3.2. 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.
(source from http://www.courseworkbank.co.uk/coursework/tesco_report_1780/)
4. 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. Also,
- Reciprocal system makes moral responsibility towards stakeholders.
- The firm have moral responsibility towards stakeholders in the firm activity. Including: workers, suppliers and customers etc.
- Manager role is to ensure the right balance between different interests.
- Viewing manager responsibility is not quantitative but quality.
In fact, the relation between organization and its stakeholders, influence or benefit is two way not one way.
4.1. External stakeholders
Tesco with a external policy which is Tesco participates in the Ethical Trading Initiative and The Fair Trade Foundation. The company insists that suppliers respect the ILO conventions. Tesco has an official policy in relation to animal testing and GMOs. In its policy on establishing new branches, Tesco takes social aspects into account, such as the creation of employment for those with a low level of education and the regeneration of economically deprived regions
(http://www.ethibel.org/profile/uk/tesco_en.html)
Community
Communities especially local communities has positive attitude toward Tesco. Tesco is committed to supporting its local communities. To underline their belief that "Every Little Helps", they support projects and initiatives at store level which give practical benefits to children, education, people with disabilities and the elderly. After working with the Royal National Institute for the Blind (RNIB) Tesco.com has launched its new accessible shopping website “access”. Tesco’s regeneration schemes aim to bring together public services, employers and community groups to yield social, economic and environmental change in deprived urban areas.
Government
As the largest supermarket chain, Tesco has good relationship with government and be support by government. However, it is also be audited by government. “Tesco shows an average sustainability performance in its industry group. Tesco management capabilities in the economic dimension are average in comparison to its industry. In the environmental dimension, Tesco scored more or less equal to the industry average. Moreover in the social dimension, Tesco performance was in the range of the industry average.” (Jonathan Refoy, Corporate Affairs Manager,2002)
Customers
For every organization, customer is very important, to Tesco, it is not exceptant. Tesco serve over 12 million customers every week. Customer focus is key to Tesco’s CSR strategy, the resiponsibility of Tesco is to deliver safe, good quality products, the right price for all customers. Tesco also provide access to good quality fresh food at affordable prices in communities across UK, and its value line range provides everyday items at unbeatable prices and helps customers on a budget. Customers perceive Tesco also for the convenience of Tesco opening time is 24 hours. As a brand — Tesco, it has been widely kwon by customers especially in the UK. Tesco’s core purpose is to create value for customers to earn their life loyalty and which is supported by its values: Understand customers better than anyone; be energetic, be innovative and be first for customers; use Tesco’s strength to deliver unbeatable value to its customers and look after its people so they can look after customers.
Competitors
As the largest supermarket chain in the UK, Tesco use fair, unethical competition strategy with its competitors, regards its competitors are competitive partner. Tesco supports the work of the Fairtrade Foundation, which give a better deal for third world producers, and guarantees small producers in third world a fair price, regardless of international market condition.
Suppliers
Tesco has several thousand supplies in the UK and which is the biggest customer of UK suppliers. Tesco work with its suppliers to find innovative ways of improving the way the Tesco work. In 2001, the Department of Trade and Industry (DTI) introduced a Supermarketss’ Code of Practice to regulate trading relationships between the four largest UK supermarkets and their suppliers. Tesco is a signatory to the Code and has met its obligations for implementing the code fully. Tesco and its suppliers run Producer Club for livestock farmers and produce growers to share information on customers trends and improve communication.
4.2. Internal stakeholders
Tesco with a internal social policy. In recent years, Tesco has created a large number of new jobs and opportunities have been given to people with a low level of education, in collaboration with local job centres. In the sector, Tesco is one of the companies which makes the biggest investments in training and courses. Absenteeism and industrial accidents are low because of a good health and safety policy. The cooperation agreement with the trade unions is promoted by the British government as a model for other companies. (http://www.ethibel.org/profile/uk/tesco_en.html)
Workers
Looking after staff because staff is the best asset of an organization. Tesco aimes to be a good employer, attracting and retaining the best staff and making Tesco a rewarding place to work. Tesco aim to make Tesco a satisfying place to work by giving its staff the opportunity to be themselves, actively encouraging their health and well-being and supporting their work/life balance needs. Tesco is committed to upholding basic Human Rights and supports in full the United Nations Universal Declaration of Human Rights and the International Labour Organisation Core Conventions. Such as:
- We will treat all employees fairly and honestly regardless of where they work
- We will pay a fair wage reflecting the local markets and conditions
- Working hours shall not be excessive.
- We will not employ illegal child labour, forced or bonded labour or condone illegal child labour, forced or unpaid overtime.
- We provide a safe working environment for our employees by minimising foreseeable risks in the workplace. All employees receive regular health and safety training.
- We provide proper governance for health and safety. Tesco shall abide by the non-discrimination laws of every country where it operates. It does not discriminate unfairly on any basis.
