Business Ethics Report: Identifying Ethical Issues and Industry Regulations in Retail Industry

This report identifies the ethical issues faced by the retail industry, discusses industry regulations, describes the ethical controversy faced by TESCO, and explains the need for stricter regulations. It also provides recommendations for better compliance with corporate social responsibilities and quality measures.

Business Ethics Report

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Identifying the main ethical issues that are faced by the retail industry......................................3
Discussing the industry regulations.............................................................................................4
Describing the ethical controversy faced by the TESCO............................................................5
Explaining opinion on requirement regarding stricter regulations..............................................6
Recommendation.........................................................................................................................8
CONCLUSION ...............................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Business ethics refers to implementing the right business practices so that there are no
problems in conducting company operations in the future. Further, the report will identify
various ethical issues that are faced by retail industry in the recent times. Also, the analysis is
done in the retail area as it is the most growing sector in UK due to the increase in demand of
variety of goods among the customers. Moreover, the study will also analyse various industry
regulations that are related to the retail industries along with TESCO one biggest ethical
controversy faced during the recent times. Lastly, certain suggestions on implementing stricter
regulations will also be discussed under this report.
MAIN BODY.
Identifying the main ethical issues that are faced by the retail industry.
Ethical issues are the types of issues that occurs due to when a certain decision create the
conflicts with set principles of the society. Also, ethics in any country helps to shape the human
behaviour so that certain role could be performed in better ways. The chosen industry is Retail
that allows the people to consume variety of goods in most efficient manner. Further, retail
industry affect the customer perception and thus it is very important for all the retailers to be
ethically responsible so that there is no negative effect on the industry. Some ethical issues that is
faced under this industry are as follows :
Misleading advertisements: There are some cases wrong information is been provided by the
retailers to the customers that might be misleading to some of its users and thus affect the overall
brand image of the firm (Lee and Jin, 2019). For example: for some customers one information
might be good but for others it might hurt the sentiments of some sections of the society.
Corporate social responsibility: It is seen that most of the companies are facing this type of
ethical issues they are unable to fulfil certain social responsibility for the society (Salmi, 2020).
In some other cases it is found that firms also sometimes depict the wrong picture in the financial
statements in regard to the total amount that is invested in conducting such activities.
Consumer fraud: Certain cases are there where the company is doing fraud with the customers
in form of false statements due to which the customers later suffer all the damages. Also, it might
be an issue when the firm is not able to provide reasonable service to the customers that it has
been promised earlier.

Unfair prices: This type of issue is mainly in those companies that wants to earn higher
revenues during the short period. Also, it is seen that prices of products in such firms are kept
higher than other competitors in the market that are selling the same product in the market. Thus,
this type of issue might affect the overall brand and good will of the company.
Treatment of employees: Further, it is seen that there are many firms that are not treating the
employees in the fair manner and thus there are certain discrimination of the employees on the
basis of age, gender and other factors (Wood, 2017). Hence, such type of issues that are existing
in the company affects the motivation among the employees at the workplace. Further it is seen
that such companies have higher employee turnover than the companies that are having better
work culture and environment.
Deceptive promotions: In this issue the firm claims false impression to the customers based on
the promotions that are not benefiting the customers in any manner. Further, such promotions
might include fake reviews, offering prizes without actually providing them, misleading
warranties, failure to disclose etc. Thus, such practices are against the law and hence should not
be practice.
Discussing the industry regulations.
It refers to the government mechanisms that helps in guiding the behaviour of various
retail companies by setting some prices and laws that need to be strictly followed. In context of
retailing there are certain regulations that are described as below:
Sales of good act :
According to this law all the goods that are sold by firms need to be in reasonable quality
and according to the descriptions that is been provided during the time of sales. Moreover,
consumers have the right to choose among the various goods, reject them and ask for refund it is
not according to requirements that is expected by the buyers. Further, such act ensures that all
the products' sold by the seller are in good condition (Ermasova, 2021). Also, all the firms need
to establish clear return and refund policies so that work could be carried out smoothly.
Weight and measures:
It means that if any business sells goods according to weight or measures than it must
comply to certain rules according to the industry norms. Thus, by following such rules the
customers would be able to understand how much they are buying and how much they are
receiving in return for it. Such type of measures also include packaging of certain types of goods

