Business Ethics and Sustainability in Modern World - Coursework Example

CHOCOLATE UNWRAPPED: BUSINESS ETHICS, GLOBALIZATION AND SUSTAINABILITY Name of Student Name of Institution Name of Professor Date of Submission Chocolate Unwrapped: Business Ethics, Globalization and Sustainability Introduction High competition in the corporate sector has marked the dawn of globalization. With the key players in the business sector, especially consumers and investors, becoming more informed and sensitive, businesses are walking on a tight rope when it comes to achieving the profit maximization goal; which is the ultimate and single most important goal of any business. The financial and operational pressures are at their all time high. Businesses are operating in an environment where a precarious balancing act must be achieved. The customers’ demands have become more complex due to knowledge and availability of information while the government and policymakers have implemented economic policies which have taken competition to the next level. In cases where globalization policies have been implemented, the outpouring of foreign-based multinationals with huge capital bases has rendered most domestic businesses irrelevant (Schultz, 2010). Operating on economies of scale, multinational entities (MNEs) have been forced to effectively utilize the globalization policies while producing cheaper goods and services. Even in cases where the policymakers and the government have implemented protectionism policies, competition is still heightened. This is because new local companies are springing rapidly within the domestic market to compete for the slowly growing customer base. Businesses which cannot put up with the cutthroat competition have been left on the wayside as mediocrity is never a plausible business strategy. Only those businesses which are able to adapt to the ever changing business environment have managed to weather the storm. Cases of new businesses closing down are common in today’s corporate sector (Capra, 2002). While considering how competition has significantly contributed to unethical business operations, this particular paper discusses the business ethics and the associated policies in light of the Cote d’ivore case study. The paper provides a Kantian and Utilitarian analysis from which it draws the recommendations. The pressures to perform sustainably and hence survive and the need to maximize profits have pushed many companies to the wall. With most companies opting for red ocean strategy, the competition for business opportunities is bound to become even stiffer in the coming years given that rather than creating demand; many companies have opted to beat competition for the already existing demand. While it seems as the ideal approach, it is rarely a sustainable business strategy compared to blue ocean strategy which aims at creating demand. In the mad rush to maximize profits and survive, many companies have increasingly found it difficult to draw the line when it comes to what is ethical or legal. That is, they have opted for the utilitarian approach where the end justifies the means. While such an approach would have been effective during the past centuries, the Information Age and civilization has revolutionized the business sector hence throwing caution to the wind is no long a clever business approach (Shultz, 2010; Porter & Kramer, 2006; Levitt, 2012). Ethical considerations in the case study The Cote D’Ivoire supplier is highlighted as not only using child labor to produce the cocoa but it is not paying them any money; they are paid inform of food rations and a few coins once in a while as incentive. According to the supplier, the children are orphans, are homeless and have no food. Without the employment in the cocoa farms, they have nowhere to go; rather, they will just roam the streets and turn into thieves. That is, the supplier has offered a safe refuge when everyone ignored them and given them a chance to live a ‘decent life’. While this is partly a humanistic view, it also reeks with inhumanity and barbarism. It actually highlights slavery and child labor. While there is a thin line between what is moral or not in the business world and conclusions bound to be made by the subjective thinking of individuals, the nature of today’s business environment demands for caution and by extension, a humanistic approach to business operations. As highlighted by Weiss (2008), questions regarding the content of the means that justifies the end are bound to be asked not only by customers but also by the authorities, general public and investors. The answers to these questions are key determinants of how successful a business can be. It is no longer enough to make profits; how it is made has become a key part of organizational management. This is why more and more businesses are investing millions of dollars each fiscal year to fund their corporate social responsibilities initiatives. Moreover, a great many are taking prudent steps to carry out not only market research for their products but also in analyzing their supply chain. Ultimately, many businesses have opted to be guided by the Kantian maxim of “the means justifies the end.” It is now more profitable to build reputation rather than put up advertisements worth millions of dollars. It is actually more profitable to operate ethically than ‘legally’. A positive and strong brand is easy to recognize and market; it attracts not only customers and investors but also helps in retaining and attracting top talents in a very competitive labor market (Freeman, 2010). It is these top talents which, through their ingenuity, can come up with revolutionary ideas to give a business the much needed competitive advantage and help the company maximize profits (Crane & Matten, 2010). Case Analysis, Utilitarian analysis and Kantian analysis Reducing the company’s expenses is one of the steps towards ensuring an organization maximizes its profits, as highlighted by the attempt to source from cote d’ivore. To attain this, most managers usually endeavor to reduce the operation and production costs as much as possible, as in the case study. Therefore, outsourcing some of the production services to other companies, some of which are located in different geopolitical