Supplier Relationships By Enhancing Ethical Conduct - Assignment Example

Supplier Relationships by Enhancing Ethical Conduct Introduction The aspect of business ethics and the responsibility of firms toward their community, i.e. stakeholders, investors and the natural environment on the whole, are gaining considerable significance in today’s corporate activities. The impact of ethical issues regarding the context of business corporate social responsibility is quite strong. It is due to the reason that the majority of the common audiences are growing to be much more concerned about their rights as consumers and also about the damage which business firms have been doing to the environment in the precedent years. However, business firms have often been witnessed to overlook the aspect of ethical being or their Corporate Social Responsibilities (CSR) while executing their organisational operations. For instance, marketers often make illusionary comments to persuade the customers, manufacturers often release harmful chemicals and elements in the open environment which affects the social and the eco-system of earth. The intention behind performing such unethical doings by organisations is mostly related to the realisation of huge profit in a short span of time. This not only harms the society at large but also has a strong effect on the company’s reputation and goodwill (Sharma, 2010). Subsequently, ethical performance is quite imperative in the case of an apparel company, especially when it is operating on multinational dais. It is because customer loyalty and their interest signify stimulated growth for the companies dealing with products similar to apparel. With this point of view, the paper shall intend to analyse the situation and identify the consequences most probable to occur in the near future. Conclusively, the paper shall also suggest certain preliminary measures to overcome the identified challenges. A Situational Analysis In managerial terms ‘Business Ethics’ is often referred to as an oxymoron, i.e. it brings two or more conflicting issues together in order to obtain an in-depth understanding to what is right and wrong for the business and the society as well. However, in the realistic practices the organisational leaders have over and over again been observed to rant the issue of business ethics as a mere management concept rather than one of the most significant and uncompromising issues (Crane & Matten, 2007). With this concern, few ethical issues related to the apparel company can be identified in their supply-chain arrangements. For instance, one of the major suppliers of the company has been recorded to continue performing unethical practices in its South African branch. The allegations recorded against the company were emitting harmful toxic effluents into river, dumping needles, razors, caustic soda and other detrimental ingredients in the local municipality dumps. As a result, child rag-pickers of the neighbourhood have complained about breathing troubles, visionary problems and skin diseases. With an overall perspective, it is seemed that the consequences of the ethical practices performed by the supplier cannot affect the organisational operations. But with an in-depth analysis, it is quite identifiable that the impact can directly influence the growth of the company. Moreover, it can also affect the entire apparel industry as it is associated with several other large companies. Hence, it is quite essential to adapt certain precautionary measures in order to eradicate the consequences. It is in this context, that organisations should pay equal attention to both the aspects of business practices and the cultural expectations. To be mentioned, there are various initiatives undertaken by business firms in multiple regions. For example, 34 different nations have been recorded to join their hands in order to enforce the Foreign Corrupt Practices Act through a treaty proposed by the US. Another example can be identified as the Caux Principles which were developed by the multinationals based in Japan, Europe and the US in order to develop a set of universal values and belief for the international business practices. Hence, it can be stated that in the international platform, the issues related to business ethics have gained a remarkable significance accumulated with strict legislations (Iyer, 2000). The Consequences/ Utilitarianism Utilitarianism is referred to as an ethical theory. It is also contextualised as a consequential theory based on its features to state which action is right and which one is wrong. To be precise the theory is concerned with the rightness and/or wrongness of human actions emphasising on the consequences of the act rather than its components and other features. For instance, if in this case the supplier company which has been alleged for performing unethical behaviour is to be judged according to the theory, it would be termed as wrong. It is due to the reason that the consequences of such behaviour is harmful and dangerous for the society and the well-being of the company as well and not because of its features. However, the