to fall within the internal dimension, the company has under Social Responsibility (SR), are: human resources management, health and safety at work, adapt to change and environmental impact and management of natural resources.
• Human resources management:
When it comes to RS the first thing you think is that a company be socially responsible before the society or community in which it resides, it must be with the employees taking into account that one of the biggest challenges is to have people trained and sense of belonging in this context the company should include measures such as lifelong learning, improving the information on the company, a better balance between work, family and distraction, greater human resource diversity, equal pay and prospects opportunities for women, participation in profits or shareholder of the company and the consideration of employability and safety in the workplace.
Another way to be socially responsible is when you discriminate against persons because of race, color or sex, responsibility and accounting practices that help meet the country’s economic policies such as employment generation.
• Health and safety in the workplace:
Usually the health and safety have been addressed from a legal standpoint, but now companies, governments and sectoral organizations seek new ways to penetrate and promote this issue, especially now that both companies and consumers are more sensitive to values and ethical issues related to the production process.
This and other practices such as SA8000 Certification which will be detailed in the next article help the company to be socially responsible.
• Adapting to change:
Any country suffers when companies are restructuring because of manpower cuts can generate economic and social crisis of great magnitude, but the community suggests that a restructuring from the point of view socially responsible means to balance and take into account the interests and concerns of all affected by the changes and decisions.
• Management of environmental impacts and natural resources:
The corporate social responsibility is closely related to the environmental impact generated by the proposed objectives and that directly affect communities.
Therefore the environmental field can be considered as a solid framework for the promotion of corporate social responsibility.
Corporate social responsibility: the external dimension
The company should be socially responsible with local communities, business partners, suppliers, customers, employees, shareholders and the environment among others.
• Local communities:
The corporate social responsibility with local communities to be expressed in:
1. Integration of the companies in their local environment.
2. Contribution to community development in terms of employment generation.
3. Establishment of training commitments of the community, environmental conservation, and procurement of socially excluded people, caring for children in daycare, sponsoring cultural and sports activities at the local level, donations to charity.
4. Participation in social welfare projects.
• Business partners, suppliers and consumers:
Relationships with partners, suppliers and consumers are especially important for businesses, thereby reducing costs and increasing quality. The main features to be emphasized as the relationship with partners, suppliers and consumers are:
1. Large companies are both partners of the smaller companies either, as customers, suppliers, contractors and competitors.
2. Companies are aware that their social performance can be affected by the practices of their partners and suppliers throughout the production chain.
3. The companies are responsible for promoting entrepreneurship in its location, for example, tutoring, or assistance provided to small businesses for their contribution to social responsibility and reporting. They also support small businesses with venture capital, facilitating their expansion.
• Human rights:
As for human rights companies ensure that their trading partners are respecting the values they considered essential and what is the approach to be taken and how to work in countries where there are frequent violations of human rights.
Although companies establish codes of conduct for the respect of human rights, labor conditions and environmental factors must be taken into account that they are no substitute for national and international laws, nor the provincial and municipal.
• Global environmental problems:
Because environmental problems have reached beyond the boundaries and that companies are directly related to and with the consumption of resources in the world, it is important to begin a drive to reduce the environmental impact of its activities throughout production chain.
The stakeholder’s perspective.
In much of the twentieth century, proper responsibility for the wider impacts of business, has been social. Recently, it was recognized that the concept of stakeholders has a central role.
In this perspective, each organization will have different stakeholders: for companies, their stakeholders they typically include consumers, suppliers, shareholders and staff from a wide range of other, for governments, organizations can include employers, unions and NGOs.
As you increase the influence of key stakeholders-oriented companies will be the adoption of corporate responsibility deeper and more solid.
The detailed discussion of these issues highlighted the following aspects:
• The leadership role in promoting a set of core values in business.
• The need to ensure that Corporate Social Responsibility is an integral part of the overall business
• To consider CSR as essential philosophy
• The importance of “follow the process properly,” that is, through transparency and consultations.
An analysis of stakeholders, recognize that shareholders are always among the most important stakeholders of corporations. In recent years, however, its role has been changing in two ways:
• First, for most shareholders, the importance of organizational governance has become an increasingly pressing issue, and
• second, the volume of socially responsible investment (SRI), which can be defined as investment for social goals and financial, has grown rapidly in recent years.
TESCO’s CSR Approach
Once a year, the board of directors of Tesco Plc consider the company’s strategy of corporate social responsibility and the review of the overall performance on this subject is discussed after every three months. Members of the board and the executives of the company receive review on corporate social responsibility performance, due to which the company can assess future opportunities and risks.
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In 2001 the company established the Corporate Responsibility committee which encompasses of cross functional executive. These executives meet several times in a year to discuss the matter of corporate social responsibility of the company. The first corporate social responsibility report was published in 2001 by the Corporate Responsibility committee. The committee used Steering Wheel framework of Tesco evaluate its accomplishment of Corporate Social Responsibility performance. Corporate Social Responsibility is a crucial part of the Tesco’s steering wheel framework so as to to guarantee that CSR is a crucial part of the everyday performance of the company.
Environmental Responsibility
Tesco has always realised that strategies that may pose harm to the environment should not be a part of the company. These sort of strategies would have a negative impact on the company’s image and may result in damaging the brand name, the clients and the environment as a whole. Conserving the environment is an important part of Tesco’s corporate strategy as it is believed to be associated with the company’s economic goal.
Nevertheless, Tesco has made sure to commit itself to maintain an environment which is healthy for everyone. Tesco has made all workers to play an dynamic part in its initiatives towards healthy environmental.
Energy, Water and Fuel
In 1996, Tesco initiated a campaign where it provides awareness towards energy consumption. The employees were expected to play a dynamic role in it. Managers in all Tesco depots, stores and offices supervised energy consumption and put an effort in reducing waste. During 1997 and 2005, Tesco’s energy consumption reduced 35% per square foot. Tesco is planning to further reduce it by 5% by the year 2006.
Societal Responsibility
As Tesco is large in size and it has huge scale of operations, it was able to impact the society on a large scale in numerous ways, through encouragement of its staff and consumers in order to achieve social responsibility. Tesco implemented numerous programmes to achieve social responsibility. These responsibilities include fund raising, charity for a foundation and to promote education. Tesco believed that it had a key part to play in order to promote healthy food for its consumers and struggled to make sure that healthy food is accessible at reasonable charges. These inititives were not only for the UK but were made available for other countries where Tesco was originated.
Communities
Tesco donated one percent of its before tax profit to charity, in the form of gifts and donations. In the year 2004 and 2005, the company’s total donations as charity were around 21,762,931 pound. The company’s charitable trust granted donations of 878,556 pounds to local and national charitable organisations in Britain.
Economic Responsibility
Tesco has taken great initiatives to achieve the economic growth and development in all the localities around the world. Tesco has played a dynamic role in reducing unemployment, supply of products at reasonable prices and giving opportunities to the community to grow and expand.
Regeneration
Tesco deliberately moved into areas with high unemployment and low development to trigger growth, and to make the areas commercially attractive.
In 6 years duration, Tesco has helped in providi
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