Tesco - the Role of Stakeholders within Corporate Social Responsibility - Case Study Example

Critically Discuss the Role of Stakeholders within CSR Using an Example from a Contemporary Business Organisation Table of Contents Table of Contents2 Introduction 3 Company Overview 3 Corporate Culture of Tesco 4 Corporate Social Responsibility of Tesco 5 Role of Stakeholders in Respect to CSR 8 Critical Analysis 9 Conclusion 12 References 14 Introduction Corporate Social Responsibility (CSR) is a policy or regulation, which expresses the responsibility of the company towards the society. In other word it can be stated that CSR is a responsibility of the enterprises towards the society and its customers. To generate the impact of the CSR policy upon the society the company should follow some ethical, social policies and environmental protection policies as well. It also describes that the continuous commitment by the business entities to contribute in the economic development is also referred to be a part of the CSR. The main objective of the CSR is to develop the work forces and improve the quality of life of the people and their families. Another name for CSR is Corporate Citizenship, which is defined to be a management concept of the company. This concept helps the business organisation to maintain the balance between economical, social and environmental imperatives. Therefore, it can also be stated that CSR is a holistic approach towards the society and environment. This holistic and integrated approach has been maintained by the core business strategies (PWC, 2013). Company Overview Tesco PLC is one of the world’s largest retail companies. It is a multinational grocery company, which is headquartered in England, United Kingdom. Tesco is the world’s number one retail outlet brand on the basis of earning profit and second as per the earning of revenue. Tesco was initiated in the year1919 by Jack Cohen. Initially, Tesco was small in size, but now it is the world’s largest retail outlets and warehouses. In the present day, the company has raised several product segments and have become a global brand. The aim of the company is to promote good quality products throughout the globe at an affordable price (Tesco PLC, 2014). The objective of the paper is to evaluate the role of stakeholders within CSR. In this article, the roles and responsibility of Tesco in respect to CSR will be highlighted. The study describes the importance of CSR in a company. Corporate Culture of Tesco Tesco’s performance has been quite impressive in the current phenomenon. Tesco gives high emphasis over maintaining its corporate culture. Each stakeholder is involved in the process of improving the company’s performance. Correspondingly, it can be argued that its emphasis to implement effective CSR strategies have been a major strength to the company for retaining as well as assuring greater stakeholder satisfaction. Explaining theoretically, CSR is simply referred to the strategies adopted by companies to bridge the gaps between its competencies to serve the stakeholders and the stakeholders’ expectations (Rahman, 2011). It is in this context that aimed at influencing the behavioural, motivational, economic as well as social needs of its stakeholders, Tesco has been able to suffice their expectations to an extent, which in turn has rewarded the company with a better sustainable position. The main objective of Tesco is to establish a work environment, which is based upon the trust and respect between its employee and customers. Tesco continuously tries to deliver motivation to its employees and manage them to provide excellent services to its customers. Tesco has developed a performance framework, which can assist the company to measure the performance of its employees. This performance framework provides the company a right direction towards working performance. The performance management framework will provide an outline, which explains the key strategic objective of the company. The performance management framework by Tesco will drive the organisation towards success. The other name of the performance management framework is the ‘Corporate Steering Wheel’ (Advanced Performance Institute, 2009). The key feature of the ‘Corporate Steering Wheel’ is that it is an easy and one of the simplest frameworks. This framework includes several aspects and the attributer of an organization. The framework will cover the financial perspective, customer’s perspective, community perspective, operational perspective and people perspective. It has been stated that community perspective and people perspective are mainly developed for maintaining the CSR activities of the company in the long run. The main intension of including the community perspective in the corporate starring wheel is to make a good relationship with the local community. In this regard, it can be stated that Tesco has been maintaining a friendly relationship with its stake holders to overcome all the challenges. This will help the company to continue its business in a long run position (Advanced Performance Institute, 2009). Corporate Social Responsibility of Tesco The CSR practice of Tesco is an important part of its corporate cultural structure. It can be stated that Tesco has taken the CSR initiative, which includes the legal generation of projects, handling several community issuers and being environmentally conscious. Apart from this Tesco mainly focuses upon the recycling of the product, initiates towards using organics products and systematic use of energy, and