The Two Faces of MNCs

I recently read a report titled ‘The Two Faces of Tesco.’ It is about following different policies, actually diametrically opposite policies, in two different countries where this MNC operates. And it makes very interesting reading.

Tesco is a huge retail giant. It is UK based. Tesco has a small presence in India and has tied up with Tata Group to open more stores. It has a market share of 30% in England. Tesco is a big success story in England.

Tesco is a respected organisation in England for another reason. It is the second largest retailer measured by profits. It donates almost 2% of its pre-tax profit for Corporate Social Responsibility work. That is a very sizeable amount. It is the largest private sector employer in UK. It employs 2,80,000 people in UK. This is what their corporate website says:

“Our Core Purpose needs to reflect how much society has changed in recent years – more scepticism about corporations, more desire to see business demonstrate it has a purpose beyond profit, a sense that large companies should be contributing more to tackling some of the big challenges. The world has changed from a culture of ‘more is better’ to ‘making what matters better’.
That’s why we’ve changed our Core Purpose [Note: There were different values mentioned earlier when the American union prepared its communication.] – this profound shift in society must be reflected in the way we think and behave as a business. Today, our brand must be about more than simply function. It’s about the way we work, the values we live by, the legacy we leave. We can’t solve the world’s problems but we want Tesco to always do the right thing, to inspire and to earn trust and loyalty from all of our stakeholders.
Our new Core Purpose is: We make what matters better, together.”

Tesco has excellent relationship with the UK union called Usdaw [Union of Shop, Distributive and Allied Workers]. The Tesco-Usdaw Partnership is the biggest single trade union agreement in the private sector. It has contributed significantly to the good employment practice in Tesco. Senior management recognises that employee involvement and participation in decision-making can contribute to the achievement of strategic goals.

So we are talking about an organisation which is huge in size, exceptionally successful in financial terms and has practised and preached partnership with union.

It entered the US market in 2006 and there was a disaster. The US operations have bombed. There is a huge loss and they are selling it off in US. The union in US is UFCU or United Food and Commercial Workers International Union. This union has published a report which is called ‘The Two Faces of Tesco.’ This report essentially attacks Tesco for following different policies in UK and USA. Quoted here is a part of introduction to it by Joseph T Hansen, International President of UFCW:

“We knew about Tesco’s ground-breaking partnership agreement with our UK counterpart trades union, Usdaw, and were impressed with what it said about bringing supermarkets and jobs into some of our more deprived communities.
We were ready to strike a constructive partnership with Tesco, to help it to succeed in the US marketplace, when all who had come from the UK before had failed.
But this was not to be. Because, hidden behind its fine policies and responsible public face, we have glimpsed another Tesco. Instead of engaging positively with community partners, it refuses to meet with them. Instead of offering partnership, it accepts conflict. Instead of defending freedom of association, it actively pursues a policy to keep out trades unions.
The UFCW is now at the forefront of a campaign in the United States to get Tesco to engage with its stakeholders, and we are joined by respected community groups which are appalled that a company with Tesco’s reputation for corporate responsibility could, in our view, act with such arrogance in its newest market.
Tesco seems to think that it can succeed in the US marketplace alone. Yet sales estimates from analysts suggest that Tesco Fresh and Easy stores may be struggling, as they believe there are too few customers. Expansion is on hold and the company is falling foul of planning and environment regulations and has been unable to obtain liquor licences for some stores. Things are not going to plan, and they will not get any better while Tesco continues to show such a stony face to its US stakeholders.
The UFCW and other community partners have repeatedly requested the opportunity to meet with Tesco and its US management, and were repeatedly rebuffed while the company planned and executed its US launch – as a non-union company. It is clear, in stark contrast to what Tesco does in the UK and says about corporate responsibility that it has two faces: one for its UK public and investors, and another for other parts of the world.”

This report ‘The Two Faces of Tesco’ goes in great detail to point out the difference in approach to partnership with unions in UK and USA. This is not where it stops. Tesco is also accused of similar practises in Turkey and Thailand.

Interesting? Not exactly unfamiliar situation for people in India.