Tesco PLC and TPG Telecommunication Case Analysis

Tesco PLC and TPG Telecommunication Case Analysis

Tesco PLC is ranked in the business market as a multinational grocery store. Apart from the grocery sector, it has ventured into other merchandise products through opening of other retails in different countries across the world. It is the second largest business operation retailer in the world, after Walmart, in terms of profits and revenues. Its stores are operational in twelve different countries across the world.1 TPG Telecom Limited is a telecommunication and information technology (IT) company that it is located in Australia. The company is specialized in offering services and products to consumers. The background of the business is consumer and business services for the users in the region. In addition, it offers mobile telephones service to its customers.2

The two companies were faced with the issues of misleading advertisements given to their customers. The ethical problem had a major negative influence across the globe on the two businesses. The issues arose differently for the companies in the relevant fields of their operations. The companies had to react differently to the problem facing them in the public domain. The misleading advertisements caused them to lose profits in large scales in the course of running their businesses. In the case of Tesco, it suffered a major setback not only on its grocery products but also on other services that it offered in the line of its business across the world. The business faced bad publicity after different grocery products were tested and deemed positive of horse and pig DNA.3 The company’s bugger was the most affected product. The hostility did not only come from the countries where it had established business roots but also from their subsidiaries, where they had an interest in expanding. The company had published an article claiming that the meat issue was affecting the whole industry in general. This attracted negative reactions from the other meat retailers, who claimed that such an advertisement was misleading for the public. The consumers will assume that even other meat and meat products suppliers were affected by the same problems, of which it was not the case. Most consumers shunned from their products because of the outcome they feared it would have on them. The meat scandal was majorly taking place in the European market, where the company had established its stores. The issue arose in 2013, when concerns were raised about testing the products, and some were found to be containing horse meat elements to the level of 29%. The company took the initiative to apologize in the newspapers for the issue affecting them, and to inform the public. The apology contained the reasons for the problems facing the company, and at the said time the information concerning the meat issue. The apology was aimed at removing liability from the company’s management and generalizing the problem affecting the industry. The consumers felt that they were being duped to buy the products based on the previous policies that did not apply to the current state of affairs. The attempt of the company to counter the negative publicity in the world was viewed as a way to avoid responsibility and liability towards its clients.4

The Australian telecommunication company, TPG Telecommunication, was also hit by the issues of misleading advertisements provided to its clients across the Australian market. The issue of overcharging for their products and services, which was a contrary to their mode of advertisement, was received with hostility by the public in relation to its products.  The company’s misleading advertisement entailed a multi-media advertisement campaign. The campaign advertisement entailed a display of prominent offer of unlimited ADSL2+ service for $29.99 per month. The company was sued by the Australian consumers’ authorities for its misleading services to the citizens.5 The problem arose between 2010 and 2011, when the company faced legal implications. The concerned was brought up by subscribers, who felt duped and robbed because of paying more for services that were considered cheap and affordable in the advertisements given by the company. The company’s marketing team in charge of advertisement had to take precautionary approach methods to cure the arisen concerns of the consumers. The company had to face the legal sanctions within the Australian jurisdiction, to explain itself the issue of the contradicting advertisements in relation to the policies it had established, in order to lure the citizens to adopt its products. The two companies faced stiff penalties and negative response towards their products across the globe, which damaged their established market network.6 Most people shied away from accepting the services they offered, which lead to accumulative losses to both companies. The losses forced Tesco to drop some of its top management to counter the expenses that they had incurred, in order to manage the salary scales of each worker still contracted with a business entity. TPG was also faced with several complaints of unethical work practices. The concerns by many subscribers were the issue of being harassed by the company’s employees to the consumers through minor details. The company was forcing its users to pay certain fees, in order to be provided with services. Further, if a subscriber had the intention of shifting to another provider, he or she was questioned on the intentions, because most of people feared to face bad publicity and a misleading effect on their policies.7