other resources. Tesco has also started some charity and communal help to maintain its responsibility towards the society through its additional services. By the initiative of Tesco towards the CSR it can influence large society and its employees to being socially and environmentally responsible. The major job of Tesco is to promote the health foods amid the people. The main aim of the company is to deliver healthy foods to its customers and make it available to the other customers in an affordable price. The invention of affordable healthy foods by Tesco will help the poor people and those people who suffering from malnutrition. The company has increased its several operational activities, which helps the company to fulfil all its duties towards society and environment. To fulfil all the responsibilities Tesco has taken the ingenuities from the past few years (Tesco, 2014). Currently, CSR is considered to an important attribute for every company. In the era of globalization, CSR is becoming significant for every company in the long run. In this context, it can be stated that with the advent of globalization the CSR activities has become International Corporate Social Responsibility (ICSR). The practices of ICSR in the organisation leads the company to the higher level of profits, which operated by the human resource management. By the evaluation of the CSR performance of Tesco, it has been observed that Tesco has paid more focus upon the external activities, which are related to social, communal and environmental activities. The main initiative by Tesco is to look after the environmental issues that are being faced by people throughout. Tesco as a part of the CSR activity provided computers to the Schools where the students can use those computers for their educational purpose. There is another outstanding initiative that has been taken by Tesco, which is one of the good influences towards the society. Tesco has taken initiative towards those people who do not have training or knowledge of working. Tesco trained those untrained people and provide them jobs to the new stores. This initiative is known as ‘regeneration’. The external responsibilities of Tesco towards the environment are to make an efficient use of natural resources. Tesco has decided to use the energy efficient products for its business and started practicing recycling of the products. The internal responsibility of the company towards the employees is to increase the safety facility that can help the employee’s to lead a healthy life. Tesco has raised the employment diversity to recruit new employees in the organisation and increase the occupational pension schemes for employees (European Foundation for the Improvement of Living and Working Conditions, 2003). The CSR responsibilities by Tesco includes the environment, community, ethical trading with its suppliers and many more. Tesco has majorly contributed over the educational field in terms of fulfilling the social responsibilities. Tesco mainly helps those children who have difficulties with speaking and writing languages. Tesco tries to help these children to provide them better education in their life. Tesco has established a cultural community centre, which helps the needy students by offering them scholarship programmes. Tesco supported several schools by providing computers and new technologies. This support by Tesco towards the society enhances the goodwill of the company in the global market considerably. Tesco has also established a charitable trust where Tesco will support some backward class people and establish good relationship with them. In order to develop the lifestyles of backwards classes people Tesco has initiated certain responsibilities by providing charities to them. The charity trust of Tesco provided some facilities to its customers and employees by providing health services, medical services, health facilities and other services to its employees and customers. In order to protect the environment Tesco has taken some initiatives towards the environment protection act. Tesco has started using recycle products to emit the risks of scarcity of resources. To maintain the balance between social and ecological balance Tesco has started focusing upon resource planning and waste management. Tesco also initiated upon the animal welfare, green transport and travel and vehicle efficiency. The wild life welfare is one of the most impressionable steps taken by the company’s towards social responsibility. In order to maintain the safety facilities for its entire employees Tesco has come into partnership with the Union of Shop, Distributive and Allied Workers (USDAW), which has been paired by the Trade Union Congress (TUC). Tesco entered into partnerships with TUC for building up better safety facilities for its employees (European Foundation for the Improvement of Living and Working Conditions, 2003). Role of Stakeholders in Respect to CSR The increase in the CSR activities throughout the globe has improved several CSR practices and has made it more effective for the working environment. The role of the stakeholder in a company is very important. In this context, it has been stated that CSR activities and stakeholders’ activities are interconnected for the benefit of the society and the company. According to a Tesco, shareholders are e very important for the company. Shareholders of a public limited company mainly seeks for high rate of profits, if the company fails to achieve the profits, the stakeholders will create pressure upon the management. In order to