Ethical Issue of Tesco with Its Suppliers - Essay Example

?Discuss The Ethical Issues Surrounding Tesco’s Relationships with Its Suppliers Table of Contents Introduction 3 Prevailing Relationship of Tesco with Its Suppliers 3 Ethical Issue of Tesco with Its Suppliers 5 Conclusion 8 References 9 Introduction Tesco PLC is determined to be dedicated towards maintaining high standards of business practices by following certain key rules and regulations. The board of directors of Tesco espoused ethics in their mission to promote fair conducts, dealings and accuracy in their dealings with the stakeholders to avoid ethical issues. Business ethics is of relevance for the organisation to maintain the values of the company in accordance with the key suppliers to avoid issues along with ensuring quality products for the customers. For the business to progress by maintaining high ethical values, the organisation shares its values with the suppliers. The sharing of same values helps in building a strong relation and standard with the suppliers, which in turn assists in increasing the efficiency of the company and maximise profit. The company focuses on ethical trading training and ethical policy for its suppliers. This course facilitates in evaluating the standard of Tesco, raise awareness on ethics and build confidence in the suppliers to follow the ethics (Tesco, 2012; Tesco PLC, n.d.). The study deals with evaluating the ethical issues surrounding Tesco’s relationships with its suppliers. The issues of the suppliers are evaluated based on the differences in keeping with the values of Tesco. Prevailing Relationship of Tesco with Its Suppliers Tesco maintains a strong and mutual relation with its suppliers by replicating a specified code of conduct which focuses on fair trading. The quality control check is done by the company before adopting the suppliers as a member of the organisation. Tesco expects their suppliers to be dynamic and provide fair dealing to ensure quality. The success of Tesco depends on its suppliers who strive to maintain ethical norms in supplying quality products to its customers. Tesco promises the customers to provide foods from the suppliers who are certified and maintain animal welfare. The core value of Tesco which is followed by every supplier is “no-one tries harder for customers’ and ‘treat people how we like to be treated” (Tesco PLC, 2008). Moreover, Tesco works with suppliers who are dedicated to the ETI Base Code and refer to the specified values. The ethical training code followed by Tesco states that employment should be chosen freely. The authority to collective bargaining must be valued. The working condition provided must be safe and no discrimination would be followed by the company in its supply chain. The supplier must be provided with regular orders and the product supplied must be of high quality. Also, no harsh behaviour would be conducted with the suppliers and all the ethical norms would be followed to ensure safety. There are certain guidelines which are to be adhered to by the Tesco’s stakeholders to maintain reputation. The code of business and principles to be adhered by the stakeholders include compliance with the law, honesty and integrity as well as to maintain compliance with the accounting procedures to avoid conflict of interest. Tesco believes all their employees and suppliers to work for their interest (Tesco, 2004). The commitment of the suppliers towards the company ensures a better standard for Tesco. Tesco has a knowledge hub which is the largest collaboration of the supply chain. It has nearly 700 suppliers as the members of the knowledge hub to ensure ethics and knowledge sharing. The commitment of Tesco is to develop deeper sustainable relationship with the suppliers. Tesco enriches the feedback of the suppliers to understand their viewpoint, and hence ascertains high standard of products with innovation. Moreover, to maintain a good healthy relationship with the supplier, Tesco supports them in overcoming the social complex issues. This ascertains a strong ethical bond in the supply chain (Tesco PLC, 2012). Tesco demonstrates that the strong relation with the supplier is based on the efficient, fair and mutually beneficial long-term association. This enables Tesco to provide customised and good quality products to the customers and gain profit (Tesco PLC, 2012). Ethical Issue of Tesco with Its Suppliers The issues of Tesco with its suppliers are based of conflict of interest and misconduct. For instance, a few suppliers of Tesco complained that they were not being allowed to increase prices, as Tesco did not want to augment the price of their products. Moreover, the aim of Tesco to provide their customers with ‘unbeatable price’ was hampering the farmers’ level of profitability along with turning them to be bankrupt. This conflict of interest between the management and the suppliers was the reason for such unethical instances. The value of Tesco was questioned by the suppliers as they were being dominated by the management and no mutual consent was taken as per the norms of Tesco. The behaviour of Tesco displayed their lack of concern towards their suppliers as they were deemed to be focussed more towards their customers. This management style exhibited the autocratic approach wherein the management takes decision for the success of its business. This conflict of interest caused the ethical issues with its suppliers (Hall, 2008; Rensselaer Polytechnic Institute, 2013). The impact of such instance was widespread as the company for its benefit was curbing the rights of the farmers and the suppliers. The ethical trading concept was being misled as suppliers were not given the required justice or credit for their work. In addition, Tesco suppliers were alleged of adding to the destruction of Amazon rainforest by following unethical practices. The issue emerged with regard to the environment and noncompliance of the law in dealing with the supply of products from the suppliers. As the consumption of the meat and beef was increasing in British, as reported from the supermarket of Tesco, the demand for the raw material also escalated. As per the report of the environmental group, the beef which was being canned by Tesco was from the ranches and lands that are carved out from the reach of local people. The supply of beef was the cause of the destruction along with affecting the brand name of Tesco. The code of ethics followed between Tesco and supplier was not being maintained. The suppliers in order to meet the demand were violating the ethical pledge of the company and leading to the misconduct of resources. The unethical practices followed by the supplier were becoming the concern for Tesco as it was hampering the reputation of the organisation. This practice from the supplier of using dishonest means was not only hampering