In The Age Of Competitive Business Environment Commerce Essay

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In the age of competitive business environment, particular attention must be paid to ethical and moral features of the organization. Undoubtedly, business and moral values are inseparably linked. However, there are many different definitions of both ethics and business ethics in common usage. This essay will mainly discuss the role of ethics in business and managerial practices. In addition, it will also highlight the importance of dealing with ethical issues and creating an ethical workplace in the supermarket industry.

Nature of ethics

One of the definition of ethics is as follows: "Ethics is concerned with the study of morality: practices and activities that are considered to be importantly right or wrong, together with the rules that govern those activities relate." (Deming, 1993: 166 , citied in Laurie J. Mullins 2005). Ethics is a general term defined how people should distinct between right and wrong and how they should define their moral judgments.

Another definition emphasizes the suitability of one's actions in relation to other people and their privileges. "Ethics refers to appropriateness of your behavior in relation to the rights of those who become the subject of your work, or are affected by it." (Lewis, Thornhill and Saunders 2007:178). It is evident that each human being has an individual's set of value that is very complex and idiosyncratic.

"In ethics people must rely on knowledge gained through experience to justify information about themselves." Not only does morality involve action but it also involves thoughts and attitudes. It is evident that values are a combination of cognitive and emotive factors and it is really hard to find out what another person really values. It is also impossible to compare and contrast our own value set with other people values. (http://gsiscommunity.org/faculty/montgomeryb/TOK/KnowledgeAeas/Ethics/index.htm, 2010)

The matter of ethics in business practices

Ethics in business can be perceived as an example of applied ethics. As previously mentioned, ethical issues and business practices are interconnected and dependent on each other. As Griseri suggests (1998, vii) we all have different kinds of values such as shared values, value driven, corporate values, professional ethics and managerial ethics, all pressing in different way on the organizations.

One of the definition of ethics stresses the importance of the position of the human being in the corporation and his moral values in relation to the working environment. "Ethics is one part of the business that is related to absolute standards and moral principles within company. It is concerned with human character and conduct, the distinction between right and wrong and the absolute duties and obligations that exist in all situations." (Pettinger, 2000: 175).

There are three levels of ethical issues concerning business and public sector organizations. At the macro level there are problems concerning the role of national and international business. (Johnson and Scholes 1994, cited in Pettinger 2000). Nevertheless, conducting business in the international area is a very complex task. Different cultures usually have different ethical standards. There are two different approaches to this problem. Firstly, "ethical imperialism is a belief that the ethical standards of one's own country should be imposed in that country when doing business in other countries." (Greenberg, Baron, 2008:63) Implementing ethical standards in countries that had made already their own judgments is an questionable issue. This approach emphasizes the presence of only one set of appropriate values and what is different than commonly known ethical standards may be considered wrong. For instance, the treatment of women is highly regulated by social and religious customs in Middle Eastern countries and it differs from ethical standards in North America.

Contrary to the ethical imperialism, there is also "ethical relativism that is a rationale saying that no culture's ethics are better than any other's and there are no internationally acceptable standards of right and wrong." (Greenberg, Baron, 2008:63) In fact, such way of thinking may lead to moral disobedience.

At the corporate level, issues are connected with corporate social responsibility and attention is paid to ethical issues facing individual and corporate entities. At the individual level, the behavior and the performance of the individual is examined in the business practices. (Johnson and Scholes 1994, cited in Pettinger 2000).

Measuring ethical performance in business practices

There are several important issues and elements, such as social, economic and environmental matters, that should be taken into consideration when assessing ethical performance of the given company. One of the most important social issues is whether a good relationship with employees, stakeholders, consumers and importers ( especially the Third World importers ) is sustained. Managers should ask themselves simple question: Does bullying and emotional abuse occur in my workplace ? What is an attitude towards staff and what are manager's and his staff' obligations? Does the actions comply with the law? What are the images used in advertising and marketing? Managers should always take control of the ways in which values and beliefs are applied. If they want to be considered ethical, they should emphasize the equality and fairness of their actions, take care of organizational stability and the attitudes of management and staff. ( Pettinger, 2000 )

When it comes to the economy, an attitude to money and finance is a key concept. Does the salary accurately reflect how much effort was put in work? Do the managers pay salary and rewards on time? In fact, in case of redundancy the company is usually obliged to pay statutory redundancy pay if people have worked for their employer for at least two years. The amount of money you get is dependent on some three factor: your age, your pay and how long you have worked for your employment.

