This essay will consider the ethical dimensions in relation to the issue of the use of child and exploitative labour in association with ASDA and its clothing lines sold in the UK. The essay will consider both the actual ethical issues around the use of child and exploitative labour as well as the wider ethical dimensions around the issue using the relevant frameworks.
To put the essay into context ASDA as part of its diversification strategy offers consumers a range of clothing lines which it markets under the George brand. The primary marketing strategy of the sub-brand is aligned to ASDA's wider strategy and as such follows a marketing mix in which the price element is the dominant one (Jobber 2007). As such in following what may be seen as a cost leadership strategy (Porter 2004) ASDA is forced to try to reduce as many costs as possible in its supply chain so as to be able to pass these savings back to the consumer and hence maintain a competitive advantage. This however presents companies such as ASDA with an ethical problem, in order to maintain the lowest prices the company is faced with choosing to imported clothing from the Far East and other part of the world were child or exploitative labour are used. As such the company may be seen as being forced to choose between the deployments of a successful strategy but using a business model which may be viewed by some as unethical and on the other hand choosing alternative model but having as such to incur additional costs. The problem would seem to be highlighted as a contemporary one by Mathiason's (2009) article in which it is heighted that a number of major retailers including ASDA chose to stop importing clothing lines from Uzbekistan due to negative publicity associated with the use of child labour in the cotton industry within the county.
Shareholder vs stakeholder models
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In the first instance one should consider that business ethics presents a set of choices which may be seen as going back to the historical debate as to whom a business should be run in the primary interest of. Classical models such as those advocated by commentators such as Friedman (1970) suggest that the only social responsibility of a business it towards the long term profitability of the business for the benefit of the owners. In the consideration of the current case this would suggest that ASDA should be indifferent to the methods used in the production of its clothing lines the only consideration being whether the use of such products fits into the company's wider profit making strategy. This however is not the only view of how a business should be managed in relation to ethical considerations, some such as Freeman (1984) advocate the view that a business should be managed for the good of a wider group of stakeholders which many be seen as including suppliers, consumers as well as more conceptual stakeholders such as the environment or the population at large. The problem initially however for the Freeman (1984) model is to consider who has a legitimate stake within a business (Johnson et al 2008), were this was simple to define within the Fridman (1970) model there is potentially an unlimited group of stakeholders to consider under the stakeholder model should the widest levels of the effects of a business be considered.
Despite the historical background of this debate the argument is personified by two more contemporary approaches towards the management of business ethics which may be seen in decision to manage via the concept of corporate governance or corporate social responsibility. Corporate governance on the one hand is an ethical approach which emphasises the accountability between managers and shareholders, in the UK the corporate governance system is largely based upon a set of voluntary codes of practise (Arnold 2007) whilst the US takes a much more robust rules based approach in the form of the Sarbanes-Oxley Act 2002 (Bumgardner 2009). Regardless of approach however one may consider that the emphasis of corporate governance is based upon the achievement of minimum standards and ensuring the accountability of managers to the owners of a business rather than a wider stakeholder group as such this more contemporary approach may be seen has having a greater resonance with the classical approach than that of the stakeholder model. Again using the corporate governance approach in relation to the case of ASDA for selling imported clothing which may use child or other form of exploitative labour it is doubtful that the approach would prevent or discourage ASDA from partaking in such an activity.
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The second approach to the management of business ethics is that of the corporate social responsibility (CSR) approach, here companies adopting this approach try to manage their businesses in way which benefits a wider group of stakeholders. Here the emphasis is not upon the meeting of minimum standards but a consideration that a business tries to run its business in a way which genuinely benefits those with a legitimate stake within the business (Johnson et al 2008). This however presents the manager with a problem in that firstly one may consider that it is difficult to define who has a legitimate stake within a business - where is the cut off point? Secondly there is also the consideration that stakeholders may often have competing interests
Such for instance whilst shareholders may put the primary emphasis on profit maximisation others, such as the public at large may have other priorities such as the reduction of environmental impacts of a business. As such in considering the issue at hand it would seem that even if using the CSR model ASDA chose ultimately not to completely stop using imported clothing which used child of exploitative labour the issue under the CSR model of business would have seen the company considering the issue and balancing the needs of the supplier in this case against the needs of other competing stakeholders within the organisation.
As such whilst one may consider that the use of a CSR or stakeholder model of business may lead to higher standards of ethical behaviour than those of the classical shareholder based models however this does not automatically lead to the assumption that every stakeholders needs will be met, this is as much a function of the scarcity of resources (Keat and Young 2009) as opposed to a reflection upon the company's wiliness to engage in a wider CSR agenda.
