Business Ethics: Fair?
The corporate world today faces an ethical dilemma in its daily operations. Ethical issues, often confused with corporate scandals, are not necessarily dramatic. Every department of an organization is confronted with moral and ethical issues in its day-to-day functioning, and often enough companies run away from unethical or immoral conduct. Of course, for different reasons. Suffice it to say, organizations cannot bear the risk of not investing their time or resources in developing a holistic approach to corporate ethics. This report looks at two multinational organizations, Unilever and Nike Inc. and make comparisons about their discriminatory practices in the different countries or cultures in which they operate. Both firms are characterized by unethical behavior, and although the state and manner of handling these issues are different, little has changed.
Unilever Issue: Fair is Lovely !!
An Anglo-Dutch company, Unilever has many brands of consumer products worldwide in food, beverages, cleaning agents and personal care products. Unilever employs more than 247,000 people and has worldwide revenues of US $ 51.4 billion in 2004. (Unilever 2006). In India however, the firm operates under the name of Hindustan lever. The company has a wide range of 'home and personal care' products. in the Indian market. One of the most successful brands is 'Fair & Lovely'. The company's website claims to use patented technology for this fariness cream. This site claims to be 'Fair & Lovely'. to be formulated with optimum levels of UV and Niacinamide sunscreen, which acts safely and gently with the skin's natural renewal process, making the skin brighter for six weeks.
Some ethical concerns however are related to the product. Aside from the adverse effects on the skin, as some doctors have pointed out, advertising and product marketing have done more harm than good to society. Frequently advertised advertisements typically depict women who are depressed with some prospects, gain a brighter future by having a boyfriend or reach a job after being more fair (emphasized by some of her darker face shapes). On its website, the company calls its product, "miracle worker," which "proves to deliver one to three color changes." (Unilever 2006). To many people it may seem unreasonable for all of this to happen in a country where the majority of people have darker skin tones with different shades of brown. Ironically though, people from all walks of life, whether they be mothers in law, or young or old men, all seem to be attracted to lighter skin. Women of all socioeconomic backgrounds go beyond just being smaller.
Despite the advertising being done by Unilever for 'Fair & Lovely' it's not illegal but it's definitely not fun. In an era fueled by corporate scandals, such as Enron and the Australian Wheat Board (AWB), Unilever has successfully run this product in more than 38 countries. The irony is that most of these countries do not develop / build countries, which can eliminate such practices. In India, a country with social and cultural divisions, high unemployment and illiteracy, Unilever has succeeded in deceiving and manipulating people through its excessive demands. While the claim is true, and such products are intended to make the skin lighter, the company looks to gain market share and increase profits by creating a mindset where lighter skin is superior to darker skin. In fact, people buy products that will do more harm than good. Demand for such "skin care" products is part of women across India who want to ease their pain with the belief that lighter is better. This desire has a long history, hatred from colonial India inspired by the contemporary global perception of beauty that has dominated western marketing and fashion. The ads shown fail at all levels of advertising ethics.
One concept that can be used to explain Unilever's advertising practices is Moral myophia, Unilever's failure to see the moral dimension at all. Ads made by the firm may succeed. How else would you describe a never ending media promotion across the media; print, display, or broadcast. Success in this regard relates to increasing the profitability of the company after specific ad campaigns. These social implications for society are nevertheless easily overlooked. Obviously, Unilever seems to follow the belief that only bad ads don't work.
The content of the product website makes things even more complicated. This site claims to help women in India, who are often viewed as having poor sex. The Fair and Lovely Foundation, a Hindustan Lever Limited initiative aimed at strengthening the Indian women's economy through information and resources in education, career guidance and skills training. Comprised of leading individual advisory bodies, the foundation aims to implement various projects and initiatives in line with its vision to empower women for a brighter future. Leading women's organizations and partner initiatives to promote women's economic empowerment. (Grace & Cohen 2005)
Noble thoughts?
Sure, but at what expense. Isn't it strange and ironic that this company, and others in the business, continue to sell justice as desirable, whether for success in marriage or career, and equate dark skin with failure and unwantedness? Where do companies draw the line between selling products and being socially sensitive? What is even more disturbing is the fact that there are ongoing attempts to conceal these unacceptable social practices. As noble as the idea behind the Beautiful and Beautiful Foundation may be, it still doesn't solve the root problem. Addressing one problem in society should not be a huge expense to another. Women in India need to be empowered, and be told that they are no less than their male counterparts, but Indians also need to be told that skin color alone does not make them superior. The people need to overcome the colonial collapse, and at least companies like Unilever can do nothing to spend millions of dollars on campaigns that do more harm than good.
