MK999 Retail Marketing Management Sample Assignment
MK999: Retail Marketing Management
Early industrialization led to urbanization and increased burden on natural resources, which transformed the environment of the United Kingdom. The increased pressure on the environment led to manmade landscapes and high-density population concentration. Over the years, the economy of the country has matured and is no longer dependent on the revenues that are drawn upon from heavy industries. The economy of the country now benefits from the expansion of the tertiary and light manufacturing sector, making a remarkable change in the patterns of consumption and production (Oecd.org, 2019). However, this is posing as a threat to the environmental progress wished by the government and citizens of the country.
The government of the United Kingdom has mandated the adoption of corporate social responsibility activities on the organizations operating within the geographical territory in order to safeguard the environment and interests of the society. The four main strands of the government’s CSR activities are – environment, people, procurement and community (GOV.UK, 2019). However, for the past few years, the motive behind companies executing CSR practices has been a point of debate for many. The society and experts are divided into two groups – some claim that companies take up CSR activities to address environmental concerns, whereas, some argue that they take up CSR activities for building brand equity for themselves in the market (Kitzmueller and Shimshack, 2012). The purpose of the report is to state the real motive behind companies carrying out social responsibilities by using the case example of Tesco. Tesco is one of the leading retail chains of the UK, and they have several CSR plans that they execute for the betterment of the society. Hence, through the report, the CSR activities of the organization would be explored, and the main idea behind it would also be excavated – addressing environmental issues or just a means of publicity.
Concept of corporate social responsibility
In the present times, several companies have realized that to remain productive, relevant and competitive in the fast-changing global business environment, they have to become socially responsible. Post phase of industrialization and globalization, the national borders have become blurred, and the advent of technology has accelerated the masked distance and time. Hence, in order to combat the sudden changes in the business environment, and ensure high profits and goodwill in the market the organizations are taking several steps (Aguinis and Glavas, 2012). One of the steps taken by them is undertaking social responsibility wherein the management executes responsibilities that contribute to the growth of the economy of the host country apart from enhancing the standard of living of the society (Brammer et al., 2012).
As per the European Union, corporate social responsibilities is defined as the concept wherein the organizations integrate the environmental and social concerns into their business activities and also in the interaction made with the shareholders of the business, as a voluntary practice (Hopkins, 2014). On the other hand, the World Business Council for Sustainable Development (WBCSD) states that corporate social responsibility is the continuing commitment made by the businesses to behave in an ethical manner. The commitment is to contribute to the economic development of the country by enhancing the quality of life of the local communities, society at large, employee workforce and their families (serc.carleton.edu, 2019).
However, Pdf.usaid.gov (2019) states that there is no universal definition of corporate social responsibility, but it can be referred to the transparency of the business practices ensured by organizations mulled with ethical values, responsibility towards environment and community and compliance with the legal requirements. In the business community, CSR is also regarded as corporate citizenship, which sets the expectations of the companies being good neighbours of the community by taking care of their employees and other stakeholders (Crowther and Seifi, 2018). One of the theorists, Carroll provided a CSR pyramid highlighting the various responsibilities that an organization needs to shoulder in order to integrate social and ethical values in their business operations. As per the pyramid, the four major areas of responsibilities are – economic, legal, ethical and philanthropic (Hopkins, 2012). The first responsibility of the company, forming the base of CSR activities is the economic responsibility wherein, the company is expected to churn out high profits from their market activities without which CSR would cease to exist. Carroll stated that the concept of CSR was not anti-profit but specified the ways in which companies should earn profits (Carroll, 2016). The second responsibility was legal in nature wherein; the theorist did not consider the corrupt laws of any country. The companies are expected to abide by all the laws of the nation so that they do not exploit any legality, causing trouble in business operations.
Figure 1: Carroll’s CSR pyramid
(Source: Carroll, 2016)
Next, comes the ethical responsibilities wherein, the companies were obliged to do what was right, just and fair in order to avoid harm. The expert stated that it was not easy to justify ethical behaviour, but it was the discretion of the company to behave in an ethical manner so that the interest of the stakeholders and society is not harmed in any manner (Tai and Chuang, 2014). Lastly, the philanthropic responsibilities topped the pyramid as per which companies were expected to behave like a good corporate citizen (Nalband and Kelabi, 2014). The expert stated that the company should contribute resources for the welfare of the community in order to improve the quality of life of the people at large.
