Mini-Case

Need for Ethics

What is business ethics? The answer to this question may be as simple as reciting the
usual definitions. Or, it may be more complex by detailing the "good" ways the company
interacts with it's various stakeholders. The answer may also depend on who is asking the
question. Many think that there is always a "right way of doing" based on moral
principles. Others believe that the right thing to do depends on the situation and so
ultimately it is up to the individual. A customer may view a safe product as proof of an
ethical business. An employee may see ethics in fair wages and full benefits. A
stockholder may it in the corporation's compliance with existing corporate best practices
as enunciated in the SEC Rules. In fact, all of these answers are accurate because the
ethics of a business is demonstrated through it's practices.

Attention to business ethics is critical during times of fundamental change, in time such
as now. Values that were previously taken for granted are now being "brought back to
life". Many of these timeless values are no longer followed to the detriment of the person
and consequently, the bigger community where this person is operating in. As a result,
there no clear moral direction to guide leaders through ethical dilemmas. They must rely
on themselves but are ill-equipped. Which brings us to the imperative need, having ethics
in the workplace. It is indeed important because it helps ensure that when leaders are
struggling then they have a strong moral compass.

This attention to ethical practices comes from differing motivations. There could be
social pressures to address these issues. Social awareness raises expectations of
businesses that are now are being held accountable to use their financial and social
influences to address social problems such as poverty, crime, environmental protection,
public health and the overall improvement of society.
Questions

1. What are some of the ethical challenges business leaders face? Discuss how business
ethics can help them.
Ethical Challenges that the business leaders encounter are values that were taken
for granted, many of these timeless values are no longer follow to the detriment of the
person and as a result, the bigger community where this person is operating in. Therefore
there is no clear moral direction to guide leaders through ethical dilemmas. To help the
business leaders face ethical challenges they must possess ethical behaviour so they may
create ethics in their organization by establishing a program such as Ethics Management
Program. This program is designed by an organization as an attempt to have formalized
structure for ensuring the organization is perceived as fair, honest, responsible and just.
Ethics Program are most effective when they flow out of a culture practicing business
legally and ethically.

2. What is the role of business ethics in improving corporate strategy and community
development?
Business ethics facilitate corporate strategy by guiding business leaders through
complex dilemmas about what is right or wrong for the welfare of the organization, that
makes the business more possibly to be successful and also make the community
improved and developed in the society. The important role of business ethics is
improving corporate strategy is by managing a sustainable business, mainly because of
the serious consequences that may result from decisions made with lack of regards to
ethics. Even if good business ethics don’t contribute to profit levels. The company should
be able to recognize that poor ethics has detrimental effect in the long run. Business
ethics are moral principles that guide the way how a business behaves. These are set of
moral standards that are relied upon to reach conclusions and make decisions. Business
ethics take into consideration responsibilities not only inside the workplace but also
within the environmental, cultural, and social structures of community. As such ethical
responsibilities may be exemplified through code of conduct, civil rights and social
acceptable standards in many areas. According to some researchers the prosperity and
development of a company or community is effectively measured and assessed by the
business ethics.

3. Why do you think some companies neglect the pursuance of business ethics in their
organizations?
Companies neglect the pursuance of business ethics in their firm because being
ethical in business is difficult, given the nature of the task involved with leading an
organization. The way ethics manifest itself in the company doesn’t make it easy to do
the right thing either; the organization demand that ethics be profitable because if not the
governing body would not accept it. Being ethical must show that the decisions are
complex. There is the tendency to rationalize the behaviour; what is immoral is presented
as something acceptable, as a normal practice, “Everyone does it”. Yes, it is hard to be
ethical in business, but it is necessary.
Mini-Case
Banning the Real Thing

In 1999, following a campaign by a student group known as Students Organizing for

labor and Economic Equality (SOLE), the University of Michigan instituted a Vendor
Code of Conduct that specified key performance criteria from all university vendors. The
code included the following:

General Principles

The University of Michigan has a longstanding commitment to sound, ethical, and

socially responsible practices, the University seeks to recognize and promote basic
human rights, appropriate labor standards for employees, and a safe, healthful, and
sustainable environmental for workers and the general public. In addition, the University
shall make every reasonable effort to contact only with vendors meeting the primary
standards prescribed by this Code of Conduct.

Primary Standards

•Non- discrimination
•Affirmation Action
•Freedom of Association and Collective Bargaining
•Labor Standards: Wages, Hours, Leaves, and
Child Labor
•Health and Safety
•Forced Labor
•Harassment or Abuse

Preferential Standards

•Living Wage
•International Human Rights
•Environmental Protection
•Foreign Law

Compliance Procedures

University-Vendor Partnership. The ideal University-vendor relationship is in the nature

of a partnership, seeking mutually agreeable and important goals. Recognizing our
mutual interdependence, it is in the best interest of the University to find a resolution
when responding to charges or questions about a vendor's compliance with the provisions
of the code.
On Nov. 30, 2004, SOLE submitted formal complaints against one specific university
vendor the Coca-Cola Company-with whom the university held 12 direct and indirect
contacts totalling just under $1.3 million in FY2004. The complaints against Coke were
as follows:

 Bio-solid waste disposal in India. The complaint alleged that bottling plant sludge
containing cadmium and other contaminants has been distributed to local farmers
as fertilizer.
 Use of groundwater in India. Ten complaint alleged that Coca-Cola is drawing
down the water table/acquifer by using deep bore wells; water quality has
declined; shallow wells used by local farmers have gone dry; and poor crop
harvests near bottling plants have resulted from lack of sufficient irrigation water.
 Pesticides in the product in India. Studies have found that pesticides have been
detected in Coca-Cola products in India that are in excess of local and
international standards.
 Labor pesticides in Colombia Data showing a steep decline in SIALTRAINAL, a
Colombian bottler’s union (from approximately 2,300 to 650 in the past decade);
SOLE claims repeated incidents with paramilitary groups threatening and
harming union leaders and potential members, including allegations of
kidnapping and murder. SOLE is also concerned about working conditions within
the bottling plants.

The Vendor Code of Conduct Dispute Review Board met in June 2005 to review the
complaints and recommended that Coca-Cola agree in writing no later than Sept. 30,
2005, to a third-party independent audit to review the complaints. An independent
auditor satisfactory to both parties had to be selected by Dec. 31, 2005. The audit had to
be completed by March 2006, with the findings to be received by the university no later
than Apr. 30, 2006. Coca-Cola would then be expected to put a corrective action plan in
place by May 31, 2006. Since one of the 12 contracts was scheduled to expire on June 30,
2005, with another 7 expiring between July and November 2005, Coca-Cola was
formally placed on probation until August 2006 pending further investigation of the
SOLE complaints. The board also recommended that the University not enter into new
contracts or renew any expiring contracts during this period, and that it agree only to
short-term conditional extensions with reassessment at each of the established deadlines
to determine if Coca-Cola has made satisfactory progress toward demonstrating its
compliance with the Vendor Code of Conduct.

The situation got progressively worse for Coca-Cola, By December 2005 at least a
dozen institutions worldwide had divested from the Coca-Cola Company on the grounds
of alleged human rights violations in Asia and South America. On December 8th, New
York University began pulling all Coke products from its campus after Coke refused to
submit to an independent investigation by that day’s deadline.

On Dec. 30, 2005, the University of Michigan suspended sales of Coke products on
its three campus beginning Jan. 1, 2006, affecting vending machines, residence halls,
cafeterias, and campus restaurants. Kari Bjorhus, a spokesperson for the Coca-Cola
Company, told the Detroit News, “The University of Michigan is an important school,
and I respect the way they worked with us on the issue. We are continuing to try hard to
work with the university to address concerns and assure them about our business
practices.”

Questions

1. Which ethical standards are being violated here?

The Coca-Cola Company violated ethical standards in terms of public
health and safety. Because there are complains in the said company that
their products has different chemicals included that can harm those people
who purchase it. More specifically, they are destroying the livelihood of
farmers and contaminating the Coca-Cola products in India. In Colombia,
Coca-Cola is charged with complicity in the murder, torture and
intimidating of trade unions organizers in Coca-Cola bottling plants.

2. Is the university being unreasonable in the high standards demanded in its Vendor
Code of Conduct?
No, because health is the main reason why they implemented this code of
conduct, they are just being careful to any negative effect that might
happen to their students as they do further investigation about the product
and it come up with negative effects. They just do a thing for the sake of
the safety and health of the people around them.

3. Do you think the university would have developed the Vendor Code of Conduct
without the aggressive campaign put forward by SOLE?
No, because in business company like Coca-Cola they will never
implement the said vendor code of conduct until there are complaints from
the consumers. What they are doing is good for the company and it makes
them profitable, even though it is not healthy for the people. The
aggressive campaign put forward by SOLE certainly put the Code of
Conduct initiative into motion and the university probably would not have
as through high standard as pushed by SOLE.

4. How should Coca-Cola respond in order to keep the University of Michigan

contracts?
The Coca-Cola should address all the companies that Michigan University
submit to SOLE. They must respond accordingly based on how the
problem should be resolved, especially to the chemical contents seen in
their products. Since the university is very sensible in terms of that matter
they must make a way to prove that those contents are not visible to their
products. In addition, Coca-Cola needs to be more transparent,
collaborative with independent investigator and NGO Agencies and also
corrective action plan.
5. How would you relate the situation in the local environment?
We can relate it to the products that has been sold in streets called “Street
Foods” most people love to buy those particular food product without
even knowing if it is safe to eat. Some vendors don’t have a proper food
preparation that can cause harm to our health. Vendors must have to
always make sure that the product they are selling is clean so that it won’t
harm people’s health.
Mini Case Study: Need for ethics and Banning the real thing

Submitted by:
Daclizon, Estefany Jane B.
Iligan, Charlymae C.
Naldoza, Jomel S.
Omni, Elizabeth E.
Rallos, Margot M.

BSBA II-12

Submitted to:
Ms. E. Victoria
Mini Case Study: Need for ethics and Banning the
real thing

Submitted by:
Ayes, Mark Joseph P.
Candelario, Ma. Anne Abigail P.
Malete, John Mark S.
Martillan, Marthy Jocelle L.
Ramos, John Robert

BSBA II-12

Submitted to:
Ms. E. Victoria