regions, is a strategy that many companies find achievable and workable. However, there are dangers that are inherent in outsourcing. Operating in a business environment where rules and societal norms have become tighter with each passing day, a company can be easily and conventionally declared guilty by association if some of its associates and businesses partners commit crimes or engage in unethical behavior while carrying business activities which are directly or indirectly associated with the company. This includes those activities that that business is bound to gain from directly or indirectly. This is usually the case if such partners are located and/or operate in countries where there are no proper legislations to safeguard and streamline business operations, Cote d’ivore’s case being an example. In such countries, most businesses use a utilitarian approach to business. It is more of operating under jungle laws where only the strong and the witty survives and survival calls for doing what must be done and not what ought to be done. Ethics, in these countries, is rarely considered a pillar for success. Importation of raw materials always presents a dilemma for many businesses especially if the goods originate from countries with no effective laws, a similar scenario presented by the Australian chocolate manufacturing company. It is possible to argue that it is the prerogative and sworn duty of the country’s authorities to regulate business operations within its borders; any goods that leave the country are considered to be ‘clean’. That is, the importer can assume that there was no law broken during its production or manufacturing. However, such a utilitarian argument assumes to be oblivious to the fact that there are no perfect laws. Businesses will always look for loopholes in the laws and utilize them to maximize profits (Crane & Matten, 2010). The cocoa beans reaching Australian borders from abroad are considered ‘clean’; any crimes committed within its country of origin during its production are legally not within the jurisdiction of Australian authorities. The importation of cocoa beans from Ivory Coast at a reduced price of 40% per kilogram compared to the Mexican cocoa can be a real game changer. It has the potential of increasing a company’s profits by up to 40%. Any business manager would be glad to see the company’s rise even by one percent in these tough economic times. It has the potential of giving the company a platform for gaining a competitive advantage and gain a large market share through reduced prices of its products. This is because the cheap prices of raw materials can be passed down to the customers in the form of cheaper prices for chocolates and other products. However, the end will not always justify the means. In the case study, The Cote D’Ivoire supplier is using child labor to produce the cocoa while not paying for the services; actually, they receive payments in terms of food rations and some coins as incentive. The supplier considers them as orphans, homeless and without food hence without the employment in the cocoa farms, the children have nowhere to go whereby they are likely to roam and turn into thieves. That is, the supplier has offered a safe refuge when everyone ignored them and given them a chance to live a ‘decent life’. It is a humanistic view of the children’s situation. However, it also reeks with inhumanity and barbarism. If viewed in strict terms of business and profit maximization quest, the business stands to minimize its operation costs and maximize its profits. The end, which is profit maximization, therefore justifies the means the supplier can now export the cocoa beans at 40% cheaper than the Mexican supplier. This, however, ethically amounts to slavery and child labor. The supplier can deliver the cocoa beans at a cheaper price and the customers will enjoy cheaper chocolates. However, as supported by the works of Sharan (2006) and Crane & Matten, (2010), when they and other key players in the business environment in Australia including authorities and international trade organizations unwrap the chocolate, they will be confronted with one of the most inhuman and unethical behavior: child labor and slavery. According to Mandal (2010), child labor is unethical and against the norms of humanity for it robs the children of their freedom, childhood and their right to education. Robbing the children of their present implies that they are confined to a life of despondency for the rest of their lives. It is essentially killing their future today. This is because education empowers children to dream and achieve big. It is denying future companies great leaders. The same also goes for slavery. The children in Ivory Coast are willing slaves; their choices are narrow and almost nil. Forced by circumstances beyond their control, they have opted to willing and sometimes unwittingly auction off their future to purchase their survival for today. Slavery and child labor interferes with the mental, social and physical growth of the children as the hard labor thrust them into adulthood while they are still children. While the International Labor Organization (ILO), the United Nations and its various agencies provide frameworks for valid ages for employment and abolishment of slavery and child labor, their successfully implementation at the individual state level is not uniform. Some countries, especially in developed world such as Australia, United Kingdom, France and the United States, have very strong legislations and implementation and monitoring platforms which help in arresting the vice. In countries where such are lacking, as highlighted by Werther & Chandler (2010), many businesses like this one have taken full advantage of the loopholes. The success of any business is hinged on identifying and exploiting business opportunities maximally. And many businesses operating in such countries with weak child welfare and labor policies and almost nonexistent effective monitoring agencies consider child labor and slavery as a business opportunity that ought to be exploited. However, guilt by virtue of willfully association or vicarious liability principles is common law principle applicable in many countries and in the international business arena. Gaining