The number one hot topic of
21st century is how ethical a company is or not. The larger the
company is the more emphasis to its culture is given. It is not acceptable a
company to maximize its wealth on disadvantage of third parties. The main
requirement is the business to obey at least the law, however this is not
enough anymore. It is “obliged” to act according to what the collector
conscience says is right. Actually the company should awaken society’s
awareness about their rights on this earth as well.
Tesco‘s turnover was
steadily increasing till 2013. When Financial Authority Conduct started
investigating the company’s accounting, an inaccurate financial disclosure was
identified. Furthermore, the value of its products as well as the collaboration
with its suppliers has been accused for an unethical misconduct. Its revenue
has a downward trend which negatively affects the company’s profit. 2013 Profit
before taxation was half than 2012 profit, in 2015 the company declared a loss
of £6bn and in 2016 had a 162 m profit only.
Tesco is fan of the old
fashion culture; in the past unethical activities used to provide the highest
returns due to their opaque annual report. However, nowadays companies are
“obliged”, due to competition, to become more and more transparent to public.
The market is efficient and any disreputable information is able to harm the
company’s financial performance decreasing its attractiveness to investors and
customers. CSR researchers state the importance of customer satisfaction.
Customers will to pay higher priced products if are engaged with ethical
activities. However, Tesco’s revenue decrease was not that bad, consumers did
not change their buying behavior and kept making their shopping from an
unethical company.
I live in England for three
years now and I have never seen Tesco empty. On the contrary is always so busy!
It might be cause is the only big supermarket in town though. However,
personally never buy row materials like meat, fish or fruits and vegetables.
Their taste is horrible.
From the shareholders
perspective the company did not pay any dividends last year while its share
price has dramatically been decreased, 3 times lower than the share price on
2013. Its lower prices sound like an opportunity to invest to a huge
corporation however is been three years now that the company cannot overcome
this downward trend. It announced a £85m to pay its investors back.
After the Enron scandal in
2001, and due to the media coverage of any unethical activity, companies try to
become more and more ethical. The advantages of CSR projects overcome its
disadvantages in long term basis. Society’s awareness has been dramatically
enhanced the last couple of years, therefore CSR is able to influence every
corporate activity, as customers, productivity, efficiency or investment
attractiveness.
No comments:
Post a Comment