Introduction
During the course of doing business, many organizations are often under much pressure to increase their performance levels as well as their productivity. This is evident in today’s business environment which is rife with aggressive behavior and rampant competition. Such situations force businesses to look for innovative means to give them a competitive advantage thereby assuring that they are not forced out of the market.
However, in a bid to stay afloat, some businesses have been accused of conducting business practices that are not morally, legally or ethically right. Ethical behavior has always been assumed to be the foundation of a productive and well functional society. Despite this, business ethics have not been given much consideration and businesses have been subjected to little criticism for their ethical behavior so long as they did not break the law (Hendry 23).
Ethics can loosely be defined as a system of moral principles by which social conduct is judged as either “right” or “wrong”. In business terms, ethics are moral principles which dictate what legitimate behavior is in varied business dealings (Hendry 15). While the public and government previously demonstrated little concern for business ethics, recent economic events have called for a more critical look at business ethics.
With this in mind, this paper shall set out to explore ethical issues surrounding the Levi Strauss garment manufacturing company. The main focus shall evolve around business practices conducted both at home and abroad.
To facilitate this analysis, ethical theories and schools of thought shall be applied to evaluate whether the actions undertaken by the company were ethical or not. Recommendations on how best the situations could have been handled shall be provided in a bid to correct the unethical practice uncovered throughout the case.
Levi Strauss Case analysis
An interesting concept when dealing with ethics is that there is no standardized approach to dealing with ethical issues as they all spring from very unique legal, political, social and economic backgrounds (Fernando 16). As such, there are no “uniform” ethical practices though there may be those practices that are generally accepted by the society. This vague interpretation of the word ethics is what makes ethical issues in business dealings especially hard to determine (Fernando 13).
The case in point had numerous ethical dilemmas regarding employee’s stakeholders and rights to entry or exit. Considering the fact that the company envisioned a bigger market share and reduced costs of production through globalization of its operations, business analysts and ethics enthusiasts have differentiated views regarding the course of action taken by the company. By using the deontology theory, we shall analyze whether the company acted ethically or not both at home and abroad.
Human right debates
Ethical theories are the criteria that we use to make judgment as to the fairness or unfairness of actions undertaken regarding problems (Melden 9).
The theories provide support to decision making and shed some light the thought process behind a conclusion. The consequentialist ethics theory holds that actions can be judged as right and/or good only on the basis of the consequences they produce with no consideration for their intentions or motives (Melden 43). Utilitarianism is considered to be the most influential consequentialist theory.
This principle dictates that the collective welfare of the people overrides the individual’s right and as such, the theory advocates the maximization of happiness for the greatest number of people (Melden 45). In this approach, the net benefit is calculated and the net consequences evaluated. From these evaluations, a decision which adheres to the theory by having the most “productive” result is chosen.
Reflecting on this case, it may be argued that LS&CO never acted ethically at home. This assumption is drawn from the fact that the company’s decision to outsource its operations abroad was not in the best interest for domestic employees who would as a result lose their jobs (Shaw 199).
Despite the fact that the company treated its employees fairly and operated ethically, shutting down factories in the US only harmed employees and its attempts to salvage the situation (retraining programs and donations) would not guarantee their happiness (getting new jobs and good wages) in future (Shaw 199).
On the other hand, establishing its operations in china would be considered as an ethical move considering the gains that the Chinese workers would reap from such a move. China has a history of human right violations (child labor, poor wages and working conditions and exploitation of employees).
As such, LS&CO decision to invest in china would benefit the workers since the company ethical principles were based on fairness, honesty, equality and better working conditions. Therefore, the company’s decision to invest in china would be ethically sound since this move advocated for the maximization of happiness for the greatest number of people as dictated by the utilitarianism principle.
On the other hand, deontological ethics place emphasis on the assumed duty. This implies that duty is the basis of all moral actions regardless of the consequences. This theory is in contrast to the consequentialist theory which places emphasis on the results with no regards to the means in which they were obtained. Deontological theory places greater weight on the rules rather than consequences to justify an action.
Ethical issues in this case and their possible solutions using the deontological theory
Should LS&CO impose its human right standards in China?