- We will not use, or condone the use of corporal punishment, mental or physical coercion or verbal abuse.
- We ensure that our store security arrangements do not infringe Human Rights and are consistent with international standards for law enforcement, etc.
Shareholders
From 1992 Tesco has grown greatly and has increased its market share from 10.4% to 15.2%. Tesco has 164,500 shareholders, over half of Tesco’s stuff – 122,000 people are shareholders in Tesco. 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.
Others
In 2002, Tesco gave away 273 million Computers for Schools vouchers and 1,000 new schools can spend their vouchers on ICT equipment or save them up for the following year. The Tesco Charity Trust was set up in 1987, and which aims to help local and national charities, as well as voluntary support for children, the elderly and people with disabilities. Since 1987 Tesco has raised over 21 million pounds for a variety of charities. The Tesco Charity of the Year for 2003 is Barnardo’s.
Tesco also recognizes that it has a responsibility to contribute to the capabilities of tomorrow’s work force.
Tesco has a environmental policy. Tesco is certainly not a leader with respect to its environmental policy. Nevertheless, the policy is comprehensive and integrated in the general activities. The management system focuses on restricting energy consumption, the use of raw materials and the choice of Nature Choice suppliers. There are no certificated branches. Tesco is one of the few British companies which achieved the recom-mendations of the environmental summit in Kyoto in the field of rational energy consumption and the reduction of greenhouse gases. For example, the company developed a comprehensive programme to replace all its freezers with CFC and HCFC-free models.
Tesco is committed to protecting the environment by doing what they can to reduce their impact. Tesco aim to use its commercial strength to put sustainable environmental principles into practice, both within its own operations and through the sharing of good practice with its suppliers. Tesco’s environment programme saved the equivalent of 1.9 million trees and recycling. Tesco recycling scheme has succeeded in recycling 350,000 phones and 35,000 inkjet cartridges, raising over 1 million pounds for charity and they recycled over 18 million Christmas cards for the Woodland Trust.
(All above part 4 source come from Tesco website, Tesco CSR Report 2003/2003, and http://www.ethibel.org/profile/uk/tesco_en.html )
All Tesco stakeholders are influenced by factors of CSR, especially suppliers, employees and communities. However, whether Tesco is ethical in its business activities and carry on with its code of conduct, from above discussion Tesco is suit the Stakeholder model which is ethical. The following part report will more discuss whether Tesco is really ethical in its relationship to stakeholders, and also use Stakeholders model.
5. How ethical is Tesco in its relationship to stakeholders?
A various issues have been discussed, according to stakeholders model and some main issues, the relationship to the stakeholders has not been responsible.
Many groups and individuals related to the firm through: 1, Power to influence on performance. 2, Got intreast in the firm acts (Freeman 1998, Donaldson & Preston 1995, Jones 1995, cited by Handout of CSR,2004). Also, the firm have moral responsibility towards stakeholders in the firm activities (Freeman, 1984, cited by Handout of CSR, 2004). Moreover, Tesco has its code of conduct.
With suppliers: In 1999, Tesco became the second British retailer in history, after Marks and Spencer, to post profits in excess of £1 billion. The biggest supermarket retailer in the UK is making around £3 million in profit a day, and accounts for 25 per cent of grocery sales in Britain. Some consumer and farming groups reacted angrily to the news, with the National Consumer Protection Council calling for price cuts to be passed on to Tesco's customers.
The Small and Family Farms Alliance accusing the retail giant of being a "new baronial class". The NFU supported the company, saying that farmers had to work with the retailers, not to "go to war" against them. Farm incomes have dropped by a third in the past 5 years. The Liberal Democrats have called for the establishment of an independent retail regulator.
Then a argument in the UK. This indicate Tesco was unethical with its suppliers. In 2001, the Department of Trade and Industry (DTI) introduced a Supermarketss’ Code of Practice to regulate trading relationships between the four largest UK supermarkets and their suppliers.
