A Framework for Ethical Decision-Making: Tesco - Case Study Example

A Framework for Ethical Decision-Making Step 1: Identify Ethical Issues Clearly and objectively define the ethical issue or issues involved with this situation. Business Ethics in any organisation is defined as the study and philosophy of human conduct which emphasises on determining the rights or wrongs within the organisation. In addition, business ethics comprises the principles, values and standards that play a significant role in guiding the behaviours of people in the world of business. An organisation should intend to overcome any ethical issue that it faces while transacting their businesses in order to maintain the pace of growth in the development of business (Ferrell, 2010). In this paper the ethical issues witnessed by an organisation, i.e. Tesco, has been discussed. The main objective of the paper is to identify the ethical dilemmas faced by the organisation. It is worth mentioning that the ethical issues or problems that Tesco is facing, especially in UK market currently, is related with its improper displaying of the prices which eventually do not comply with all commercial laws, according to the National Consumer Agency (Independent, 2011). In lieu of this, Tesco’s labor relations also raised a noteworthy ethical issue for the organisation while transacting their business globally. The company looks after the factor towards sick pay of the employees in order to reduce absenteeism which further forced the company to face difficulties (Guardian News, 2011). Another significant ethical issue of Tesco lies with the way of its advertisements. The television advertising campaign promoting Tesco’s products showed an idle country’s view towards the consumers and the media as some pigs were wandering freely around the field which was considered to imply that the meat which are used for the company’s product comes from free range pigs and was considered to be a misleading one (Guardian News, 2011). Furthermore, the company also had to face a few difficulties in relation to health and safety aspects where Tesco was accused for causing unhygienic conditions that consequently resulted in severe diseases, such as pneumonia with the possibility effect the entire community at large (Guardian News, 2011). In accordance with, the company publicly apologised and felt very keen to comply with all the conditions which satisfy the planners (BBC, 2006). In relation to this, another significant issue faced by Tesco related with the waste management initiatives. The UK government had also criticised the company’s waste management techniques for the increasing amount of ravages thrown away by the British shoppers which included Tesco as well (BBC, 2008). Step 2: Clarify Personal and Professional Values Identify your personal values, professional values, and the values of others as they relate to the situation. Personal Values In relation to the labour issues faced by the organisation, having a control upon sick pay and reducing the rate of absenteeism can be termed as an unethical conduct of the company when considering the personal values. However, taking into account the organisation’s motive to reduce the rate of absenteeism rather than penalising the sick employees should not be accounted as unethical. On the similar context, the unethical advertising and pricing policies executed by the organisation can be depicted as strictly unethical from the personal value perspective. Professional Values It is worth mentioning that professional values depend largely on the organisation’s intention in conducting a particular operation while treating it as an unethical or an ethical issue. In this case, government has strictly criticised upon buy-one and get-one-free offers at the supermarkets existing in UK which is a significant concern for increasing the amount of food dumped on a daily basis. This major waste factor lays the foundation of ethical issues in UK markets which is an awaking concern for Tesco. In this context, television advertising campaigns executed by Tesco also raises an unethical issue in the professional significance point of view. Some pigs were shown in that particular advertisement wandering hither and thither which was considered to be a misleading one as it implied that the meat which are used for the preparation of sausages comes from free range pigs (Guardian News, 2011). This can be stated as a major unethical issue faced by Tesco in relation to the professional values. Values of Others Involved The values of others involved in the ethical dilemma faced by Tesco can be evidently demonstrated in view of the fact regarding health and safety issues towards the consumers. It has been recognised that one of the stores of Tesco was eventually closed after it was examined that the supermarket of Tesco was infested with live mice. The environmental officers, while executing their investigation also found dead mouse on the premises of the store. This was a major and significant ethical issue faced by Tesco in the year 2001 (RTE News, 2001). Furthermore, the permission for planning of Tesco was unfortunately refused by the respective officers after examining that a branch of Tesco supermarket in UK had built its store bigger than agreed plan indicating towards the eventual closure of the store (BBC News, 2006). In view of the interests of the society and the stakeholders of the company as the other members involved in the organisational operations of Tesco, it can be stated that these operations were certainly unethical and require major concern from their end. Step 3: Clarify Influencing Factors and Barriers Gather and review additional information from the practice setting and professional