The chosen topic for this discussion is business ethics and sustainability. The proper use of business ethics in the management of a company makes it run all the business operations in a manner that respects the company’s stakeholders. Business Ethics according to Crane and Matten (2010:5) is “the study of business situations, activities and decisions where the issues of rights and wrongs are addressed”. In this essay, the focus is on ethical dilemmas in Starbucks Company. As at October 2011, Starbucks has 149, 000 employees, operating over 17, 000 Coffee Shops globally, spread in approximately 40 countries (Hoovers, 2011, p.1). Out of the outlets, The United States accounts for most of the outlets, meaning that the country forms the base of the company’s operations (Hoovers, 2011, p.1). The relative importance of the ethical dilemmas and the ways, in which the company deals with the dilemmas, shows its strength. Mostly, ethical organisations achieve success in their business undertaking and corporate citizenship. The combined factors have led to the success in Starbucks Company. Despite the improvements, which the company has made on its corporate ethics, there are various ethical dilemmas that it faces.
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Business Ethics and Sustainability
The Ethical Duty of a Business Organization with Regard to Sustainability
In business, the three aspects of sustainability include social, economic and environmental. The role of companies in addressing all these three aspects depend on the management practice implemented in the organization. Therefore, as the company strives into the future, it should take keen interest on a number of strategic options. For example, the company should focus on global economic development so that it could change with the trends. This is important for the company’s success in all its business initiatives. Secondly, the company should strategically monitor the global monetary policies so that it could adjust based on the provisions of such regulations (Lynch 2003, p. 26). The company should also be able to detect international weaknesses and capitalise on them. This strategic option indicates that the company has to be agile and flexible in its operations so that it could capitalise on global business dynamics (McWilliams & Matten 2010, p. 27). The company should also avoid unnecessary sceptics in its strategic mission. This means the company could change its mode of operations to suit the state of economic affairs.
Engaging in CSR practices is also another significant step that the company could use to address the social, economic and environmental challenges it faces. In this regard, companies are most likely to react to the evidence provided by pretending that the issue CSR does not exist. This owes to the fact that despite the pressure presented by the evidence, companies may not afford to ignore the insurmountable profits accrued to the unethical practices (Carroll 1979, p. 497). Considering the amounts low costs of inputs invested towards the production of merchandise, organizations are most likely to ignore the evidence presented. This can continue until more pressure is enforced via other tools like the media (McWilliams & Matten 2010, p. 27). It is also possible that companies respond by pretending to withhold/suspend rather than completely stopping their production processes. They can do this by issuing press statements that give the wrong notion that production processes are stopped completely. A good example is the action taken by the Nike organization (Carroll 1979, p. 502). Despite the mounting pressure to stop the unethical practice of child manual labor, the organization only opted to suspend its activities until the world cooled down. The organization pretended to give in the pressure presented that it was using child labor to produce its merchandise.
However, it later resumed its endeavors despite the concrete evidence provided against its procedures. The bottom line is that it is extremely hard for organizations to refrain from production based on the evidence provided in the materials. Whichever option firms may take, they will always find a way to come back and enjoy the numerous profits. On the other hand, assuming that companies accept the legality and strength posed by the evidence, there are various measures that can be taken (Lynch 2003, p. 33). One is to improve the working conditions of the workers in third world countries. This can be achieved by ensuring that there are no instances of sexual harassment. Companies can reduce male dominance in the industry. Secondly, the organizations can make their workers in the third world nations proud of being part of the production process (Korhonen 2003, p. 30).
One of the most vital ways of doing this is by eliminating the exploitive contractors at the grass root level. This will provide the organizations with the ability to monitor the level of pay accrued to the workers (Carroll 1991, p. 40). If the companies accept the claims made, they can as well decide to involve their grass root workers in their decision making process so that they are made aware of all the companies operations. This will not only reduce the level of criticisms but will also integrate the workers in to the organizational operations. In addition, the firms may also respond to the substantiated claims by introducing a system that allows workers to work from their homes rather than from the industries (Carroll 1991, p. 41). This will be of great merit to the workers especially the women. It will help alleviate issues of harassment both verbally and sexually that are because of male domination in the congested work place.
Identifying and Improving Social Impacts of Business Ethics and Sustainability
In reality, it might not be easy to identify and improve social impacts of
business ethics and sustainability in a company, but it is a necessary organizational practice. By comparison a progressive company implementing social practices with others, there are reasons why different companies do not changed voluntarily or has not been forced to adapt its strategy yet (Vicianová 2011, p. 44). People who work in several branches of their company in Europe need their jobs and also cheap items to cut their living expenses to improve the social well-being of their organization. A boycott of the cheap pricing policy would lead to increased living costs and perhaps also a loss of labour, a situation that might create adverse social impact in the company. However, if the company is not against their strategy, customers will support their ethical behaviour among employees so that it could improve its social outlook among potential competitors (McWilliams & Matten 2010, p. 27).
