Business Ethics

Business ethics are a set of codes and principles that govern decisions and actions undertaken by a firm, organisations will have standards to decide what decisions are good and bad and what decisions made and behaviour is acceptable and unacceptable, business ethics helps businesses decide what is right and what is wrong, the codes and principles set can apply to an individual in an organisation or to an organisation as a whole.

Companies will have to make decisions in each of their operations as they want to work to achieving their aims and objectives, in the companies operations there may occasionally poor decisions being made which can have an impact on the stakeholders in the business. Some operations that ethical issues could be present in include; * Buying * Advertising * Pricing * Suppliers * Selling A business cannot be ethical if they purchase supplies from a supplier with a history of unethical acts.

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The business may ignore the fact that the supplier has an unethical history and therefore it is wrong if they continue as an ‘ethical’ company. Examples of unethical actions and behaviour from a supplier may include using child labour and forced labour, producing goods in sweatshops, violating the human rights of workers, not abiding to Health and Safety, work and environmental legislation. Businesses may have ethical behaviour in their business but it does necessarily mean they are an ethical business because of the other factors they need to consider before claiming they are an ethical business.

Individual Ethical behavior is the standards that individuals hold for themselves based on honesty, responsibility and how they treat other individuals. These standards are applicable to whatever you become, your behavior in your community or even in even in the individuals household. Individual Ethical behavior consists of applying one’s own standards even when it is not appropriate to do so. My own beliefs and standards for myself then they would be my individual ethic values and I would have my own ethical behavior to support my own personal ethic beliefs.

Professional ethical behavior is abiding to a set of rules governing a professional; each professional has to have a particular behavior in a profession that has these codes to follow. The code governs the actions, decisions, relationships and transactions of professionals in their profession. Businesses have values that are main standards that guide a company into how it does its business; they summarize what the business stands for and make the business unique in comparison to other firms. These values stay the same even if the business decides to change plans and strategies for the future.

Management in ethical business need to adapt so they can satisfy employees and customers who may have their own ethics, management will need to hold meetings and discuss how to make the business more ethical. They will concentrate on introducing ethics into the workplace so the business is seen as ethical and employees enjoy their work. Management will constantly have to analyze their company’s business values and come up with plans on how to promote these values and they will continue to show what they stand for and what they believe in.

Management may adopt ethical behavior as a marketing plan and will try and promote ethical behavior and ethical standards throughout the business so customers recognize that the business has standards and will be willing to pay for products or a service from a business that is ethical and fair. http://www. footfall. com/News/~/media/Logos/adidas_Group_logo. ashx For over 80 years the Adidas Group has been part of the world of sports on every level, delivering state-of-the-art sports footwear, apparel and accessories.

Today, the Adidas Group is a global leader in the sporting goods industry and offers a broad portfolio of products. Products from the Adidas Group are available in virtually every country of the world. Our strategy is simple: continuously strengthen our brands and products to improve our competitive position and financial performance. http://www. adidas-group. com/en/ourgroup/our_business/default. aspx Adidas Group Mission Statement “The Adidas Group strives to be the global leader in the sporting goods industry with brands built on a passion for sports and a sporting lifestyle.

We are committed to continuously strengthening our brands and products to improve our competitive position. We are innovation and design leaders who seek to help athletes of all skill levels achieve peak performance with every product we bring to market. We are consumer focused and therefore we continuously improve the quality, look, feel and image of our products and our organisational structures to match and exceed consumer expectations and to provide them with the highest value.

We are a global organisation that is socially and environmentally responsible, that embraces creativity and diversity and is financially rewarding for our employees and shareholders. We are dedicated to consistently delivering outstanding financial results. http://www. adidas-group. com/en/ourgroup/values/default. aspx This mission statement shows Adidas’s intentions for its company in the long term; Adidas will face ethical issues if they fail to deliver quality products as promised in this mission statement.

They say they are also very committed to the feel, quality, look and image of their products Adidas will face ethical issues if they fail to provide this promise to their customers for example the packaging may not live up to the customers standards or they may face other ethical issues with the packaging. Adidas need to ensure their label information on their products is 100% accurate and fits the description of the item. Adidas need to make sure the graphics of the packaged item match the same as customers see it when they order it online, if packaged correctly the quality of the shirt seen online will be the same as when they received it.

Adidas may use eco-friendly packaging or green product to package the items, if they say promise that the packaging materials are eco-friendly then they could face customers complaints if they use packaging that may be hard to recycle or not environmentally friendly as previously promised. “Our vision is clear: to enhance social and environmental performance in the company and the supply chain, thereby improving the lives of the people making our products. We are striving to be the global leader in the sporting goods industry and this demands that we return strong financial results.

But leadership is not only about results, it is also about how success is achieved. We are accountable for the way we do business. In particular, we accept responsibility for the way our products are manufactured by our suppliers. By our actions we can – and should – improve the lives of workers who make our products. We are committed to good governance, and use our sustainability statement and our corporate missions on Social and Environmental Affairs, Human Resources and Community Affairs to achieve our vision. http://www. adidas-group. com/en/sustainability/vision_and_governance/default. aspx This vision statement clearly states Adidas’s intentions on the performance side of the business, they aim to provide better lives for their workers perhaps in foreign countries, this is a big promise that Adidas have to keep to, and Adidas need to ensure that their workers in low economically developed countries are paid correctly and have suitable working conditions.

Adidas will have ethical issues if in some countries they don’t comply with the legislation; they may receive bad press and a loss of customers if they fail to comply with the legislation that protects workers in their factories of production, this could also damage their corporate social responsibility. Adidas state that they accept full responsibility for the way their products are manufactured by their suppliers, the ethical issues they may face is the ethical behavior and ethical views of their suppliers companies.

