You are on page 1of 6

VODAFONE AND ITS BUSINESS ETHICS ANALYSIS 1

Introduction:
Vodafone Group is the world's leading mobile telecommunications company, based on
revenue, with a significant presence in Europe, the Middle East, Africa, Asia Pacific and the
United States through the Company's subsidiary undertakings, joint ventures, associated
undertakings and investments. It currently has operations in 31 countries and partner networks in
a further 40 countries. Based on subscribers, it is the world's second largest mobile phone
operator behind China Mobile and over Telefonica; with over 427 million subscribers in 31
markets across 5 continents as of 2009.The Group's mobile subsidiaries operate under the brand
name 'Vodafone'. In the United States the Group's associated undertaking operates as Verizon
Wireless. It has a market value of about £71.2 billion in November 2009.
This Case looks at how the Vodafone Group and its subsidiary value ethics. It examines
how ethics supports the company's growth and how Vodafone's ethics drive the company's
actions in dynamic market. Let’s first define the subject of business ethics. Business ethics is the
study of business situations, activities, and decision where issues of right and wrong are
addressed.

Vodafone’s Business Principles and Code of Ethics:


Vodafone's success is underlined by their commitment to ethical conduct in the way they
do business and interact with key stakeholders. The company’s Business principles define how
the business is conducted and the relationships with key stakeholders.
Some of the ethical issues covered under Vodafone’s Business principles include:
• Bribery and corruption
• Conflicts of interest
• Data protection
• Environment
• Health and safety
• Human rights
• Political contributions and lobbying
• Transparency
VODAFONE AND ITS BUSINESS ETHICS ANALYSIS 2

Though the business principles were well constructed, it is necessary to create awareness and
implementing it across the various groups to ensure that they are effectively applied. For this,
Individual market Chief Executives are made responsible for ensuring the application of business
principles in their companies. The company have developed a ‘Vodafone Code of Conduct’ to
provide clear guidance for employees on how to behave accordingly to Business principles and
engage in an ethical manner with colleagues, customers, business partners and other
stakeholders. Vodafone have also developed ‘Duty to Report Policy’ to ensure all Vodafone
employees including contracted staff and suppliers act with honesty, integrity & fairness. This
makes sure that all employees are aware of their obligation to report any suspected incidents of
dishonesty, financial malpractice, illegal activity or breaches of Vodafone's Business principles or
policies.
Vodafone had taken efficient measures to deal with violations of business principles.
Employees as well as suppliers and contractors are allowed to report at any time regarding any
potential violations of the Business Principles. The company expects its each officer to act with
integrity, including being honest and sincere while still maintaining the confidentiality of
company information and to observe fully applicable governmental laws, rules and regulations.
Its gives more emphasis on to adhere to a high standard of business ethics and not to seek
competitive advantage through unlawful or unethical business practices. It is the company's
policy to comply with all applicable governmental laws, rules and regulations.

Ethical Decision Making:


Vodafone believes that ethical companies concern themselves with the long term and do
the right thing. This may damage financial performance in the short term but still it believes that
ethics guide decisions. To cite an example is that when Vodafone first included moderators into
young people's chat rooms to create a safe environment for chat, the number of users dropped
significantly and this led to reduced revenues for the company. However, the company believed
that this was the right thing to do.
Vodafone takes a strategic approach to its ethics and business decisions. This involves
managers considering the impact of important decisions in the long-term. By discussing options
managers are more likely to achieve agreement and goals that are agreed are more likely to be
met.
VODAFONE AND ITS BUSINESS ETHICS ANALYSIS 3

Stakeholders Approach:
Here let’s see Vodafone’s approach to some of its key stakeholders.

Towards customer:
Vodafone always tries to be an ethical company to its customers. Vodafone has carried
out extensive research which confirms what the company believed. It was that operating ethically
generates clear benefits. The results showed that customers are loyal to companies they trust.
They also favour companies that operate in a responsible manner. Vodafone lays emphasis on its
customers by marketing products and services responsibly, communicating openly and honestly,
and protecting customers.
The company’s emphasis on its customers particularly among young customers can be
seen through its effective and ethical approach towards them. The advent of 3G technology and
video content is related to young customers and society's concern about adult material reaching
under 18s. Vodafone UK's research has revealed that parents do not know the types of content
available via mobile phones and a survey of all adults showed, however, that they believed
restricting access to adult content on mobile phones was very important. Together with other UK
mobile phone operators, in July 2004 Vodafone UK launched a joint Code of Practice for self-
regulation. The Code requires operators to stop under 18s from accessing commercial content
classified as being unsuitable for them. Operators must also offer parents the opportunity to
apply a filter to Internet access services. When developing this Code of Practice for content,
Vodafone gave phones to researchers working for children's charities. The charities could see the
sort of content available. They could also check that the restrictions were effective. Vodafone
was the first company to introduce a network bar that effectively blocks access to all forms of
content that has been rated as 18. This bar, called Content Control, was introduced in 2004. This
prevents access to18 rated content for children and young people. It is automatic and the bar is
lifted only if customers can demonstrate they are 18 or over.
While working on the Code of Practice, which is self-regulatory, Vodafone had the
opportunity to consider what its ethical stand should be. It could interpret the requirement to
block access as having either an
VODAFONE AND ITS BUSINESS ETHICS ANALYSIS 4

