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Business Ethics & Responsible Management Case 4 Supply Chain Ignorance

8 Pages 2060 Words 476 Downloads

Introduction

Business ethics refers to form of applied or professional ethics which examines principals and ethical problems, arise in a company. It deals with ethical questions in different-different field like medical, legal, technical or more. Present report is based on a case study of supply chain ignorance, which arise ethical issues in a company. For this purpose, ASOS is taken which is a British online fashion and cosmetic retailer.

As per BBC report, this company found to be guilty of exploitation in supply chain. In this regard, from perceptive of senior manager at ASOS, ethical dimensions of managing supply chain is outlined. Here, some ethical theories for judging ethics in stated situation also highlighted. Furthermore, qualities for being an ethical manager is elaborated in order to raise ethical standard of business and overcome from such situations.

PART 1

A) Explanation of ethical dilemma and identification of key factors

Today for almost all organisations, the main goal of business is to bring revenue and achieve highest position in their industry. However, achievement of this certain goal seems not to be always ethical at all costs. Therefore, business ethics command organisations to conduct business with specific code of conduct that prevents from unethical activities. If companies failed to do so, then it tends to loss customer base and subject to bad publicity also. The main objective of present assignment is related with concern about ASOS that being an ethical retailer and face dilemma including ignorance of supply chain. Iconic retailers have been implicated under BBC investigation where unethical practices of Turkish Textile industry.

This broadcasting corporation has conducted a survey where famous retailer companies have been identified as possessing child labour in supply chain process. This kind of scandals come under limelight when several branded companies like M&S and ZARA were founded guilty. Under this case, investigators of BBC have founded that children of age 7 to 8 years are engaged in sewing boxer shorts. They have exhausted from 60-hours working under organisations therefore, unable to attend schools.

The present report on ethical dilemma is written by middle manager of ASOS. It is further addressed to senior managers with major purpose i.e. to bring attention about a new trend of unethical practices in Turkish Textile industries. In this regard, report revolves around an ethical dilemma from perspective of ethical management “Should ASOS engage in scandal of child exploitation in supply chain services?”.

Considering this dilemma, seniors have argued that such practices are against of business policies and procedures. They have said that ASOS is run on specific initiative – 'fashion with industry'. The main intention behind this initiative is to make sure that entire aspects of business are able to be scrutinised. Therefore, this company is unaware from unapproved outsourcing that is child labour in Turkish factories. Henceforth, this report is made argument related to the ethical dilemma that ASOS will not get engaged in any unethical practices.

There are various examples have shown where companies dealing in same sector face same kind of ethical dilemmas. M&S found guilty to use child labour in factories. It has offered legal employment to refugee and pledged that it will never to same activity again in future. Similarly, BBC claimed that workers in ZARA are worked on 12-hours basis in vulnerable conditions. With this assistance, duties of ethics concerns on activities of organisation instead of consequences of their actions. As per this regard, companies have responsibilities to operate business in ethical manner even if, it create loss in revenues. In this context, ignorance in supply chain management where child labour is found, will negatively affect the reputation of business.

Positive impact of duty-based ethics:

  • Emphasises the value of each human being: Ethics of duty states to give equal respect and introduce diversity at workplace. It gives rights to human beings to get equal employment opportunity.
  • Deals with intentions and motives: Duty-based ethics concerns on two main intentions as-  Company's policies or code of conduct framed in narrow manner. Second one is that a company not intentionally do a wrong act, it was happened accidentally. Therefore, from deontological point of view, such companies do not deserve to be a part of criticism.   

Negative impact of duty-based ethics:

  • Absolutist: Duty based ethics are set on absolute rules. Therefore, under this condition the only way to overcome is to build a list of some assumptions or exceptions to rules.
  • Hard to reconcile conflicting duties: Ethics of duty doesn't deal in such cases where duties are in conflicts.  

Corporate Social Responsibility refers to core business activities activities by companies. The main purpose of company behind this is to manage their business practices for creating an overall impact on society in positive manner. It includes environmental protection and sustainability; work in partnership with local communities; develop adequate relationship with customers and employees; etc. This would lead organisations to generate revenue and gain high profitability. Therefore, CSR activities consider as an important way to enhance competitive advantage, raise and protect brand reputation, build trust among stakeholders and more.   

In context with ASOS, it operates business by following initiative as 'Fashion with integrity', for managing all aspects of transparency. Therefore, in response to given allegations, this company has argued that such kind of practices were contrary to its code of conduct. In Turkish factories, it has not allowed any type of child labour. The evidence of this is its remediation programmes, which are run by oversees partners of ASOS. These programs are campaigned for vulnerable people who found in pity conditions. It's managers have argued that one supplier, Hazar Tekstil from Turkey's Industrial Hub (Istanbul), sub-contracted its works with small workshops dealing in same area. These areas are considered as unregulated and unapproved where children were forced to work in factories.

In this regard, the evidence which shows that ASOS conducts ethical activities- gives supports to children and Syrian refugees as well as as dropped Hazar Tekstil also. However, this evidence is not sufficient for claiming ignorance related to either for unknown suppliers or create an environment, under which such unauthorized outsourcing have occurred. According to BBC report, companies are founded to be responsible for conditions where goods are manufactured. It is responsibility of ASOS to monitor operational activities of suppliers. Along with this, they must ensure that there is high standards of visibility within supply chain management.