foremost objective of the ethical theory is to recognise the most significant consequences of an act to judge whether the act is ethically right or wrong (Frederick, 2002). Notably, Utilitarianism being the first ethical theory acquires a few major advantages which can prove to be highly beneficial in the modern era. For instance, one of the foremost principles of the theory is to maximise the ‘overall good’ for the ‘greatest number’. Hence, it secures the interest of the community on the whole by opposing the autocratic policies and supporting the democratic associations and policies. Moreover, it is based on the consequences of an act rather than its features, such as instrumental values, and others. Thus, it becomes more reliable and ethical from its end. Another most important attribute of the theory is that it largely differs from Egoism. Egoism tends to focus on the happiness or good of an individual or a particular institution, whereas utilitarianism focuses on the overall good multiple democratic institutions (Desjardins, n.d.). A Case Study of H&M H&M is a Swedish apparel company operating as a large marketer in the international market. In 1997, the company was recorded to be associated with suppliers who were accused to perform unethical behaviour towards its communities. After few years, two of the major players in the supply chain of the industry, Atlas Copco and Sandvik were accused to perform unethical practices. This emerged as a chief problem of the buyer companies, i.e. Ashanti Goldfield and Goldfields Ltd headquartered in Ghana. With due course of time and the growing publicity of the matter by media publications, various companies faced the consequence of negative publicity, such as Electrolux, H&M, Atlas Copco and Sandvik (Idowu & Filho, 2009). Negative publication, not only in the case of an apparel company but also for any other marketing companies, can result in failures as marketers. However the consequences of unethical behaviour by suppliers can be stated as: Consequences of the Unethical behaviour by the Supplier Company Its affect on the operations and the well-being of the H&M and the community at large A gap in the trust relationship between supplier and buyer Conflicts in the internal environment of the business Instability in the internal environment Influence the organisational performance Deficiency in the quality of the products Increasing operational costs Affect the industrial environment (i.e. the micro-economic environment) Can lead to organisational re-structure Effect the entire value chain of the organisation Attract negative publicity Hamper the customers preferences Effect the market coverage of the organisation Lead in deficient competency Hamper the public image of the company strongly Hamper the interests of the shareholders and stakeholders Hamper the financial health of the organisation All these above mentioned consequences can be derogatory in terms of the company’s performance. Hence, to eradicate the consequences raised by the unethical behaviour of the company’s supplier, certain restrictive measures are suggested in the further discussion of the paper. Recommendations In order to eradicate the consequences identified in the above discussion, the company can consider certain advantageous strategies to inspire the supplier in assisting the company’s commitment towards ethical practices. At the primary stage, the company can organise few presentations for the suppliers where the prime focus should be on the ethical issues performed by the company and its consequences adhering to the Utilitarianism theory. The company can also assure extra benefits, such as extension to the contract, extra allowances and others for the company if it efficiently manages its ethical well-being. However, if the company seems to repeatedly neglect its ethical issues, major steps should be adapted. For example, the company can impose pressure on the supplier with due consideration to the legislative rules regarding unethical behaviour (Öğütçü & Balasubramanyam, 2003). Worth mentioning, the supplier can be pressurised to perform its ethical behaviour through the application of a restructured memorandum to the suppliers stating the importance of ethical presentation for the company. It should also highlight the corollaries of any unethical practices performed by the suppliers or any other participants of the company’s supply chain. This will not only regulate their operations but also increase their awareness regarding their ethical representation (Great Britain: Parliament: House of Commons: International Development Committee, 2007). Apart from these the company can also organise frequent awareness campaigns for the participants of the industry, (i.e. the suppliers, the employees, the shareholders and other similar companies marketing apparel products) with the sole intention to encourage them to perform ethical responsibilities with efficacy. Worth mentioning, enforcing legal and administrative barriers will enhance the concern of the suppliers regarding the issue, while educational campaigns will increase the responsiveness of the