Business Ethics, Globalisation and Sustainability - Framing Key Ethical Issues - Coursework Example

Running Head: BUSINESS ETHICS, GLOBALISATION AND SUSTAINABILITY Business Ethics, Globalisation and Sustainability Business Ethics, Globalisation and Sustainability This essay provides an analysis of an ethical situation in which a representative of a company has to make a moral decision on whether or not the company represented should enter into a supply contract with a supplier who uses child labour in the process of producing the raw materials. The essay is divided into three distinct sections as follows. In part one, a general outline of the ethical issues that arise from the situation is presented. This is followed by a detailed analysis of the morality of either course of action that can be taken in the second section. This is done using both utilitarian and Kantian ethical philosophies. In the third part, the question of whether the company should enter into the contract or not is answered. Reasons for making the decision are provided. Part One: Framing Key Ethical Issues There are several key ethical issues that arise from the situation in the plantations. These issues, which arise from the conflicting interests when business organisations deal with suppliers as key stakeholders of the business, are important in understanding how all other different stakeholders of an organisation are affected. These effects are felt down the supply chain of an organisation. Essentially, the ethical issues that arise from the situation presented are as a result of the company looking for cheap sources of raw materials. On the other hand, the suppliers, being keen on maximising profits, seek to supply the raw materials required at the lowest cost possible. Although this trend may be necessitated by the need to achieve triple bottom line success, it raises a number of ethical issues based on different environmental and labour conditions. From the observation of what was occurring in the farms, two issues can be pointed out as raising the greatest ethical concern. These are outlined as follows. The first issue regards the labour conditions that workers are subjected to. In the case, this is evident in several ways. For instance, it can be seen that labour is provided by orphaned children who are of school-going age. It can also be seen that the children, apart from being forced to work in plantations in the first place, are subjected to poor working conditions in that they work without proper remuneration and are exposed to difficult conditions when working. This means that they neither have an occupational status nor job security when working in the plantations. Although the explanation given is that the children would be in worse conditions if they were not working at the plantation, the whole issue raises the ethical question of whether, considering the local circumstances of the children, this constitutes child labour and whether it is acceptable. The second issue that arises from the situation presented regards issues to do with health and safety concerns. This can be seen in several instances as described in the case. To begin with, the cocoa beans are processed under non-hygienic conditions, when evaluated by international standards. Also, workers at the plantations, who are children, lack the right equipment to do the work. As a result of this, they are exposed to dangers of harm and injury while working. To the company, although the costs of acquiring the raw materials are relatively low, the ethical issue that arises here is whether to compromise health and safety concerns for easily acquired raw materials. Theoretically, manufacturing companies are faced with the question of whether they should use their internal guidelines to influence working conditions that workers at the plantations of their suppliers are subjected to (Pier, 2002, p. 79). This practice, known as ethical sourcing, can be an effective means of regulating the activities of business organisations in environments where appropriate legislation does not exist (Crane & Matten, 2010, p. 420). A similar issue arises in the case study. The issue of child labour being used in cocoa plantations in West Africa has been properly documented (Drachman, Shank, Cunningham & Grace, 2003, p. 143; Castan Centre for Human Rights Law, 2008, p. 17; Olaniyi, 2009, p. 53). With a lack of proper legislation and enforcement mechanisms, children are subjected to poor working conditions in the plantations. Therefore, the question is whether the company has a responsibility of ensuring that all its suppliers adhere to the highest standards of labour conditions, safety and health concerns or leave the responsibility to individual suppliers. Part Two: Analysis of the Issues The observations made in the plantations can be analysed using a utilitarian and a Kantian system of ethics. Before determining the morality of the action to be taken by the representative based on the situation observed at the cocoa plantations, it is important for the situation to be analysed using the stakeholder theory of the firm. This will provide important information about different views that form the moral dilemma for the different parties that are involved. According to this theory, organisations can be effective in their operations and achieve their objectives in the market if they take care of the various needs of their stakeholders (Weiss, 2008, p. 40). In such an approach, organisations move beyond the traditional approach of being concerned primarily with meeting the needs of their shareholders to one that recognises the relevance and importance of other stakeholders as strategic assets in a complex business environment (Scherer & Patzer, 2011, p. 140). When applied to the situations that were observed on the plantations, the theory can be used to answer three key questions. The first one is who exactly the stakeholders of the chocolate making firm are. The second one is why the stakeholders identified do matter to the organisation. The third one regards whether it is the responsibility of the organisation to take into account the different needs of the stakeholders when carrying out its activities. For the first question, a stakeholder, under this theory, can be defined as a party that can be harmed by or benefit from the activities of an organisation and whose rights the organisation has to respect or may violate (Crane & Matten, 2010, p. 65). This is applicable to the networked stakeholder theory model in which a firm has different stakeholders as a result of both direct and indirect relationships with them (Sachs & Ruhli, 2011, p. 59). Therefore, through its relationship with the direct suppliers of cocoa, the company has the workers in these farms as part of its stakeholders. For the second question, the essence of stakeholders in the activities of a firm can be understood in terms of legal, fiduciary and economic perspectives. To begin with, a company has fiduciary responsibilities to deliver value to its shareholders (Freeman et al., 2010, p. 128). This is applicable to both the traditional capitalist and stakeholder theories of firms. Secondly, an organisation is obliged to take care of the needs of different stakeholders through legal requirements, regulations and binding contracts. These legal responsibilities make it necessary for different stakeholders to have a claim in the way an organisation conducts its affairs. For the third question, it is the responsibility of a firm to take into account the needs of its different stakeholders in its activities because of the need to show accountability in corporate governance (Mallin, 2013, p. 20). As such, a company is obliged to fully interact with its different stakeholders as a way of enhancing its performance in the market. When applied to the observations in the cocoa plantations, it can be seen that the chocolate