In considering ethical considerations an important concept to consider is that of the economic concepts of "trade offs" here one considers that on the basis that resources are scarce (Keat and Young 2009, Begg et al 2008) it is not possible to meet the needs of all stakeholders even if the company in question wished to do so. Ss such companies in there consideration of ethical behaviour much choose between a trade off of utility between stakeholders with competing needs. As such this is an appropriate model for analysing the case of ASDA's choice to use and sell clothing lines which have used the use of child or exploitative labour. On the one hand the use and sale of such products allows ASDA to give utility to both shareholders and consumers, on the one hand costs are reduced this allows the business to be more profitable and thus benefits the shareholder at the expense of the supplier. On the other hand such cost savings may be used to pass on these cost savings to the consumer thus making trade off in this case between the benefit derived by the consumer at the expense of the supplier.
The major problem for a company in such as situation is how does it decide what bundle of benefits should it choose and how can it priorities the allocation of resources. One consideration is that the market should be allowed to decide upon such issues, under this model the process is relatively simple in that the company is free to sell products freely and that the market in the form of the consumer will decide upon the trade off of utility. For example in the instance of ASDA if there company were to offer both low cost lines which are made using exploitative and child labour as well as standard priced lines which do not then the consumer will be able to make there own mind up as to the level of utility to be assigned to each of the stakeholders and thus the market will have decided upon the ethical stance to have been taken by the company.
Another view however is that the market does not in its self make the best ethical decisions given that many consumers in themselves act in a way which may be seen as unethical (Babakus at al 2004, Poulter 2005). As such one may consider that managers under this consideration have duty to impose ethical standards upon there organisations. Whilst this is a popular model especially with companies that have a strong CSR approach such as Marks and Spencer there is the consideration that such ethical stances represent a personal interpretation of what is ethically important on the behalf of a manager. For instance in the case study in question if ASDA were to decide to apply a blanket ban upon imported clothing which used child or exploitative labour thus taking the choice away from the consumer there is the consideration that in effect this is a personal decision on the behalf of managers at ASDA as such one may question to what extent an individual has the right impose there personal set of ethical values upon another.
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An alternative method which may help a company to decide upon its ethical stance in relation to a given question is to consider a number of ethical models. The essay will now consider two contrasting ethical models in the form of Kantian ethics and Utilitarian ethics and then apply them to the case study so as to see the impact upon the decision.
By definition Kantian ethics may be seen as an approach to ethics which emphasises principal over results. Following the Kantian approach to ethics a person who is considering a given course of action should consider not the results of that action but whether that action is morally right or not (Fisher and Lovell 2009), following this approach there are no exceptions to a given principal regardless of result and thus the idea is noted as the "categorical imperative". This is in contrast to other models of ethical decision making such as Utilitarianism in which the focus is not necessarily on the principal but on the overall result of a decision (Graafland 2007, Velasquez 1998). This however still leaves the question as to what is considered to be unethical? In general terms the categorical imperative is often interpreted in the context of Kantian ethics to be linked to the concept of treating others as one would wish to be treated. In the context of ASDA's dilemma assuming that the reader agree that the use of child and exploitative labour is morally wrong because it causes undue suffering then Kantian ethics would provide a simple blanket answer that the company should not use such products regardless of the benefit to another group such as consumers or shareholders.
On the other hand Utilitarian ethics provides a much more complex decision making process which considers the total result of a problem rather than the morals behind a decision. The utilitarian approach is often summed by the phrase "the greatest good to the greatest number of people" (Fisher and Lovell 2009) as such the utilitarian model acknowledges that in decision making there are potentially winners and losers but that the decision which is most ethical is the one in which the most good is generated for the greatest number of people even if that decision results in some groups or stakeholders losing out at the expense of others. As such the utilitarian model would not suggest that the use of child or exploitative labour by ASDA is automatically unethical instead it would require the company to consider does the benefit derived by consumers and shareholders outweigh the harm done to those involved in the production process. If the answer is yes then ASDA should continue to use imported low cost clothing lines, if the answer is no then from an ethical perspective ASDA should stop supplying such lines.
Having considered the research one can see that contemporary ethical issues often have far reaching implications and rarely have simple solutions. The case of ASDA's sale and use of low cost clothing are the prime examples of this in which there are many stakeholders involved all whom have to an extent competing ethical needs and the need for the allocation of corporate resources in differing forms. In addition to the complexity of the issue one can also see that whilst business ethics and consumer perceptions are a contemporary issue the wider context is a broad and historical one routed in well established debates as to how, why and whom for a business should be run in the interest of.
Considering all of the models and arguments it is the view of the researcher that ultimately the market should be allowed to decide upon how corporate resources should be allocated to achieve the best overall ethical standards. As such in the case considered ASDA should continue to offer its low cost imported clothing lines but only so long as there is sufficient consumer demand to justify the continuation of the product lines; or should consumers stop demanding these products then this will be a clear signal to ASDA that such as stance is no longer acceptable triggering a reallocation of resources?