through using appropriate metric weights and measures. Also, through such weights the
customers feel satisfied as certain value is attached in it and thus they are ready to pay little
higher prices even when the quantity of product is lower in comparison from the competitors.
Consumer protection act 1987:
This act applies to all retail companies that are operating in UK as it gives right to the
consumers to claim particular amount of money in case where there is any defective product that
is sold by the firm that causes death, injury or damage to the buyer (Must know legislation for
retailers, 2021). Also, according to this regulation certain test are also devised for the companies
to prove that there products are free from some damage, defects or harmful substances. However,
the companies also have the right to defend such claims when it is not the fault of the seller.
Consumer protection form unfair trading regulations 2008:
This act helps the buyers from any unfair trading practices and aggressive sales tactics.
Also, misleading practices could in any form like advertisement for the goods that does not exist
in reality, giving false characteristics that are relating to any kind of products, adopting sales
tactics etc. (Melé, 2019). Thus, such practices need to be avoided as it not only affects the brand
image of the firm but also the company might be charged heavy penalties that might even cause
shutdown of the firm if any claim is made by any of the customers.
Distance selling regulation:
It is type of law that is set out by the UK government in 2014 and is applicable to all
those retail companies that are involved in online selling. Also, according to this, all the
companies need to clearly give the description and prices of goods and services, determine the
delivery cost, minimum duration of the contract and detail regarding the seller that is providing
the products (Crane and et.al., 2019). Further, if this is not followed by the company than
customers may claim and government would charge the penalties that are according to the laws.
Describing the ethical controversy faced by the TESCO.
Tesco is the largest chain of supermarkets in UK that is selling variety of goods to its
customers across various parts in the world. However, it is seen that one of the biggest
controversy that the company had faced during the recent time was it made “lot of delay in
making payment to suppliers so that its financial position could be improved”. Moreover,
it was found that the company without any particular reason was delaying the payments to all it
majors suppliers linked in the supply chain. Thus, it remained under the investigation in relation

to the accounting scandal. Further, through internal reports it was found out that certain emails
were sent to the staff of the Tesco that suggested them not to make payments to any of the
suppliers before the particular date so that underperformance could be avoided. Thus, this type
of issue was major one as it showed the company in better financial position to its outsiders and
also helped the company in showing others in better position than that of the competitors to stay
ahead in the competition (Tesco knowingly delayed payments to suppliers, 2021). Moreover, by
following such practice the company showed that company was giving unfair treatment to all its
suppliers as it was against the laws on conducting the operations on the fair ground. After such
type of incident the shareholders of the Tesco launched a legal action as part of the penalties.
However, no financial penalty as imposed on the company in later times.
Thus, it is said that company like Tesco need to take utmost care in conducting any
activities that are against the law as it such practices only lead to losses and impact the goodwill
in the long run. Moreover, after facing such type of ethical issue the company had revised its
policies and structure of working so that it could make the company look different from the
previous and also build better relationships with all the suppliers.
Explaining opinion on requirement regarding stricter regulations
In the current competitive environment, retail sector is facing growth and development as well
contribute in the economic development of the company. There are several rules which are
required to be followed by retail sector in turn having proper ethical practices can become
possible. There are number of ethical activities which are required to be followed by companies
operating in the retail industry (Kalhan and Franz, 2020). It needs to have effective application of
activities like health & safety, employment law, quality standards, customer protection act
compliance with return & refund, warranties, complaints, consumer credit fair trading, etc. In
order to be successful in the current competitive environment it becomes essential for the
organization to focus on having relevant processing in turn having appropriate level of execution
of ethical activities becomes crucial.
From the evaluation of the prevailing circumstances where retail sector has been
considered to be one of the essential requirement fulfilling sector. In addition to this, much
emphasis on fir trading for protecting prevailing circumstances becomes essential. In the
competitive working situation having stricter regulations becomes essential on order to gain fair
prices, good quality of products, relevant & accurate information regarding benefits, reliable

