There first Tesco store in north London (Tesco

There has been
an increase of ethical concerns in regards to how businesses conduct themselves
and the various impacts of some business practices towards stakeholders. Ethics
in the business world deal with issues addressing right and wrong in terms of
situations, decisions and activities in a business (Crane & Matten, 2010). Business ethics are
related to an organization’s social responsibility which is defined as the responsibility that lays with the organization to
the community that it operates in (Hartman, et al., 2014).

The act of selling food that is contaminated and
therefore not fit for human consumption is an unethical business practise and
it is punishable by different laws in different countries. Food contamination
is when food is made unpure by an external substance. Food can be contaminated
by three types of substances which are cheminal, physical or biological (Santacruz,
2016).
Food contamination can occur at any stage including the production stage or
while the food is being stored (Sheen, 2012).

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1.1.Background of the company

The company of interest
in this report is Tesco Stores Ltd. Tesco PLC is a one of the world’s largest
multinational companies in the retail industry with operations in 11 countries
including the United Kingdom, Hungary, Czech Republic, China, Malaysia, Ireland
and others. Tesco PLC is a British company that deals in providing groceries
and general products to its valued customers in both their stores and online.
Tesco Store Ltd first started in 1919, London, by Jack Cohen who started
selling some groceries from a stall. In 1924, Tesco made its first very first
product that had the Tesco brand and 5 years later, Jack Cohen opened the very
first Tesco store in north London (Tesco PLC, 2017). Today, Tesco owns hundreds of products
with the Tesco brand and have a total of 6,902 stores in the above mentioned
countries around the world (Tesco PLC, 2017). Tesco’s mission statement is, I quote, “to be the champion for customers,
helping them to enjoy a better quality of life and an easier way of living” (Tesco PLC,
2017).

 

 

 

2.0.Tesco Stores Ltd Rodent Scandal

On the 21st
of October 2008, one Tesco Extra Store located in Western Avenue, Cardiff, was
brought before the Cardiff Magistrates Court following a scandal where the
store delivered to a customer, a chocolate cake that was partly eaten by
rodents (rat) (BBC News, 2008). Local residents had
ordered a caterpillar themed chocolate cake to be delivered to their home for a
kid’s birthday celebrations (Daily Mail, 2008).

Fig. 1: BBC NEWS
article on Tesco rodent scandal

According to an
article by Daily Mail (2008), the mother of the
child was terrified after she found that the cake box as aswell as the £4.98 caterpillar chocolate cake itself had been
munched on and partly eaten. From the looks of the nibbling, it appeared that
it had been done by rodents (see Fig. 2 and 3 below). The mom reported this to
the environmental health chief who, after further investigation, confirmed that
rodents had tempered with the food (Daily Mail, 2008).

Fig. 2: Chewed
box                                    Fig. 3: Caterpillar
Chocolate cake

Further
investigation found that the box and contents had been chewed through by
rodents while pending delivery at the Tesco Stores Ltd warehouse which resulted
in prosecutions being brought forward by Cardiff council for sales of food that
is unfit for human consumption. Figure 2 and 3 on the previous page show the
photos of box and the caterpillar chocolate cake that were presented as evidence
to the Cardiff Magistrates Court (Supermarket UK, 2008). During the
prosecutions, the prosecutor, Julia Reynold brought to attention the findings
of an investigation conducted by Cardiff food safety team on the conditions of
the warehouse in which the food for delivery was being kept while waiting for
home delivery.  The team found that
orders were being kept at, I quote, “an unprotected external part of the store
despite store management being aware of ongoing rodent activity in the outside
area” (BBC News, 2008).

The prosecutor
had evidence of the fact that both Tesco Stores Ltd and the management were
well aware of the rodent activity in that particular area as a result of an
earlier case where Tesco management were urged by council officers, to stop
storing food that is susceptible to pests externally. Tesco Stores Ltd pleaded guilty
to the offence and were fined with £8,000
and Tesco was also ordered to pay prosecution costs adding up to £8,000 by the judge.

In an article
written by Irvine (2008) on The Telegraph, the
mother, who discovered the unfortunate condition of the cake, said, and I
quote, “We were disappointed that they (Tesco) only attempted to contact us to
apologise about the incident three days before sentencing took place”.

Refer to appendix 2 for BBC News article on the
scandal.