Nike Dilemma: Still waiting for them to "do it"!
Another corporate giant with controversial stocks over the years is Nike. Nike employs about 26,000 people worldwide. In addition, about 650,000 workers working in Nike factories contracted worldwide. More than 75% of these work in Asia, especially in China, Thailand, Indonesia, Vietnam, Korea and Malaysia (Nike 2006). In 1998, Nike was burned for sweatshop conditions at Nike factories in China and other third world countries. Evidence shows that workers are always subject to physical punishment and sexual abuse and are exposed to harmful chemicals. (Nike Accused Lying About Asian Factory 1998). Sub-standard work facilities, minimum wage and labor health risks mark NIKE's factories in Asia. The company is also accused of practicing child labor in Pakistan.
So the question now is why it happened, and more importantly, what has been done since then to correct it.
So why did it happen?
Well that's pretty clear. The reason most firms export their activities to less developed countries is to exploit lower labor and production costs. Nike has a worldwide reputation for brands, and is in fact the market leader in sports shoe sales. The focus will always be on formulating strategies and strategies to reduce production costs, and one way is for less workers. The high levels of unemployment in third world countries, as well as the desperation for working people, in any kind of job, enable multinationals like Nike, the perfect platform to foster malpractice without too much hassle. Looking at some of the ethical issues related to human (or inhumane) violations of Nike will give us a better understanding of those concerns.
Ethical Dilemma:
Any firm expanding its operations globally must adhere to the international code of ethics:
o Accidentally causing danger in the host country. By providing under standard and unsafe working conditions, and low wages, Nike is clearly in danger.
o Benefits of the host country. Although Nike does indeed expand the number of jobs available in China, it does make sense, but its low pay means that it's all beneficial to the company and not the people in China.
o Respect for human rights. Reports of unsafe working conditions prove that Nike doesn't care about human rights in China.
o Respect for the values, culture and laws of the host country — as long as they are not morally or humanly wrong. (Grace & Cohen 2005)
It is a fair assumption to make that, if certain behaviors are not acceptable in the home country, they are likely to be morally abusive in the foreign environment as well. Managing stakeholder interests is also very important for any firm. However problems arise when businesses fail to prioritize the interests of stakeholders. Nike prioritizes its importance in the interests of the firm, and clearly its employees in Asia appear to be at the top of this list of priorities. As a result, all of the firm's efforts are directed towards consumers, who are usually in advanced countries, with more money, and who doesn't care what might happen at a Nike factory away from home.
So has Nike done anything about it?
Since the first controversy in 1998, Nike claims to have taken several steps to correct the mistake. Or so what the organization says. Part of this article focuses on Nike's efforts, its truth, its lies and its myths.
Following the controversy in the international media, Nike founder and CEO Philip Knight made six commitments:
o All Nike footwear manufacturers meet U.S. Occupational Safety and Health Administration standards. (OSHA) in indoor air quality.
o The minimum age for Nike factory workers will be increased to 18 for the shoe factory and 16 for the garment factory
o Nike will include non-governmental organizations in its factory monitoring, with a summary of monitoring issued to the public.
o Nike will expand its employee education program, making it a free school equality course for all employees at the Nike shoe factory.
o Nike will develop a micro enterprise lending program to benefit four thousand families in Vietnam, Indonesia, Pakistan, and Thailand.
o Funding university research and open forums on responsible business practices, including programs at four universities in the 1998-99 academic year. (Connor 2001)
However, there is still no mention of workers 'rights, higher wages, more reasonable working hours, safer and healthier workplaces and respect for Workers' Rights for Freedom of Association. Then consumer activist Marc Kasky filed a lawsuit in California regarding advertisements in Nike newspapers and papers that were circulated in response to criticism of the factory conditions. Kasky alleges that the company created a representation that created false advertising. Nike's response to fake advertising laws does not include the expression of the company's views on public issues, and it is entitled to First Warning protection. The local court agreed with Nike's attorneys, but the California Supreme Court overturned this ruling, claiming that corporate communications were commercial speech and therefore subject to false advertising laws. (Kasky V. Nike 2002)
The parties then settled out of court before finding out about the accuracy of the $ 1.5 million Nike statement. The findings in the Kasky case have the potential to open Nike's files to public scrutiny, to document employee abuse around the world, and to flow money from Nike to the public interest group. However, Kasky and his lawyer have settled this historic case with a potential $ 1.5 million donation to a group controlled by the shoe and clothing industry. No word on it since.
