MKT60010 Marketing Management Assignment Sample
Assignment: Case Analysis
Aim: This assignment aims to assess ULOs 1, 2, and 3 for the unit of study.
Nature of assessment: Individual
Word limit: 2,500 words
Tesco in China: How could things go so wrong?
Case study link - https://www.neilsonjournals.com/JIBE/JIBEpromos/TescoinChina14P.pdf
TESCO is a well-known organization across the world, it deals with variety of goods ranges, however in China it failed terribly. There were many reasons of the failure of TESCO in China, one of
the key reasons were poor marketing and change in retail sector landscape in China. This study will focus on the Tesco, a big British multinational retailer's experience in China. Tesco's goal of actively participating into to the Chinese market did not succeed, considering the market's overall health and other favourable factors. The case focuses on the dynamic nature of the Chinese retail industry and the difficulties that companies like Tesco are encountering there. This example might be used by international business, marketing, and strategy professors to illustrate the difficulties of operating in China's rising market, where the battle for market share is fierce from both foreign and domestic firms.
The study will focus on key marketing issues & macro environment analysis including the PESTLE analysis of TESCO in china leading to threats and opportunities, further target customers and their behaviour along with the marketing mix & its 7Ps will be discussed to establish coherence of the marketing mix and target customers & Integration of the key and relevant marketing concepts. Further Survey will be conducted in order to attain the thoughts of people on failure of TESCO in china, lastly
2 key matrices for marketing and the justification of the choices will be done.
TESCO have faced a sever failure in the China and its marketing strategy failed due to number of factors, such as strict laws of China, cultural and community issues of China, poor marketing strategies and lack of conducting analysis for the customer segment.
Macro-environment analysis using the PESTLE framework
The success of a company is heavily influenced by macroenvironmental factors. Shareholders may be able to spot new trade opportunities, increase the size of the firm's inventory, and broaden their reach into existing and potential markets by keeping an eye on these macro-environmental variables, which affect the demand for a company's goods. Tesco, with headquarters in the United Kingdom, is only one of many multinational corporations that takes use of macroenvironmental elements in its international business operations.
Table 1: PESTLE Analysis
Opportunities and threats imposed on TESCO’s operation in the Chinese market
Table 2: Threats & opportunities
Target customers and their behaviours
Target customer segment
The key customer targeted by TESCO is the young ones and the middle-class family who loves to have the best quality goods and food at an affordable process.
Demographics- Male, female, kids
Marketing Mix strategy for Tesco
Product- Food, clothes, stationery, cosmetics, gadgets, financial services, and more are just some of the many categories that Tesco caters to. With a constantly growing selection of goods, it meets the needs of each buyer. It offers a wide variety of categories stocked with top-quality brands. It also manufactures its own goods. Tesco has many of its own labels, such as Everyday Value, Tesco Value, and F&F Clothing. However, it's important to note that the kind of establishments clients frequent determines the variety of product categories that are available to them.
Price- Every store, but notably those in China, appears to have the greatest trouble with its pricing approach. In light of regional differences in purchasing power and price sensitivity, stores should set their own pricing. TESCO Offering products at discounted prices has the potential to rapidly boost sales. An intricate process for maintaining profit lies behind the seemingly inexpensive pricing (Woohyoung et al., 2020). The market reference price, incentives, and promotional activities are three major contributors to the pricing process. Tesco offers competitive prices, however, the quality of its items is compromised.
Promotion- The widespread use of many forms of marketing is remarkable. Increasing TESCO's prominence in consumers' minds via consistent advertising campaigns increased the brand's perceived value. Tesco has to include a greater share of new media in its advertising plan, including instant messaging, Weibo, movies, Weixin, and public transportation. Tesco opts for a more conventional approach to advertising and pays little attention to the ascendance of new media (Khanta and Srinuan, 2019).
