Ethical Issues in the Supply Chains of the Coffee Manufacturing and Grocery Retailing Industries - Term Paper Example

? “Ethical trade is an increasingly popular approach that allows companies to manage the social and environmental dimensions of their supply chains,”(Blowfield, 2004). Thus, it can be seen that the concept of ethics has significantly gained prominence during the contemporary period since it affects various facets of business. Whilst businesses need to achieve their own profit oriented goals, they must make an effort to create a fine balance between their objectives as well as the interests of the people who may be affected by their operations. There are various ethical issues in the supply chains of the following industries: coffee manufacturing and grocery retailing. Therefore, this paper seeks to critically discuss ethical issues that affect the operations of the above mentioned supply industries. The paper starts by defining the key term which is ethics. The paper will also analyse in detail how ethical issues are dealt with in the coffee manufacturing and grocery retail industries. Basically, businesses are governed by rules of professional ethics as well as social codes which go beyond written regulations (Kotler & Armstrong, 2004). Thus, enlightened companies often put measures that can enable them to do the right things that benefit all stakeholders that are affected by their operations. In order to fully understand how the concept of ethics affects business, it is important to begin by explaining the meaning of the term. Business ethics can be described as the values, principles and standards that operate within business and these attempt to make a distinction between something that is morally good from bad (Rossouw, 2004). Ethics mainly derive from values which are “essential and enduring tenets” that help distinguish an organization and they should not be “not be compromised for financial gain or short term expediency,” (DesJardins, 2006, p.5). From this definition, it can be seen that organizations are compelled to operate within expected standards so that they do not violate the values of the targeted people. The concept of ethics also goes hand in hand with the concept of corporate social responsibility (CSR). Mele & Guilene (2006) loosely define CSR as the social function that compels corporations to operate within certain standards so that they do not violate the interests of the members of the society in which they are operating. In other words, organizations should also plough back some of the profits they generate from their operations as a way of showing appreciation for conducting business in that area. The profit goal of the organization should not override the social interests of the people who are also affected by the kind of business being undertaken. It is also the duty of the organizations operating in a given area to make sure that they do not destroy the environment as this may negatively impact on the welfare of the people living in that place. In some cases, companies that are involved in coffee production often engage in bad business practices where the producers of this raw material are exposed to harsh working conditions. In some cases, they can very low prices for their products. However, there are many successful businesses that have become a force to reckon with in the coffee industry. For instance, Starbucks is one major player in the coffee industry which comes to mind since this is a very popular brand the world over. Indeed, the success of these companies can be attributed to bad business practices where the company acquires the raw materials through the use of bad business practices. Therefore, it is the duty of all organizations involved in the coffee industry to practice ethical sourcing so that they do not violate the social interests of the people involved in different stages of the supply chain of the product. Bowfield (2004), posits to the effect that the company being part of the supply chain should take responsibility of protecting the social and or environmental interests at different stages of the chain particularly the primary producers. Ethical sourcing is meant to protect the interests of the producers of coffee as well as the company that sells the processed product. For instance, the Starbucks preferred-supplier programme sets social and environmental criteria which, if met, give coffee producers a price premium (Bowfield, 2004). Prices are negotiated with the vendors and this strategy offers stability in the market. The other strategy that can be implemented by the players in this industry is to engage in fair trade practices. This concept has significantly gained prominence in the UK and many other western countries since they strive to ensure that ethical practices in the supply chain of coffee are practised. The case of Starbucks can be used to illustrate this point where it can be noted that it sets the guidelines that should be followed in order to ensure that fair labour practices are followed. However, it can be noted that though efforts are being put to ensure that ethical sourcing is practiced in the whole supply chain, the interests of the small holders in the coffee industry are not well represented. In some cases, the small scale producers of coffee are offered prices that are not commensurate with the quality of the products they produce. It can be seen that some of the ethical principles are overlooked at different stages of the supply chain especially at lower levels. Some businesses are more concerned with maximising profits from their operations though measures are being put in place in order to ensure that the notion of ethical sourcing in the coffee industry is given the attention it deserves. Fair trade practices can also go a long way in addressing the anomalies that may be witnessed in the coffee supply chain. There are many players involved in this chain and their interests should be protected by the main actors involved in this industry. On the other hand, it can also be noted that the concept of ethics is very important in the operations of different organizations that are involved in grocery retailing. This mainly involves marketing of food to different people and it can be seen that there are many ethical issues that need to be taken into consideration by the people involved. The interests of the consumers and the environment ought to be protected while companies involved in this business pursue their profit oriented