(http://www.direct.gov.uk/en/Employment/RedundancyAndLeavingYourJob/Redundancy/DG_10029836 2010)

Not only does resource utilization raise the controversy nowadays but also the use of materials is an important issue when it comes to environment. It is worth mentioning that there is a growing interest in business ethics as a consequence of immoral behavior during last few years. The public's acceptance of unethical acceptance have changed and nowadays the standards are higher (Greenberg, 1996). Despite all the attention that have been recently paid to ethical issues, ethical scandals are very commonplace. For instance, Jerome Kerviel, a is popular French trader,  was is accused of breach of trust, forgery and unauthorized use of the Société Générale computers. According to the article in The Economist, Mr Kerviel needs to repay the bank €4.9 billion, the amount that it lost in January 2008 causing public consternation. One of the outcomes of this scandal is a fact that several other banks have been fined for similar misdemeanors. (October 9th 2010, "All his fault", The Economist: 98)

Being ethical versus being unethical in business

Undoubtedly, setting up a fully ethical company is a very demanding task. Nevertheless, there are some organizations in the world that strive for ethical perfection. The Ethisphere Institute in New York City releases annually a list of World's Most Ethical Companies. These companies have got at least 100 employees and their annual profit reaches million dollars. The data was collected basing on previous organization's projects and their initiatives. The stress was put on workforce sustainability, ethical values and good scheme for the future. The most ethical companies are Adobe System, Ford Motor Company and Starbucks. As it is evident, all of these companies produce different products. It proves the theory that it is possible to be ethical no matter what company you run or products you produce and sell. ( Coster, http://www.forbes.com/2010/03/22/ethisphere-ethical-companies-leadership-citizenship-100.html, 2010)

One of the main features that ethical company must possess is a good customer care. After many years of struggling and having problems with complaining customers, Swedish operator Stena Line implemented a scheme that monitors customers needs and evaluates their complaints. If people have any complaint in respect of services provided by Stena Line they can inform the management on the spot. In addition, Stena Line presents clear and fair terms of business available online for every customer. Nowadays, Stena Line is a very profitable company having many customers who are satisfied of Stena Line's implemented policy. Unquestionably, what improves Stena Line's service directly is a monitoring and regular meetings with 100 customers in order to discuss with them possible changes in the future. It is evident that they may be some mistakes and obstacles in the future but the staff nearest customers should be empowered to remedy them. This case proves the theory that being ethical is possible as long as some well-developed scheme is be introduced and attention is paid to every single detail. (Mullins, 2005)

On the other hand, there are many factors that encourage unethical behavior. Being unethical in organizational practices is very usual as such actions happen on regular basis, many managers take it for granted, or even promote such practices. Practices implemented in business that are contrary to ethical standards are known as organizational counter-norms. For instance, one of the societal norms of ethics is taking responsibility for your actions. However, there are more and more people who are unreliable, reckless and immature.

It is generally dictated that it is appropriate to be open and honest towards colleagues, customers and stakeholders. Nowadays, people do not trust anyone and are more likely to be deceiving and secretive. Another prevailing societal norms of ethical is following the rules at all costs. Within organizations, however, it's often recommendable and desirable to do whatever it takes to get the job done, against all odds. ( Greenberg, 1996 )

Secondly, one of the other reasons why immoral organizational behavior occurs is stonewalling. The act of stonewalling is popularly known as hiding relevant information. (Greenberg, 1996) For instance, BP p.l.c that is the fourth largest global oil and gas company in the world was accused by drilling company of stonewalling relating to the last oil drill. It was said that BP was hiding information intentionally to prevent people from investigating the origin of the incident.

http://money.cnn.com/2010/08/19/news/companies/transocean_bp/index.htm, 2010

Thirdly, managers develop some ways of thinking that promote unethical behavior. One of the perspective suggests that "anything is right if the public can be convinced that it's right". This way of thinking is known as Madison Avenue mentality and is based on hiding unethical actions or justifying them and them as completely normal. (Greenberg, 1996) As an example it is worth to present the case of Enron Corporation, one of the world's leading electricity companies based in Texas, that was accused of faking partnerships. Officials were more concerned about their actions appearing to be ethical than about their legitimate morality.

Many managers would go to any lengths in their pursuit for staying profitable. Managers usually rationalize that their action are ethical and the benefit for their corporations will be outstanding. This kind of interesting perspective that encourages an unethical behavior is known as the bottom line mentality. (Greenberg, 1996) It promotes long-term solutions in order to become more and more profitable despite the fact that it causes problems in the company. But from a long-distant perspective it is not the best option for the company to follow this way.

