Companion to Business Ethics - Assignment Example

Contemporary Business issues Introduction Business environments randomly change in order to fit in the new world order. As the environments metamorphoses, there are fundamental contemporary business issues that arise (Hinman, 1999). Among contemporary business issues that arise is creation and implementation of policies on sustainable business morals and ethics (Hasnas, 2005). Moral values and ethics form the core base for political, social, legal, technological, environmental and economical settings in the society (Perla, 2004). This report shall critically evaluate what companies generally hope to achieve through the adoption of an ethics policy, identify the main ethical issues facing members of Asdas’ staff negotiating with suppliers, and examine the Asda Ethics Policy. The report’s objective is to evaluate whether ethical trading initiative is likely to influence Asda’s staff in negotiating and balancing the interests of suppliers and customers. Moreover, the report will seek to evaluate how the ethical trading initiative seeks to enforce its provisions, explain how the aims of the ethical trading initiative are designed to influence Asda in her dealings with suppliers in Bangladesh. This report aims to determine whether the ethical trading initiative has any real influence on the living and working conditions of the employees of suppliers in Bangladesh. What companies hope to achieve through the adoption of an ethics policy Although organizations seeks to increase its profitability, increase its market share and minimize costs, it goes without saying that it is imperative for such organizations to ensure that it follows stipulated ethical standards (Blackburn, 2001). Companies can integrate ethical standards in their decision-making processes, production, distribution, marketing, promotions and advertising and during service and product delivery. Companies that present themselves as ethical more often than not want to win the approval of its consumers and attract potential markets. Consumers in the recent past have opted to buy and consume products and services from companies that have a reputation of being ethical (Perla, 2004). Ethical companies ensure that they do not discriminate in its operations. For example, they repute themselves as an equal opportunity employer, by giving every individual equal opportunity. They do this without discriminating against anyone based on their gender, sexual orientation, religion, race, colour, status, health, disability, nationality and ethnicity (Blackburn, 2001. Companies that implement ethical policies seek to offer social equality and social justice, thus upholding fundamental rights of her employees. When companies ensures that there is no forced labour, child labour, there is conducive working environments for workers and ensure workers receive wages relative to labour put in, they appeal to the markets. This leads to consumers becoming brand loyal thus strengthening brand name and quality. Ethical companies realize increased demand for her products and services and they do receive a competitive edge against companies that do not comply with ethical standards (Perla, 2004). Major ethical challenges facing members of Asda’s staff negotiating with suppliers a) Excessive working hours and unpaid for overtimes Asda’s staff negotiating with suppliers to supply them with products and services for their chain stores are finding it hard to do business, since the company has not been able to comply with stipulated ethical standards and initial agreements it had entered. Although on paper the standard working hours for most of workers employed by Asda’s suppliers are 48 hours a week, in reality, workers have had to work more than 12 hours a day in order to earn enough money to survive (McLoughlin & Aaker, 2010). According to the War on Want report, employees in Bangladesh, producers for Asda’s garments, work more than 50 hours of overtime not to earn extra cash but to beat deadlines. Moreover, employees are unable to join trade unions, and if they do, they are punished by police who collaborate with the management. b) Unfair wages Asda has reputed and established itself as a low-priced brand. Their ‘just in time’ delivery policies, are driving financial risks and costs down the supply chains to producers, which inevitably affect workers in factories (E.T.I., 2010). This is because, as Asda lowers her prices, suppliers get less profit and consequently pay poor wages for their employees. Majority of Asda employees are not employed directly by Asda but are employed by suppliers of Asda. c) Non-compliance to freedom of association and the right to collective bargaining According to the Competition Commission Report on Supermarkets, overseas and British supermarkets are prone to universal concerns. Most suppliers are not currently happy with the trend retail chains have taken. The trends include retail chains requesting suppliers to offer better terms when there is increased volume of sales, suppliers are being obligated to contribute financially for promotion, advertisement and marketing of their goods and there is supplier discrimination when offering them credit periods (McLoughlin & Aaker, 2010). Moreover, supermarkets have constantly threatened to delist suppliers who refuse to cut prices of their products while others have gone ahead to delist them. Delisting not only affect operations of the supplier, but cuts off employment for workers since one supplier only supplies to only one supermarket. Asda’s staff will find it hard to negotiate with suppliers since the company has not responded to suggestions brought to them and when they have, it is with an aggressive grand standing (E.T.I., 2010). For example, the