Corporate social responsibility adopted by Tesco
Being a leading retail chain, the stores of Tesco serve several communities throughout the globe, especially in the United Kingdom. As per the statement issued by Tesco in their website, the management states that continuous interaction with the different communities reminds the company about their social responsibility of being a good and responsible employer, neighbour and business house. The chief executive of Tesco Ireland, Tony Keohane says that the customers of the organization demand more of local products and healthy food at the aisles of the store. Hence, this motivates the company to be more thoughtful about the impact their activities cast on the community and the good neighbour image of the organization in the society (Tesco.ie, 2019). Tesco has assumed the role of carrying out social responsibility in several arenas assuming the responsibility of being a good corporate citizen. The management of the company feels that the CSR deeds of the company would help them to build brand equity in the market due to which all the acts of corporate social responsibility is highly publicized by the management, marketing and public relations team of the organization. The CSR activities of Tesco are as follows:
Food waste: The organization had vowed that no food fir for human consumption would be wasted from its UK stores hence, motivating them to endeavour on food surplus donation programmes across the different stores of the Group. Moreover, Tesco is the only retail organization in the United Kingdom to publish information on food waste in its UK stores. Health: As per the CSR report of Tesco, the company aims at protecting the health of the consumers and the people at large. The company claims to have cut down the sugar content in their soft drinks by 5% every year. Moreover, the company also claims to raise over £13.7 million for its National Charity Partnership with British Heart Foundation and Diabetes UK. Additionally, they also distribute free food to children across their stores in the UK.
Business Ethics and Anti-Library: The organization has taken the initiative of launching a refreshed set of Code of Business Ethics and also an awareness campaign for its Protector Line, a hotline for whistle-blowing. The management has also taken the initiative of revising the training programmes for their employees where the employees are made aware of income recognition, anti-bribery and relevant supply codes (Business Ethics Case Study, 2010).
Labour standards and human rights: The social programmes undertaken by the company support at least 450000 individuals across communities along with the company collaborating with 42 local-based responsible social specialists (Sustainability.tescoplc.com, 2019).
Environment: Tesco has managed to reduce its carbon emission rate by 3.1% each year and has also become the first retailer in the United Kingdom to collaborate with Sustainable Agriculture Initiative. The management has also taken the initiative to expand the MSC label scheme for frozen fish and pre-packaged food.
Relationships with the suppliers: The management of Tesco has created a supplier helpline in
Central Europe and have also issued standardization of payment made to the suppliers across the UK. The company takes efforts to safeguard the interest of the suppliers by not deceiving them in any means.
CSR – means of generating publicity or addressing the environmental issue
The above segments discuss the importance of corporate social responsibility while attending the number of activities carried out by Tesco regarding corporate social responsibility. Corporate social responsibility is supposed to demonstrate the conscience of an organisation towards the sustainability of the environment. However, over the years, large companies such as Tesco have been utilising corporate social responsibility to improve their image in the concerned market along with the customers. These activities help them gain good public relations that lead to enhanced productivity and profits for the overall organisation. Therefore, it can be said that the fundamental motive of the organisations behind the corporate programs for funding environmental and social programs are means of campaigns for public relation that can help in improving the reputation of the brand (Rangan et al., 2012). The primary responsibility of Tesco as a business is associated with developing financial returns for a larger economy and its shareholders. The value of the company is mostly associated with generating financial wealth for its shareholders.
Moreover, any initiative on environmental and social grounds, which does not gain any profits for the organisation simultaneously are considered as a waste of organisational resources. Several researchers believe that if each sector in the entire chain of the business conducted their activities appropriately and accurately, actual gain for the sustainability of the society and environment could be observed. Many researchers believe that an organisation such as Tesco does not focus on public and societal values that in turn help them gain private value rather their main focus is on the private value of the organisation that is turn develops into societal and public value (Jahdi, 2014).
It can be stated with proof that corporate social responsibilities of the organisation are focused on profits of the organisation rather than addressing the issues harming the environment and the society. The people have grown a conscience towards the environment and therefore, are aware of the current issues disrupting the stability of the environment along with that of the society. Organisations have gradually utilised this emotion of human beings are targeted towards improving their profits and reputation. People in the current scenario are willingly to purchase and deal with organisations that associated themselves greatly with corporate social responsibility; hence, leading to an improved public image for the organisation along with profit margins (Suliman and Al-Khatib, 2014). Social responsibility demonstrated by an organisation focuses on the ethical practices it has incorporated into its operations and activities that attract the attention of the customers aware of the global and national along with the local issues. Therefore, it is safer for organisations to admit that these activities of social responsibility are partially conducted to influence the purchase decisions of the targeted consumer base.
Moreover, adopting social responsibility helps an organisation nurture their assets that consist of trust, good reputation, and goodwill. In addition, social responsibility enhances the dynamics of an organisation such as Tesco while contributing to the enhancement of societies and communities; it provides solutions to the societal and environmental issues. It also improves the attractiveness of the organisation towards investors (Plewa et al., 2015).