The company has a special way of identifying and making sure that it attracts more potential customers, thus having competitive advantages without affecting its profitability and social impacts (Vicianová 2011, p. 48). Attracting customers by adopting effective action plans to reward them is a practice that will play a key role in ensuring that the strategies put forward by the firm are not just stories to make the competitors believe that the welfare of employees is put in to serious consideration (Mallin 2009, p. 46). The CSR that the company used towards its clients are improving the entity’s international image, defending the functioning situation and to prevent problems, which could eliminate the confidence of all the stakeholders. Implementing appropriate CSR ensure that the company will most likely to react to the evidence provided by pretending that problems do not exist among its stakeholders. This is due to the fact that despite the pressure presented by the evidence, the company may not afford to ignore the insurmountable profits accrued to the unethical practices. The reason is that it will affect the company’s reputation among the consumers.
Considering the amounts low costs of inputs invested towards the production of different items, companies are most likely to ignore the evidence presented. This can continue until more pressure is enforced via other tools like the media so that the company reaches more customers. It is also possible that the company responds by pretending to withhold/suspend rather than completely stopping its production processes, but by promoting its relationship with the consumers (Lynch 2003, p. 49). The company can do this by not issuing statements that give the wrong notion that the production processes are stopped completely. A good perspective is the specific action taken by an individual company to improve its social impacts to stakeholders. Despite the mounting pressure to stop the unethical practice of child manual labor in manufacturing the items, the company only opted to suspend its activities until the issue cooled down (Miles, Munilla & McClurg, 1999, p. 119). The company pretended to give in the pressure presented that it was using child labor to produce its merchandise so that it could promote its image.
Apparently, there are several companies that do not have CSR, neither do they have strategies to improve the social impacts of their activities. Such companies risk becoming irrelevant in the market and could face potential collapse. Essentially, the post-colonial perspective of company-customer relationship arise because of lack of information regarding the role of those companies providing organization in terms of CRS. Owing to the fact that they are never informed of the policies, projects and objectives of the organization, exploitation is not part of their perspective. This means that lack of CSR in those companies is not working for them (Yin 1984, p. 77). As such, company-customer relationship is non-existent to them. Perhaps, the company has no information to think along such lines, thus resort to advertising so that the business increase sale other than engaging in CSR. Sometimes, it would be wiser to use the alternatives if CSR practices proove expensive. Normally, the Public appreciate and recognize CSR efforts by fashion companies because the practices make the entities closer to the customers.
Establishing Sustainability Indicators
The specific issues related to establishing sustainability indicators in a company include determining the organizational profitability, proper practice of CSR and adequate management (Lantos 2001, p. 620). For instance, the concept of sustainability entails the achievement of growth and success ensuring that the systems and materials employed will not deplete natural cycles. In order to establish sustainability indicators, every business must ensure it earns profit and in the long run experiences growth and expansion (Miles, Munilla & McClurg, 1999, p. 121). Without a rise in the number of sales it has, an organization stops existing. For it to ensure it sustains itself, the management should ensure it maintains the rate at which it brings in profit. An organization can achieve this by maintaining its clients, ensuring the image of the company is maintained and the workers of the organization who deliver the services are well taken care of (Lantos 2001, p. 622). Devoid of adhering to these concepts an organization cannot survive. Without profits, the activities the organization is doing to the environment like charity work remain irrelevant because it will not exist.
For the business to achieve environmental sustainability, it should ensure it minimizes the rate at which it contaminates the surroundings. This can be realised by depending largely on power that can be renewed. The organization should also put into consideration the processes it takes to ensure a product is converted from a raw material into a useful product (Yin 1984, p. 81). An organization should, for instance, offer recycling opportunities for its product. Those who produce harmful materials after manufacturing products like medicine for instance can devise a method in which the harmful products can be purified so as to be reused.
CSR and Sustainability Standards
In reference to Corporate Social Responsibility and sustainability standards, the general thought of CSR was that a company, which has implemented CSR, gives back to the society (Blowfield & Murray, 2011, p. 4). They defined CSR as the following: “It refers to the obligations of businessmen to pursue those policies, to make those decisions, or to follow those lines of action which are desirable in terms of the objectives and values of our society” (Blowfield & Murray, 2011, p. 6). Companies, governments and society had a particular interest in CSR, thus several definitions arose. Dahlsrud (1-11) for instance has identified and analysed the 37 most frequent definitions between the years 1980 and 2003 and identified the following Hopkins definition as a very precise one:
“Corporate social burden is concerned with treating the stakeholder of the firm ethically or in a dependable way. ‘Ethically or responsibly’ means treating stakeholders in a way regarded satisfactory in civilised public orders. The social perspectives include investment burden in verifying that the group premiums are upheld. Stakeholders exist both within a solid and outside – case in point, the earth is a stakeholder. The more extensive point of social burden is to make increasingly elevated standards of living, while safeguarding the benefit of the partnership, for folks both within and outside of partnership”.