government of Bangladesh proposed a 20% increase on worker’s wages in order for workers to survive hard economic times and increased cost of living. Asda however, have not effected the suggestions to her suppliers. Moreover, productivity deal suggested will increase production in expense of workers who will have to make more garments to earn an extra coin. Asda Ethics Policy Ethics policies do not only affect the company in question but also those who work for the company and other firms in the same industry (Machan, 2007). They pertain to rights to safe and secure working conditions, fair wages and lack of prejudiced and discriminatory practices and acts (E.T.I., 2010). Ethical challenges occur in business where a firm give false claims about its products and services, infringe on copyright legislations and allow its retailers to price fix, non-compliance to environmental ethical standards that leads to pollution, and ecological degradation. Asda, a subsidiary of Wall Mart, has an ethics policy as presented by Ethical Trading initiative. The policy is geared towards assuring consumers that Wal-Mart products are made in acceptable and humane working conditions and without worker exploitation. The policy is achievable, ethical, universal and auditable (McLoughlin & Aaker, 2010). The policy applies to domestic and direct suppliers. They are advised to produce products and services that conform to internationally acceptable conditions of employment and accordance to legislations of supplier’s country. Non-compliance by suppliers leads to termination of contract. The policy suggests supplier’s audits by Wal-Mart Europe independent Third Party Inspection Bodies. Supplies are advised to employ workers who are willing to, offer safe working environments, limit working hours, avoid discriminating acts, offer regular employment, avoid forced and child labour, avoid inhumane treatment of workers and comply with immigration and labour laws (E.T.I., 2010). Asda has taken a moral relativist approach of viewing complaints presented. Their actions suggests that what is right or wrong for one does necessarily not mean it is right or wrong for another and that there is no optimal standard to determine which perspective is right or wrong (McLoughlin & Aaker, 2010). As illustrated, although, Asda offer minimum wages, has adopted ethics policy, is a member of Ethical Trading Initiative, allow trade union membership, it will be unable to influence and negotiate balance of interests of suppliers and customers. This is because suppliers have received instructions that Asda gave to its staff in 2009, to buy for less, delist suppliers who fail to deliver, ask for money to cover marketing and waste and to ignore complaints forwarded by suppliers. How the aims of the Ethical Trading Initiative are designed to influence Asda in its dealings with suppliers in Bangladesh The Ethical Trading Initiative is a coalition of world wide organizations, trade union associations, brands and voluntary organizations that work together to promote good working conditions for workers, fair wages and respect for fundamental human rights for workers who produce consumer products such as clothes, tea, flowers, footballs, auto models among other things. The objective of ethical trading initiative ensures all workers globally are not exploited; work in safe environments, have secure and equal job opportunities (McLoughlin & Aaker, 2010). It foster ethical trade which allows brands, retailers and suppliers to take an active role to safeguard the rights of workers, since most of their workers are in poor States with legislations meant to safeguard workers are not implemented and when they are, they are inadequate (Frederic, 2002). Among code of ethics presented by the ethical trading initiative address problems of working hours, wages, safety and job security, health and hygiene and worker’s right to register with a trade union (E.T.I., 2010). Ethical trading initiative is designed to influence Asda in its dealings with suppliers in Bangladesh since it eases complexities presented by broad current supply chains and rising challenges of labour, labour policies and labour laws globally. The aims of the Ethical trading initiative have been renewed due to the reactions of brands recently. Among recent trend is Asda has not reacted to the pleas of government of Bangladesh to have a 20% increase of worker’s wages, recent comments to its staff to employ the buy for less policy, asking suppliers to cover for marketing and wastage expenses and threatening to delist suppliers who do not cut prices (E.T.I., 2010). The new regulations stipulate that suppliers cannot be delisted, giving suppliers the avenues to appeal unfair contract terms, allowing suppliers to terminate contract when retail chains alter terms and conditions initially agreed upon and assurance for suppliers that the dealings will be fair (Jones & Parker, 2005). Asda as a member of the Ethical trading initiative has no option but to subscribe to its aims (McLoughlin & Aaker, 2010). This has made Asda offer minimum wages for her workers, allow her employees join trade union organizations, and reinforce ethical conduct and standards to her supplier in regards to the working conditions of their employees. Moreover the approach ensured Asda pay for overtimes, ensuring job is given to willing employees, ensure that worker do not work for excessive hours, offer compensations, compliance to international labour and immigration laws and suppliers to abide to the rule of law of their country. How the Ethical Trading Initiative seek to enforce its provisions The Ethical trading initiative seeks to enforce its provisions globally by ensuring that trade union associations, brands and voluntary organizations work