literature. Environmental Factors Environmental responsibility is one of the vital components of any business strategy as it not only helps the improvement of the surrounding environment, but it also wins the trust of communities and gains the respect from the government of respective countries in which a particular business operates. All businesses have several impacts upon the environment like emitting pollution and producing wastes and used resources. For instance, a mining company while executing its operations should be aware of the various environmental influencing factors. The factors include the area where the mine is located; it carries out its operations with utmost care and also tries to improve the lives of local people surrounding the area by minimising noises and polluting effects. In addition, into the wider region around the mining plant the company contributes financially to local communities and also helps to generate new businesses (Routledge, 2000). From the supermarkets point of view apart from any particular company, it has been one of the businesses where the significance of “green credentials” has become increasingly important. The strong concerns like plastic and packaging factors are growing immensely among the consumers. These supermarkets, including Tesco have realised that they must consider the environment related ethical credentials as well as price, availability and accessibility due to the fact that these factors create significant impression on consumers satisfaction and long term growth of the company as well (Routledge, 2000). credential Barriers Environment related trade barriers can have significant impact upon market access which is mainly dependent upon environmental regulations and standards, environmental labelling and economic instruments. In connection with environmental regulations, it can be understood that these measures are legally binding and relates to the composition, quality and performance of the product. Due to increasing concern over harmful substances, bans on products on environmental grounds are increasing day by day which is regarded as an environmental barrier towards Tesco (Khatun, 2009) The barriers in terms of environmental labelling which provides information to both producers and consumers regarding health and environmental impact of products also forces the organisation in taking initiatives in order to minimise the negative environmental impacts (Khatun, 2009). In this connection, some economic instruments like product charges and taxes may be imposed in order to discourage the production as well as consumption of products upon which the tax is levied. By considering this major issue, it can be regarded as an environmental barrier for the companies to execute their operations (Khatun, 2009). Step 4: Identify guiding ethical and legal principles. List professional standards of practice and laws related to the rights and obligations of all involved. Standards of Practice It is very much important for the employees of Tesco to adhere and follow the ethical guidelines while executing the assigned responsibilities. In this connection, Tesco’s business whether domestic or international is required to be conducted in compliance with all applicable laws and regulations. While complying with Accounting Controls and Procedures, Tesco does not permit the use of unrecorded funds or assets. All disclosures enclosed in reports and documents with other government authorities on behalf of Tesco have to be reasonable, precise, timely and understandable. The company is subjected to a range of laws in connection with the international trade along with the export of equipment’s and technology. In lieu of this, Tesco is subjected to U.S. trade laws and economic sanctions which deal with U.S. suppliers of goods and services. In order to ensure complying with all applicable laws, Tesco established certain policies and procedures with the intention of assessing as well as processing the cross-border contracts. Tesco also maintains its standard of practices from political point of view as the company do not intend to discourage the participation of employees in political and related activities (Tesco, 2004). Legal Guidelines & Principles The guidelines and principles that are usually used in retail food industry generally involve the application of control processes in the food chain ranging from primary production to consumption. In the current environment of food safety controls, it provides flexibility with some control measures and the validations of these measures have been witnessed to acquire huge acceptability in the global industries. A set of control measures have been adapted forming a food safety control system such as HACCP and GHP systems. With the establishment of these specialised systems, some important tasks have been carried out like identifying the hazards that are intended to be controlled in the commodity or environment concerned, with due consideration to all pertinent information which also includes risk assessment information. In this connection, one significant task executed by the organisation is to identify the food safety outcome which is essentially required to be determined. With this concern, a particular industry should determine if there are existing food safety outcomes or targets established by the competent authority supposed to be relevant to the intended use of the food. In addition, identifying the measures that are to be validated to the food business and also ensuring the conditions in the particular operation do not differ from the conditions under which the control measure was previously validated are considered within the principles of food safety (CAC/GL, 2007). Step 