from an illegal and/or unethical business deal directly or indirectly is prosecutable in many jurisdictions and usually attracts huge fines and forfeitures. The litigation costs can also affect the profit margins of the company (Edmonds & Pavcnik, 2005). Moreover, operating in today’s business world where the brand image of the company is an important tool, businesses cannot afford to damage their reputations by associating with entities or individuals engaging in unethical business practices. Few investors and customers would be willing to associate with such businesses. Businesses which lay emphasis on being socially responsibly are more attractive and have strong brand images that have spurred their success (Freeman, 2010; Friedman, 1970). For instance, one of the reasons which have been cited as the driving force behind the unrivalled growth of Virgin Group is its award-winning corporate social responsibility initiatives. From sponsoring children from poor backgrounds through school to mentoring and providing essential services such as healthcare and housing and tackling emerging problems such as global warming, Virgin Group has become an embodiment of the Kantian ideology (Porter & Kramer, 2006; Pravab, 2010). Essentially, businesses which have opted to justify the end based on the means rather the other way round are increasingly in high demand. Corporate citizenship looks beyond just profit maximization; it intertwines the need to make profit with being responsible while doing it. It gives the organization both a business feel and a humanistic face. It aims at deflecting negative publicity while attracting positive publicity (Mallin, 2010). Ethical business practice therefore transforms a business from being the sum total of its physical premises and assets into an entity with human qualities capable of holding and judging whether an action is moral or not. That is, it looks at morality based not on how high the profits are at the end of the fiscal year but how the profits were maximized (Crane & Matten, 2010). Recommendations The reputation and brand image of any business is an important asset when it comes to gaining competitive advantage both in labor and product markets. Brand image is an important market tool that many firms have effectively used to gain unrivalled market shares both in new and old markets. Therefore, it is imperative that just like businesses can go a great length to maximize profits, the company should also use the same effort to improve the image and build a reputable brand. It attracts customers and investors alike (Freeman, 2010). Moreover, engaging in unethical business practices are increasing being punished by the authorities. Such huge fines, restitutions and litigation costs negatively affect profit margins. It therefore denies the company an opportunity to increase its capital base and investment funds by discouraging potential investors and customers. This is despite the fact that in some cases the business actions can be considered entirely unethical and not necessarily illegal (Porter & Kramer, 2006). Importing beans from Ivory Coast is a rare business opportunity with the potential of pushing the company’s profit margins to an all time high in the short-run. However, the price the company may have to pay in the long run may be too steep to survive. Sustainability is important to the survival of any business (Jennings, 2008; Friedman, 1970). I therefore recommend that the company continue with its current supplier from Mexico. It is ethical and legal and does not portend any serious problems now and in the future. Alternatively, it can source for new suppliers within Ivory Coast and only sign a deal after ascertaining beyond reasonable doubt that they do not engage in unethical business practice. Conclusion The fast-paced business world of today present unique challenges some of which may threaten the very survival of the business and therefore must be timely and decisively addressed in the most ethical and legal manner. Ethical business practice puts an entity on a high pedestal; a corporate citizen. It confers the business human qualities that extend beyond legalism. And with the new social trends in the corporate sector and the global village at large, such businesses are bound to have strong brands which are important in attracting customers and investors while reducing the cost of operations in terms of legal fees and fines. Such a Kantian approach is profitable and sustainable and hence suitable for the modern day business environment. References Capra, F. (2002). The Hidden Connections. New York, New York: Random House. Crane, A & Matten, D. (2010). Business Ethics. Oxford: Oxford University Press Edmonds, E. V. & Pavcnik, N. (2005). "Child Labor in the Global Economy". Journal of Economic Perspectives 19 (1): 199–220. Freeman, R.E. (2010). Strategic Management: A Stakeholder Approach. Cambridge University Press Friedman, M. (1970). “The Social Responsibility of Business is to Increase its Profits.” New York Times Magazine Sept 13, 1970. Jennings, M. (2008).Business Ethics: Case Studies and Selected Readings. Cengage Learning. Levitt, T. (2012). Partners for Good: Business Government and the Third Sector. Aldershot, Hampshire: Gower Publishing. Mallin, C. A. (2010). Corporate governance (2nd ed.). Oxford: Oxford University Press. Mandal , S. (2010). Ethics in Business & Corp Governance. Tata McGraw-Hill Education. Madhavan, S. (2011).Business & Ethics - An Oxymoron? Karur Madhavan Pravab. (2010). “The Virgin Group.” Pravab.blogspot.com. 14 May, 2010. http://pravab.blogspot.com/2010/05/virgin-group.html Porter, M. E. & Kramer, M. R. (2006). “Strategy and Society: The Link between Competitive Advantage and Corporate Social Responsibility”. Harvard Business Review. Schultz, R. A. (2010). Information Technology and the Ethics of Globalization: Transnational Issues and Implications. IGI Global Snippet. Sharan, V.(2006). International Business 2/e, Concepts, Environment and Strategy. Pearson Education India, 2006 Werther, B. & Chandler , D. (2010).Corporate Social Responsibility: Stakeholders in a Global Environment. SAGE Weiss, J. (2008).Business Ethics: A Stakeholder and Issues Management Approach Author Joseph Weiss. Cengage Learning.   Read More