2.1.Rodent Scandal effects on Tesco’s stakeholders

The stakeholders
affected by this scandal are:

·        
Customers (the customers that made the order)

·        
Government agency (the Cardiff council)

·        
Stakeholders (Investors)

Customers

Those customers
that made the order were highly affected by this scandal. Firstly, they were
affected because they were exposed to things that were contaminated by rodents
and that in itself could cause allergic reactions and possible infections as a
result of the bacteria left on the box. Breathing in air contaminated by
rodents, being in contact or eating food that has been contaminated by rodents
can result in diseases because rodents carry around different viruses and
spread the viruses with things they come into contact with (Rentokil, 2017). The
mom was specially affected because of the terror that she experienced when she
discovered that the box and food were chewed on by rodents. The scandal caused
the family disappointment on a day when they were celebrating an important
event (the child’s birthday) and the fact that Tesco Stores Limited did not
issue an apology to them until only 3 days before the sentencing did not help
in the matter.

Government
Agency (Cardiff Council)

This government
agency was affected by this scandal from a perspective of costs. After the
incident was reported, the council conducted investigations to gather further
evidence that would help with the prosecution. Investigations require the use
of resources such as time and money. These resources are costs the council had
to encounter as a result of this scandal that would have otherwise been avoided
or invested in something else.

Investors/Stakeholders

The stakeholders
will be affected because the scandal ended with Tesco having to pay a fine
which is a cost to the stakeholders. In addition, the investors may be affected
by a decrease in the value of shares of Tesco resulting from the bad press that
this scandal can create. Bad press would lead to the firm being discredited
making it less appealing to potential investors hence the decrease in share
price.

3.0.Company policy, Code of Ethics and Law

3.1.Company Policy

Tesco’s code of
conduct is aimed at protecting the company by ensuring that the company follows
all laws and policies. Like most supermarket stores, Tesco Stores Ltd has code
of conduct and policy for the quality of their food and product. In their
policy, Tesco recognizes the need for high quality goods and products and the
trust that their customers have in them that all their products are safe for
use and consumption and respect the laws and regulations set by government
bodies (Tesco PLC, 2017).

According to
Tesco’s code of conduct for food and product quality, I quote, “We ensure that all
the products we source are safe, legal and meet our exacting quality standards” (Tesco PLC,
2017).
Tesco’s policy includes a food safety management system installed in their
stores and distribution centers which requires daily monitoring and checking of
safety and quality of food (Tesco PLC, 2017). In order to
maintain standards some of the activities in the daily monitoring are:

·        
Checking temperature of food

·        
Personal hygiene

·        
Cleanliness of stores and equipment

·        
Prevention of food contamination

From Tesco’s
code of ethics/policies regarding food and product quality stated above, it is
safe to say that Tesco was in violation of their own code of conducts in this
rodent scandal. They did not live up to the quality standards implied in their
policies especially regarding cleanliness of the store and equipment and
preventing food contamination seeing as they were aware of the rats present in
the same place that they stored the food for delivery but did not take action
to clean the area and to avoid contamination of the food.

See appendix 1
for the Tesco policies on food and product quality.

3.2.Code of ethics

There are
certain ways in which businesses are supposed to deal with incidents and
unethical practices that affect stakeholders. According to the Food Standards Agency (2017) in Wales, companies that
have sold food that they are aware may be contaminated are advised to extract
or recall the food back to the business and issue food that holds up to quality
standards instead. While taking this into account, Tesco failed to uphold this
because they did not make any effort to recall the chocolate cake even after
being aware that it might be contaminated after being stored in an external
area that they were aware had rodents.

A similar scandal took place in 2016 where rats were
found in a chili tank in a Giant Supermarket operating in Malaysia. After being
made aware of the contamination, the Giant immediately removed the chili tank
and shortly after, Giant management issued a statement apologizing for the
disappointment and inability to prevent the incident (World of Buzz, 2016).

 

3.3.Law

The Wales laws
and regulations that Tesco breached are:

·        
Food Safety Act 1990 (Section 8)

·        
Food Safety Act 1990 (Section 14)

·        
Food Safety (General Food Hygiene) Regulations
1995

Food Safety Act
(1990), Section 8 (1)(a) reads, “Any person who sells for human consumption, or
offers, exposes or advertises for sale for such consumption, or has in his possession
for the purpose of such sale or of preparation for such sale any food which
fails to comply with food safety requirements shall be guilty of an offence”
where food that is unfit for human consumption is defined in Section 8 (2)(c)
as, I quote, “it is so contaminated (whether by extraneous matter or otherwise)
that it would not be reasonable to expect it to be used for human consumption
in that state” (Legislation.gov.uk, 2017). Under Section 8 of
the Food Safety Act 1990, Tesco Stores Ltd is guilty of an offence because Tesco
sold and delivered a chocolate cake that was contaminated by rodents making it
food that any rational human wouldn’t expect to be fit for human consumption.