Place- A recent study found that choosing a good market location is the single most crucial aspect of a successful retail business. TESCO should not only consider the physical location but also the political, economic, social, and cultural factors as well. the financial might of each area and the kind of enterprise that will thrive there. The location's accessibility makes for promising prospects. Also, Tesco would do well to target smaller urban centers in an effort to expand its customer base (Tian, 2020).
People- the key targeted customers of TESCO are people who are cost conscious, it is well known that TESCO offers the facilities at affordable costs which makes it a promisingly desirable supermarket.
Process- A business process is a predefined series of steps used by an organization to complete a certain job, such as fulfilling an order placed by a client. To complete a purchase at a physical Tesco shop, consumers simply retrieve their items and go to the cash register. They may also utilise automated teller machines (ATMs) to settle their bills (Hanaysha et al., 2021).
Physical evidence- Included in the category of "physical evidence" or "environment" are things like furniture, aprons, menus, brochures, logos, postcards, reports, signs, and equipment. Tesco's logo is fantastic, and the company makes clever use of colour. The merchandise at offline businesses are well organised, making it simple for shoppers to locate what they're looking for. The Tesco website is equally impressive in its design and use (Rahman, 2018).
Figure 1: 7Ps of the marketing mix
(Source: Brooks, 2020)
Marketing research to gauge Chinese customers’ purchase-related decisions
1. Are the new Laws and regulations of Chinese government concerns with the marketing of TESCO?
Figure 2: Survey 1
2. Does integrating the marketing mix with the old marketing strategies will improve TESCO’s customer base?
Figure 3: Survey 3
3. Will the digital marketing of the TESCO in china bring improvement in the market and ROI?
Figure 4: Survey 3
4. Is poor marketing and not following the culture of China and its community the key reason for TESCO failure in china?
Figure 5: Survey 4
5. Will the rise of E-commerce affect other industries?
Figure 6: Survey 5
6. Will the introduction of TESCO in the industry of China or in the market of China lead to the competition?
Figure 7: Survey 6
7. Is the implementation the digital platforms and technology in TESCO a sustainable approach?
Figure 8: Survey 7
8. Does the consumer purchasing habits and TESCO not doing proper analysis and research the key reason for TESCO failure in China?
Figure 9: Survey 8
9. Will the late entry into the retail market of china affect the growth of TESCO?
Figure 10: Survey 9
10. Is it necessary to conduct a market analysis of the old failure of TESCO failure and segment the customer base?
Figure 11: Survey 10
The result analysis of marketing casestudy assignment help has shown that people in the favor of TESCO must conduct marketing research before entering into the China market of retail and the old marketing strategies, as well as Chinese laws and regulations, have created a severe hindrance in the TESCO business. Hence, TESCO must come up with an extraordinary strategy this time to avoid the loss and follow all the guidelines of the Chinese government made for the retail industry.
2 KEY MARKETING METRICS TO MEASURE MARKETING STRATEGY SUCCESS
Metrics in marketing for TESCO are parameters tracked by professionals to assess how well their efforts are doing. These metrics may help TESCO assess how well TESCO marketing is influencing customers to do the desired activities and ultimately create revenue. Marketers are experimenting with new strategies to connect with the digital-first demographic. Consequently, they feel compelled to diversify the parameters by which their marketing campaigns are evaluated.
As, TESCO has severely failed in the China and is now looking forward to establish their market into the China, they are also coming up with the digital marketing strategies and engagement of the digital platform in order to align with the Chinese culture and personalised services. For such scenario, the 2 key marketing matrices are as mentioned below-
1. (Retention matrix) Return of investment- this will indicate how much TESCO has invested and the gain it acquired against its investment in the Chinese market.
a. Customer churn- That's the pace at which consumers cease purchasing or paying. Especially important for premium account businesses.
b. ROI Growth in existing customers- If this measure goes up, it means that TESCO's marketing and sales efforts are successfully persuading clients to buy from the business more often or spend more money overall. Instead, if there's a fall, it has to be looked into and fixed right away.
c. Net promoter score- This indicator informs TESCO how inclined a consumer is to promote business products or services to others using a scale between -100 to +100 (a rating of 1-10) (Valve and Meter, 2018).
