Ethical Audit Report of Tesco

Topics: Business ethics, Ethics, Corporate social responsibility Pages: 11 (3998 words) Published: March 29, 2013
1.0 Introduction
According to Mamoria (2010), business ethics is defined as the businessman's integrity so far as his conduct or behaviour is concerned in all fields of business as well as towards the society and other businesses. Thus, the conduct or behaviour by businessman towards the society or others may have some conflicts and contradictions. The intention of this report is to highlight what and why the incidents happened. The incidents include the employment of illegal workers, price fixing, and poor product quality. All these incidents tend to spoil the corporate’ image of the company and also bring harmful effect to the communities and other stakeholders. So, Tesco took action by compensating to the victims, restructured corporate management system for better performances, and provided training programme and learning course for the employee. The ethical theories applicable to Tesco include Ethics of Justice, Ethics of Duty, and Feminist Ethics, which will also be discussed in this report. In addition, the organization’s best practices and values such as corporate social responsibility and protecting the environment will also be discussed for the close up of this report.

1.1 Background of Tesco
Tesco, one of the largest retailers in the world started its business in 1919. The Founder, Jack Cohen started a grocery stall in East End of London. He made a profit of £1 from sales of £4 on his first day. After 5 years, in 1924. Mr. Cohen bought a shipment of tea from Mr. T.E. Stockwell where the “Tesco” brand first appearance. Tesco expanded its business to petrol station in 1974, and became the UK’s largest independent petrol retailer. It generated a total sales topped £1bn and doubled up to £2bn in 1982. In order to overtake the UK’s leading grocer in 1990, Tesco made an aggressive marketing campaign to open more stores to gain its businesses. In 2000, Tesco continued to expand its business by product range from clothes to electrical and personal finance products when was launched ( For more detail on its corporate background, kindly refer to Appendix I.

2.0 Ethical Dilemmas
Ethics in general and ethics in business are very intimate to one another. Therefore one's personal ethics cannot be completely separated from one's business or organizational ethics. If you are a man of principles, then you are more inclined to insist on high moral standards in your business and organizations (Gavai, 2010). No matter how strong the corporate policy and system, ethical dilemmas still exist as everyone is looking for their own interest. Tesco, one of the biggest retailers in worldwide also faces the same problems such as illegal workers, price fixing and poor product quality.

2.1 Illegal Workers
Tesco was caught for hiring 30 illegal workers who were foreign students at one of its warehouses. These students were from 11 different nationalities; mostly Bangladeshi and Indian origins were alleged for working up to 3½ times longer than their allowed working hour in visa permit ( They worked as much as 50 hours extra than the allowed hours of 20 hours per week. This incident happened after the UK border Agency enforcement team visited their factory on July 2012 in Croydon ( The retailer took responsibilities by giving corporation to the investigation as they insisted they did not condone illegal working ( Anyhow, employees were considered the victims in this incident as they had not been protected by the company’s employment rules, where they were forced to work for extra hours. They faced big losses such as inability to further education and having a work-life balance. Employer did not protect for employee welfare, they abused employee right to work extra which prompted to product high productivity, maximize the profit margin by saving cost of employee salary. Supplier played a key role...
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