making firm is responsible for managing all the stakeholders down its supply chain. These stakeholders include the brokers, the workers in the plantations, the authorities in the source country and the general society. The ethical value of the situation observed in the plantation can be analysed using utilitarian and Kantian ethics. According to utilitarianism, whether an action is right or wrong depends on the effect of its results (Crane & Matten, 2010, p. 102). An action is moral and ethical if its consequences result in the greatest good to the largest number of people. Under this theory, human beings are regarded as pleasure-seeking entities and as a result, the morality of an action is measured on the level of pleasure its consequences produces and the number of persons affected (Shaw, 2007, p. 49). It is this utility that forms the value for economic measure of the consequences of different actions. This can be applied to the situation at the plantations in different ways. To begin with, there are three key actors: the company, the dealer and the children workers. Secondly, there are two possible courses of action open for the company: to sign the supply deal with the broker or not to do so. Thirdly, there are different outcomes which will result from the action taken. These outcomes, which form the utilities of the actions, can either result in pain or pleasure to different actors. If the company, through its representative, signs the deal with the broker, it will gain pleasure from increased profitability resulting from reduced costs of raw materials. The action will also be of utility to the broker who will gain from increased sales of the raw materials. By extension, accepting the contract with the supplier may produce desirable consequences to the individual representative of the company in the form of increased commission and other performance-based benefits. On the other hand, there are several unpleasant consequences that may follow if the company accepts to contract the broker. First, the children, who are working in the plantations, will remain subjected to poor labour conditions in the plantations. Also, by choosing to do business with the broker, the company will indirectly make the children to remain exposed to dangerous and harmful conditions at work while at the same time being kept away from school. Another unpleasant consequence resulting from acceptance of the deal is that the company will be running the health and environmental risk resulting from the conditions in which the cocoa beans are harvested and prepared. A completely different scenario arises in the event of the company rejecting the deal with the broker. One positive effect of this action is that the company will have maintained high levels of health standards of its products. In addition, such an action, which may be in accordance with the company’s code of ethics, may boost its corporate social responsibility activities. However, there are several unpleasant effects that may arise from this action. For instance, the dealer, as a result of declining business, may be forced to cut his workforce. Consequently, the children may be exposed to worse conditions both at the plantations and on the streets in case they lose their jobs. Further, the company would experience the loss of an otherwise cheap deal for the supply of its raw materials. The situation can also be analysed using Kantian model of ethics. According to this philosophy, the morality of an action is neither influenced by the prevailing conditions nor can it be judged based on the consequences of the action (Crane & Matten, 2010, p. 105). Therefore, the morality of an action depends on a universal set of principles and moral laws. These laws are contained in a set of categorical imperatives that take the form of three standard maxims against which the morality of an action can be tested (Eaton, 2004, p. 39). The situation can be analysed using this philosophy as follows. To begin with, the action that needs to be tested for morality is whether the company should sign the deal with the broker. This action is weighed against the three maxims to determine whether it is ethical or not. For the first maxim, an action can only be ethical if it can be performed by every other person as a universal principle (Eaton, 2004, p. 40). When applied to the situation at the plantation, the action is tested on whether it can be acceptable to everyone else for a company to do business with a supplier who uses child labour. For the second maxim, the action is tested with reference to recognition and respect for basic human dignity. The action of doing business with a supplier who uses child labour is tested on whether it actually recognises and shows respect for basic human dignity. Lastly, the third maxim tests the universality of an action, that is, whether the company representative would like everyone to be informed of the decision taken about doing business with the supplier. Part Three: Outcome and Decision From the outcome of the analysis of the observations made at the cocoa plantations, the decision on whether or not to enter into a contract with the supplier can be made. It is important to point out that considering the situation under the Kantian moral maxims, it would be completely unethical of the company representative to sign the contract with the supplier. This is because of the fact that such an action fails all the three tests of the maxims. For instance, the action does not pass the consistency test since it is highly unlikely that everyone else would be willing and ready to do business with a supplier who uses child labour to produce the raw materials. Secondly, the action fails the test for respect of humanity since, by agreeing to do business with the supplier, the company representative would be indirectly supporting child labour and poor working conditions, which are vices in themselves. Lastly, the action fails the test of the last maxim which tests on universality of an action. It is unlikely that the representative of the company would be glad to let all people know that the company works with a supplier who uses child labour in the plantations. Although the action is unethical, when considered from this perspective, it is important to point out that this determination is based on the decision of the individual representative. However, since the representative is working with the interests of the company, the decision on whether or not to get into a contract with the supplier is greatly influenced by this. As a result, the decision of the representative is seen in light of its impact on the entire organisation and its stakeholders. When the situation is considered under a utilitarian analysis, it is much better for the business to accept the contract with the supplier than not to. This is because of the following reasons. To begin with, the benefits that result from that action exceed the potential risks associated with not signing the contract. Although signing the contract will benefit the company directly in the form of a cheap source of raw materials, one important benefit will result from the supplier being able to keep the large population of children from being exposed to conditions worse than those on the farm. Conclusion From the situation, it can be seen that it is better for the representative of the chocolate manufacturing company to sign the supply contract with the broker from West Africa than not to. This is because of the relative advantages that the consequences of doing business with the broker present to different actors in the situation, particularly the children workers who are employed in the plantations. Although the children are subjected to child labour, not doing business with the broker may expose them to much difficult situations like war and sex trade. 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