2. E-mail marketing matrix- One of the most effective methods to contact and interact with your target audience is via email. TESCO Marketers may evaluate the success of the email marketing by looking at things like-
a. Email open rates- Open rate is the ratio of email opens to total receivers. An engaging subject line increases open rates.
b. Bounce rate- It's the number of undeliverable emails. Hard bounces (false or non-working addresses) and soft bounces (limited difficulties) must be assessed to improve subscription lists.
c. Click through rate- Higher CTRs suggest good email text, design, CTAs, etc.
d. New subscriptions- Subscriptions trends may effectiveness uncover brand engagement drivers. This digital advertising statistic helps direct email promotion and marketing (Salesforce, 2021).
Justification of choosing these 2 metrices
In the world of digitalisation, it is known that TESCO is looking to expand its business through digital platforms however, China has banned the internet.
Nevertheless, it has introduced its internet explorer and TESCO can used for marketing. These marketing strategies are the most effective one, as they both will offer the measures for ROI of TESCO and further through the analysis and the results, TESCO will be able to develop new strategies. Email marketing metrics will help in analysing the customer base (interested and non-interested people).
PESTLE analysis. (2018, October 6). PESTLE Analysis for Tesco discusses its Business Environment. PESTLE Analysis. https://pestleanalysis.com/pestle-analysis-tesco/
StudyCorgi. (2022, October 17). Macro Environment Impacts on Tesco Company in China | Free Essay Example. StudyCorgi. https://studycorgi.com/macro-environment-impacts-on-tesco-company-in-china/
MBA Skool. (2020, January 26). Tesco PESTLE Analysis. MBA Skool; MBA Skool. https://www.mbaskool.com/pestle-analysis/companies/18023-tesco.html
Valve and Meter. (2018, September 26). 13 Measurable Marketing Metrics That Define Success. Valve and Meter. https://valveandmeter.com/measurable-marketing-metrics/
Salesforce. (2021). Marketing Metrics: What They Are, and How to Use Them to Measure the Success of your Outreach. Salesforce. https://www.salesforce.com/in/blog/2021/11/marketing-metrics.html#:~:text=make%20marketing%20successful-,What%20are%20marketing%20metrics%3F,take%20actions%20that%20generate%20value.
Tian, Q. (2020). Modern Economics & Management Forum Analysis on the Business Strategy of Tesco in the Chinese Market.
Brooks, A. (2020, December 3). The Marketing Mix: Building a Strategy With the 7Ps. Venture Harbour. https://www.ventureharbour.com/marketing-mix/
Khanta, F., & Srinuan, A. P. D. C. (2019). The relationships between marketing mix, brand equity, lifestyle and attitude on a consumer’s private product brand purchasing decision. African Journal of Hospitality, Tourism and Leisure, 8(5), 1-14.
Woohyoung, K., Kim, H., & Hwang, J. (2020). Transnational corporation’s failure in China: Focus on Tesco. Sustainability, 12(17), 7170.
Hanaysha, J. R., Al Shaikh, M. E., & Alzoubi, H. M. (2021). Importance of marketing mix elements in determining consumer purchase decision in the retail market.
International Journal of Service Science, Management, Engineering, and Technology (IJSSMET), 12(6), 56-72.
Zhang, X. (2020). Analysis of Cultural Differences in China-Uk Joint Ventures.
Rahman, M. (2018, May 28). Marketing mix of Tesco (7Ps of Tesco). Howandwhat. https://howandwhat.net/marketing-mix-tesco-tesco-marketing-mix/#:~:text=It%20analyses%20the%207Ps%20of,the%20company’s%20business%20%26%20marketing%20strategies.