major players of the industry in minimising the effect of unethical practices (Brock, n.d.). Due to the fact that the supplier company also renders its products to other similar companies, it is quite likely that those companies shall also face the parallel consequences of unethical practices. Thus, the company should take an initiative to assemble those companies with a common interest to eradicate the malpractices of the participants within the industry. This can be done by organising general meetings, generating the perceptions of the other companies in this regards, and taking their feedbacks in a written format. However, while performing the task, the company officials should provide significant considerations to the aspect of cultural values and beliefs in Southern Africa. It can also be stated that not only one supplier but their might be other manufacturers of the industry performing unethical practices. Therefore, the company should further instigate the problem to identify the suppliers and/or any other participants performing unethical practices. Limitations of the Strategies Suggested Along with several advantages, the suggested measures also have certain limitations which should be considered significantly by the company while executing the precautionary strategies. For instance, the strategies mentioned above can be time-consuming and costly as well, due to the fact that it intends to assemble almost every participant of the industry. Furthermore, the induction of legal barriers can also provide rise to the dissatisfaction level among other suppliers. As the strategies seek efficient involvement by other members of the industry, an inefficient contribution shall minimise the advantages of the strategies. Although the precautionary strategies mentioned in the above discussion shall witness certain major limitations, it shall be of great assistance to eradicate the consequences. Conclusion Considering the consequences raised by the issue of unethical behaviour of the suppliers, the company is on the verge of getting strongly affected in its future performance. The above recommended measures thereby shall prove to be highly supportive in order to eradicate the consequences and/or chances of the occurrences of unethical issues from the end of any participant in the industry. However, proper emphasis should be provided to the context of the limitations of the suggested strategies. In this regard, the company can seek the help of other one or two companies and divide the responsibilities to generate ethical awareness among the suppliers. This shall in turn reduce costs and also make the process time-efficient. Conclusively, it can be stated that the issue of unethical behaviour can harm the company at large for which the suggested strategies shall be highly beneficial. Thus, the company should intend to minimise the limitations of the strategies and execute it in its realistic practices. References Brock, J., No Date. Strengthen Your Supplier Relationships By Enhancing Ethical Conduct. Baxter Healthcare Corporation. [Online] Available at: http://www.ism.ws/files/Pubs/Proceedings/BrockGD.pdf [Accessed March 08, 2011]. Carter, C. R., 1999. Ethical Issues in International Buyer-Supplier Relationships: A Dyadic Examination. Elsevier. [Online] Available at: http://www.cib.espol.edu.ec/Digipath/D_Papers/38367.pdf [Accessed March 08, 2011]. Crane, A. & Matten, D., 2007. Business Ethics: Managing Corporate Citizenship and Sustainability in the Age of Globalization. Oxford University Press. Desjardins, No Date. An Into To Business Ethics 2E. Tata McGraw-Hill. Frederick, R., 2002. A Companion to Business Ethics. Wiley-Blackwell. Great Britain: Parliament: House of Commons: International Development Committee, 2007. Fair Trade and Development: Seventh Report Of Session 2006-07, Vol. 2: Oral and Written Evidence. The Stationery Office. Idowu, S. O. & Filho, W. L., 2009. Global Practices of Corporate Social Responsibility. Springer. Iyer, G. R., 2000. Teaching International Business: Ethics and Corporate Social Responsibility. Routledge. Öğütçü, W. & Balasubramanyam, V. N., 2003. Attracting International Investment for Development. OECD Publishing. Sharma, P., 2010. Corporate Social Responsibility: An Empty Vessel? Juris Online. [Online] Available at: http://jurisonline.in/2010/09/corporate-social-responsibilty-an-emplty-vessel/ [Accessed March 08, 2011]. Bibliography Abela, A. V. & Murphy, P. E., 2007. Marketing with Integrity: Ethics and the Service-Dominant Logic for Marketing. Springer. [Online] Available at: http://www.ethicsbasedmarketing.net/articles/artices19_8_2008/Marketing%20with%20Integrity.pdf [Accessed March 08, 2011]. Beauchamp, T. & Et. Al., 2008. Ethical Theory and Business. Prentice Hall. Fisher, C. & Lovell, A., 2009. Business Ethics and Values: Individual, Corporate and International Perspectives. Prentice Hall. Griseri, P. & Seppala, N., 2010. Business Ethics and Corporate Social Responsibility. Cengage Learning. Lattal, A. D. & Clark, R. W., 2006. A Good Day's Work: Sustaining Ethical Behavior and Business Success. McGraw-Hill Professional. Read More