Corporate Social Responsibility and Ethics - Assignment Example

Corporate Social Responsibility and Ethics Table of Contents Table of Contents 2 Q Examine and Justify Actions Nike Could Take To Improve the Labour Conditions of Its Workers in Developing Countries 2 Q. 2 Assume You Are The Chief Executive Officer (CEO). Discuss Whether Or Not You Should Carry Any Personal Responsibility For Alleged Misdeeds In The Multinational Company. That Moral Theories Could You Use? 7 Q. 3 Is It Reasonable, Or Fair, To Expect A Large Company In One Part Of The World To Be Responsible For The Activities Of A Supplier In Another Part Of The World? 12 References 15 Q.1 Examine and Justify Actions Nike Could Take To Improve the Labour Conditions of Its Workers in Developing Countries In this discussion, primary intention is to demonstrate a critical understanding of labour conditions of developing countries with the concepts and theories of corporate social responsibility (CSR) and business ethics. And, also analysis of the significance of business ethics and corporate social responsibility concepts with respect to Nike Inc. will be ascertained. The concept of corporate social responsibility refers to a general belief which is detained by the modern business organisations towards the society. In accordance with Crowther and Aras (2008), corporate social activity “Analyses economic, legal, moral, social and physical aspects of environment” (Crowther & Aras, 2008). Along with the time, significance of the corporate social responsibility has changed. Before 1970s, few large corporations were involved with the CSR activities and provided philanthropic services for its employees and workers in terms of financial support. In recent times, it has been observed that corporate social responsibility has become a well harmonious wealth maximisation strategy for the corporate industry (Kristoffersen & et. al., 2005). The concept of business ethics is related with the facet of “Honesty is the best policy”. Business ethics involve with several rules and norms of human behaviour which are indivisible and also related with the environment (Maheshwari, 1997). In order to analyse the facet of business ethics, it can be asserted that there are four common theories of business ethics which are shorty illustrated below: 1. Utilitarian Theory: The utilitarian theory recommends that the plans and actions of a business should be estimated by its values. In simple terms, it can be asserted as the key concept of business is to ‘minimize the cost’ and ‘maximize the profit’. 2. Theory of Rights: During the business practices, organisations’ must need to be conscious about social, legal and human rights. 3. Theory of Justice: During the business practices, organisations’ must be imperial in terms of decision making. And, the decision should be reasonable and equal for all the parties. 4. Theory of Care: During conducting the business activities, organisations’ should remain concerned about its workers in terms of implementing new strategies, policies and actions. In addition, organisations must provide fair and similar opportunity to its workers such as fair wage, good human relation as well as health and safety conditions. In contrast, organisations’ should remain concerned about its customers as well. Organisations’ should maintain these theories in order to conduct their business operations morally and ethically in a society (Maheshwari, 1997). During the 1990s Nike was surprised, when the protestors had attacked Nike due to its sweatshop conditions in overseas supplier market. Nike had been indicted for using child labour in Pakistan for its soccer balls manufacturing purpose. Apart from Pakistan, similar instances had been derived in certain other developing nations of Asia such as Bangladesh, Indonesia and India (American University, 2014). Figure: 1. Child Labour Used by Nike (American University, 2014) In order to capitalize the low wage labour and reduce production cost, Nike had engaged them towards the violent and unethical business practices. As an effect within a short period, Nike had failed to meet its own standards of manufacturing before the internal report exposed in the market. According to the report, it had been found that almost two-thirds of the factories out of 168 factories were not able to meet the quality of its brand image (Wong, 2013). During that phase, International Monetary Fund (IMF) and World Bank (WB) had identified the cheaper trend of multinational companies which was only beneficial for the organisations’ but not the workers indeed. In effect, the IMF and the World Bank had introduced a corporation’s and worker’s rights in order to reduce poverty and focused on health, education and development in developing countries (Shah, 2006). Since after the occurrence, Nike’s approach has changed and instead of sweatshop conditions, Nike has rewired its approaches towards its supply chain during the financial year 2010. Eventually, Nike has diversified its organisational goal for bringing a systemic change for its workers since in the year 2005/06. Through CSR activities, it has created a new organisational structure within its own boundary in order to improve labours acquiescence, health, security and environmental issues. Besides, all these issues, it has also emphasised lean manufacturing, human resource management and waste and water management among others. Moreover, it has also concentrated on moral and ethical conduct in order to fortify its brand image (Nike Inc., 2012). Correspondingly, Nike