BUS2003 Sustainability and Ethics Assignment Sample
Follow the below case study to complete the assignment -
The Chinese coffee chain, founded in 2017, described itself as "a pioneer of a technology- driven new retail model to provide coffee and other products of high quality, high affordability, and high convenience to customers". It had rapidly expanded to have more than 4,500 outlets by 2019. Luckin made false statements and fabricated its financial performance to lure in investors. Luckin failed to disclose accurate revenue and expenses, and also obtained money through false bank statements.
2. Purdue Pharma opioid marketing
Over the past 20 years, efforts have been made to hold Purdue Pharma and its owners liable for their contribution to the opioid epidemic. In a 2007 plea agreement with the United States, Purdue admitted that its marketing of the drug OxyContin was misleading and that it was addictive. Additionally, the vast majority of Purdue’s profits after 2007 resulted from its marketing of OxyContin. The wide use of opioids continued to grow, and in 2017, the U.S. Department of Health and Human Services declared the crisis a public health emergency
3. Theranos Fraud
Theranos was an American health technology company established in 2003, that claimed to have invented a device that could complete extensive blood tests with only one drop of blood. The company was not able to develop this technology properly and patients were misdiagnosed and given false test results. The founder Elizabeth Holmes misled investors and claimed much higher company profits than were achieved. She was 19 years old at the time of starting the company and was able to raise $700 million from investors. In 2022 Elizabeth Holes was found guilty of fraud and is awaiting her sentence.
4. CBS Sexual Harassment Scandal
The #MeToo movement saw millions of victims break their silence on stories of abuse, leading to convictions for some the most powerful men in politics, business and entertainment, and an improvement in sexual harassment awareness by the public. One of the largest institutions that faced widespread accusations of sexual misconduct was the American television and radio network CBS. High level players in CBS such as the CEO Les Moonves, TV anchor Charlie Rose, and executive producer Jeff Fager, lost their jobs after being accused of sexual misconduct, and a number of employees have spoken out about the company’s hostile culture.
5. Coca Cola greenwashing
Earth Island Institute filed a lawsuit against the Coca-Cola Company, the American multinational beverage corporation, for its false and deceptive portrayal as a sustainable and environmentally friendly company while in reality generating more plastic pollution than any other company in the world.
6. “996” overtime in Chinese tech companies
996’ work culture in China is the expectation in some industries, especially internet companies, that work should last from 9 am to 9 pm six days a week. Chinese company Pinduoduo took criticism for poorly handling the death of a staffer, only to face boycott calls a week later after the reported suicide of another employee. Other companies have also had deaths of young workers. Later, the Chinese Supreme People’s Court (SPC) and the Ministry of Human Resources and Social Security (MOHRSS) ruled 996 illegal, however many companies still pressure workers to follow this expectation.
7. Commonwealth bank financial planning scandal
Australia’s Commonwealth Bank customers lost hundreds of millions of dollars after financial planners put their clients' money into high-risk investments without their permission. The Senate committee looking into CBA's financial planning arm found the bank had not dealt appropriately with complaints over poor advice and alleged fraudulent practices by some of its planners.
8. Wells Fargo Fake Accounts
Wells Fargo is an American bank and financial company established in 1852. In 2016 it was revealed that the bank staff were opening additional accounts without the consent of the customers. The management of the bank had set very high sales goals for staff and many staff found the only way to meet sales targets was to create fake bank accounts. The bank fired approximately 5300 employees between 2011 and 2016 but claimed that upper management was unaware of the practices. The company faced civil and criminal suits reaching an estimated $2.7 billion by the end of 2018.
9. 3M ethical compliance
In 2021 3M was named as One of the World's Most Ethical Companies by Ethisphere Institute for 8th Consecutive Year. 3M's Code of Conduct is part of 3M's values and is a competitive advantage. It is what makes 3M's reputation as an ethical company among consumers and across many industries. 3M leaders create and promote a workplace environment where compliance and ethical business conduct are expected and encouraged by leading through example.