the business reputation but was also hampering the environment and the society (Harvey, 2012). This event exhibited the non-adherence of the social ethics by Tesco because of the illegal acts of the suppliers. The ethical norms of transparency and honesty of the company towards their loyal customers were getting destroyed because of unethical approaches. Moreover, the ethical issue faced between the supplier and Tesco was predominant as suppliers accused Tesco of using tactics which breached the code of conduct of the supermarket. The reason for the outburst was that the suppliers were asked to pay ?22,000 to ?750,000 as the profit level of Tesco was not achieved as expected (William Reed Business Media, 2013). In this instance, the Supermarket Code of Practise was not being followed which depicts that the suppliers were not allowed to cover the shortfall of the company. This unethical practice from the end of the management disrupted the smooth functioning of the company and the supply chain. It subsequently affected the mind-set of the suppliers and influenced them at times to supply products which were not of good quality. The business ethics followed by Tesco in this event was against the ethical and moral values of any organisation. This was the case of mere dominance of the company over the supplier. The loss of the company was being recovered by considering the unethical means which were not the code of practice of Tesco. Such behaviour of Tesco might have led the supplier to provide products which are not meeting the standards of the organisation. Furthermore, one of the major suppliers of Tesco, Bowes was found to practise unethical conducts while supplying materials such as pork bacon and meat. The condition of the animals was taped in a video. The animals were struggling to move and few were suffering from infections. The practise was observed in Attlesborough who supply thousand kilograms of meat to Tesco. The video depicted the violence of the ethical norms, which was hampering the reputation of the company. This incident created a negative impact on the customer and the management of Tesco as their values were being cheated by the suppliers. This made the customer think that Tesco was acting unethically for their gain and this led to losses for the company (Barnett & Wasley, 2003). This issue faced between Tesco and its supplier was affecting the brand image of the company along with impacting the quality of the products due to the misconduct or differences in interests. Correspondingly, supply chain management was getting affected due to the indifferent attitude which led to the wastage of the products. The sole reason for the disruption and controversy regarding the organisation was due to the misjudgement and unethical practice between the management and the suppliers. Due to all these reasons, Tesco in recent years has often been unable to meet the ethical trading norms (Blowfield, 1999; SIPTU, 2012) Correspondingly, all these issues affected ethical values of Tesco’s operations. In order to mitigate the issues and recover its reputation in the market, Tesco has adopted various policies. Tesco has implemented policies related to healthy living, reducing waste, ensuring high quality product along with in supply chain to manage future ethical issues. Moreover, to assess the ethical operations in trading with the suppliers, an independent auditor was appointed. The agendas related to the ethical norms would be considered in the annual meeting to avoid such issues in future (Muspratt, 2007). Conclusion Ethical consideration amid the stakeholders has been ascertained to be an important constituent as it facilitates the business in building its reputation and brand image. Tesco being one of the leading global retailers needs to adhere to the business ethics for the smooth functioning of the organisation. In order to maintain quality and market position, the organisation and the supplier need to have a good ethical and mutual relationship among them. The key reason for the determined issues between the two entities had been non-adherence to the strict policies and quality control measures by Tesco. Both the supplier and the management rely on each other for meeting their own objectives and thus unethical conducts between the two would result in loss for both. Consequently, the need for dynamic suppliers and positive responses from the organisation can be possible by abiding by ethical practices in the business. This would lead to satisfied customers and profit for both and help in the success and growth of the organisation along with the stakeholders. References Blowfield, M., 1999. Ethical Trade: A Review of Developments and Issues. Third World Quarterly, Vol. 20, No. 4, pp. 1-28. Barnett, A. & Wasley, A., 2003. Revealed: Horror At Tesco Pig Farm. Guardian News. [Online] Available at: http://www.theguardian.com/uk/2003/oct/19/foodanddrink.animalwelfare [Accessed November 28, 2013]. Harvey, F., 2012. Tesco Supplier Accused of Contributing To Amazon Rainforest Destruction. The Guardian News. [Online] Available at: http://www.theguardian.com/environment/2012/jun/06/tesco-supplier-amazon-rainforest-destruction [Accessed November 28, 2013]. Hall, J., 2008. Tesco 'Curbs' Its Suppliers' Prices. The Telegraph. [Online] Available at: http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/2783800/Tesco-curbs-its-suppliers-prices.html [Accessed November 28, 2013]. Muspratt, C., 2007. Investor Puts Ethics On Tesco's Agenda. The Telegraph. [Online] Available at: http://www.telegraph.co.uk/finance/markets/2808987/Investor-puts-ethics-on-Tescos-agenda.html [Accessed November 28, 2013]. Rensselaer Polytechnic Institute, 2013. Management Styles. Business Structure. [Online] Available at: http://www.rpi.edu/dept/advising/free_enterprise/business_structures/management_styles.htm [Accessed November 28, 2013]. SIPTU, 2012. Tesco Fails To Meet Commitments On Ethical Trading. Press Release. [Online] Available at: http://www.siptu.ie/media/pressreleases2012/fullstory_15487_en.html [Accessed November 28, 2013]. Tesco, 2012. Tesco Corporation. Code of Business Conduct and Ethics, pp. 1-8. Tesco, 2004. Tesco Corporation. Business Ethics Policy, pp. 1-15. Tesco PLC, No Date. Ethical Trading At Tesco. Tesco Plc. [Online] Available at: http://www.tescoplc.com/site/library/policiesandfactsheets/ethical-trading-at-tesco.htm [Accessed November 28, 2013]. Tesco PLC, 2008. Our Suppliers and Ethical Trading. Corporate Responsibility Review, pp. 1-29. Tesco PLC, 2012. Tesco. Corporate Responsibility Review, pp. 2-19. William Reed Business Media, 2013. Suppliers Say Tesco Tactics Are In Breach Of Code Of Practice. Article. [Online] Available at: http://www.thegrocer.co.uk/companies/suppliers-say-tesco-tactics-are-in-breach-of-code-of-practice/202951.article [Accessed November 28, 2013]. Read More