5: Analyse Alternatives. Consider all possible alternatives by analysing the ethical arguments for and against each action, as well as their possible outcomes. Option: Labor Relations Arguments for: According to Tesco, the unplanned absence of the labours has its impact upon its business and was intended towards developing strategies for maintaining low absenteeism rates and enhancing work opportunities for people in store. This certain strategy is likely to de-motivate the employees from being absent without a particular and authenticated reason. However, the provision to give compensations after the third day of sick leave which secures the interests of genuinely sick employees and thus cannot be referred as unethical in this context (Guardian News, 20011). Arguments against: The factors against this argument related to labor problems of Tesco identifies that the public sector workers are almost twice to be sick and if Tesco would have trailed the scheme on its existing workers instead of in new stores, then the company might have fallen into breach of violating contract rules which are executed before its business operation (Guardian News, 20011). Option: Advertisement Arguments for: For the promotion of a product, Tesco had executed a television advertising campaign which was misleading according to the perceptions of significant number of people. To a certain extent, it is not a misleading one because the company said that by adding the pigs which are used in the advertisement had been reared to the World Class Nationally Agreed Welfare Standards (Guardian News, 20011). Arguments against: The television advertisement of Tesco which showed the pigs were wandering here and there was a misleading one. It is so because the meat which was being used for the preparation of sausages are identified to be collected from free range pigs which was unacceptable by the UK populace and thus causing a barrier in terms of social aspects (Guardian News, 20011). Option: Planning Infringements Arguments for: Tesco has made a statement regarding its planning infringements publicly apologising and assuring to comply with all the conditions that the planners wish to see. In addition, Tesco also believed that their refusal of planning permission will not lead to eventual closure of the store. The company created nearly about 500 jobs in the area and provided training to approximately 120 unemployed people. Therefore, the company has the confidence that its staffs and regular shoppers will not have to suffer with their planning permission refusal (BBC News, 2011). Arguments against: The planning authorization of Tesco for one of its supermarket eventually was refused and rejected after it was observed that the store was made bigger than agreed. The planning officers found it larger for more than 20% of the agreed space and thus it was refused. The planning committee decided to shut down some portion of area until the issue was resolved (BBC News, 2006). Step 6: Find Common Ground Review alternatives, in an effort to gain consensus or compromise. Identify possible trade-offs. In order to face the challenges, difficulties and ethical dilemmas that usually arise while executing business operations domestically or internationally, Tesco will have to focus upon certain remedial measures or take some necessary factors concern for overcoming those difficulties or dilemmas. The success factor of any organisation, like Tesco, lies in the fact of branding products and reputation that the company holds. The company intends to be more competitive in terms of customer loyalty and in terms of the services that it provide to the community, especially labours, such as introducing fair wages payment, creating more employment opportunities and payment of compensation considering sick days among others (Ivory Research, 2011). In this connection, Tesco should also lay emphasis on the environmental factors as well. The company made much of its commitment towards the emission of harmful gases and also seeks to control over the energy consuming efficiency. Along with the environmental factors, the company should also concentrate on the health and safety issues of the food that the company manufactures which would reward it with better outcome in terms of customer satisfaction. In addition, the promotional factors like advertisement of the products should be broadcasted in such a way that bears a wide acceptance towards everyone in the society. It is one of the significant factors that a company would like to telecast its product in order to gain maximum results and achieve the desired goal of the business (Guardian News, 20011). In this connection, the company would also take the supplier management factor in order to overcome the dilemmas that it faces (Ivory Research, 2011). Step 7: Decide and Act. Document your decision and rationale. Create an action plan. Resolution For the development of the organisation and to achieve the desired goal of the business, Tesco would have to take keen interest upon the factors, such as resolving labor problems prevailing within the organisation, considerable pricing and proper advertising means of communication. It should also focus on maintaining a proper and smooth supplier management relationship and process by complying with the legal responsibilities possessed the organisation. The company also has to pay a severe attention towards the quality features maintaining proper implementation of food quality control measures so that in future the company can meet the various challenges in terms of ethical dilemmas. Rationale The labor problems could be a major issue as these key personnel are directly related with the production process of any organisation. With