10. Lego sustainable materials
Three years ahead of schedule, the LEGO Group achieved its ambition to balance 100% of its energy use with energy from renewable sources. Lego then invested about $150 million in the establishment of a Sustainable Materials Center at it Danish headquarters in Billund which set more than 100 employees on the task of Lego using fully sustainable materials in its products by 2030. They aim that by 2025 all LEGO packaging will be made from renewable or recycled materials, will be made as efficiently as possible, and will be easy for consumers to recycle.
Ethics and culture are important parts of any business unit. It helps to create and build trust amongst different stakeholder groups, thus, improving longevity in competitive market share. To obligate businesses to follow ethics, not only do owners and business people establish morally obligated rules; even national and international governments have created rules for enabling individuals and businesses to follow ethics.
Through this marketing case study help , the aim is to define the importance of ethical corporate culture and its linkage with stakeholder theory. It is very important as unethical practices impact business growth and influence society. The case study will help to understand the importance of ethical practices and why the fabrication of accounts is detrimental to business as a whole. The analysis will be done by obtaining information through secondary sources by exploring literature through websites, peer-reviewed journals and others.
Financial scandals have been part of businesses and corporates for a longer time. This has created impacts on economies and societies. In the past decades, fraud in financial scandals has had disastrous consequences, resulting in huge losses for vital stakeholders like investors, creditors, and the business. Financial fraud deals with the misappropriation of accounts, assets and balance sheets which gives a fake representation of the company to investors, which in the long run will result in loss, impact on brand reputation, and criminal and legal charges (Giroux, 2013). Luckin Coffee Chain has falsified accounts, thus creating a situation of distrust amongst different stakeholder groups. The company fails to implement ethical corporate culture, which will impact the business in the long run. The company also fails to build interconnections with stakeholders, investors, customers, banks, and others.
Ethical Corporate Culture and its importance
Toms (2019) examined all the incidences of financial fraud occurring from 1720 to 2009, the paper aimed to highlight regulatory responses for implicating reporting in accounting and finances. The review suggested that all evidence related to frauds and financial scandals was skewed particularly towards banking and finance-related sectors.
Darwish & Abdeldayem (2019) aimed to study and examine the relationship between managing risks and business ethics within GCC areas. The authors highlighted that financial crises, scandals and unethical compliance of corporations had raised awareness of business ethic compliances. The study used surveys from more than 970 individuals from Gulf countries, including Bahrain, Saudi Arabia, Kuwait, Oman and UAE. The empirical findings indicated that ethics mediate strong relations with risk management and business ethics as efficient managing of different business risks is highly reliant on ethics. Thus, the evidence revealed that it is important for all managers to maintain an ethical culture that will ensure that employees follow, thus creating an ethical culture. The study also highlighted that business ethics and risk management should rely on models and frameworks that will cover all phases related to identification, assessing and solving issues of unethical ones.
In this view, humility has been increasingly recognized as one of the important attributes at all levels of employees for building successful and ethical organizations. The research focused by Cortes-Mejia, et al. (2022) on humility mediated by CEO and its impacts on collective perceptions to indulge in strategic decision making. The secondary research indicated that CEO humility influences decision-making that promotes ethical organizational culture. The secondary research was supported by survey results conducted on 120 small and medium firms. Thus, the authors highlighted that humility and strategic leadership greatly impact business ethics.
Additionally, businesses operate in a dynamic business environment requiring managers and owners to make continuous improvements to build a competitive edge. Jurcevic (2022) conducted a literature review that indicated several factors influencing the development of integrated management systems. To ensure an integrated management system, it is important to embed organizational culture with values and integrity. Quality culture is a subset of overall organizational culture, which implies acceptance of quality patterns. Thus, the article highlights the importance of organization for influencing quality working patterns in a morally and ethically way.