insights regarding weights & measures, product labeling & packaging, etc. Having proper
complacence with the mentioned course of action becomes essential for the companies
functioning in the retail sector as it deals with products daily used by consumer. Growth and
development of the retail industry is facing upward movement-in turn having relevant activities
to gain profitability can become possible. From the evaluation of the provided findings regarding
TESCO that carry forward it so operational activities in the retail segment. There is no proper
compliance with making payment to the suppliers for showing its wrong liquidity position
(Tesco knowingly delayed payments to suppliers, 2021). There is need to give emphasis on
having appropriate amount of good relationship with suppliers so that having relevant
relationship with suppliers can become possible.
On the basis of conducted research regarding an ethical controversy faced by TESCO regarding
delaying payments to suppliers. It can be identified that TESCO pay attention on making its
financial position stronger for the particular period. From the assessment it can be articulated that
main objective is to retail stakeholders by presenting its fake strong financial j position. It is
highly important to protect the interest of stakeholder by conducting ethical activities in order to
have significant level of functioning (Vogeler, 2019). For this purpose having relevant
functioning is essential in turn better compliance can become possible in order to protect the
interest of suppliers.
For gaining higher capabilities to accomplish the objectives of business to meet market
forces in effective pattern the specified organization pay attention on having larger number of
suppliers in turn bargaining power of them can be declined. In order overcome such kind of
activities which has adverse impact on the processing of the suppliers it can be specified that
there should be accurate & reliable implementation of stricter regulations for gaining greater
amount of profitability & sustainability. In addition to this, it can be specified that retail sector
need to give emphasis on having such rules & regulations which can ensure that proper payment
& collection of funds can become possible. Having appropriate level of rules can decline chances
of default payments, comprise in quality of products, meeting requirement of consumers, etc. On
the basis of this, it can be specified that organization is required to pay attention on adhering
rules and regulations in order to avoid any legal obligation arising due to any controversy
occurring in result of non-compliance with ethical action. On the basis of provided information
it can be specified that there is requirement of stricter regulations.

Recommendation
It is recommended to give larger emphasis on compliance with corporate social
responsibilities in turn Better trustworthiness among stakeholders can be found to achieve higher
level of profitability (Lagorio and Pinto, 2021). In order to operate successfully it becomes
essential for the organization to give emphasis on conducting activities that can benefit the
society in turn achieving higher level of such activities that can contribute in making social
practices successful in turn development of customers, suppliers, employees, etc can be derived.
It is suggested to gain proper quality of products in turn meeting requirements of international
environment can become possible. The main reason behind having significant extent of quality
measures becomes essential in order to adhere better kinds of health & safety. It can aid in
gaining competitiveness which can incline profitability & sustainability by ensuring proper
safety of consumer. In the retail sector quality of product becomes essential to have higher ability
to attract & retain customers in turn achieving better level of profitability can be attained. It can
the firms towards success by ensuring proper compliance with profitability & sustainability.
There are several types of financial rule s& regulations formulated for companies so that
having ethical actions application can become possible. There should be implementation of both
internal & external auditing which can ensure that proper conducting of commercial transaction
is exerted. There are several components like proper publication of financial reporting fulfilling
tax and other legal liabilities, etc so that meeting objectives can become possible. On the basis of
this, firm can gain stability by maintaining proper ethical action implementation.
CONCLUSION
From the above report it can be concluded that ethical practices are crucial for gaining
higher trustworthiness & credibility in the market. The current report has been prepared on the
retail sector. It has identified ethical issues like misleading advertising consumer frauds,
inappropriate pricing strategy, etc. In addition to this, present report has involved relevant
industry regulations like standard quality, protecting consumer rights, etc. current study has
given focus on identified ethical controversy faced by TESCO which is showing inaccurate
financial position by not overcoming its trade payable On the basis of conducted findings it can
be stated that having stricter regulation is essential for overcoming such unfair activities.

REFERENCES.
Book and Journals.
Crane, A. and et.al., 2019. Business ethics: Managing corporate citizenship and sustainability in
the age of globalization. Oxford University Press, USA.
Ermasova, N., 2021. Cross-cultural issues in business ethics: A review and research
agenda. International Journal of Cross Cultural Management. 21(1). pp.95-121.
Kalhan, A. and Franz, M., 2020. Regulation of retail: comparative experience. Economic and
Political weekly. pp.56-64.
Lagorio, A. and Pinto, R., 2021. Food and grocery retail logistics issues: A systematic literature
review. Research in Transportation Economics. 87. p.100841.
Lee, J. Y. and Jin, C. H., 2019. The role of ethical marketing issues in consumer-brand
relationship. Sustainability. 11(23). p.6536.
Melé, D., 2019. Business Ethics in Action: Managing Human Excellence in Organizations.
Bloomsbury Publishing.
Salmi, T., 2020. Moral Legitimacy of Ethical Investing–Retail Investors’ Perceptions.
Vogeler, C. S., 2019. Why do farm animal welfare regulations vary between EU member states?
A comparative analysis of societal and party political determinants in France, Germany,
Italy, Spain and the UK. JCMS: Journal of Common Market Studies. 57(2). pp.317-335.
Wood, G., 2017. Reflections on business ethics through 1992-2017. European Business Review.
Online.
Tesco knowingly delayed payments to suppliers. 2021. [Online]. Available through:
<https://www.bbc.com/news/business-35408064>.
Must know legislation for retailers. 2021.[Online]. Available
through:<https://www.wrighthassall.co.uk/knowledge-base/must-know-legislation-for-
retailers>.