BTEC Business, Unit 37 Understanding Business Ethics, Pass 1, 2, Merit 1, Distinction 1 / P1 P2 M1 D1
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Course
Unit 37 - Understanding Business Ethics
Institution
PEARSON (PEARSON)
This is my assignment for Understanding Business Ethics, Unit 37 Level 3 BTEC Business. This is the work I did to achieve Pass 1 and 2, Merit 1 and Distinction 1.
P1
Business ethics are the moral codes which a business uses as a guideline when
making business decisions and everyday conduct. These are shaped by
individuals and their moral codes, values and beliefs as well as corporate culture.
The definition of business ethics can differ from person to person as well as what
the person’s interest in the company is. For example, a customer may expect a
company to be eco-friendly and pay their employees a certain amount, whereas
shareholders may not as concerned about these ethical issues as they just want
the company to make as much money as possible.
Tesco is a supermarket which was founded in 1919 and has become the third-
largest retailer in the world (measured by gross revenues), with 6,800 stores
across 13 countries. They are a groceries and general merchandise retailer and
have the largest percentage of the market share in GB for grocery stores. Tesco’s
core purpose is ‘Serving shoppers a little better every day’, they want to ‘be the
champion for customers, helping them to enjoy a better quality of life and an
easier way of living’. Tesco aim to become/stay there leading retail supermarket
and provide good quality services and products at a low cost so that they are
cheaper than their competitors.
I have chosen to examine Tesco from an ethical viewpoint because they are one
of the largest retailers and have the biggest supermarket in the UK with a long
history behind them. Because Tesco has been around for 100 years, it has
changed a lot and over the years has been in the news a few times due to ethical
issues, such as unethical trading practices and branding products with fictional
farms name.This makes it an interesting business to examine, especially as they
are now trying to become more sustainable.
Corporate governance
Corporate governance is the system by which companies are directed and
controlled by the participants in the corporate structure. Companies have an
ethical duty towards making decisions that are best for their stakeholders, this
includes protecting the interests of their customers, employees, suppliers, and
communities, as well as shareholders.
Tesco’s board is made up of a chairman, chief executive, non-executive
directors, senior independent directors and company secretary. They have to
consider corporate governance within the operational activities of Tesco
because they have to make sure any decisions made have been considered so
that they uphold their ethical duties towards shareholders and stakeholders as
well as any government set ethical principles which they have to legally follow.
The board has to make decisions whilst taking account of the interests of Tesco’s
various stakeholders, for example, Tesco is cutting its carbon usage in an
, attempt to become a carbon-neutral business by 2050. When making this
decision they have to consider everyone involved, if this was going to cost the
company a lot of money the shareholders may have not been happy with it,
whereas customers would see this as only a good thing.
Corporate social responsibility, environment & sustainability
CSR is where businesses address social and environmental considerations as
part of their normal business activities. It encourages businesses to work more
ethically and try to have a positive impact on society. Tesco need to consider CSR
within their operational activities because they want to integrate it into their
everyday running of business, for example they are reducing their food waste
through things such as donating surplus food to charities at the end of each day
and making it easier for customers to understand use by dates so that they don’t
waste food at home. Tesco updated their CSR commitments in 2016, and it is easy
to find so other people can also see what they are planning to do, for example
Tesco have been cutting down their carbon emissions, in 2017 they cut down by
13%, with plans to sourcing 65% of their electricity from renewable sources by
2020. This shows that Tesco are considering CSR and including it into their
operational activities. Linking to CSR, big companies have to consider the
environment and sustainability in their operational activities. Tesco are
improving by doing things such as cutting down their carbon emissions and
sourcing more of their electricity from renewable sources. They have also
partnered with the MSC (Marine Stewardship Council) and expanded the MSC
label for pre-packed and frozen fish as well as the fish counters, meaning it is
easier for customers to identify fish that meet high standards of sustainability.
They are also the first UK retailer to join the Sustainable Agriculture Initiative and
have made sure that 100% of palm oil in our own brand products comes from
sources certified to the Roundtable on Sustainable Palm Oil (RSPO) standards.
Human rights and fair trade
Tesco are founding members of the Ethical Trading Initiative (ETI), they support
their suppliers to comply with the ETI Base Code and help them to improve
standards. Tesco focus on the lower tier of their supply chain and have steps to
ensure that any human rights concerns are dealt with, they have a team of 42
responsible sourcing specialists in ten key sourcing countries who ensure they
can implement this approach across all of Tesco’s main supply chains. They look
at which workers are usually underpaid (for example Bananas) and pay them
more than the market price, and they support many groups which help to make
working conditions safer and to help against child labour. Tesco support
Fairtrade and were one of the first retailers to do so in 1994, they sell a range of
fairtrade products. They work directly with suppliers and wider industry to ensure
that their products have high ethical standards and to address supply chain
issues such as child labour and discrimination.
Corruption
Corruption in a business is when they use influence or unfair means to gain
business advantage, they abuse their power for gain. Corruption is taken into
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