In the current scenario, the brand strategies utilised by an organisation are integrated with corporate social responsibility since one enhances the activities of the other. It helps in creating the differentiation an organisation seeks to serve as a competitive edge over the rival organisations in the concerned market and industry. Organisations utilise the programs of social responsibility instead of their taglines and logos currently to advertise and promote the operations of their business. The brand of a company serves as the promise of the quality of their business to its targeted consumer base due to which it is essential for them to integrate corporate social responsibility in those promises (Kollat and Farache, 2017). Organisations follow certain strategies that help them promote their brand through social responsibility such as selecting the right advocacy or cause, involving as many stakeholders as possible along with customers and utilising social media to reach out to a larger base of consumers that can learn about their efforts of corporate social responsibility. Additionally, it also includes not overselling the idea of their corporate social responsibility and ensuring the programs of social responsibility reflect the brand of the organisation. Moreover, advisors of large organisations believe in integrating the activities of corporate social responsibility even if it does not intend to make a difference on the environment or the society (Brennan et al., 2013).
Similarly, Tesco determines the potential benefits of corporate social responsibility in relation to the stakeholders and the business costs. One of the benefits of the activities of social responsibility in relation to the stakeholders and costs of Tesco is that while publicising the corporate social responsibility activities, it is ensured that the local community, suppliers, and the targeted consumers are well aware of the activities carried out by Tesco. These activities will lend themselves to good stories in the news that develops publicity for the concerned organisation (Mueller, 2014). Tesco has been able to acquire these benefits through its website and other means of advertisements. They have managed to engage the local communities in their activities of social responsibility. Such type of publicity through corporate social responsibility can help an organisation like Tesco gain contracts. People in the society to seek to associate and purchase from respectable businesses and Tesco is one of the most respectable businesses according to their profits and brand reputation. It helps them acquire and retain the loyalty of their consumers. These activities regarding social responsibility can be specifically effective for aiming towards ethical organisations, non-profit organisations, and the public sector (Green and Peloza, 2014).
The organisations face large amounts of trouble due to such pressure and awareness gained alongside the brand reputation and profit. However, the weight-age of the benefits are much higher than the losses or risks faced by the organisation due to which it is necessary for them to maintain their publicity through corporate social responsibility (Supanti et al., 2015). Moreover, Tesco ensures that people and their employees understand the fact that more concentration is given to the work when they understand their value to the organisation. This can be considered as another prospect associated with corporate social responsibility. The benefits of such social responsibility are associated with offering valuable treatment to the individuals working within the organisation that can lead to reduced rates of employee turnover and employees loyalty. Tesco does not require selecting and recruiting new employees thus leading to cost saving solutions through no training sessions for new employees. It will eradicate any type of disruption caused due to training and recruitment along with tribunal costing. Retained employees feel motivated due to which their performance is better in terms of productivity that improves the overall labour productivity of the business while improving their products and services for sale, which gradually leads to potential maximised profits (Gaudêncio et al., 2014).
Tesco majorly focuses on the environment through their activities of corporate social responsibility. A vivid illustration of such activities is associated with reducing the carbon footprint on the environment while indulging in activities of recycling. It is beneficial to the business since stakeholders like those that the customers are motivated to retain the stability of their trading with the organisation that develops or attempts to minimise the possible harm to the environment and the society. In addition, Tesco focuses on health and wellbeing through its corporate social responsibility, which is beneficial for the reputation of the organisation. Health and wellbeing are essential factors for human beings due to which they are attracted to their business through the activities carried out for corporate social responsibility.
Moreover, they reduce the prices for the healthy products they offer, which makes it more affordable for the individuals to purchase the goods after receiving a good impression (Visser, 2014)
Another evidence of organisations using corporate social responsibilities to improve their public image rather than focusing on improving the sustainability of the environment can be observed through the accounting scandal of Tesco in the last five years. Senior personnel of the organisation tampered the accounting records of Tesco in order to hide the hikes in their profits and productivity. When the tampered accounts were crosschecked, Tesco suffered a loss of £6.4 billion along with damage to their public image and brand reputation. However, in the years following the scandal, they focused highly on activities of corporate social responsibility that led people to believe their focus towards improving their relations with the society and the environment. It helped them to cover up the consequences of the scandal and restore the flow of their activities and productivity. Organisations tend to demonstrate charitable activities to improve their image as an organisation; however, these charities are set with a budget limit, which provides evidence for their activities associated with corporate social responsibility. Activities of social responsibility can demonstrate the humanity of the leader of the organisation integrated with the focus on goodwill. The rates of organisations focusing on corporate social responsibilities have increased largely over the last decade since they deduced they ways of improving their social image along with their productivity and profit (Glavas and Godwin, 2013).
The report discusses the concept of corporate social responsibilities in details in order to understand the motive of the companies behind undertaking social responsibilities. As mentioned in the report, corporate social responsibility is the ethical behaviour executed by the organizations to safeguard the interests of its stakeholders – customers, investors, government, community, employees and society at large. Following this definition, Tesco, one of the largest retail companies of the United Kingdom endeavours several acts that allow them to work in the interests of society and environment. However, on critiquing the concept and motive of the company, it has been witnessed that Tesco carries out the CSR activities to create goodwill for them in the market rather than improve the environmental condition or lifestyle of the society. They are more focussed on using public relations to promote their socially responsible acts so that they can gain the trust of the investors and customers and cover up for the activities conducted earlier that tarnished their reputation.
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