increase in these labor problems the company is most likely to witness reduced pace of growth. In addition, competitive but fair price of the products should be considered in order to meet the customers’ needs in the global market. In addition, proper means of advertisement for the promotion of the products performed by the company in order to achieve wider acceptances from the consumers should also be considered. In this context, maintaining smooth relationship with the suppliers is also necessary for Tesco to increase the pace of growth while executing its businesses. Action Plan An organisation should take some necessary action plans in order to cope up with the ethical issues that are usually faced by the organisation. Strong action plans, like integration with IT can be adopted as a central role in the business strategy formulation of Tesco. The organisation by using Internet as an IT tool customises the information flow through the company and its business partners. Furthermore, the plan of branding the products to facilitate better management and more efficient delivery of wide range of products to customers should be considered. In this connection, along with managing the supplier management relationship and applying upgraded technology in its communication and co-operation with the suppliers, the company should aim to control and improve the conditions in it supply chain processes. Step 8: Assess Outcomes. Evaluate both the process and outcomes of your ethical decision making in order to track creative solutions, unanticipated consequences, and overall satisfaction with the results of the plan of action by all of the parties involved. Creative Solutions Found After assessing all the solutions in order to cope up with the various ethical issues that are faced by the companies while transacting their businesses, some creative and innovative solutions were found to be highlighted. In this context, integration with latest IT practices which crucially plays a very significant role in business strategy formulation needs to be mentioned. Also the solution like supply chain management by maintaining proper and smooth relationship with the suppliers and also with the stakeholders is recognised to be a creative one in any organisation. In addition, maintaining and resolving labor problems through the introduction of various labor reward programmes were found to be motivated and creative one. Unanticipated Consequences Any organisation can face some unanticipated consequences like effect of climate that can happen at any time mainly in agricultural point of view. In this connection, natural disasters like flood, earthquakes and global warming can hamper in the business strategy formulation of any organisation. Also the consequences like strikes or rebellions from the labours’ point of view also counts for hampering the business environment of any particular organisation. Overall Satisfaction with Outcomes After implementing all the innovative and creative solutions by an organisation, the barriers or the difficulties faced by them certainly reduces the chances of losing its market position and can attain higher business growth into this competitive business world. The various factors that are considered for the successful running of a particular business should satisfy every individual including labours, employees, customers, suppliers and stakeholders. Furthermore, the result after implementing all these creative factors can assist in developing the business of a particular organisation into a strong position which can overcome any sort of dilemmas. In lieu of this, a particular organisation can develop and also attain consumers’ confidence which motivates them to expand their businesses both domestically or internationally. References Ferrell, L. & Et. Al., 2010. Ethical Decision Making and Cases. Cengage Learning. Independent, 2011. Tesco One Of Seven Firms Fined For Not Displaying Their Prices. National News. [Online] Available at: http://www.independent.ie/national-news/tesco-one-of-seven-firms-fined-for-not-displaying-their-prices-1435055.html [Accessed November 30, 2011]. Guardian News, 2011. Tesco Axes Sick Pay To Reduce 'Days Off' Cheats. Business. [Online] Available at: http://www.guardian.co.uk/business/2004/may/16/supermarkets.uknews [Accessed November 30, 201]. BBC News, 2006. Tesco Planning Permission Refused. [Online] Available at: http://news.bbc.co.uk/2/hi/uk_news/england/manchester/5342914.stm [Accessed November 30, 2011] BBC News, 2008. Get-One-Free Deals 'Boost Waste'. Politics. [Online] Available at: http://news.bbc.co.uk/2/hi/uk_news/politics/7365373.stm [Accessed November 30, 2011]. RTE News, 2001. Dublin Tesco Store Closed Due To Vermin Infestation. News. [Online] Available at: http://www.rte.ie/news/2001/0330/tesco.html [Accessed December 01, 2011]. Routledge, 2000. The Relationship between Business and Environment. Textbooks. [Online] Available at: http://cw.routledge.com/textbooks/9780415366311/resources/new-edition.pdf [Accessed December 01, 2011]. Khatun, 2009. Environment Related Trade Barriers. Centre for Policy Dialogue (CPD). Tesco Corp, 2004. Ethics and Business Conduct. Business Ethics Policy. [Online] Available at: http://www.tescocorp.com/data/1/rec_docs/173_20051017_Ethics_Policy.pdf [Accessed December 01, 2011]. CAC/GL, 2007. Guidelines for the Validation of Food Safety Control Measures. Tasks Prior To Validation of Control Measures. Ivory Resarch, 2011. Critical Success Factors. Strategic Management of Tesco Supermarket. [Online] Available at: http://www.ivoryresearch.com/sample5.php [Accessed December 01, 2011]. Bibliography Garsten, C. & Hernes, T., 2008. Ethical Dilemmas in Management. Taylor & Francis. Read More