While it seems as the ideal approach, it is rarely a sustainable business strategy compared to blue ocean strategy which aims at creating demand. In the mad rush to maximize profits and survive, many companies have increasingly found it difficult to draw the line when it comes to what is ethical or legal. That is, they have opted for the utilitarian approach where the end justifies the means. While such an approach would have been effective during the past centuries, the Information Age and civilization has revolutionized the business sector hence throwing caution to the wind is no long a clever business approach (Shultz, 2010; Porter & Kramer, 2006; Levitt, 2012).

Ethical considerations in the case study The Cote D’Ivoire supplier is highlighted as not only using child labor to produce the cocoa but it is not paying them any money; they are paid inform of food rations and a few coins once in a while as incentive. According to the supplier, the children are orphans, are homeless and have no food. Without the employment in the cocoa farms, they have nowhere to go; rather, they will just roam the streets and turn into thieves. That is, the supplier has offered a safe refuge when everyone ignored them and given them a chance to live a ‘decent life’.

While this is partly a humanistic view, it also reeks with inhumanity and barbarism. It actually highlights slavery and child labor. While there is a thin line between what is moral or not in the business world and conclusions bound to be made by the subjective thinking of individuals, the nature of today’s business environment demands for caution and by extension, a humanistic approach to business operations. As highlighted by Weiss (2008), questions regarding the content of the means that justifies the end are bound to be asked not only by customers but also by the authorities, general public and investors.

The answers to these questions are key determinants of how successful a business can be. It is no longer enough to make profits; how it is made has become a key part of organizational management. This is why more and more businesses are investing millions of dollars each fiscal year to fund their corporate social responsibilities initiatives. Moreover, a great many are taking prudent steps to carry out not only market research for their products but also in analyzing their supply chain. Ultimately, many businesses have opted to be guided by the Kantian maxim of “the means justifies the end.

” It is now more profitable to build reputation rather than put up advertisements worth millions of dollars. It is actually more profitable to operate ethically than ‘legally’. A positive and strong brand is easy to recognize and market; it attracts not only customers and investors but also helps in retaining and attracting top talents in a very competitive labor market (Freeman, 2010). It is these top talents which, through their ingenuity, can come up with revolutionary ideas to give a business the much needed competitive advantage and help the company maximize profits (Crane & Matten, 2010).

Case Analysis, Utilitarian analysis and Kantian analysis Reducing the company’s expenses is one of the steps towards ensuring an organization maximizes its profits, as highlighted by the attempt to source from cote d’ivore. To attain this, most managers usually endeavor to reduce the operation and production costs as much as possible, as in the case study. Therefore, outsourcing some of the production services to other companies, some of which are located in different geopolitical regions, is a strategy that many companies find achievable and workable.

However, there are dangers that are inherent in outsourcing. Operating in a business environment where rules and societal norms have become tighter with each passing day, a company can be easily and conventionally declared guilty by association if some of its associates and businesses partners commit crimes or engage in unethical behavior while carrying business activities which are directly or indirectly associated with the company.

Read More