Business Ethics

1
Business Ethics

• Ethics Supply Chain Management General Motors
  and Nike

2
Whose Responsibility?

• Dominant Firm
• in the supply chain should be responsible for the
  ethical conduct of its suppliers
• Why?
• The most powerful value chain member bears the
  greatest burden of responsibility
• With greater power comes greater
  responsibilities
• Examples in this case Nike and GM
• How?
• Identify develop suppliers whose policies
  values mirror their own
• Able to influence supply chain due to its
  relative size buying power
• Willingness to end relationships/contracts with
  unethical suppliers or repeat offenders
• Move from traditional SC sustainable SC
• Includes environmental, social ethical issues

Reference Phillips Caldwell, Value Chain
Responsibility A Farewell to Arms Length
3
Sustainable Supply Chain Management

• Environmental Issues
• Natural resource use
• Emissions, waste
• Energy loss
• Use of biodiversity deforestation
• Nuclear radiation
• ozone depletion
• climate change

• Ethical issues
• Labour practices (child labour, discrimination,
  wages, unions, working hours, health safety)
• Irresponsible marketing (marketing to children,
  misrepresentation)
• Supporting oppressive regimes
• Honesty, trust, respect fairness in corporate
  relations
• Bribery corruption

• Social Issues
• Role responsibility with local community
• Direct indirect employment in developing
  countries
• Investment in education training

Source www.shef.ac.uk/uni/companies
4
GMs Gift Policy

• Positives
• Minimizes opportunities and sets expectations
• Facilitates unbiased business decisions
• Provides guidelines and examples
• Outlines process to handle exceptions
• Applies universally across the company

• Negatives
• Grey areas Applicability not always clear
• Makes exceptions in certain cases depending on
  business interests
• Adopts a relativist stance leads to
  inconsistency
• Difficult to distinguish expected social courtesy
  from bribes

5
GMs Gift Policy

• Does this policy do enough to Ensure ethical
  conduct?
• It is an important means of promoting ethical
  conduct, but
• A policy by itself cannot ensure ethical conduct.
  
• Other aspects are essential Training, education,
  culture, environment, leadership
• Ultimately, each employee is entrusted with the
  responsibility for ethical conduct

6
Nike Goes Green

• Starting in 1993, Nike has made big efforts to
  green its supply chain.
• It began using best practices and demanded the
  same from its suppliers. It educated them on
• Corporate environmental policy
• A master substances list
• Legislation concerning products and packaging
• Executive summaries on all programs so factories
  know which programs apply to them
• A sustainability assessment
• Labor practices programme information

7
Questionable Labour Practices??

• Although Nike educates its suppliers, it has had
  to contend with allegations of at least one
  account of a subcontractor using sweatshop
  labour.
• This has sparked much controversy and large
  boycotts of Nikes shoes
• But, Nike has made huge strides in environmental
  awareness

8
Does one Good Act Balance a Bad One?

• There is no way one right can make up for a
  wrong - this is a form of rationalization.
• Nike has had to deal with issues facing many MNCs
  and it needs to lead by example.
• Inappropriate labour practices can never be
  balanced by a sound environmental policy.