goals. Companies involved in this industry need to be socially responsible since there may be conflicting interests where there may be some disagreements among the people about the right course of action that can be taken in carrying out their business. As such, social responsibility and corporate ethics in business have significantly gained prominence during the contemporary period since they determine the success of business. There are various aspects that need to be taken into consideration when dealing with the issue of grocery retail marketing especially food. There are different ethical issues that have to be considered by companies that are involved in this sector such as the effect of the food on the people as well as its effect on the environment. It is also important to take into account fair employment practices in this particular sector since it is designed to cater for the health needs of different people. For instance, food retailers need to ensure that they do not sale food that is considered as dangerous to the health of the consumers. The profit goal of the organization should not override the interests of the consumers. There are different retail supermarkets that sell food that is made from genetically modified organisms (GMO) and this type of food has been criticised since it is believed to be detrimental to the health of the people. Organizations which sell this kind of food need to prioritize the health interests of the people and they must be honest to tell them that the kind of food is genetically modified. Another ethical issue that should be considered by people involved in retail business is related to environmental protection. These companies should ensure that the products they sell to different people are not detrimental to the environment since this can impact on the health of people living in different societies. Retail organizations also ought to take into account the fact that their activities should not involve cruelty to animals since this is bad practice in business. Companies that do not take this into consideration risk losing business as they will lose credibility among different customers. The other ethical issue that should be taken into consideration is related to religion since people belong to different religions. Therefore, companies should clearly label their products so that customers can make informed decisions when they decide to purchase the products. Another important ethical issue that should be taken into account in retail business is related to companies that export different products to other countries. There is a tendency by developed countries to expect food that is of poor quality to other countries and this practice ought to be stopped since it negatively affects the people involved. All companies that are involved in manufacturing as well as supply of food should ensure that they follow the health and safety regulations that are set by the regulatory bodies in their countries. The aspect of best practice to ethics should be taken into consideration by the parties involved since this is designed to cater for the interests of many consumers that are involved in this kind of business. All companies that are involved in retail business should be accountable for their actions so as to ensure that they uphold social needs of the people affected by their operations. In order to deal with the issue of ethics in different places, it can be seen that the notion of FAIRTRADE has significantly gained prominence especially in European countries. According to information obtained from http://www.fairtrade.org.uk/what_is_fairtrade/fairtrade_certification_and_the_fairtrade_mark/default.aspx (ND), “FAIRTRADE is a strategy for poverty alleviation and sustainable development. Its purpose is to create opportunities for producers and workers who have been economically disadvantaged or marginalized by the conventional trading system.” Thus, people who have been disadvantaged are given equal opportunities through the use of FAIRTRADE so that they can also benefit from their products. For instance, retail shops in the UK are compelled to operate within the framework set by FAIRTRADE. For instance, Tesco chain supermarket in UK buys its raw coffee mainly from Brazil and Mexico and it is supposed to pay premium prices for these products since this is a regulation that is set by the FAITRADE Foundation. The other aspect related to the notion of FAIRTRADE is related to ethical consumerism where the customers have the right to compel the chain supermarkets to comply with rules and regulations that are designed to make them abide by the ethical standards. For instance, under the FAIRTRADE ethical initiative, supermarkets are compelled to sell organic foods since these are believed to be beneficial to the consumers. All foods that are manufactured following FAIRTRADE guidelines have labels that help the customers to make informed decisions when they want to purchase these products. It can be noted that the aspect of ethics has a bearing on the performance of supermarkets in the UK since this helps them to gain a competitive advantage over other players in the same field. Over and above, it can be noted that the concept of ethics plays a very significant role in the operations of any business. Businesses that that are socially responsible for their actions are likely to gain the trust of their customers and this can improve their performance. It has also been noted from the above discussion that there are many ethical issues that affect the operations of a given business. All companies that are serious about realising their profit goals should make sure that they properly implement ethics in their operations. References Barrientos, S. & Dolan, C. 2006. Ethical sourcing in the global food system. Earthscan: London. Blowfield, M 2004, Ethical Supply Chains in the Cocoa,Coffee and Tea Industries, Center for Corporate Citizenship, Greenwich Publishing, USA, Viewed 11 November, 2011, from: . DesJardins, J. 2006. An introduction to business ethics. (2nd Edition). McGraw Hill International Edition: Boston. Fairtrade. Official website 2012. Viewed 13 November, 2012, from: Kotler, P. & Armstrong G. 2004. Principles of Marketing. Pearson Education International: NJ. Mele, D & Guilen, M 2006, The intellectual evolution of strategic management and its relationship with ethics and social responsibility, University of Navara. Rossouw, D. 2004. Business Ethics: (3rd Edition). Oxford: CT. Read More