maintain the corporate social responsibility the stakeholders of Tesco has been planning to invest in the Social Responsibility Investment (SRI), which implies that the stake holders are investing in the developmental process of society. This can be stated that there are few responsibilities of stakeholders regarding the CSR practices (Jones & et. al., 2007).In this context it is worth mentioning that few activities of shareholders affects the companies CSR activities. The elements of CSR activities of stakeholders are ethical and economical. The main responsibility of the stakeholders of Tesco is to work in a legal way. The stakeholders of Tesco have decided to impose all the civil litigation in their working culture. The important factor of a company is the stake holders who are the business partners, suppliers, and consumers. In respect to maintaining the corporate social responsibilities the stakeholders sometimes decides to negotiate with the cost price of the products. The suppliers and the business partners have agreed and decided to contribute 1% of their pre tax profit in the form of charity. Tesco has decided to establish a human rights department for delivering the quality to its labour and employees. Tesco as a part of CSR activities with the help and support of its employees and stakeholders have decided to support the small businesses by providing them adequate training and entrepreneur tutoring for the future benefit of the small businesses. Tesco has been providing support to the small business by offering venture capital for its expansion. The stakeholders of Tesco have decided to prepare the codes of conducts for its business partners and try to maintain all the ethical issues. It has been stated that the stakeholders and Tesco has decided to include NGO’s and employee unions in their organisation. By the evaluation of several responsibilities of the stakeholders of Tesco it has been knowledgeable that the principals and the ethical values are strictly followed by them (Tesco PLC, 2012). The ethical values are considered to be the most important factor which the Tesco and its stake holders by taking into the consideration the corporate governance. The ethical activity is considered to work with moral behaviour in an organization. Tesco has been planning to prepare a team which provides the management and stakeholders ethical advices for maintaining the corporate social responsibilities towards the society. Tesco has been planning to launch written codes regarding the ethics and standards regarding the working cultural. The stakeholders of Tesco have decided to supply suitable raw material for its production process. Tesco and its stakeholders are to follow the ethical trading which is legally approved for the long term sustainability (Razaq & et. al., 2013). Critical Analysis By analysing the corporate culture of Tesco it can be stated that the CSR activity of the Tesco is very efficient and effective. It can be sated that the Tesco has taken several initiates towards the fulfilment of CSR activities for the benefit of the company and the society at large. This has been also noticed that Tesco in its CSR activities has been setting a milestone for its competitors. CSR activities of Tesco have a good and positive impact for the company as the local communities and people are rating it to be the best. Local communities value every stores and business of Tesco as a good entrepreneur due to their social activities. Contextually, Tesco have a sound goodwill among its customers, but it has faced several challenges in terms of fulfilling its ethical responsibilities towards the customers. The economic instability has raised the labour cost, which has become the major reason of rising prices. In this context, it can be stated that Tesco has helped its customers by providing them the support to lead a healthy life. Tesco has launched a range of healthy food and organic foods for the healthy life of the people. Tesco through its various product ranges and low prices supported people as well as children to fight against malnutrition (Ivey Management Services, 2009). In other hand the suppliers of Tesco has been complaining for the unethical trading facilities of Tesco. However, Tesco has claimed that they provide and practice ethical trade practices. The suppliers stated that Tesco has paid them less in respect to their real payment for the material supplied. In respect to this complain of suppliers Tesco stated that the suppliers are charging more for the well packaged and fresh fruits. The fresh fruits that are supplied by the suppliers include labour cost as well as package expenses. In this regard, Tesco states the price to be overcharged as it includes other variable costs. Tesco has denied for paying the extra expenses to the suppliers. This argument for non payment of labour cost has created dissatisfaction among the farmers. This has been observed that the management always create pressure upon the farmers for providing the fresh and quality products but they are not providing with their real payment. This practise is considered to be an unethical practice of Tesco (Cochius, 2006). Another loophole has been found about the Tesco is that it has hired employees in terms of temporary basis, which indicated that its employees are not employed in Tesco on permanent basis. The production department of the company is facing several problems due to lack of permanent employees. As the company is not hiring permanent suppliers for the vegetable and fruits, it is also creating problems