1. The relevancy of ethics for business decisions – Literature review and discussion.
2. How ethics is relevant for business decisions in a chosen case organization.
• Examine and analyze the case organizations rules, policies to ethics in business decisions making.
• Include decisions or cases that shows how the organization is considering ethics in its business decision making.
3. Is ethics relevant for small businesses? (30%) 4. Clarity and citation (Harvard style referencing).
The Role of Ethics in Business Decisions
In today’s competitive business world, companies engage in unfair or unethical business practices while conducting their business operations to gain an unfair competitive advantage in the industry. The importance of business ethics has increased substantially between corporations to ensure that they evaluate the impact of their operations on their stakeholders and implement policies in their interest (Crane and Matten, 2016). Business ethics includes applied or professional ethics that assist companies in examining principles and moral problems which arise in a business environment. The importance of sustainable business practices has increased among corporations as well since it provides that long term benefits and enable them to achieve their corporate goals without adversely affecting the interest of their stakeholders (Trevino and Nelson, 2016). The objective of this report is to evaluate a wide range of literatures to understand the role of ethics in business decisions and why it is important for companies to take ethical principles into consideration while making these decisions. In order to understand the role of ethics, the example of ‘Woolworths’ will be evaluated to understand how the company has incorporated ethical principles in its rules and policies and analyse decisions of the company which are taken after considering ethical principles. Lastly, this report will evaluate the relevance of ethics in small businesses.
Ethics is also known as ‘moral philosophy’ which is the area that seeks to understand fundamental values relating to both personal and professional which enables the management to effectively take business decisions that reflect those values. The ethics principles are important for businesses because they assist the management in building and managing the company with deeply rooted ethical decisions and strategies that are beneficial for stakeholders of the company (Pearson, 2017). In the past few decades, the importance of business ethics is highlighted by many cases such as Volkswagen Emissions Scandal, Enron Scandal, Satyam Scandal and others. All these scandals were a result of the failure of the management to take business decisions while focusing on key ethical principles. For example, in Volkswagen scandal, the management deliberately manufactured engines that could cheap emission test which enable them to sell more vehicles that increase pollution in the environment (Rutherford et al., 2012). They did not take the interest of stakeholders such as consumers, environment, government and the public into consideration while taking this decision. Similarly, the management of Enron and Satyam engaged in unethical practices to show false amount in their balance sheets to conduct fraud with the company.
Benefits of Sustainable Business Practices
These incidents have highlighted the importance of adaptation of corporate social responsibility (CSR) structure by companies to ensure that their management can be held accountable for their decisions. The CSR is a type of self-regulatory framework which is adopted by companies to manage the impact of their operations to create a positive impact on the society (Mason and Simmons, 2014). Through this model, companies can comply with corporate governance principles which are a set of rules and guidelines that ensure that the decisions taken by the management are in the interest of a wide range of stakeholders. Ethical behaviour and effective CSR structure provide significant benefits to corporations that enable them to adopt sustainable business practices (Dincer and Dincer, 2013). These practices enable companies to attract customers which lead to a boost in sales and profits of the organisation. A recent study found that 73 percent of millennial customers prefer to purchase products from companies that have adopted sustainable business practices to reduce their environmental impact and promote the development of local communities (Curtin, 2018). Therefore, ethical decision making leads to growth in sales and profits which enable companies to sustain their growth in the market.
Woolworths Limited was founded in 1924, and it operates in the retailing industry; it is a major Australian brand that has established retail stores throughout Australia and New Zealand. The company has established 995 stores across Australia, and it handles its operations with the help of over 115,000 team members (Woolworths Group, 2019a). The management of the company focuses on linking the ethical values with the decision-making process to incorporate these values into the rules and policies of the company. The company has created a positive global brand reputation due to its ethical decisions and adoption of an effective corporate social responsibility (CSR) structure. Through its CSR model, the company focuses on maintaining transparency in its operations and imposing obligations on the management to make ethical decisions in the business (Dos Santos, Svensson and Padin, 2013). The rules and policies of the company support ethical principles to ensure that the interest of a wider range of stakeholders can be fulfilled. For example, the company has adopted ‘Responsible Sourcing Policy’ which is focused on doing the ethical thing responsibly for people, customers, communities and the environment (Woolworths Group, 2018). Through this policy, the company has set standards for itself and its suppliers to ensure that they improve the supply chain in all its businesses. As per the rules of the company, priority is given for respecting human rights of employees to make sure that their rights are not violated by the company through its actions.
Case Study: Woolworths Incorporating Ethical Principles in its Rules and Policies
It means that the management undertakes due diligence activities in order to identify, prevent and mitigate any policies that violate the human rights of employees or which adversely impact the operations of the company. The Board Sustainability Committee is established in the company which is responsible for governance oversight to make sure that its actions are conducted in an ethical manner (Woolworths Group, 2015). The responsible sourcing policy of the company complies with various legal frameworks to ensure that the company did not face any legal consequences. For example, the policy consists of the guidelines given by the United Nations Universal Declaration of Human Rights and International Labour Organisation Declaration on Fundamental Principles. The corporation has also adopted a ‘Diversity and Inclusion’ policy in the company through which it promotes diversity in its workforce and eliminate discrimination between its employees (Blake, 2018). When it comes to responsible sourcing of materials, the company ensures that its customers are receiving 100 percent ethically and Australian grown fruits and vegetables (Woolworths Group, 2018). This policy continuously monitors the responsible sourcing framework which is a key part of the supply chain of the company. Due to this framework, the company is able to offer 100 percent fresh vegetable and meat to its customers. The company has built a strong relationship with its suppliers who also comply with these rights to make sure that they comply with environmental compliances and deliver ethically sources supplies in the company (Dos Santos, Svensson and Padin, 2013).
