Executive Summary

In the present scenario, major ethical issue that takes place in retail industry is that firms do not tell the complete truth to a customer regarding the actual traits of a product and sell it by communicating only positive side of the same. All stakeholders associated with the business get highly impacted with this practice which ultimately leads to affect the goodwill of firm in market. Fair trade is a preferred alternative by which firms like Tesco can resolve the mentioned ethical issue that is, keeping customers unaware of complete information of products offered to them. It will increase the trust and loyalty of customers and they will become brand loyal. By this way, firm would be able to satisfy all stakeholders associated with business and sustain for a long term

Introduction to Ethics and Sustainability

Ethics are the rules of conduct or can be termed as moral principles that supports as well as serve as a guide for an individual or group behavior. However, sustainability is meeting the needs of people in present in such a way that future generations would not need to compromise to fulfil their requirements. In the present report, there will be discussion on an ethical issue in retail industry of UK and the way it impacts different stakeholders. Solutions for the same will be suggested along with justifying the best suitable one.

1. Ethical issue and its impact on different stakeholders in industry

In the present scenario, major ethical issue that takes place in retail industry is that firms do not tell the complete truth to a customer regarding the actual traits of a product and sell it by communicating only positive side of the same. However, negative sides if any or those points which may change the customer’s buying decision are always kept hidden. Now-a-days, it serves as the most common ethical issue which almost every firm in retail industry is doing (Gibson, K., 2015). Through every media, whether it is print, radio, digital or social, consumers are never communicated with the complete truth of product which means firms cheat the customer by charging complete high price from them even when the product is actually not of that high quality.

Example of Tesco can be taken for the same as it is also indulged in this ethical issue. Tesco also promises to give the highest quality of products but price charged is not as per the worth of offering. This is the major ethical issue in which customers get cheated and their loyalty towards firm becomes reduced (Gibson, 2015). All stakeholders associated with the business get highly impacted with this practice which ultimately leads to affect the goodwill of firm in market. Different stakeholders on which this ethical issue put a huge impact are stated as below:

Consumers – They are the king of market and thus, if company becomes unable to keep them satisfied, it will lead to hamper its profits as well as growth. Consumers have right to be informed with true, correct and precise information of the product for which they are paying. This information must be in terms of warranty, ingredients used, price, etc. Retail industry is already facing intense competitive and thus, to survive in today’s dynamic and competitive environment, it is important perform ethical business (Becker, 2011).

Investors/shareholders – They are called as the owners of business and should be given with fair returns after every particular interval as they make investment in business. Firms may have to face severe losses if they will perform unethical practices like not disclosing the complete and true information to these stakeholders. They must be aware with the correct information with regard to financial status of business organization. Their dissatisfaction may lead the firm to bear huge losses in business, that is, monetary (they would not invest in business) and non-monetary (hampered goodwill) both. Firms like Tesco in retail industry must act in the interest of shareholders.

Employees – In the retail industry of UK, large volume of employees is employed and thus, keeping them satisfied with performing ethical business is highly important. If they will be dissatisfied with their job, employee turnover rate will get increased that will put a direct impact on the productivity, profits and goodwill of organization (Krainer, 2011). Therefore, firms in retail sector of UK like Tesco must have proper policies and procedures that management frames for employees with respect to hire and train them as well as emphasizing on their promotion and welfare.

Suppliers – Apart from that, if firm will not perform its activities ethically, suppliers would not get ready to supply the required material as they would not trust the brand and find choosing some other buyer to be more suitable.

Government – Firms performing unethical activities and cheating the buyers are always the target of government to take strict actions against them which spoils the goodwill of business in market (Cantú-Martínez, 2015). So, to save business from loss of reputation, retail manager of firms like Tesco must follow ethical practices.

2. Major alternatives for addressing the issue

Some major alternatives are there by which the ethical issue prevailing in retail industry can be addressed, that is, not disclosing the complete and fair information about products to consumers. These alternative are like:

CSR activities – In today’s era, it is one of the enlarged concept responsibilities of firms in retail sector which helps in evaluating the values in relation with business organization and the environment in which it is operating.

Ethical consumerism – It can be termed as the practice in which products and services produced by a firm in such a way that when retail organizations offer them to the ultimate customers, they neither create any social or environmental damage nor put any negative impact on the society (Biedenweg, Monroe and Oxarart, 2013).

Fair trade – It refers to the way of doing business in which firms charge the right price from customers for what they are offering to them in terms of quality as well as communicates fair information about the products offered.

Going green – Since last few years, firms are focusing on the concept of “going green” and many organizations of retail sector in UK have already adopted it. Companies like Wal-Mart are following the concept of “going green” and reducing the impact or damage through products which is happening to the environment like by using paper bags instead of plastics (Carroll and Buchholtz, 2014).

3. Preferred alternative and its justification

Fair trade is a preferred alternative by which firms like Tesco can resolve the mentioned ethical issue that is, keeping customers unaware of complete information of products offered to them. Through fair trade, firm will communicate with the customers through different media like print, digital and social to provide them fair information that is true to their knowledge. It will increase the trust and loyalty of customers and they will become brand loyal. In addition to this, company will not be required to make extra efforts to retain these customers (Wright and Bennett, 2011). It will ultimately increase the goodwill of organization in market along with sustainability.

Conclusion

It can be articulated from the above report that maintaining ethics and sustainability in business is highly significant as it put a direct impact on the associated stakeholders. Being ethical proves to be highly beneficial for firms operating in retail industry as it improves the financial performance of business, increases brand value, helps in achieving long terms growth and success as well as reduces operating cost along with gaining a competitive edge over others.

Recommendations

Firms like Tesco in retail industry of UK can gain many benefits by adopting ethical practices like performing Corporate Social Responsibilities (CSR), fair trade, going green in products offered, etc. In order to stay in the competition for longer span of time, companies should perform all ethical activities effectually. Also, firms can use the latest techniques for maintaining product’s safety and doing ethical sourcing especially for clothing. By this way, they would be able to satisfy all stakeholders associated with business and sustain for a long term.

REFERENCES

  • Becker, C., 2011. Sustainability ethics and sustainability research. Springer Science & Business Media.
  • Biedenweg, K., Monroe, M.C. and Oxarart, A., 2013. The importance of teaching ethics of sustainability. International Journal of Sustainability in Higher Education. 14(1). pp.6-14.
  • Cantú-Martínez, P.C., 2015. ETHICS AND SUSTAINABILITY. Revista Latinoamericana de Bioética. 15(1) pp.130-141.
  • Carroll, A. and Buchholtz, A., 2014. Business and society: Ethics, sustainability, and stakeholder management. Nelson Education.
  • Gibson, K., 2015. Ethical Issues in Retail. [Online]. Available through: <http://www.icaew.com/en/technical/ethics/framework-for-resolving-ethical-problems>. [Accessed on 28th March, 2017].
  • Krainer, L., 2011. Ethics and Sustainability (pp. 153-160). Nomos Verlagsgesellschaft mbH & Co. KG.
  • Wright, N. S. and Bennett, H., 2011. Business ethics, CSR, sustainability and the MBA. Journal of Management & Organization. 17(05). pp.641-655.
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