Understanding Business Ethics | Report

Running Head: BUSINESS ETHICS 0
Understanding Business
Ethics
Student Details:

BUSINESS ETHICS 1
Task-1
Introduction
The purpose of this report is to analyse ethical issues faced by a particular business while
conducting its operational activities. This report will take an example of Tesco Plc. operating
in retail sector and is one of the largest British multinational companies as grocery retailers.
This report will evaluate the ways company will improve ethics in its operations and analyse
the impact of ethical behaviour on its stakeholders. Lastly, this report will also include
implications of ethical operations within the company and its stakeholders.
Ethical concerns faced by the firm
The operations of the company include offering groceries and other products to its customers
through its super market, hyper market, convenience shops and supper stores. One of the key
ethical concerns faced by the company is ensuring health and safety of its employees since it
has hired over 450,000 employees globally. The risk of occupational accidents and other
work related safety challenges are necessary to be considered by the management of the
Tesco to make sure that its employees remain safe in the workplace (Tanwar, 2019). In case,
the employees’ health and safety is not ensured by the company, then it creates a negative
workplace environment and it also hinders brand reputation of the firm. Another ethical
challenge is relating to safeguarding the books of accounts of the company to make sure that
it did not engage in unethical accounting practices especially when it is a publicly traded
company (Bundy, et al., 2013). It is an obligation of the senior level management of the
company to make sure that they comply with necessary accounting principles to avoid
engaging in unethical conduct. Lastly, protecting the environment and ecosystem of local
community is a key concern for Tesco. The company is obligated to make sure that it reduces
its carbon emissions in order to contribute to the protection of the environment.
Improvements in ethics
In order to deal with ethical challenges faced by Tesco, the management is required to
carefully consider various factors. The health and safety of employees of the company can be
ensured when the management complies with relevant health and safety laws in the UK.
“Health and Safety at Work Regulations 1999” provides various guidelines for company such

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as Tesco to make sure that they focus on health and safety of their workers by eliminating
many factors that could harm them (Natural HR, 2020). The ethical concerns relating to
accounting practices can be eliminated by Tesco if the company complies with “GAAP or
Generally Accepted Accounting Principles”. As per these guidelines, the company has to
make sure to maintain consistency in its books of accounts and maintains transparency which
eliminates any risk of unethical accounting conduct (Choi, et al., 2019). The management of
Tesco can address the issue of unethical practices relating to the environment by reporting
their impact on the environment and also complying with environmental protection
guidelines in the UK. The “Environmental Protection Act” and the “Control of the Protection
Act” are good examples of legislation which enforces Tesco to assess its carbon footprint and
take necessary measures to reduce its emissions that would lead to protection of environment
resources (McKinley, et al., 2017).
Impact of ethical behaviour on stakeholders
The operations of a business directly affect the internal as well as external stakeholders. The
internal stakeholders of the company include employees, shareholders, the Board of directors,
managers and others whereas the external stakeholders include customers, suppliers, the
governments, environment, local communities and others. Complying with ethical behaviour
allows businesses such as Tesco to create a positive impact on its business as well as
stakeholders. Actions taken by the organisations for protection of its employees by
complying with health and safety guidelines also ensure that it complies with relevant laws
and it also creates a positive brand reputation of the company which increases its sales
benefiting its shareholders (Bello, 2012). The decisions made by the management for the
protection of the environment results in development of local communities as well due to
reduction in pollution and protection of natural resources. The ethical conduct of managers
and the Board of Directors are crucial for the company to create and foster a culture in which
unethical accounting practices are not supported by the organisation and it is able to maintain
transparency in its operations. These ethical behaviours have a positive impact on the
stakeholders of the company allowing Tesco to sustain its growth in the market by generating
a competitive advantage (Jones, et al., 2018).

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Implications of operating ethically
There are various benefits of engaging in the ethical behaviour by businesses which have a
positive impact on their stakeholders as well. Companies are able to build customer loyalty
while engaging in ethical practices since it creates a positive brand reputation which allows
organisations to reach out to a wider customer base. A recent study found that 73 per cent of
millennials customers preferred to pay additional money for products which are ethically
manufactured by organisations (Curtin, 2018). This shows the engagement in ethical
behaviour such as protection of the environment allow organisations such as Tesco to offer
better products at high prices for its customers which benefits them and it increases
company’s profitability that has a positive implication on its stakeholders such as employees,
shareholders, managers and customers. Companies are also able to avoid legal problems
while engaging in ethical behaviour since they comply with relevant laws that affect their
business operations. Another positive impact is retention of talented employees since ethical
behaviour creates a positive work environment in which employees feel secure and they are
more committed towards achieving corporate goals (Leonidou, et al., 2017). Especially
employees working in developed nations are able to protect their fundamental rights which
show positive implications of ethical behaviour on the stakeholders of a company.
Conclusion
To conclude, general ethical issues faced by companies such as Tesco are relating to
accounting of health and safety of employees and protection of the environment. These issues
can be addressed by complying with relevant laws and taking precautionary measures.
Stakeholders and the business benefits from ethical behaviour of a company and the positive
implications results in enabling companies such as Tesco to maintain a balance between
stakeholders’ interests and increasing profitability.