together to promote good working conditions for workers, fair wages and respect for fundamental human rights for workers (Blackburn, 2001; Hamowy, Kuznicki and Steelman, 2008). It has stated punitive measures for members, who do not comply, and give advice to organizations and brands whose suppliers do not comply to be delisted, their outstanding orders be cancelled, their shipments to be returned or unaccepted and total termination of business with them (Drahos and Braithwaite, 2002). The Ethical trading initiative provisions allow workers to benefit for the labour they put in production of consumer goods and not to fuel returns for shareholders and growth of national exports (Hinman, 1999). Furthermore, it ensures that supplier have better payments that are above cost of productions which translates to better pay for supplier employees (Elliott & Turnbull, 2005). The provisions are against child labour, poor working conditions, unfair wages, inability of workers to join trade unions, bonded or forced labour, intimidation and inhumane treatment of workers. The provisions in regards to child labour states that ‘A child is any person less than 15 years of age unless local minimum age law stipulates a higher age for work or mandatory schooling, in which case the higher age shall apply. If however, local minimum age law is set at 14 years of age in accordance with developing country exceptions under ILO Convention No. 138, the lower will apply. A young person is any worker over the age of a child as defined above and under the age of 18’ (Perla, 2004). It further emphasizes that “child labour is any work by a child or young person younger than the age(s) specified in the above definitions, which does not comply with the provisions of the relevant ILO standards, and any work that is likely to be hazardous or to interfere with the child’s or young person’s education, or to be harmful to the child’s health or physical, mental, spiritual, moral or social development” (Blackburn, 2001). Whether the Ethical Trading Initiative have any real influence on the living and working conditions of the employees of suppliers in Bangladesh The influence of The Ethical trading initiative is on a 50-50 basis. Although it is illegal to force workers to work overtime, reports indicate that Asda suppliers in Bangladesh, a member of The Ethical trading initiative, have their workers working for more than 12 hours a day to survive, others working more than 50 hours overtime to beat set deadlines and are not allowed to be members of trade organizations. The Ethical trading initiative has suggested a productivity deal meant to improve worker’s wages but has resulted in workers making more garments to earn an extra coin (McLoughlin & Aaker, 2010). Moreover, it has implemented provisions that safeguard the rights of workers, organized industrial boycotts for products and services from unethical brands and organizations and laid down punitive measures for non-complying members. However, majority of workers still cry foul since their employers do not offer safe and secure working environment, discriminate when employing, are reluctant to compensate retiring or injured employees, and there is increased child labour in Bangladesh. Moreover, workers are intimidated to freely associate in trade unions by police who collude with management, and workers still get low wages although they put so much time and work into production. The Ethical trading initiative provisions face the challenge since it is difficult to enforce them across continents and national boundaries (McLoughlin & Aaker, 2010). Asda although a subscriber of Ethical trading initiative aims has not reacted to the government of Bangladesh proposal of a 20% increase on worker’s wages, in order for workers to survive hard economic times and increased cost of living. Recent instructions to Asda staff in 2009 that non-delivery by suppliers was not an option, to buy for less and making suppliers pay for marketing and wastage shows that Ethical trading initiative has not been able to effectively influence brands and organizations and safeguard the rights of workers. The instructions adopt an aggressive stance contrary to Asda ethics policy. Conclusion Moral values and ethics form the core base for political, social, legal, technological, environmental and economical settings in the society. Companies integrate ethical standards in their decision-making processes, production, distribution, marketing, promotions and advertising and during service and product delivery. This leads to consumers becoming brand loyal thus strengthening brand name and quality, increased demand for products and services and companies receive a competitive edge against companies that do not comply with ethical standards. Asda is subsidiary of Wal-Mart and a member of Ethical trading initiative. The objective of ethical trading initiative is to ensure all workers globally are not exploited, work in safe environments, have secure and equal job opportunities. They foster ethical trade, which allows brands, retailers and suppliers to take an active role to safeguard the rights of their workers, since most of their workers are in poor States with legislations meant to safeguard workers are not implemented and when they are, they are inadequate. Asda has ethics policy to safeguard her employees. References Blackburn, S. 2001. Being good: a short introduction to ethics. Oxford: Oxford University Press. Drahos, P. and Braithwaite, J. 2002. Information Feudalism: who owns the knowledge economy? London, Earthscan. E.T.I. 2010. Ethical Trading initiative base code. Available at www.ethicaltrade.org/eti-base-code [Accessed on 22nd Oct 2010]. Elliott, C. & Turnbull, S. 2005. 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