According to this theory, if an organization promotes ethical practices it expects others to follow suit. Despite the fact that some organizations do not support human right preservation, it is considered as a moral duty and by respecting it, an organization is deemed as being ethical (Lange and Fenwick 44). As such, LC&CO’s policy on the preservation of human rights should be imposed on others in that environment. This means that imposing LC&CO’s human right standards on china is an ethical move.
Should LC&CO change its ethical standards so as to invest in China?
Using the utilitarianism theory, the answer is no. this is based on the fact that the ethical standards held by the company will benefit most people in China. As such, changing its code of ethics would be unethical because it would not achieve the purpose which in this case would be to guarantee maximum happiness for the majority stakeholders. Similarly, while using the deontological theory, if LS&CO decided to change its ethical codes so as to do business in china, this would mean that other organizations should do the same.
Such a move would prove ethical standards useless since organizations would be free to do as they please (Lange and Fenwick 47). As such, changing its ethical codes would be unethical. In addition, a change in ethical codes in this case would be driven by potential gains as opposed to moral duty. This is unethical according to the deontological theory.
Impact on stakeholders
Employees
A move into china would mean job losses to domestic employees who have vested interests in the company. On a foreign point of view, this would give the Chinese workers an opportunity to advance in an American corporation all the while enjoying benefits from such an investment.
The company’s presence in china is a great step towards lifting the standards in china and in the long run, it may influence positive change in the human right standards held in China. Conclusively, using the utilitarianism principle, the company will have acted unethically at home but ethically abroad. In deontology, the Chinese people stand to gain from the company’s presence in china, therefore making the move an ethical one.
Consumers
Considering that most of LS&CO’s customers come from the United States, LS&CO stand a risk of eliciting public unrest if the company decides to stay in China. However, this is a short-term situation since globalization is rapidly taking precedence in today’s business environment.
Shareholders
From the case, it is evident that most of the shares (95%) belonging to LS&CO, are owned by immediate family members and top management whereas the remaining 5% are held by employees. In deontology as well as Utilitarianism, moving operations to china is therefore an ethical move since the majority shareholders will gain.
In most cases, shareholders believe that in the long-run, high ethical standards leads to more profits. As such, sacrificing short-term earnings so as to uphold ethics as is the case with LS&CO will be justified by the long-term benefits that shall be accrued as a result of such actions.
As regarding to stakeholders, despite their level of influence within the company, ethics dictate that they should be treated equally and fair where applicable. As such, LS&CO is obligated to consider the needs and wants of all stakeholders before making any major decision. This is mainly due to the fact that each stakeholder has rights and failing to consider them would be unethical.
Recommendations
LS&CO should work towards improving the established ethical standards. In so doing, the company will shift from a passive position to an active role. If rights are being abuse and the company decides to stay quiet, it will neither be ethical nor morally right. If staying in china proves to be feasible, then it goes without saying that the company should invest since the price (improving the working conditions) is little as compared to the benefits.
Conclusion
As mentioned earlier, an interesting concept when dealing with ethics is that there is no standardized approach to dealing with ethical issues as they all spring from very unique legal, political, social and economic backgrounds. However, we should act in such a way that our actions inspire positive change wherever we go.
Considering the case in point, LS&CO can foster positive reinforcement by showing the value behind upholding human rights in a business setting. Throughout this case, it is evident that LS&CO has high and commendable ethical standards. As such, they should not change this so as to gain more from a potential business opportunity. Maintaining their stand regarding ethics will not only improve the company’s reputation, but will also foster goodwill and stronger relations with china and other regions.
Works Cited
Fernando, Alex. Corporate Ethics, Governance, and Social Responsibility: Precepts and Practices. India: Pearson Education India, 2009. Print.
Hendry, John. Between enterprise and ethics: business and management in a bimoral society. London: Oxford University Press, 2004. Print.
Lange, Elizabeth and Tara J. Fenwick. “Moral commitments to community: mapping social responsibility and its ambiguities among small business owners”. Social Responsibility Journal, 4.1/2: pp. 41 – 55.
Melden, Abraham. Ethical Theories. Carlifornia: Koebel Press, 2008. Print.
Shaw, William. Business Ethics: A Textbook with Cases. New York: Cengage Learning, 2010. Print.