had given effort to build an effective and better working conditions for its employees’ and in order to ensure that it has chosen three main tools such as audits, human resources management (HRM) training and lean manufacturing. In between the financial year FY 2007 to FY 2011 period, Nike had directed the first contract factory management for redressing working conditions in overseas market. In addition, it also arranged training supports for its workers with intension to upraise the skills of the labours and empower its workforce. Besides, it has also expanded its focus on sustainability of health, safety and eco-environmental issues. Accordingly, Nike has evidenced progress in terms of its workforce and brand recognition during the end of FY 2011. In accordance with the internal audit report, Nike was employing more than one million people around the world and out of them 67% were female employees (Nike Inc., 2012). Figure: 2 Countries, Factories and Workers during FY,09 to FY,11 (Nike Inc., 2012). From the analysis, it can be magnified that Nike has realised its fault when IMF and World Bank had taken initiatives against its unethical approaches. It has been also quite prominent that since last fifteen years, Nike has been working quite hard to improve its labour conditions for supply chain. Consequently, Nike has been also engaging it-self with the moral and ethical approaches of business ethics and CSR activities from the year of 1998. Nike has stopped allocating child labours due to its supply purpose from the developing countries and through maintaining that conduct it has implemented utilitarian theory. At the same time, Nike has focused on CSR activities and it has ensured social and human rights for its workers through availing them several facilities such as life safety, good working condition and sufficient wages. Moreover, it has also provided required training for improve the skills of the workers. Apart from this, Nike has also improved the quality of its products for its consumers’ and through involving in all such activities it has maintained the business ethics and also it has improved its labour conditions in developing countries. Moreover, along with focusing on the already taken actions to address its position in the industry Nike should also aim to provide fair wages to its workers in the developing countries according to the industry standards. Besides, the labour condition can be improved by focusing on their health and hygiene factors with special emphasis on avoiding child labour. Additionally, the labourers should be valued as a key component of the organisation and not merely as a commodity. Q. 2 Assume You Are The Chief Executive Officer (CEO). Discuss Whether Or Not You Should Carry Any Personal Responsibility For Alleged Misdeeds In The Multinational Company. That Moral Theories Could You Use? A chief executive officer (CEO) is normally the utmost experience holder individual of an organisation or administration who is responsible for decision making and looking after the betterment of the organisation. Being a CEO, several difficult and tough decisions have to be made for the organisation such as corporate governance, compliance program along with maintaining the rules and regulations. At the same time, CEO’s responsibility is to look after the ethical culture of the organisation in order to achieve goodwill for organisation. Thus, it can be asserted that CEO’s are the guardian of culture for an organisation. Consequently, it can be evaluated that in order to maintain the moral and ethical conducts CEO’s should focus on normative ethical theories. Normative ethical theories are a part of philosophical ethics. It can help in case of decision making in a prescriptive manner rather than descriptive way. Moreover, it can be asserted as a common belief which is concerning virtue of ethics. Under the assumption of normative theories, CEO of an organisation such as Nike which faced serious ethical concerns due to its operations in developing nations should decide apparently the path to be followed without compromising ethical approach. Consequently, in case of instrumental perspective, it asks an organisational CEO such as the CEO of Nike to study which responsibilities are profitable for the firm. Apart from this, it also asks the corporation to study how it can give more motivation for the fulfilment of its responsibility. At the same time, in descriptive approach, it asks what actually the firm needs to do in order to develop business ethics. According to the analysis and understanding, it can be asserted that normative theories perhaps cannot reduce queries of statistically analysed evidences. And neither can it determine the maximum efficient strategies for reaching ethical goals for the organisation. These approaches always queries about human rights, fairness and justice among others (Texas A&M University, 2014). According to Texas A&M University (2014), multinationals CEO should concern about all of these ethical approaches in order to avoid alleged misdeeds. Those are mentioned below: 1. The right of freedom as well as physical movement 2. The right of property ownership 3. The right of liberty from torture 4. The right to a fair trial 5. The right to unbiased treatment 6. The right to physical security 7. The right of freedom of speech as well as association 8. The right to minimal education 9. The right to subsistence From the analysis, it can be affirmed that being a CEO of a multinational company, it is quite essential to take