In another article by Asher & Wilcox (2022), financial risk management practice was explored using the vertical ethical lens. The article highlighted that managing risks should be embedded in organizational culture, building on virtue ethics, value alternatives and normative expectations. Application of virtues in organizational culture needs reflective and collaborative practice from employees at all levels, while risk culture should be developed by reviewing virtue ethics. In contemporary organizations, risk cultures could be developed with leadership cultures not constructed on monetary capital. Organizations need to recruit and retain financial managers who have developed ethical virtues, while they should not be overwhelmed with legal requirements and compliances. Developing virtue ethics becomes important during leadership and risk failure; internal ethical values help organizations conduct functions on moral and ethical grounds.
Stakeholder Theories is a branch of capitalism which puts stress on interconnected relations among the business and important stakeholder groups like customers, suppliers, employees, investors, and others (Zoghbi-Manrique-de-Lara & Viera-Armas, 2017). R. Edward Freeman developed this theory in 1984 to address moral and ethical values that should be applied when managing organizational functions. It is important to create value for each stakeholder group to cope with competition and survive all stages of the business cycle.
Kim (2022) analyzed news articles that reported South Korean firms' CSR activities. The findings revealed that companies like LG, Samsung and Hyundai had conducted CSR activities during Covid- 19. The companies rapidly identified requirements from routine business activities and responded quickly and flexibly. It was revealed that stakeholder theory was aligned with the CSR activities of those companies as they adopted agile and systematic approaches for targeting specific stakeholder groups for contributing to the creation of social values.
Valentinov & Hajdu (2021) claimed that stakeholder theories usually encompass an instrumental and normative variety, of which the relationship is very unclear. This exhibits classic tensions amongst aspects like self-interests and moral obligation. Valentinov & Hajdu (2021) developed strategies through the study for directing the classic tensions. The study's findings revealed that systematic theoretic information would reflect the functions of real-time institutions. Thus, normative and instrumental stakeholder theories reflect modern organizations' institutional structure. The practical implication of the findings is that managers should be able to adjust complexities when moral dilemmas. Hence, it becomes important for the organization to embed normative and instrumental aspects of stakeholder theory when devising strategies for ethical conduct. Although Waheed & Zhang (2022) the study created arguments that corporate social responsibility embeds three theories: legitimacy, stakeholder and institutional and others. The findings revealed that all the theories are interrelated; hence, underpinning theoretical underpinnings is important for indulging in ethically and morally binding practices.
In addition, Fernando & Lawrence (2014) explored stakeholder theory and practices by evaluating the impacts of corporate socially responsible practice, sustainable competitive performance, and ethical and cultural practices. The empirical and secondary data collection methods revealed that corporate socially responsible practice positively relates to ethical and cultural practices in countries like China and Pakistan. Thus, the findings concluded that sustainable performance of the firms could be achieved by embedding ethical, cultural practices and corporate social responsibility.
The case study chosen for this assessment is Luckin Coffee house. The Lucking Coffee Chain was established in the year 2017. The coffee chain is determined to be a technological pioneer in driving new retail models for providing high-quality and affordable products and customers' convenience. Rapidly the chain was expanded to 4500 outlets, although it had made false statements. It had fabricated its financial performance to attract investors. This failed to disclose accurate information on revenue, costs, and different sources of income. To attract investors, it forged its accounts, while it fabricated bank statements to obtain investments in its business.
To find relevant articles for this study, renowned portals like Proquest, Sage and Google scholar were used. Phrases like "the importance of ethical culture," "Stakeholder theory," and "ethical business practice" were used. The timeline from 2012 to 2022 was selected to acquire updated insights, out of which articles published from 2015 to 2022 were chosen. Each article with pdf access was chosen to allow the scholars to review the entire article through qualitative descriptive techniques. While browsing Proquest, all the relevant articles were found on the first page. Hence, the majority of the information was selected from this portal. Other portals like Google Scholar and Sage were also used for collecting information on the topic.
The articles were selected on their publication date, covered concepts, and linked with the topic. More than 20 articles were searched for literature review, although only 12 could be used within the study.
