Tesco Plc Essay Example | Topics and Well Written Essays - 2250 words

Tesco Plc - Essay Example Through the concept of corporate social responsibility (CSR), companies have been forced top look beyond the economic returns of the business but also consider their impact on the environment and community around them. The importance of value creation through positive stakeholder relationships has an impact of significantly increasing the profitability of a firm (Edwards 1998). The increase in environmental legislation and the emerging trends of ethical consumers, the incorporation of social responsibility in the business strategy is more of a necessity in the competitive market. This report seeks to analyze the annual report of Tesco Plc for the year 2011 to investigate the way it accounts for its social, ethical and environmental impact. The report further compares the performance of the company with other companies in terms of environmental policies. Another aspect that is considered in this report is the nature of reporting that the company uses and recommendations for future str ategies to improve on the presentation of the company’s stakeholder’s strategy. 2. Business Review of Tesco Plc in 2011 Tesco is the most dominant retailer in the United Kingdom with a market share of about thirty percent. The company has a presence in several countries. It reported revenues in excess sixty billion in the financial year 2010/2011. The core purpose of Tesco Plc is to accord quality service to customers. The company’s goals are aligned to this vision that is clearly aimed at giving the company a competitive advantage in its market. The company has underpinned its commitment to the community and the environment by having a goal to put its responsibilities to the communities that they serve. To achieve this goal, the company has broken down its policy on environment and social issues into five key performance indicators that it uses to analyze the impact of its strategies. The key performance indicators on the social and environment issues for Tesco Plc for the period ending 2011 are analyzed below. 2.1 Responsibility in Buying and Selling of Products The customers require safe and affordable products. The company also lays emphasis on ensuring that the products that it sells are sourced in a way that is robust and meeting the required standards. Tesco has laid out strategies to help improve its relations with the suppliers through a program called â€Å"Trading Fairly†. However, the impact of this program cannot be quantified because the metrics of measuring the results are not available. In fact, it can be argued that these programs are publicity stunts since the same buying processes were used prior to the introduction of this program are still in place. A case in point is the widely documented practice by Tesco Plc to buy potatoes from the grey market instead of the official supply chain through Tyrells Crisps. The other issue of fair trade has been recently brought to the fore due to the price undercutting by super markets on bananas. The price wars between Tesco and Asda almost brought down the banana industry. The supermarkets opted to lower their margins and in turn reduced the amount they pay to their suppliers. According to Michaels (2004), the demand for cheaper products by supermarkets has become a ruthless way by the supermarkets to exploit the supplier. The net effect of lower supplier prices is that the workers in the farms are paid much less and this impacts negatively on the society. Sainsbury was the first supermarket to announce that it will sell one hundred percent fair trade bananas. Other supermarkets have followed suit but it is worth noting that Tesco was reluctant to commit to this cause. The increased money paid to the suppliers will have a positive impact on the community where the products are sourced from. The style of disclosure of the responsible sourcing and buying of products the Tesco