As discussed above, Woolworths has incorporated ethical principles in its rules and policies which are targeted towards making ethical decisions in the company. There are various cases which show that the company has effectively complied with its policies to make ethical decisions while catering to the interest of its stakeholders.
Responsible for farm workers
The company recognised its moral responsibility towards farm workers who are responsible for managing the operations of the company. Exploitation of migrant worker is a common issue in Australia since companies focus on hiring them at cheaper rates and exploiting their rights to conduct their operations. Woolworths has also hired migrant workers from Europe and Asia who are engaged in farming related operations for the company (ABC, 2015). The company make sure that the rights of these individuals are not violated by its operations and they receive equal rights and opportunities as local employees. These rules are a part of the Ethical Sourcing Policy of Woolworths which provides that the company did not discriminate between its employees. Based on this policy, the company had worked with the government in order to create a licensing system to provide residential facilities to these workers to make sure that they receive adequate employment opportunities and their rights are protected in the company (Lauder, 2015).
Positive Implications of Ethical and Sustainable Practices
Woolworths Group has partnered with ‘Share the Dignity’ organisation in order to end poverty and its negative implications. This is a leading women’s charity organisation in the country that engages in the practices to end poverty in Australia (Woolworths Group, 2019b). Currently, there are over 3.2 million Australian that are living below poverty, and 52 percent of these individuals include women and girls (Woolworths Group, 2019b). The company has provided one million dollars as charity to Share Dignity in order to help homeless women and girls and help them to eliminate the risk of domestic violence. Many women and girls in the country face ‘period poverty’ in which they are unable to afford necessary sanitary products; therefore, the charity works with Woolworths to provide pads, tampons, period briefs and other sanitary items through its stores across the country for women and girls who cannot afford them (Woolworths Group, 2019b).
Woolworths has created a positive brand reputation of the company since it offers 100 percent fresh vegetables and fruits to its customers that are grown in Australia and fresh meat without any hazardous chemicals. The company has initiated many programs which are focused on promoting healthy eating among Australian. The company ensures that people have access to fresh and healthy food directly through their stores which are conveniently located across Australia and its online store which offers home delivery to customers (Hogan, 2019). This is an ethical decision because the company can generate more revenue by offering slight bad food to its customers; however, it focuses on healthy food offering to make sure that its customers receive high-quality options. The corporation has recently teamed up with Jamie Oliver in order to make healthier eating easier for Australians by launching the Woolworths ‘Healthier Easier’ Program (Woolworths Group, 2019c). In this program, the company offers easy and quick snacks and meal options to its customers through its online website. It shows the commitment of the ethical decision making of the company towards its stakeholders.
Woolworths is a major Australian brand, and it actions affect a wide range of stakeholders due to which it is important for the company to adopt ethical decision making to ensure that it protects the interest of its stakeholders. Small businesses affect only a small number of people, and many business owners fear that if they focus on ethical decision making, then they have to shift their focus from profit maximisation which they did not prefer. However, this is not a correct approach because ethical are equally relevant in small businesses as they are in large enterprises (Sen and Cowley, 2013). Small businesses have to comply with accounting ethics while taking decisions in the company. Most major ethical dilemmas faced by companies are caused due to financial condition of the company. If the management has not taken appropriate steps to ensure that the financials of the company are recorded in correct manner, then it becomes easier for parties to engage in unethical actions.
Small businesses also owe this duty as they have to ensure that they prepare their accounts while complying with accounting standards to ensure that they did not engage in any unethical practices. HR Ethics is also important for small businesses which must be considered by the management while taking business decisions (Spence, 2016). While hiring and dealing with employees in the workplace, the management of small businesses has to ensure that they comply with ethical principles to avoid discrimination between employees based on caste, race, religion, age, gender, colour or any other factors. They have to ensure that they provide equal growth opportunities to employees despite their differences. Compliance with these ethical principles ensures that small businesses create a positive image in the market and build a trustful relationship with suppliers and customers which are crucial for them to expand their operations (Floyd et al., 2013).
In conclusion, ethics plays a major role in the decision making of corporations to ensure that the management takes decisions after considering the interest of a wider range of stakeholders. These values apply on all aspects of business conduct, and it is relevant when it comes to the conduct of individuals and organisations. The relevance of ethics in decision making is highlighted in this report along with evaluation of the example of Woolworths to understand how the company incorporates ethical principles in its rules and policies. Actions of Woolworths such as Ethical sourcing policy, moral responsibility towards farm workers and engagement with local charities show that the company has effectively incorporated ethical principles in its decision-making process which is also highlighted by its decisions such as protecting the rights of farm workers, healthy eating and end poverty campaign. Ethics are relevant in small businesses to ensure that they conduct their operations while considering the interest of stakeholders to sustain their growth in the market.
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