Case Findings and Recommendations
Ethical conducts are an important part of any organization as it impacts related businesses, employees and important stakeholder groups. The case study revealed that Lucking Coffee had forged its income and bank statement to secure money from the stakeholders. It has highlighted underlying factors like lack of ethical organizational culture, issues while managing ethical dilemmas and false targeting of the stakeholder group.
Firstly, literature identified that fraudulent activities and financial scandals had increased worldwide in 10 years. This suggests a lack of ethical climate within the organizations. Ethical and moral dilemmas of employees at all levels are guided through strong organizational norms and inspirational examples from top management. In the case of the scandal of Luckin Coffee Chains, it is evident that the organization of more than 4000 stores lacks strong organizational norms, due to which employees in the accounts department were encouraged to forge income and bank statements. It might also be the case if they are encouraged and ordered by senior authorities to misguide the stakeholders through enhanced profits and fake disclosure of financial accounts. In addition, the company lacked employees with strong eternal virtue for ethics. Hence they did not protest the management team that persuaded them to follow unethical conduct.
Darwish & Abdeldayem (2019) highlighted strong relations between risk management and business ethics. Thus, the case study reveals that the coffee chain giant lacked proper risk management techniques, which impacted following ethical conduct while managing operations and seeking investments. By forging the revenue and income statement, Luckin Coffee house created a higher risk for the business by adopting unethical practices for seeking investment to support its business. Since the document produced for the investors were forged, the business could fall into serious legal charges and penalties. Also, distrust amongst the investor stakeholder group would impact its future investments and influence its survival and expansion strategies. The legal litigations would impact its brand reputation, thus impacting its capability to attract a customer base. Since the CEO did not mediate ethical behavioural patterns, the employees lacked moral persuasion to produce a report on forged data.
In addition, the company lacked CSR responsibilities, impacting its target of stakeholder groups. As Waheed & Zhang (2022) evidenced that CSR and stakeholder theories are interconnected. Besides stakeholder theories. This statement was further evidenced by Fernando & Lawrence (2014), who argued that corporate socially responsible practice is positively related to ethical and cultural practice. Stakeholder theory reveals that organizations operate ethically and morally to create values for different stakeholder groups. The company failed to apply underlying principles of stakeholder theory. By forging the documents and misrepresenting the figures, Lucking Coffee house did not aim to create value for its investor stakeholder groups, as the company's poor financial performance would result in losses for all.
Lucking Coffee House has adopted unethical practices for conducting business which will impact its business growth in the long- run. The unethical practices will impact stakeholder relations, backed by a lack of ethical corporate culture. The literature has evidenced that ethical culture is important for long-term business growth while adopting CSR practices enables the companies to create value for stakeholders, fulfilling underlying principles of stakeholder theory.
Luckin Coffee House needs to embed ethical corporate culture. Thus, the CEO and top management are recommended to enrol in training and mentoring session, which will provide insights on the importance of business ethics. The sessions will help modify the perceptions of unethical practice, enabling the senior team to establish ethical culture by setting examples for themselves.
The organization is recommended to develop strong operating procedures requiring each employee to abide by ethical and moral conduct of the responsibilities strictly. External auditors should develop the store operating procedures to reduce any biasness while recording figures or performing any financial activity (Zoghbi-Manrique-de-Lara & Viera-Armas, 2017).
Luckin Coffee House is recommended to employ technological tools for recording all the transactions without manual interferences. One software type for recording, managing, and sharing financial data should be used across all 4500 stores to maintain ethics and the same accounting principles. The updates on the financial position of the company should be updated with important stakeholder groups frequently. This will help to embed on transparency principle.
Also, it is recommended to Lucking Coffee House that underlying principles of corporate social responsibility should be embedded within the operational fronts to follow ethical conduct. This will include inviting external and independent auditors to validate the ethical and moral conduct of the operations (Kleyn et al., 2012). All the directors should be independent, thus following the transparency principle under CSR activities. Since CSR and stakeholder theory are interlinked, it will help to create value for specific and general stakeholder groups.