• opt in policy - i.e. everyone would be barred from accessing over 18 material and would have
to make a conscious choice to receive this content or
• opt out policy - everyone could access the material and request to have the bar applied to 18
rated content.
Vodafone, through its work with the children's charities determined that an opt in policy was the
more appropriate and responsible position to take in the UK.

Towards employees:
Vodafone is committed to protecting and enhancing the human rights of its employees. Its
Group employment policies are consistent with the UN Universal Declaration of Human Rights
and the International Labour Organization's Core Conventions. Its goal is to recruit and retain the
most talented, motivated people by providing a good working environment, treating people with
respect, and offering attractive incentives and development opportunities.

Towards suppliers:
Vodafone's Code of Ethical Purchasing aims to ensure that its suppliers share its values
and uphold standards on human rights. They assess new and existing suppliers for compliance
with their Code of Ethical Purchasing. They are using site assessments of high-risk new and
existing suppliers to identify potential areas of non-compliance with their Code of Ethical
Purchasing. Their Code of Ethical Purchasing sets out the standards that they expect their
suppliers to meet. It covers human rights issues and labour standards, including child and forced
labour, discrimination, disciplinary practices, freedom of association, health and safety, payment
and working hours. It also covers environmental management and bribery.

Towards pressure groups and governments:


Vodafone’s actions are also influenced by other stakeholders including pressure groups
and government regulators. A business that did not care about ethics would simply seek to
maximise revenues regardless of how its products affected society. Vodafone believes that it is
unlikely that such a business would continue to grow because, regulators would punish their
actions (e.g. imposing fines and revoking operating licences) and pressure groups would
highlight unethical actions, adversely affecting what customers think. Vodafone's commitment to
VODAFONE AND ITS BUSINESS ETHICS ANALYSIS 5

human rights is embodied in its business principles. It is that respect and comply with all human
rights legislation, regulations and standards in the countries where they operate.

Business Ethics and Changing Environment:


Vodafone's ethical approach drives its response to changes in the environment.
Vodafone's employees implement company strategies in a fast changing competitive environment
to make effective tactical decisions with their consistent and shared set of values.
Vodafone keeps on monitoring and actively reduces the impact of the business on the
environment e.g. recycling mobile phones, reducing waste, energy reduction activities. The
company always listens to any concerns local communities, pressure groups, customers and other
interested parties may have about the company's impacts. Vodafone ensures that their staffs are
empowered and ethical to make them take better decisions when reacting to changes.
Vodafone believes that ethics guide companies in reacting to changes in the environment.
An example is that company’s ethical approach to the society under 18 due to the advent of 3G
mobile phone technology. Naturally, 3G will help the companies to increase their sales revenues.
However, Vodafone recognises that it brings additional responsibility. This includes the need to
protect young people from inappropriate contact, including violent games, gambling and erotic
material.

Corruption and Governance:


Vodafone’s Business Principles set a policy of zero tolerance on bribery and corruption.
They had set up “Anti-corruption Compliance Guidelines’ to help ensure that employees and
other related to company comply with all applicable anti-corruption laws and regulations. They
have also introduced an anti-bribery online training course. The company is keen that there
should be no form of bribery, including improper offers or payments to or from employees.
Vodafone always believes in and follows transparency with their shareholders.

While-Blowing:
Last but not the least, Vodafone always encourages whistle-blowing in an appropriate
way that the company had set. Employees are encouraged to report any potential violations of
VODAFONE AND ITS BUSINESS ETHICS ANALYSIS 6

the Business Principles to their line manager or local human resources manager in the first
instance. Alternatively, they can raise concerns anonymously to the company’s Group Audit
Director or to Group Human Resources Director via an online whistle-blowing system.
The company also encourages suppliers and contractors to raise their concerns either by
contacting Vodafone’s Group Corporate Security department directly, or via a third party
confidential telephone hotline service. The line was made available 24 hours a day. The company
follows the procedure that all local markets must report incidences of fraud monthly. Vodafone is
committed to completing a timely investigation, follow-up and resolution of all issues reported.

Conclusion:
Vodafone always believes that it has a responsibility to society. Vodafone is a leading
player in mobile telecommunication sector and has grown quickly, like the industry itself. Such a
growth presents challenges and the company's approach to ethics guides its continued growth.
Ethics are fundamental to the company's development and companies should remain true to their
ethical values like the one, Vodafone Group. If they do not, customers may question the
company's beliefs.