The obvious conclusion to be drawn from these facts is that it is easier to be unethical than ethical. In other words, it is not likely to be fully ethical in the business as some major problems within the organization always occur..

There are many reasons why unethical behavior occurs and the perceptual bias, that we are ethical and others are not, can have major implications for the way we act in the business environment . Although an organization can make an immediate profit by convincing others that they have behaved appropriately. These companies prefer acting unethically as it is easier way to become profitable in a shot-period of time.

People think that being profitable requires being unethical and in most cases it is not true. Even though money is one of the main motives in business, people should not accept it as an excuse for ignoring and not obeying the basic standards of being good. What is more, consequences of illegal actions are not usually realized until much later than when the act is committed, as in case of Enron Corporation.

Supermarket industry as an example of applied business ethics

Having presented the role of ethics in business, it is worth to discuss the supermarket industry as a one of the examples of applied business ethics. What is a supermarket? According to Merriam-Webster dictionary, "Supermarket is a self-service retail market, usually organized into departments, selling especially foods and household merchandise that offers a wide variety of products such as food and other household merchandise." http://www.merriam-webster.com/dictionary/supermarket, 2010

The UK supermarket industry

One of the most powerful supermarkets in the UK is Tesco p.l.c. Founded in 1919, it is now the second largest retailer in the world measured by profits. It is a global grocery rapidly heading for a 30 percent of share of the UK grocery retail market, having nearly 2000 stores in the UK. Not only is Tesco popular in the UK but it is also reaching other countries such as Poland or Japan. In order to expand its business, Tesco opens not only convenience shops and but also Express stores. As a result, Tesco is now more prominent on the high street. N the other hand, Tesco has to also overcome many problems connected with ethical pressures facing on it.

Overseas suppliers and local workers

Treatment of the overseas workers has raised a criticism, as it is in Tesco's interest to sustain a good relation with its suppliers. Third World workers face horrendous condition and earn far below the living average. According to Oxfam ethical pressures on South African fruit, tea and wine suppliers include being paid below the cost of production and having pay for promotions.

What is more, Tesco with its market-leading position has power to push down prices. The prize is usually below cost of production, paying poverty wages and exposing women to unethical working and living condition. The exploitation of workers' is represented as a problem because the code of ethics implemented earlier by Tesco does nothing to prevent unjust trading relationship between Tesco and a supplier. Women working on the farms usually become seasonal workers even though they are on contracts to work 10 months a year, working 11 hours a day.

It is worth mentioning that favouring imports over British produce is also considered as an ethically questionable issue. Because of that some of UK farmers are on the brink of bankruptcy while overseas suppliers receive very low wages in the same time. When it comes to local workers employed in Tesco, it is usually a low-paid job that demands physical and moral strength to resist or withstand illness and fatigue. Working conditions for many of these laborers have been said to be inappropriate. At least but not least, industry is faced with continuous pressure to downsize and restructure to sustain competiveness in an increasingly global economy so many of the workers lose their jobs.

Demanding slotting fees

One of the common ethical pressures facing the major-brand supermarkets is demanding slotting fees from suppliers. "Slotting fee is a sum paid by a vendor or manufacturer to a retail chain or establishment for making room for a product on its store shelves". http://www.businessdictionary.com/definition/slotting-fee.html, 2010 It is one of the most ethically questionable issues whether paying fees to retailers for the display to pay and sale of their products is a bribery or just a plain competition.

Fair trade in Tesco

The definition of the fair trade is as follows: "A fair trade is a system of trade in which workers receive living wages and employment opportunities for the goods they produce. This system serves as an alternative approach to conventional international trade for producers who are typically economically disadvantaged artisans and farmers from developing countries." (http://www.sustainabilitydictionary.com/f/fair_trade_fairtrade.php) In fact, Tesco has the largest range of fair trade goods in the country. Yet they sell only 91 fair trade product lines, for example in 2004 just 4.5% of Tesco's sales of bananas were fairly traded. What is evident is that Tesco overcharging customers for far trade products. Import of fair trade's roses from Kenya rose criticism among member of Friends of the Earth as the working conditions are still very poor and another ethically questionable matters is the overtime of the workers in Kenya during periods of peak demand in the West.