Luckin Coffee House requires ethical culture; hence, it is recommended that employee meetings should be conducted frequently. The meetings would include communication of ethical expectations, deployment of punishment and rewards on such behavioural patterns, and creating perceptions to follow ethical conduct when faced with dilemmas. Ethical training programs should be established through seminars, workshops and others for all employees.
Luckin Coffee house was founded in 2017 to provide good quality and affordable coffee to its clients. Despite a huge expansion of more than 4000 stores across the region, the company failed to meet stakeholder expectations and adopted unethical means of raising funds. The literature discussed that underlying factors of unethical conduct are lack of ethical corporate culture, risk management techniques and reduced application of stakeholder theory. It is recommended that Lucking Coffee house undertake steps for improving ethical and moral compliance through offering ethical training, conducting external audits and deeming all the board of directors independent. It is also recommended that Luckin Coffee House should use strategic options for acquiring profits and meeting stakeholder requirement which will reduce the impetus of unethical conduct.
Asher, A & Wilcox, T 2022, ‘Virtue and risk culture in finance: JBE’, Journal of Business Ethics, vol. 179, no.1, 223-236. https://doi.org/10.1007/s10551-021-04815-2
Cortes-Mejia, S, Cortes, A F, & Herrmann, P 2022, ‘Sharing strategic decisions: CEO humility, TMT decentralization, and ethical culture: JBE,’ Journal of Business Ethics, vol. 178, no. 1, 241-260. https://doi.org/10.1007/s10551-021-04766-8
Darwish, S & Abdeldayem, MM 2019, ‘ Risk Management and Business Ethics: Relations and Impacts in the GCC’, International Journal of Civil Engineering and Technology, vol. 10, no.10, pp.489-504.
Fernando, S & Lawrence, S 2014, ‘A theoretical framework for csr practices: integrating legitimacy theory, stakeholder theory and institutional theory’, The Journal of Theoretical Accounting Research, vol. 10, no. 1, 149-178. https://www.proquest.com/scholarly-journals/theoretical-framework-csr-practices-integrating/docview/1629406998/se-2
Giroux, G 2013, ‘Business Scandals, Corruption, and Reform: An Encyclopedia [2 volumes]: An Encyclopedia (Vol. 2)’, ABC-CLIO
Jurcevic, M 2022, ‘Importance Of Organizational Culture And Quality Culture In Building An Integrated Management System’, Varazdin Development and Entrepreneurship Agency (VADEA).
Kim, S 2022, The COVID-19 pandemic and corporate social responsibility of korean global firms: From the perspective of stakeholder theory, ‘ Emerald Open Research, https://doi.org/10.35241/emeraldopenres.14511.1
Kleyn, N. et al., 2012, ‘ Building a Strong Corporate Ethical Identity: Key Findings from Suppliers’, California Management Review, vol. 54, no. 3, pp. 61–76. doi: 10.1525/cmr.2012.54.3.61.
Toms, S. 2019, ‘Financial scandals: a historical overview’, Accounting and Business Research, vol. 49, no. 5, pp.477-499.
Valentinov, V & Hajdu, A 2021, ‘Integrating instrumental and normative stakeholder theories: A systems theory approach’, Journal of Organizational Change Management, vol. 34, no. 4, 699-712. https://doi.org/10.1108/JOCM-07-2019-0219
Waheed, A. & Zhang, Q. 2022, ‘Effect of CSR and ethical practices on sustainable competitive performance: A case of emerging markets from stakeholder theory perspective: JBE’, Journal of Business Ethics, vol. 175, no. 4, 837-855. https://doi.org/10.1007/s10551-020-04679-y
Zoghbi-Manrique-de-Lara, P & Viera-Armas, M 2017, ‘Corporate Culture as a Mediator in the Relationship Between Ethical Leadership and Personal Internet Use’, Journal of Leadership & Organizational Studies, vol. 24, no. 3, pp. 357–371. doi: 10.1177/1548051817696877.