and lack of permanent employment in the society as well. Tesco often fails to fulfil some CSR policies in its operational activities (Kdramastars.com, 2014). It can be critically reviewed that the Tesco should be more responsible regarding maintaining the relationship with its stakeholders, business partners, government and investors. This can be apparently stated that the unethical activities, which have been practiced by the Tesco, will lead to disappointment. This disappointment will decree the goodwill of the company, which will be considered as a huge loss in market share. Tesco needs the contemporary improvements in its ethical approaches. In this context, it can be stated that the contemporary development will help Tesco to concentre more on the over the ethical activities for the long term sustainability of the business. The positive side of Tesco’s CSR activities is that it has highlighted its commitment towards the local community. Tesco has tried to maintain good relationship with its local and global suppliers in its tenure, which will work as a safeguard for the company’s future business activities (Bather & Tucker, 2011). CSR initiatives may also refer to a situation where the firms participate in activities moving beyond their defined periphery of working area. These activities can further be related to the social responsibilities of any firm, which in turn leads to a sustainable development of the company. It is in this context that the interests of CSR have increased substantially among managers of multinational and multi-dimensional companies such as Tesco (McWilliams & et. al., 2005). However, implications of CSR have been under scrutiny by various theorists wherein many have also argued on the cons of such initiatives, overlapping its advantages overall. For instance, Scherer & Palazzo (2011) have been arguing that CSR raises complexities in organisational flow of operations, especially in the short-run, demanding for increased investment of time, cost as well as managerial efforts. In addition, return from CSR is a long-term phenomenon, which might not be quite relevant when dealing with short-run challenges or limitations. When considering the example of Tesco, a similar notion becomes evident wherein the long followed CSR activities of the company are helping it in yielding returns currently. Through CSR activities, Tesco has been highly efficient for to preserve its growth in the current day context. The Tesco has also taken some measures towards establishing the green business practices, which has however been much cost intensive during the short-run, which in case of smaller organisations, could have been a serious challenge. Nevertheless, to ensure its efficiency within this context, the organisation has also taken measures to gain cost efficiency in managing and utilising its resources for more sustainable returns (Eurofound, 2014). Conclusion By the study of several CSR activities of the Tesco it can be concluded that the Tesco is well efficient in maintaining the ethical activities in the core business environment. It can be stated the CSR is an integral part of the business. Behind the success of Tesco the responsibility of the CSR practices is huge. The long term commitment towards the society and environment seems to be a vital factor for the company. It has also been stated that the Tesco well efficiently maintains its all legal and ethical obligations towards the business. This efficient activity of the company will helps to endure its business for long term activity. By reviewing the CSR practices of Tesco it can be stated that after the invention of ICSR the Tesco has also developed its CSR activities as per the international basis. There are several good effects, which have been seen in the working process of Tesco. The CSR activities are also having positive and negative points. However, there are few bad effects of Tesco, which has created a bad impression upon the world and affected its goodwill. This can be also stated that the several CSR activities by Tesco are having a huge positive impact upon its business. In the modern organisation such as Tesco the impact of the corporate social responsibility is very essential. This will bring out several developments in the social and in the corporate world. The development in the social and environmental activity will lead Tesco towards the development of the business world. Though Tesco has hired employees as temporary basis but it increases the employment proceeds in the society. The other positive point of Tesco’s CSR activities are that it contributes towards the education of the children and provides training. These facilities will increase the literacy rate of the society. This has concluded that the Tesco is one of the leading companies, which provides effective and a good CSR practices towards the society. It has been also stated that to improve the work performance of the all employees Tesco has initiated and launched a corporate framework, which will be a good and effective performance appraisal process for the company. References Baker, M., 2012. Consumer Relationships: Tesco - Know Thy Stakeholder. Consumer Relationships. [Online] Available at: http://www.ethicalcorp.com/stakeholder-engagement/consumer-relationships-tesco-know-thy-stakeholder [Accessed November 21, 2014]. Bather, A. & Tucker, R., 2011. Legitimacy Theory and a Compliance Analysis of Tesco’s 2008 Business Review. International Review of Business Research Papers, Vol. 7. 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