Tesco and the environment

Undoubtedly, Tesco contributes to environmental damage. Its stores are energy efficient, especially when it comes retail or light sector. An interesting theory related to carbon footprints is that of "food miles". "Food miles is the distance food travels from where it is grown to where it is ultimately purchased or consumed by the end user." The longer distance the food has to travel from one place to another, the less sustainable and the less environmentally desirable that food is. http://www.gdrc.org/uem/footprints/food-miles.html

Tesco transports tons of food and non-food products using different means of transport. It heavily contributes to climate change resulting in 22 percent of total greenhouse gas emission in the United Kingdom. Thirdly, Tesco generates a huge amount of packing waste, much of it is plastic which only about 7 percent is recycled in UK. Undoubtedly, another problem is a food waste. A single store may spend 10 000 pounds a week getting rid of food waste.

Another ethically questionable mater is connected with pesticide and organic food. What is organic food? According to some sources, "organic foods are foods that are grown without synthetic chemical pesticides or fertilizers: consumers who buy organic are looking to avoid dietary ingestion of such chemicals." (http://www.trustyguides.com/healthy-eating8.html ). Even though using pesticides is such a popular environmental problem, Tesco claims that the it is not that serious and the usage of pesticides is kept to minimum. Yet still the profit motive is the most important issue and the organization overprices organic food. They are usually 50 percent more expensive.

Selling products with dangerous chemicals

According to the latest news, Tesco is now selling products with dangerous chemicals such as carcinogenic, mutagenic and other toxic substances. An European consumer group revealed that there are were products containing "substances of very high concern" which are very dangerous for human beings. Many of the everyday use products available for the consumers contained the dangerous chemicals http://www.guardian.co.uk/money/2010/oct/22/tesco-carrefour-dangerous-chemicals, 2010

How these ethical problems can be overcome and what can be done to promote ethical behavior within the supermarket industry?

Implementation of a code of ethics can be one of the ways to prevent unethical behavior. The code is a document describing the rules of conduct. It is a document that includes a general description of general rules such as being honest etc. As Greenberg (2006) claims managers should test the ethics of any decision they are considering. They should ask themselves simple question: Is it ethical? Is it harm environment? Is it beneficial for the customer?

As it is popular that people usually convince themselves that they are right in what they are doing and the things they do are morally acceptable, although they are wrong it is important to challenge one's rationalization about ethical behavior in a supermarket industry.(Greenberg, 2006)

Conducting an ethics audit that is a general assessment of an organization's ethical practices and activities by actively investigating and documenting incidents of ethical value, discussing them in an open and honest fashion. Developing a concrete plan to avoid such actions in the future. (Greenberg, 2006)

More and more customers should use ethics help lines that are special telephone lines that employees and customers can call to ask a question or inform the managerial staff about any errors.(Baron and Greenberg, 2008)

What is more, a high-ranking, well-educate person so-called "ethics consul" should be employed. His main task should be providing strategies for ensuring ethical values inside the company. (Baron and Greenberg, 2008)

Thirdly, ethics committee that is a group of managers, usually the most experienced ones and , coming from different backgrounds and areas of the organization who can cooperate and evaluate a plan. The best way to get the best results is It is a necessary for a company to survive. The work of ethics officers is to provide strategies for ensuring ethical conduct throughout an organization.

In order to reduce the environmental damage some serious policies should be introduced. Instead of using refrigerators that damage environment, it is more beneficial to use second loop machines. Not only are they easy to maintain but also they provide low initial cost and low cost of operation. In order to reduce food miles people should buy products locally.

Conclusion

Understating and maintaining ethical values is the key concept for a each and every corporation to survive and become profitable. It is crucial to recognize your obligations and ensure that all of questionably ethical matters are reported, monitored and evaluated.

There are some cultural pressures such as ethical imperialism and ethical relativism. However in both cases, a meaningful dialogue between people who come from very different cultures is essential.

It is not possible to be fully ethical in the practices if there is no consistency between ethical values and behavior in the age of the green consumer. However, some of the world-leading companies such as Starbucks or Adobe System are still in the pursuit of becoming one of the most ethical companies in the world. Sometimes refusing to get involved in some suspicious contracts means becoming an ethical company, as some of the contracts are not worth having and may do a long-term damage to the company.

When it comes to the supermarket industry, a policy that the supermarket promotes is generally based on customer's needs. In other words, what the customer needs is what Tesco will provide, against all odds.  Taking into consideration profits of Tesco, some of the issues that are ethically questionable, are still essential for the supermarket to operate successfully. They are one of the factors that help the supermarket to develop and cater for all their customer's needs.

Suggestions should be taken into consideration and implemented by the company. Nowadays more and more business owners realize that a business ethics program, when implemented, helps owners and managers make profits, improve their business performance and contribute to economic progress.

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