ASOS is committed for being a responsible retailer at marketplace, where every worker is  respected as well as protected in supply chain. In 2014, it has launched a new Ethical Trade Programme,  which is based on three main key pillars. It includes people, partners and practices. As in garment factories, workers all around the world are found in vulnerable conditions. Therefore, ASOS ensures that no factories in supply chain, fail to meet criteria related to health and safety standards. It has implemented sourcing practices which set out how business work, what are its expectations from workers and how it improves need of suppliers.

Henceforth, suppliers are considered as central to Ethical Trade Program. It has removed all barriers that conflicts pressures on suppliers to share company's vision. Thus, main purpose of this CSR activity is to improve conditions for near about 79,000 workers by supply chain.

 The unethical practice or scandal of child labour has affected to both internal and external stakeholders of OSAS. As per Friedman Theory, managers, owners, shareholders, employees and other workers are considered as internal stakeholders.

While customers, media partners, communities and suppliers are external stakeholders. Since trust of stakeholders are built on transparency and fair practices conducted by OSAS. Therefore, any scandal has affected entire brand image and led down their expectations as well.

Recommendation:

As per above mentioned report, it is recommended to OSAS that it has made some adequate policies and procedures. It has to change its monitoring processes, managing ethical trade as well as the way to oversee sourcing practices. This company further needs to develop a new Sourcing Department that gives support to work in collaboration with suppliers and local audit teams. This division helps in reviewing the sourcing practices in regular manner to ensure that any unethical activity will not conduct in supply chain.

b) Applying two ethical theories to the case study

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Utilitarianism- theory of ethics

It is an ethical or philosophy theory, given by Jeremy Bentham and John Stuart Mill. As per this theory, it is essential for organisations to act in a certain way by which maximisation of goods can be delivered to large number of people. According to present case study, OSAS have faced scandal related to child labour. But, its managers have strictly opposed to this scandal by stating that it is contrary to mission of company. The code of conduct of this company is based on a specific initiative- 'fashion with integrity' i.e. to manage entire business in transparent manner. In this regard, Utilitarianism may be utilised to consider on both negative and positive consequences. These consequences are linked with a particular policy to reduce all such aspects which leads to generate unethical activities. 

PART 2

The qualities required for being an ethical leader or manager who can manage ethical issues of business

Ethical leaders are defined as those individual who gives priority to own values and opinion while executing their responsibilities. It refers to certain characteristics of leaders that are trust-builders, honesty, fairness, transparency and more. Therefore, this concept used to motivate leaders or individuals to perform duties within ethical boundaries. In this regard, there have been analysed that there are various conditions occur in working environment, that develops the requirement of ethical leader. The main purpose behind such situations is to attain targeted goals and set objective of business within certain period of time. In order to become an ethical manager of a company, I need to possess certain qualities which makes me able to manage entire job responsibilities of business. By enhancing my skills and abilities related to ethics, I can handle major operations in systematic manner. I can also prevent business from scandals and unethical activities which impact on image of business negatively.

However, I have analysed that it is sometimes difficult for a leader to perform their responsibilities in ethical manner, when company wants instant results. This would ultimately leads to create dilemma between me and my part of work. Similarly, when a company wants to avail competitive advantage then it pressurise its managers and leaders to obtain results. Under this condition, as a manager I have to take certain actions which oppose my ethical opinion and forces me fulfil demand of business. (Corvellec and Hultman, 2014) (Smith, 2012) (Savage,  Gorman and Street, 2013) (Fearn-Banks, 2016) (Morden, 2016) (Woodburn and McDonald, 2012) (Rainey III and Sigler, 2016) (O'brien, 2015) (Raufflet and Mills, 2017) (Brunt,  2016) (Sheehan and Quinn-Allan, 2015)

References

  • Corvellec, H. and Hultman, J., 2014. Managing the politics of value propositions. Marketing Theory. 14(4). pp.355-375.
  • Smith, A. D., 2012. Green supply chain management and consumer sensitivity to greener and leaner options in the automotive industry. International Journal of Logistics Systems and Management. 12(1). pp.1-31.
  • Savage, N., Gorman, M. E. and Street, A., 2013. Emerging technologies: socio-behavioral life cycle approaches. Pan Stanford.
  • Fearn-Banks, K., 2016. Crisis communications: A casebook approach. Routledge.
  • Morden, T., 2016. Equality, Diversity and Opportunity Management: Costs, Strategies and Leadership. Routledge.
  • Woodburn, D. and McDonald, M., 2012. Key account management: The definitive guide. John Wiley & Sons.
  • Rainey III, J. L. and Sigler, K., 2016. Securing an IT Organization Through Governance, Risk Management, and Audit. Auerbach Publications.
  • O'brien, J., 2015. Category management in purchasing: A strategic approach to maximize business profitability. Kogan Page Publishers.
  • Raufflet, E. and Mills, A. J. Eds., 2017. The dark side: Critical cases on the downside of business. Routledge.
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