Section 14 of
the Food Safety Act (1990) talks about the sale of , I quoted, “food not of the
nature or substance or quality demanded” by the consumer (Legislation.gov.uk, 2017). Section 14 (1) of
the act states and I quote, “any person who sells to the purchaser’s prejudice
any food which is not of the nature or substance or quality demanded by the
purchaser shall be guilty of an offence” (Legislation.gov.uk, 2017). According to this
act, we can deduce that Tesco is guilty of an offence because Tesco sold food
that was not of the quality that was demanded by the consumer seeing as the
food (cake) that Tesco sold was partly eaten by a rodent. Refer to appendix 3
and appendix 4 for more on Food Safety Act 1990.

In addition, Tesco
failed to respect the regulations set out for the place in which food is being
sold and stored. Schedule 1, chapter 1 and paragraph 2(c) of the Food Safety
(General Food Hygiene) Regulations 1995 reads, “the food premises shall permit
good food hygiene practices, including protection against cross contamination
between and during operations, by foodstuffs, equipment, materials, water, air
supply or personnel and external sources of contamination such as pests” (Legislation.gov.uk, 2017). Tesco Stores Ltd
clearly failed to respect this regulation seeing as the place where the orders
were found to have been being stored were contaminated by rodents. To make the
matter worse, the management was aware of the presence of the rodents and continued
to store food there. Refer to appendix 5 to view the regulation.

4.0.Recommendation

From a personal
point of view, I do not agree with how Tesco dealt with the rodent scandal to
begin with. My biggest dispute with the way Tesco dealt with the issues is because
they did not apologize to the family that was affected by the scandal in the
beginning and they only came to make an apology 3 days before the sentencing.
In my opinion, Tesco did not show that they were sincerely sorry in this
particular case seeing as they did not come forward to take responsibility and
apologize to the family as soon as they were made aware of the issue at hand.

With close
attention into one theory regarding making ethical decisions in corporations
called the  Normative Stakeholder theory (Hartman, et al., 2014), we can deduce that
Tesco ought to take the stakeholder’s interests into great consideration when
making a decision of what to do after the rodent scandal. The normative
stakeholder theory is a theory that says that organizations ought to make
decisions that are fair to all their respective stakeholders (Weiss, 2006)
and not just to shareholders (Hartman, et al., 2014).

Taking into
account the theory mentioned above, there are two suggestions that I would
recommend that Tesco would have done to deal with the rodent scandal. The two
suggestions are:

·        
Issue an apology letter to the family and to the
general public

·        
Make efforts to rectify the distress the family
had encountered

Knowing that
they had caused distress to a member of the public, Tesco Stores Ltd should
have taken responsibility for the scandal in a manner that would inform its
consumers that their well-being is cared for and that providing good quality
products for them is important to the business. Tesco would have made a public
apology letter as well as an apology letter to the family that was involved in
the scandal, recognizing its responsibility and role in the scandal and making
it clear that measures will be taken to ensure that this type of incident does
not occur again. Taking responsibility publicly would give advantages because
consumers would acknowledge the apology as an effort to remedy the situation
and it would decrease the risks of Tesco losing customers as well as
credibility as a result of the rodent scandal.

Having issued
apology letters, Tesco would go a step further in order to rectify the distress
that was caused to the family as well as ensure that the health of the family
was not put at risk. Tesco would, for instance, send a gift basket to the
family and offer them a discount card usable at all Tesco stores. Taking into
account the health hazards that being in contact with rodent contaminated
materials presents, Tesco would cover the costs of the family getting a check
up to ensure that they do not have signs of any infections that are causes by
rodent carried viruses.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5.0.Conclusion

In conclusion,
this report covered an unethical business practice scandal that took place in
Cardiff, Wales which involved Tesco delivering a chocolate cake that was
ordered for a child’s birthday party that was found to have been corrupted by rodents.
Tesco was prosecuted and fined. The report also covers the company policy, code
of ethics and laws and regulations in relation to the sale of contaminated food
products. Lastly, the report covered recommendations for how Tesco Stores Ltd
would have dealt with the rodent scandal in relation to a relevant theory called
the normative stakeholder theory.