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Role of Ethics in Contemporary Business Practices : Marketplace, The…

- - - - Justice in perfectly competitive market:
        
        For seller (capitalist justice) only on the supply curve
        
        Perfectly market move price to equilibrium point which is on both supply and demand curves and so is just for both buyer and seller.
        
        For buyer, prices are just (capitalist justice) only on the demand curve
      - Efficiency
        in competitive markets
        
        comes about in perfectly competitive free markets in three main ways:
        
        c) They distribute commodities among buyers such that buyers receive
        the most satisfying commodities they can purchase, given what is available to them and the amount they have to spend.
        
        b) They encourage firms to minimize the resources they consume
        to produce a commodity and to use the most efficient technologies.
        
        a) They motivate firms to invest resources in industries with a high consumer demand and move away from industries where demand is low.
    - - Utility in perfectly competitive market:
        
        Utility in perfectly competitive market:
        Prices in this market attract resources when demand is high and drives them away when demand is low – caused resources are allocated efficiently.
        
        Consumers buy the most satisfying bundle of goods – achieve maximization of utility.
      - Right in perfectly competitive market:
        
        Respects right to freely choose the business one enters.
        Exchanges between sellers and buyers are voluntary – respect the rights of free choice.
        No seller exerts coercion by dictating prices, quantities, or kinds of goods consumers must buy.

The corporate citizen in the business community : Ethical sourcing

1) Ethical Sourcing

  - the process of ensuring the products being sourced are obtained in a responsible and sustainable way, that the workers involved in making them are safe and treated fairly and that environmental and social impacts are taken into consideration during the sourcing process.

 - inclusion of explicit social , ethical and/or environmental criteria into supply chain management policies, procedures and programmes.

Ethical Sourcing Strategies

1) Ethical Sourcing Strategies

 -     set criteria in purchasing policies and agreements.
 -    Example: UK DIY retailer, B&Q, has required all of     its suppliers to provide information on environmental     performance as part of its Supplier Environmental     Audit.
 -     Example: Adidas, Reebok & Puma have introduced     ethical ethical codes of conduct to prevent labour     and human rights abuses in their suppliers’     operations.

  -  engagement approach by working together with suppliers to achieve improvements, utilizing a collaboration pattern based on partnership.

firms engaged in ethical sourcing to introduce social auditing approach in order to ensure compliance with their sourcing guidelines in supplier factories, farms and other production units.

 - setting clear standards for suppliers and assessing compliance with those standard (i.e., ethics audit). Failure to meet standards in the short to medium term will result in disengagement by the company in order to do business elsewhere.

Ethical Issues and Suppliers

Suppliers and organisations are mutually dependent.
Ethical Issues:
Misuse of Power

- imbalances in power – create unfair terms and conditions.
  -resource dependence theory (Patrick & Salancik, 1978) – power derives from the degree of dependence that each party has on the other’s resources.

b) Preferential treatment

  - favoured suppliers by the purchasing staff/     
    management, i.e disclose competitor’s quotations .

Procedural justice – fairness of the processes through which decisions are made. All suppliers had equal opportunity to bid for business.
c) Gifts, bribes and hospitality

- official and unofficial “perks” that purchasing staff might be offered from their interaction with salespeople.
-inducements are made in order to secure some form of preferential treatment for the supplying company.
- purchasing staff face conflict of interest between their own personal gain and the best interests of their firm (Fisher, 2007). 
- Hence, purchasing code of ethics should be in place.