A news on 20, February 2004 -- Trading code failed small firms. Food and drink companies supplying Britain's biggest supermarkets say a code of practice designed to give them a stronger voice has failed, according to a report from the Office of Fair Trading (OFT) published today. The vast majority of suppliers and trade associations which took part in the OFT review thought the way firms were treated by supermarkets (include Tesco) was the same as before the code's introduction in March 2002. But Tesco said: “We are supportive of the supplier code of conduct and welcome publication of the OFT report. We have not received any complaints under the code and work positively with our suppliers to develop good long-term relationships. We will continue to co-operate with the OFT”. Friend with the Earth on 20 April 2004 said Tesco treats British farmers unfairly and things are getting worse. According to the Competition Commission's report on supermarkets in 2000. Tesco paid the lowest prices to suppliers. Although a Supermarket Code of Practice was introduced in 2002 to stop unfair trading practices, the Competition Commission and Office of Fair Trading have found that it has made no difference to the way in which Tesco operates. In fact things have got worse for Tesco suppliers – in 2003 the Competition Commission's report on Safeway said that suppliers said their negotiating strength with Tesco had been `much reduced' over the last four years. (refer to appendix 2, appendix 3, appendix 4 and appendix 5)
Also, on 9 January 2002 BBC news “Farmers set to blockade Tesco”, Militant farmers plan to protest against Tesco after the supermarket chain refused a meeting to discuss the prices it pays them for produce. (refer to appendix 1)
With Employees: Tesco squeezes overseas suppliers leading to uncertain jobs and poor conditions for workers. Recent research by Oxfam in South Africa revealed how "Tesco loads many of the costs and risks of its fresh-produce business onto farmers, who are passing them on to workers - especially women - in the form of precarious employment". Oxfam found that women working for supermarket suppliers were struggling to make ends meet to feed their children, most got no paid sick leave or maternity leave and many had to work in poor conditions without protective clothing. (refer to appendix 2)
With Competitors: Tesco's dominance puts smaller shops out of business. Tesco now controls 27% of the grocery market and is increasing its share of sales of non-food goods. In 2000, the Competition Commission warned that the massive buyer power of the big supermarkets made it hard for smaller shops to compete. But now Tesco has been allowed to expand further by taking over chains of high street convenience stores creating a new threat to local stores. One local trader in Withensea, North Yorkshire, called on the Office of Fair Trading to intervene when Tesco opened a store nearby and cut prices by 40%, saying that Tesco was trying to put him out of business. If Tesco's growth continues unchecked consumers will soon be left with little choice of where to shop. (refer to appendix 2)
In Environment: Tesco has been found to be selling furniture from illegally logged timber. Last year Tesco was found to be selling tropical wood garden furniture made from illegally sourced Indonesian timber. Tesco was thrown off the WWF `1995 Plus Group' of which it had been a member for eight years, supposedly committing the company to buying timber products independently certified by the Forest Stewardship Council as legal and sustainable. Illegal logging causes major social and environmental damage, fuelling corruption and organized crime. (refer to appendix 2)
According the code of conduct of Tesco (2002/2003) and Stakeholders model (Freeman, 1984), does Tesco suit stakeholders model and carry on its social responsibilities listed in its social responsibility report?
6. Conclusion:
Through above analyzing Tesco’s CSR/ethics in its business operation, it is clear that Tesco is not fit the Owners Model – Stakeholders, in a other word, Tesco is not ethical in its relationship to stakeholders. Although, Tesco has a perfect CSR report with more than one code of conduct, and, in fact, Tesco also really contributed a lot of social responsibility, especially to local communities and charity and got many award.
Becoming an respected ethical company, Tesco still has a long journey to go. Which require Tesco not only has a good CSR report but also according it to do. Someone ever said ethical means “Trust me”, the author suggest Tesco that “ Show me” is more important than “ trust me” in its future days.
7. References
Cannon, T. (1994) Corporate Responsibility, UK, Pitman Publishing
Balabanis, G., Philips, H. C. and Lyall, J. (1998) “Corporate social responsibility and economic performance in the top British companies: are they linked?”, European Business Review, 98:1, 25-44
Drummond, J and Bain, B. (1994) Managing Business Ethics, UK, Butterworth-Heinemann Ltd
Freeman, M. (1996), “living by the code: some issues surrounding a code of conduct for the LIS profession”, New Library World, 97:5, 17-21
Johnson, G. and Scholes, K. (2002) Exploring Corporate Strategy (6th), England, Person Education Limited.
Handout of CSR, (2004), Derby Business School
History of Tesco (online) (cited 2 May 2004) Available from URL: http://www.courseworkbank.co.uk/coursework/tesco_report_1780/
Hoffman, W. M. and Frederick, R. E. (1995) Business Ethics (3rd),
Importance in Business (online) (cited 2 May 2004) Available from URL: http://www.bsr.org/CSRResources/IssueBriefDetail.cfm?DocumentID=199
CSR theory and News about Tesco materials (online) (cited 2 May 2004) Available from URL: http://www.tesco.com/
http://www.foe.co.uk/resource/press_releases/tesco_profits_at_whose_exp_20042004.html
http://www.article13.com/A13_ContentList.asp?strAction=GetPublication&PNID=494
http://www.ethibel.org/profile/uk/tesco_en.html
http://www.rip-off.co.uk/food.htm
http://www.mail-archive.com/[email protected]/msg00294.html
http://www.thisismoney.com/20040220/nm74629.html
8. Bibliography:
Chrysside, G. and Kaler, J (1996), Essentials of Business Ethics, England, McGraw-Hill Book Company Europe
Chrysside, G. and Kaler, J (1995), An introduction to Business Ethics (2nd), London, Chapamn & Hall
Pearson, G. (1995), Integrity in Organizations – An alternative Business Ethics, England, McGraw-Hill Book Company Europe