A company concerned with the global business has to be aware of the different working relationships that exist among the countries. The global market is considered to be a market of multicultural economic interactions, and it should be approached by means of a precautionary approach to managing the business.8 Globalization has provided the two companies with a big business opportunity, of which both businesses has to consider taking. The expansion to the global field demands consideration of a multicultural environment, which will help to avoid the bad publicity. Some aspects that will boost the two companies to work at a global scale environment will include several policies required in such an environment. Being flexible regarding all persons by the management is a major attribute. A flexible management team will appreciate that it is dealing with different personalities across the globe, irrespective of their country of origin. They will have to understand that people have varying beliefs concerning their race, religion, and nationality, which influences running a business or even consuming the products available. The managerial team will have to avoid judging them based on these attributes. An employee in the two companies in such a global environment must learn to treat the consumers in a fair manner. There is a general rule in the business world that the customer is always right, which should be a guiding factor. The services offered should be provided according to the expectations of the consumers at all levels. The consumer must feel satisfied, whenever he or she is being served with any product of the two companies. The management team in charge of holding the company should learn to delegate taskforces to its subsidiary companies, based on their potential of the market.9 A subsidiary should be offered with the products that will provide the possibility for the stock to be cleared by its consumers within a reasonable time rather than stocking what cannot be consumed. Another attribute at the global level is to learn to listen to the demands of the customers and consumers before making any judgments or conclusions on what the consumer might require at the end of the day. The consumer should also be given a chance to communicate his demands or specifications in terms of a service or product delivery, irrespective of his or her purchase price in any of the retailers. Here, the information on the specification of the customer in the multicultural business working environment for the two companies will be conveyed for the right decisions to be made. Such approaches will improve the communication channels between the business operations and the consumers. Finally, the managerial team should have a periodical work review in such an environment for all its retailers. The checks and balances of every retail or branch store in terms of work and profits will keep the team focused on the established policies. Each station will keep its deadlines to avoid unnecessary negative conflicts.10

The two companies had their challenges concerning the misleading advertisement, handled by their respective managerial teams with different approaches. The concerns of the problems were both internal and external. In the scenario of Tesco, the business had to take drastic steps to secure its image across the global market. Some of the steps as mentioned earlier include dismissing some members of the top management team, who took the blame for the meat scandal issues. The scandal was treated as an industrial problem, and someone had to face the consequences that came with it. The company had to retract its products from the stores. Further, the company also sorted the services of a new chief executive to manage it.11 This strategy was chosen, in order to bring a positive image to it and to give hope to the consumers of its credibility to offer better services. The stakeholders had to make the decisions in the best interest of the public, both at the local and global level. The decisions were majorly to save the image of the company in terms of the trust it had created across the globe over a long period. Stakeholders had to fire some members of the management team, based on their decisions about running of the business in their respective levels and branches. Different global newspapers had also covered the story that was considered bad publicity in terms of the company and its business transactions globally.

TPG, on its part, concerning the misleading advertisement, preferred taking the legal channels. When the company was sued for misleading the consumers with its services, it preferred to go to the court and to face the charges instigated by the Australian authorities to clear its credibility. The court of the first instance ruled against it, which was a blow to its publicity. The company had to appeal, but it was offered a lesser fine to pay. The credibility issues were majorly connected with the services it offered to its subscribers, who complained of being duped to pay unnecessary charges for using their services. The TPG stakeholders preferred to tackle the problem through the court process, in order to clear the doubt casted by the public regarding its services and products. The approach to be taken through the court process created a public hearing for the company to be declared innocent through the same legal instruments that were acting against its interest.12 The company had a chance to prove its case and to stick to its established policies during the set-up of the business. The company stacked to its original policies, which it considered relevant, and which each consumer was under a contractual obligation to be bound.13

The approaches taken by the two different companies to clear their ethical issues concerning the misleading advertisement had a positive impact, but were grounded on different measures. The approach chosen by Tesco was a long-term approach to clear the doubts of consumers about its products. The company ensured that all the loopholes are sealed in terms of management and customer doubts. The approach adopted by TPG was a short-term approach that still had loopholes in the future. Although both approaches have cured the ethical problem that had arisen within the two companies, the managerial teams in each company have to adopt the global values on conducting the business in a multicultural environment.

Endnotes

1 Finch, J 2010, ‘Tesco opens its first zero carbon store’, The Guardian.

2 Mason, M 2013, ‘TPG to acquire AAPT for $450m from Telecom NZ’, The Sydney Morning Herald.

3 Tan, M 2011, ‘Banned pesticides detected on vegetables in Tesco and other supermarkets in China’, Greenpeace East Asia.

4 Horsemeat scandal: Tesco reveals 60% content in dish 2013, BBC News.

5 Ramli, D 2013, ‘High court looms for ACCC vs TPG’, The Australian Financial Review.

6 Telco/ISP 2013, ‘TPG to build fibre to the basement’, iTnews.

7 LeMay, R 2010, ‘TPG ads: has the ACCC gone too far?’ Delimite.

8 Leahy, T 2012, Management in 10 words, Random House, London.

9 Meyer, E 2012, ‘Managing confrontation in multicultural teams’, Harvard Business Review.

10 Ganguly, A 2012, ‘How to lead multicultural team’, Sustainable-Sphere.

11 Thompson, J 2011, ‘Domino's Pizza lines up Lance Batchelor as next chief executive’, The Independent.

12 Colley, A 2010, ‘TPG finalizes pipe buyout’, The Australian.

13 Adhikari, S 2013, ‘TPG's spectrum surprise’, Business Spectators.

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