Business Ethics

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There are many social implications that affect Tesco, in the way they operate. There are many risks Tesco are willing to take for them to remain one of the biggest retailers in the world. By doing this they may do it in an unethical way, not only in the UK but also around the world.

Recently Tesco were caught in a bribery case. To compete with other retailers in Turkey, Tesco want to expand their empire all over Turkey. They were caught up in a political scandal, Tesco paid an entrepreneur to buy land for them, but the person paid local politicians extra money on the side so that they could speed up planning permission plans, it is believed Tesco paid the person extra so that he could offer them a bribe. This is not very ethical but also this could be negative press for Tesco in Turkey, where they hope to expand even further.

Tesco to continue with reign of being number one retailer in the UK, they now, they must have a good relationship with the government. By doing this, they can ask them anything such as planning permission in certain places or if a village did not want a Tesco to be opened, they could still go ahead and open up a new store. This kind of power, other retailers do not have and this is why Tesco keep expanding even further and growing stronger. In 2003 Tesco denied they made any contributions to any political parties, but we now otherwise. During 2003 they paid out 4,713, sponsoring the labour party for political events (14,368), the Conservative Party (5,502), Liberal Democrat Party (340), Plaid Cymru (1,300), Fianna Fail (1,203) and Usdaw 6,000). They paid out more money than any retailer in that year, just so that they kept a good relationship with the political parties.

As Tesco keep ever expanding, they try to open up a new store in areas they know they can make money. Operating this way can be unethical to local competitors, as they cannot compete with Tesco, such as price or the availability of certain products they can offer to their customers. In some parts of Britain, where Tesco have opened new stores or expanded old ones, local business have seen sales go way down or even have had to shut down. Recently in Suffolk a local town said no to a new Tesco opening as they knew this would affect the local economy. They had heard how other towns that had a new Tesco open in their area, felt their presence and had to shut down their stores because of prices that they simply could not compete with. With the recent recession you cannot blame customers trying to find the best deals.

Production of prices, one of the main areas Tesco thrive in, it’s a subject that Tesco have been questioned if ethics ever came to them when producing products for such low prices. Recently Asda slashed their prices down of milk to 1.25 for a four pint bottle. So Tesco realized they had to compete with this, also brought their milk prices down. By doing this unethically, this is affecting the local dairy farmers. Tesco are saying to them, they want the same quality at lower prices, and Tesco know that because they order in such bulk they won’t argue over the deal. This is the power that Tesco have over other retailers. This is defiantly beneficial to the customers but to the dairy farmers they are struggling to cope. They also know if they were to say no them, Tesco would take their business elsewhere, in result they would lose a huge loss in sales and even go out of business.

Tesco’s yearly payment to their executives has also been questioned by four corporate governance lobbying groups, and they have urged investors to vote against the company’s remuneration report. They said payments to their executives were excessive and that it should be reduced. This is very unethical of Tesco to offer one of their executives 10 million pounds a year but also offer him very cheap or free shares. A Tesco store is probably in every city in the UK, so they come in contact with the local communities a lot. So the way they operate, it can affect the community in many ways, normally this would be a negative effect as many local businesses cannot compete with a big co-operation like Tesco.

Communities that contain other businesses probably feel the most hit in sales, should a new Tesco open. As Tesco is such a big company, the other businesses cannot compete with their prices; this is because Tesco can buy in such bulk, that they can offer crazy prices. This is where Tesco do not think of other local businesses, but only care that they keep on improving their sales. This then causes the local businesses to either lower their prices, but this sees them lose out on profit or they must shut their business down. To tackle this many villages are saying no to Tesco, this is because they know how other villages in other parts of Britain felt their presence in their town, because they could not compete with their prices.

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