Assignment: Ethics Essay
This is an Essay with a 1,500 word-count limit.
This essay is designed so that you can explore your own ethics and how you see the business world in relation to how others see it. Ethical theories help us to understand our view of the world and it is likely that you will have a preferred theory which you, personally, consider to be ‘right'. For this task, there is no ‘correct' theoretical framework, however it is important that you explain how your chosen ethical framework leads you to the decision that you make. Business decisions have an impact on a number of different stakeholders. This essay is also designed for you to explore how a business decision that you make in an organisation can affect many people. It is an important part of this essay for you to show that you understand how widespread the effect a decision can be.
You are required to write an essay in response to the case below, taking into consideration the specific discussion points listed after the case study. To obtain a higher grade for your essay, you should note the following:
• Discuss the problem from the viewpoint of the different stakeholders
• Choose an ethics theory/ framework that appeals to you and use it in your response.
You have a limited word count and you cannot afford to explain or utilise more than one ethical theory. Discussing the problem using more than one theoretical framework will not gain you further marks.
• You are required to relate your final decision to your chosen ethical framework. Failure to use the theory in the explanation of your decision will affect your final mark.
Case Situation
You are the Chairman of TWE Ltd, a long established wine producing company in South Australia. The company's next board meeting is due to be held next month. Top of the agenda for the meeting is the possibility of changing the company's source of raw materials. This has come about because for some time now, the company has experienced falling profit margins. All of the directors had been tasked with identifying ways of reducing the cost base.
One obvious target would be to reduce the level of the workforce but you only want to revert to this option as a last resort - the work force has been loyal and hard working.
Mr Y, the production director responsible for sourcing grape stock from around South Australia, the primary raw material used in the production of wine, has recommended that the board considers shifting contracts away from existing regional suppliers in favour of lower cost suppliers from farther afield, even in New Zealand. Supporting this view, the Chief Executive, Mr X, has specifically identified Company XYZ, a company based in a New Zealand. It is known that his family have an involvement in this company and that Mr X personally has a 10% equity stake. Despite the obvious conflict of interest, there is no doubt that this direct link to the supplier would be of benefit to TWE Ltd if it decided to take up this option. It would reduce the risks of dealing with a new supplier, particularly one which is based overseas.
In conversations you have had with some of the other directors, they have expressed concern that the image of TWE Ltd in the Australian market will be damaged by withdrawing business from the regional suppliers. At present, most of the grape stock is purchased from three particular suppliers, with the contract making up over 70% of each supplier's business. The expected cost reductions for TWE Ltd are undeniable, but there is a fear that moving the contract will put the existing three supplier out of business, and there would be the associated knock on effects in the local community.
It is also well known that the country from which it is proposed that the grape stock be sourced in future, adopts indiscriminate policies towards deforestation (clearing forest areas), causing irreparable damage to the eco-system. Its government has consistently argued that the improvement in the quality of life of its people in rural areas must take priority over natural resources. Additionally, the political environment is fragile and the possibility of a coup is ever present.
Another factor is that only just under three years ago TWE Ltd received a regional development grant for AUD 3,500,000 which was used towards the cost of renewing some of the company's outdated equipment. This grant was partly awarded on the basis of retaining jobs in South Australia. The qualifying period will expire in three months time and the local development agency will not then be able to claw back any of the money - however, you are trying to square the logic of this with the undoubted damage it would do if TWE Ltd terminated its contract with the three local suppliers in South Australia.
Having read all the board papers in readiness for the meeting, and having spoken to the other directors, you are contemplating what recommendations you will make.
What do you do now?
Note: This case study was modified from ISCA.