Adidas’s suppliers may have poor working conditions for their employees; they could possibly use sweatshops and forced labor to reduce labor costs. If this was found out to be true Adidas would have to take full responsibility, which could result in a loss of customers and reduction of sales and demand, customers are more likely to go other companies that are more ethically trustworthy. Adidas has three segments in which they operate; wholesale, retail and other businesses.

Adidas operate globally with several divisions operating worldwide. Adidas’s wholesale and retail divisions Adidas and Reebok were responsible for 88% of Adidas’s sales back in 2010; the other 12% of sales was generated by their other businesses TaylorMade and Rockport. Adidas rely on exporting and importing goods as an operating activity to generate sales and expand their business globally.

Adidas have headquarters, factories, and offices all over the world. http://adidas-group. corporate-publications. com/2010/gb/en/group-management-report-our-group/employees. html? start=4 This image shows the percentage of people working in each department worldwide for the years 2009 and 2010. 54% makes up the staff used in the retail companies. A 5% out of a hundred for production may seem surprising because of the global demand of their products.

When recruiting any employee for any department, Adidas will face ethical issues in the recruiting process, there are three main ethical decisions Adidas will have to take in the recruitment stage to ensure their recruitment selection is ethical, Adidas must ask the same questions in an interview for each employee this gives a fair chance to each candidate for a position in Adidas’s company, if they adjust their questions for different candidates it is unethical because it prevents all employees having a fair chance.

Adidas need to ensure that all applicants don’t have relatives in managerial positions, this would help some candidates get into positions even if they don’t have the correct potential and the right skills, this is unethical as it prevents people with the appropriate skills to have a chance of working for Adidas. Adidas need to have a balance of gender and ethnics on their recruiting panel; this gives the candidates an impression that the business is fair and gives equal opportunities to all applicants.

All applicants will feel like they have a chance of working for such a big company as Adidas are, the ethnic balance allows them to get different views on each applicant and it creates fairness when their managers make the final decision on whom to employ. “To minimize production costs, we outsource over 95% of production to independent third-party suppliers, primarily located in Asia. While we provide them with detailed specifications for production and delivery, these suppliers possess excellent expertise in cost-efficient, high-volume production of footwear, apparel and accessories.

The latest list of our supplier factories can be found on our website” “The Adidas Group also operates a limited amount of own production and assembly sites in Germany (1), Sweden (1), Finland (1), the USA (4), Canada (4), China (1) and Japan (1). In order to ensure the high quality consumers expect from our products, we enforce strict control and inspection procedures at our suppliers and in our own factories.

In addition, we promote adherence to social and environmental standards throughout our supply chain” http://adidas-group. corporate-publications. com/2010/gb/en/group-management-report-our-group/global-operations. html? start=2 There are common ethical issues that occur when any company decides to produce their goods in Asian countries; Adidas seem very keen about reducing production goods and are not really looking at the ethical side of their productions abroad.

Adidas mention that their suppliers possess expertise in the production of footwear; ethical issues Adidas would need to consider are if their suppliers are providing their workers with the right working conditions and the right pay, it is extremely unethical to use child labour or forced labour to produce footwear in poor conditions, Adidas have the assembly sites in each country in charge of production to ensure it is prevented, again even the inspection could be seen as unethical because the labour may be forced to work harder because of low productivity levels, Adidas need to give their foreign workers the right rewards and right pay to ensure they match the standards of production and fairness is seen throughout the factories producing the footwear.

Adidas will need to comply with the various legislation in the countries they produce their footwear; they may need to make sure to give their workers regular breaks and give them a fixed pay and salary. “On 31 December 2010, we worked with more than 1,230 independent factories from around the world who manufactured our products in 69 countries. Many of these are in one of the following five countries: China, India, Indonesia, Thailand or Vietnam. Workers in our suppliers’ factories play a central role in our programme. It was concern for their working conditions that led us to write our ‘Workplace Standards’. These standards set out the Group’s position on a number of challenging labour issues workers can face including; * Working hours * Fair wages * Freedom of association * Child labour.

To explain how we expect our suppliers to live up to our Standards, we have produced a number of supporting guidelines that further define expectations for fair, healthy and safe workplace conditions. All companies that source from developing countries face challenges in implementing codes of conduct such as our Workplace Standards. Our strategy is based on a long-term vision of self-governance in our supply chain where suppliers take ownership of their compliance programme. To achieve this, we need to act both as inspectors and advisors – assessing management commitment to compliance and the effectiveness of the programme, and providing help and support to suppliers to ensure success in the long term. ”

http://www. adidas-group. om/en/sustainability/suppliers_and_workers/ From this piece of text taken from Adidas’s sustainability section we can already see that Adidas have had some ethical issues in the past and have attempted to rectify them by introducing workplace standards, critics can question Adidas’s actions and will wonder how the problem could be stopped from arising again, they are developing a long term scheme to prevent unfairness in the workplace. This information is provided on the website to ensure customers who may have an interest in where the products have come from and where they are produced that the workers are producing goods in healthy and safe conditions with the right pay for their work.

If Adidas fail to keep to these standards then there customers will interest in the company and decide to use similar companies for the products they need because they believe it is unethical how Adidas are producing their goods. If Adidas choose to use forced labor to produce goods they are also damaging their workers human rights, any worker has the right to have freedom from forced labor Adidas, Adidas must ensure that their suppliers aren’t using a forced workforce to produce footwear because they are damaging their employee’s human rights. If Adidas are found to have a forced workforce they will be fully responsible for failing to prevent it from happening. The above image is taken from a recent article in the Guardian newspaper (28/4/11), journalist Madeline Bunting describes how top retailers in the

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