(Weissman & Mokhiber 2002)
In 2004 Nike announced that it would develop a balanced scorecard to integrate corporate responsibility into its business. The sports goods manufacturer said it would introduce corporate responsibility as part of its contract manufacturing business. The sourcing decision is not only based on price, quality and delivery but also the contractor's promise of labor management and environmental, health and safety programs.
In 2005, seven years from the time the controversy was first published, independent research showed that while 60% of factories monitored reaching A or B ratings in compliance with agreed standards, a quarter of factories were found to have more serious problems. These range from lack of basic work conditions and overtime to unauthorized sub-contracts, abuse of physical or sexual abuse and the existence of conditions that can lead to death or serious injury. The Guardian also reported on a number of conditions that existed in Chinese factories in 2005
o Between 25% and 50% of factories in the region restrict access to toilets and drinking water during weekdays.
o More than half of the Nike factories, the report says, work people work more than 60 hours a week. In up to 25%, workers are reluctant to spend more time being punished.
o Wages are also below the legal minimum of up to 25% of factories
(What is the state of the factory in China 2005)
Once again Nike said it would set up a task force to increase compliance with its code of conduct during work hours. It will also work with factories to help them tackle the most pressing issues and strive to create a common set of standards across the industry. (Nike opens in 2005 Standard Drive)
The question is, what to do. There's a good chance it's not possible. Nike sees business ethics as "bad at all", and believes that acting ethically will not be in the best interests of the business. Not until then, as business sales slow down, will there be any hope of a drastic increase in this situation. Nike has always had its share of controversies, and the firm seems to be thriving. The firm successfully used controversy as a publicity tool. So far, Nike has treated the claim as a matter of public relations rather than human rights. Each allegation was followed by the release of public statements across various magazines and newspapers stating the firm's efforts to make a difference, but seven years on the road, the difference remains unclear. Meanwhile, Nike's efforts to manipulate and win more customers continue. The firm's corporate website talks a lot about their transition approach to employee compliance.
(Evolution: A Transition Approach to Labor Compliance 2006)
Unlike Nike, Unilever is not quite involved in illegal activities, but does that make it less dangerous, or does it make Unilever a little more ethical than Nike?
According to this author, the answer to both questions is NO. Even what makes Unilever's practice even scarier than the Nike ones is the fact that they pose a lot of danger, but it still seems a bit scary. The firm has been operating since 1978, and even 28 years later it seems to have little or no attention. There has been little media coverage of the threat, perhaps because of paid advertising revenue, or just the unknown nature of today's media, which appears to be more interested in scandals than some social concerns in third world countries.
The standard double is practiced by Nike Inc, and Unilever is clear. Most of Nike's apparel is manufactured in countries where there is no sale, but of course the factory conditions of a worker based in an American factory are very different from those in the Chinese factory. Likewise, Unilever manipulates the market by introducing the cream of justice in a culture where beauty equals justice. To increase sales, the company goes a step further by trying to position the product by changing consumer perception of justice as successful, both socially and emotionally.
Social impact? Did you ask?
Of course that's not the agenda. The interesting thing is, although Unilever operates in more than 40 different counties, including Australia, the 'Healthy & Beautiful' products are Only available in a handful of markets. The company does not have any 'dark & pretty' brand in their western market, probably because they realize that the market is becoming more educated and therefore more difficult to manipulate.
Firms do have their reasons, and one of them is us consumers, who buy these products. It is a summary of the demand and supply of the past. We demanded the product, and the firm certainly went everywhere to fill that gap. In the case of Unilever, there is a clear need in the minds of consumers in India to have fair skin. Likewise for Nike, the worldwide demand for their clothing has forced companies to reach unreliable levels to produce low-cost products. This story doesn't end here. We consumers, then put the firm under greater pressure to maintain their profitability, only this time we take on the role of investors. Investors of course are only concerned about stock returns, and don't care about how the company maintains its profitability.
Jennifer Abbott and Mark Achbar, in their documentary 'The Corporation', prove that companies today conform to the definition of 'psychopath'. The concern is that this psychopath is being raised and raised by us, consumers, and investors. This is the average time we live, with more and more issues, more scandals and more controversy. However reading the story is hardly enough. There is something everywhere that needs to change and change first, before long, before it's too late.
End of story?
Unfortunately, I don't think so.
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