responsibility for alleged misdeeds and these are the fundamental areas where the CEO should provide more attention in order to avoid misdeed behaviours (Texas A&M University, 2014). Besides maintaining all the ethical conducts, the CEO should also concentrate on a few other aspects such as general business ethics. This general business ethics aims to determine the fundamental resolve of the company. For instance, it can be asserted that if a firm’s intention is to provide maximum returns to its shareholders then it could seem like unethical approach. In this approach, a firm cannot consider the interests or rights of others excluding its own. In addition, in case of finance paradigm, the CEO should take more initiative to perform disciplinary activities in case of investment allocation, debt and equity management and dividend policy control. At the same time, the CEO should be alert regarding ethics of human resources management. Particularly in this segment, the CEO should focus towards the employees’ rights and benefits such as providing good human behaviour, healthy and secured working environment, fair wages and training and development among others. Apart from all of these, the CEO should be concerned about its consumers during the production process. It should understand the needs and requirements of its consumers and according to these requirements consumers’ expectations should be fulfilled, by providing quality goods, services and maintaining environmental ethics. Moreover, being a CEO along with all of these responsibilities, it is quite important to maintain a few other dimensions ethics of economic system for distributing benefits equally, law and business ethics for avoiding legal obligations and criticism, ethics of skills, intellectuality, property, knowledge for developing the society and international business ethics for developing business ethics globally (Velentza & Broni, 2010). In order to address the requirement of the discussion, it can be apparently asserted that being a chief executive officer, it is quite essential to carry out his/her responsibilities regarding dealing with alleged misdeeds in the corporation. According to the analysis and evaluation, it is quite clearly determined that during the international business or domestic business a multinational organisation’s CEO should follow the normative ethical theories in order to create a positive impact. Accordingly, it can be evidently asserted that CEO is the prime concerned or responsible authority who has to decide about whether the organisation is following the moral or ethical conducts during the international business practice or not. Thus, it can be recommended that, during the business activities a lack of caring attitude of an organisational chief executive officer can be a cause of distraction of the brand identity from the market forever. Q. 3 Is It Reasonable, Or Fair, To Expect A Large Company In One Part Of The World To Be Responsible For The Activities Of A Supplier In Another Part Of The World? In this discussion, the main objective is to justify whether it is reasonable or fair to expect a large multinational company to be responsible for its suppliers’ activities in one part of the world or not, during the supply chain management. In order to analyse that it is quite essential to understand the future trends of corporate social responsibility. Recently, above sixty thousand multinational companies’ operate in the entire world. And all these MNCs have in excess of 800,000 subsidiaries and a number of suppliers. Even all these enterprises are having a wide range of connectivity with the entire world through web connection. This kind of scenario has not seen before. At the same time, governmental authorities such as IMF and World Bank among others have also been concerned about sustainability of the world economy and they also have taken care about population, poverty, inequality and climate changing issues among others. Even these issues have not been ever taken before under serious concern, but with the changing trends corporate social responsibility movement has become an extremely essential activity for corporate industry (Maguire, 2011). In the recent times, during the business activities, most of the reputed business firms are trying to improve social and environmental conditions across the world. Moreover, those companies are providing effort to address the similar issues of their own stakeholders such as suppliers. As an effect, CSR activities have been steadily gaining peak in recent times, and giving hope for future. Consequently, from the evaluation it has been observed that during the Exxon Valdez oil spill and Union Carbide gas leakage case disaster, CSR movements had participated to redress the issues. On the contrary, from the effect related to CSR movement, it can be asserted that it has not aimed to redress the issues or filled the government gap, instead through CSR; enterprises have wanted to mobilize internal development. Thus, it can be apparently determined that through CSR activities, most of companies try to ensure their high position in terms of brand equity and apart from this, they also try to ensure fair employment practices, products safety, communication with media along with maintaining fair competitive advantages among others (Procter & Gamble, 2013). In keeping with Boston University CSR report (2009), during the last fifteen years out of sixty thousand companies only 4,000 companies have participated effectively in CSR activities but, many firms