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The main aspects of Hopkins definition are the economy, stakeholder, social aspects and voluntariness. Dahlsrud (2006) identified in his analysis of the 37 definitions of CSR five core dimensions: environment, society, economy, stakeholder and voluntariness (6). Only a few definitions of CSR encompass these dimensions. The European Union (EU) offers a widely recognised definition of CSR: “An idea whereby groups join social and earthy concerns in their business operations and in their connection with their stakeholders on a voluntary foundation” (COM 681 final 1).
Case Study Organization (Starbucks Corporation)
The experience of case study organizations who have adopted such approaches could be explained in a theoretical framework, the main content of the shareholder theory can be found in the headline of Milton Friedman’s article in the year 1970: “The Social Responsibility of Business is to Increase its Profits”. In Friedman’s opinion only individuals can act responsibly even in the company. This means a corporate executive as a person has a direct liability towards leading the company in the interest of the employer (Carroll 1999, p. 269). Thus, the corporate executive’s primary goal should be to generate as much profit as possible by sticking to the basic rules of the society, for instance ethic and justice. Friedman implicates that if an employee acts social responsibly by, for instance, hiring unemployed instead of better qualified workers, the employee does not act in the interest of the employer (Rigby 2005, p. 55).
According to Friedman, the employee would spend money that does not belong to her or him. If her or his actions implicate a raise of products prices, lower wages or reduce return, she or he would spend money of customers, employees and shareholders. Friedman (2) argues that individuals can feel free to spend their money for charitable service, but the purpose of the company is maximising profit. Additionally, managers have lack of experience in solving societal problems, hence Friedman sees CSR as a main duty of the state (Friedman, 2012, p. 1). In essence, issues that the businesses face with regard to resource use and pollution has been minimal due to efficient practices, which they adopt in their production, for instance mechanization.
Some of the sustainable options which are available to business organizations include cleaner production of its coffee.
Friedmans’ opinion was widely discussed in a critical edition of Mallin’s work in the year 2009, which states that “managers are recruited by the owner of a company with the long-term goal of maximising the profit”. Similar to Friedman, the economist implies that companies have a lack of competence to resolve issues of the society. The theory was challenged by Mallin (2009) when he indicated that CSR implementers will have to work on data regarding their previous efforts made to stop such societal practices (Bowen 1953, p. 25). This proved that the organization was sourcing labor from the country for its items production was never willing to cease from using labor provided by children. Although this may pose numerous challenges, the scholar was justified because the ability of the company to work together and prove their CSR practices will bear fruits (Mallin 2009, p. 58).
Broad Sustainability Strategies are Available to Businesses
There are two strong recommendations, which the company should practice to answer their critics, including the following: improve their public image and increase their sales. Notably, the recommendations are attributed to ethical behaviour particularly to the company.
Improve Their Public Image
The pros of this strategy are that Starbucks Company should have a strong, reliable and responsible public relations office, to receive ethical concerns arising from the customers, workers and the business partners (Grant 2005, p. 28). Second, this body would coordinate all the ethical issues, raised inside or outside the company, which are important for their sustainability. The con is that improving the public image might not necessarily translate to profitability of the organization.
7.2 Maintain its Ethical Position
The pros of this strategy are that since the company is considered as the ethical company in the world and would like to maintain this position, their policies should promote ethical behaviors, including honesty, integrity and impartiality (Kaler 1999, p. 212). In addition, the work environment should be non-discriminative in terms of policy application, meaning that the stakeholders should be given the same treatment with dignity and respect. The con is that achieving a universal ethical position may not be easy.
The experience of case study organizations that have adopted such strategies has been characterized by anxiety (Lawson 2002, p. 78). Capitalism and crisis, for example, are some of the systemic problems in the wider business environment that promotes unsustainable business practices.
Impacts of State Capitalism
In business, ‘state capitalism’ and ‘market capitalism’ differ significantly. State capitalism is a mode of production that is imposed by government rules and regulations of the country. On the other hand, market capitalism is caused by market forces such as demand and supply, international fiscal policies and trends. In essence, market capitalism is more sustainable than state capitalism. The reason is that market capitalism is flexible to changes in business trend and can change to accommodate the state of global economy.
In summary, the essay indicated that environmental performance depends on business ethics and sustainability and it is important to a company, especially when it adopts an EMS. Therefore, the suppliers’ environmental assessment is very significant to the organization because it promotes ethics and cordial relationships among different suppliers, a situation that may improve the organization’s profitability and reputation. In terms of the methods for assessing the environmental performance, the essay employed both qualitative and quantitative to ascertain the impacts of suppliers in the organization. On issues relating to sustainability, the essay established that aspects such as social, economic and environmental play an important role in determining the success of a business. In addition, the way and extent in which an organization engages in CSR impacts its reputation among the competitors. Essentially, improved reputation might increase the consumers’ preference to the organization. Although the use of EMS has limitations, its advantages are central to the success of an organization since they could lead to standardization of the products.
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