remained on the side-line. Instead, CSR performances have increased steadily (Maguire, 2011). Figure: 3 Total CSR Report (Maguire, 2011). Accordingly, it has been determined that most of the organisations are participating in corporate social responsibility movements, in order to ensure their elevated position in the industry along with ascertaining due competitive advantages and fulfilling the stakeholders’ requirements significantly. Thus, it can be apparently affirmed that global key players attempt to promote their brand identity in front of the modern civilisation trough the help of CSR movements. Consequently, in order to address the prime issue of this discussion, it can be asserted that supplier is a foundation of building brand equity. During the business activities, most of the firm used to depend on its suppliers. It can be highlighted that suppliers are the only resource for an enterprise depending upon which the organisations’ make promises to its customers with regard to quality, price and availability among others. This dependency can create a positive or negative impact on the organisational brand equity and at the same time it can also decide whether the large company will keep a strong customer relationship with its consumers’ or not. Therefore, during the international operations, organisations’ have remained conscious about its supplier situation from the several aspects (Benso & Kinsell, n.d.). Most of the multinational brands during the supplier selection focus on a few factors such as whether the supplier will able to attain the brand promise in terms of quality, quantity, price and time-table. At the same time, organisations’ also emphasise whether the selected supplier can maintain the required moral or ethical conducts during the business process or not. Otherwise, later on, during the collaborated activity it can cause a serious trouble for the organisation which can lead the organisation to face detrimental scenario regarding its own brand identification. In order to relate this issue with a real incident, it can be asserted that, a globally renowned dairy food offering multinational company Danone had failed in the Chinese market due to the quality issue of its supplier. One of the leading global suppliers i.e. New Zealand’s Fonterra had failed to retain quality of the milk based products. Subsequently, as an effect, sales volume of Danone had decreased in entire Asian markets including China (BBC, 2014). Even almost similar incident happened in case of Nike during the 1990s when they had indulged in child labour and also engaged in unethical practices with its workers in the Asian market. Due to that reason, Nike had also faced several difficulties in international business which in turn affected the image of its suppliers. Consequently, after evaluating all these factors evidently it can be asserted that a large multinational company in one part of the world is responsible for the activities of its own supplier in another part of the world. Moreover, from the evaluation, it can be asserted that a multinational organisation should focus on maintaining its moral and ethical conduct in order to ensure its brand identity at a high level. This can be apparently attained by engaging its suppliers to the core values of the company which should without fail focus on ethical business practices. Subsequently, a large company can be expected to address the activities of the suppliers according to its own values so that any misdeed by the supplier does not occur which harm the reputation and the brand value of the large company. References American University, 2014. NIKE: Nike Shoes and Child Labor in Pakistan. Identification. [Online] Available at: http://www1.american.edu/TED/nike.htm [Accessed 01 May, 2014]. BBC, 2014. Danone To Sue New Zealands Fonterra Over Recalls. Business. [Online] Available at: http://www.bbc.com/news/business-25663779 [Accessed 01 May, 2014]. Benso, J. &Kinsell, B., No Date. How Your Supply Chain Can Build or Destroy Your Brand. Brandchannel. [Online] Available at: http://www.brandchannel.com/images/Papers/brand_supply.pdf [Accessed 01 May, 2014]. Crowther, D. & Aras, G., 2008. Corporate Social Responsibility. Bookboon. [Online] Available at: https://www.ashgate.com/pdf/SamplePages/Handbook_Corporate_Governance_Social_Responsibility_Ch1.pdf [Accessed 01 May, 2014]. Kristoffersen, I. & et. al., 2005. The Corporate Social Responsibility and the Theory of the Firm. Edith Cowan University. [Online] Available at: http://www.ecu.edu.au/__data/assets/pdf_file/0020/40736/wp0505ik.pdf [Accessed 01 May, 2014]. Maheshwari, R. P., 1997. Principle of Business Studies. Pitambar Publishing. Maguire, M., 2011. The Future of Corporate Social Responsibility Reporting. Boston University. [Online] Available at: http://www.bu.edu/pardee/files/2011/01/PardeeIIB-019-Jan-2011.pdf?PDF=issues-in-brief-no-19 [Accessed 01 May, 2014]. Nike Inc., 2012. Labor. Impact Areas. [Online] Available at: http://www.nikeresponsibility.com/report/content/chapter/labor [Accessed 01 May, 2014]. Procter & Gamble, 2013. Our Worldwide Business Conduct Manual We Do the Right Thing. We Do the Right Thing… for Each Other. 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Two Faces of Economic Development: The Ethical Controversy Surrounding U.S.-Related Sweatshops in Developing Asian Countries. Global Ethics Network. [Online] Available at: http://www.globalethicsnetwork.org/profiles/blogs/two-faces-of-economic-development-the-ethical-controversy [Accessed 01 May, 2014]. Read More