Executive Summary
This paper explores business ethics and corporate social responsibility (CSR) in the context of a fictional organization identified as Avalon Group. The former is a multinational enterprise which operates as a retailer and has a wide product catalog. In its industry, it competes against other dominant brands recognized as SkyBlue Stores, Greenfield Buy, and NextWave Food. Avalon’s CSR program has indicated several challenges especially in environmental responsibilities. The syndicate processes have affected the surrounding with rising cases of water pollution, habitat loss, carbon emissions.
Moreover, it also finds it hard to harness renewable sources energy, and industrialization of food production. The retailer’s CSR initiative identifies several stakeholders such as the shareholders, employees, customers, suppliers, and the local communities. As a way of managing its ethical issues, it adopts several strategies such as an antitrust principle, consumer protection, food safety, labor and employment program, and health and safety initiatives. Avalon’s CSR activities primarily consists of collaborations with governmental agencies, environmental protection, advocating for human rights, and educating children from low-income families.
Business Ethics and Corporate Social Responsibility
Avalon Group is a multinational retail-based corporation which offers a wide variety of products and services to its customers. It operates and manages several grocery stores and hypermarkets in different areas of operation. Moreover, its competitive environment comprises other dominant players such as NextWave Food, Greenfield Buy, and SkyBlue Stores. Its product portfolio consists of several items from various categories: consumer goods, home and furniture, grocery, apparel, footwear, and many more. Its non-tangible class provides the customers with a wide variety of services such as cloud computing and financial services.
The latter include money transfers, bill payments, and check to cash. Furthermore, Avalon primarily competes in the retail industry but has minor operations in the technology sector. It has a broad scope of operational activities that comprise location, layout design and strategy, quality, supply chain, and inventory management. This paper explores the dimensions of business ethics and corporate social responsibility, according to Avalon Group’s operations as a fictional corporation.
Ethical/CSR Issues and Challenges Facing the Company
In the business world, organizations face several ethical issues that may arise from corporate social responsibility engagement. It is a business model that helps a corporate participate in sustainable goals that benefit significant stakeholders (Bhardwaj et al., 2018). In the contemporary world, as businesses continue to develop their expansion strategies for further growth and development, the enterprises are subjected to several ethical issues which may impact their long-term existence (Liang & Renneboog, 2017).
For example, one of the challenges facing Avalon Group is environmental responsibility. The company’s development practices have a significant effect on the environment causing several problems such as water pollution, habitat loss, and increased driving, leading to carbon emissions. The retailer has attempted to position itself as a leader in sustainability but has since faced significant barriers. While its ecological campaign has had a key influence on its image, it has failed to promote environmental consciousness. Its enterprise activities remain highly polluting, while its continuous growth and development have come at the expense of sustainability principles.
A considerable challenge facing the retailer is its failure to harness renewable sources of energy. For example, it derives less percentage of its electricity from its renewable power and solar projects. As compared to its key rivals in the industries, Avalon is still lagging on these renewable sources as the competitors are thriving. NextWave and Greenfield Buy has entirely converted to renewable sources, as have several other autonomous retailers. Another challenge facing the corporation is that its operations have considerably increased greenhouse gas emissions. It is attributed to its massive size of stores and distribution center, which consume a significant percentage of electricity.
Consolidation and industrialization of food production are also regarded as a challenge facing the syndicate. As a grocer, the retailer controls a significant percentage of the market share ahead of its core competitors, such as NextWave and Greenfield Buy. As such, it has prompted an upsurge of mergers among diaries, meat-packers, and other food corporations. Although Avalon claims to advocate for sustainable agriculture, it has utilized its industry to bring a massive and more industrialized food system. As a result, this has made the currency decline, as fewer retailers compete for their output, thereby affecting the farmers in the long-run.
Avalon’s employees have also reported having been exposed to poor working conditions. The retailer has faced protests and several litigations within its corporate structure. Frequent issues are stringent working schedules and low wages, which makes the employees’ private life difficult, leading to employee turnover resulting from unpaid overtime.
Avalon’s business ethics includes upholding the standards of international labors, ethical trading, minimizing the cost of production, and many more. These moral principles have become vital issues from the perspective of the stakeholders of the corporation. The suppliers have reported several complaints associated with being paid less for their supplies while Avalon is amassing significant revenues on their products. The retailer also attempts to exploit temporary staff workers in its production process rather than recruiting them permanently to minimize labor and production costs. As such, these employees are paid fewer wages and bonuses while their performance is not effectively appraised.
The Company’s Stakeholders and their Varying Interests
Avalon’s stakeholders play an imperative role in driving the corporations towards their strategic ambitions. They are the individuals interested in the business, and enterprise operations either affect them directly or indirectly (Lehtinen et al., 2019). As a result, they compel the corporation to develop strategies that will achieve goals to consider their interests. With its massive corporate structure and international scope of operation, Avalon has many groups of interested parties. Its stakeholder groups can be classified based on their shared interests. They have different levels of priority according to the organization’s customs and policies. According to Avalon’s corporate social responsibility, it has the following parties as to its stakeholders: shareholders, customers, employees, and suppliers.
In its CSR program, the stockholders are given the highest priority due to several reasons. They are also considered in the decision-making process of the retailer. Generally, the investors are primarily interested in the revenues and profits of the corporation (Lehtinen et al., 2019). They expect Avalon to be the leading company in its industry which translates to higher dividends or earnings per share. Moreover, the stockholders are also interested in reducing the costs of organizational operations. When such expenses are minimized, it contributes to profit optimization, which is considered an asset to the investors. Avalon also engages the stockholders in formulating its strategies, and it is one of the reasons it strives to minimize its operational costs. Theoretically, the key objective of an enterprise is to make profits.
The second category of stakeholders regarded as significant in its CSR agenda is the customers. This group of individuals is generally interested in high-quality and low-priced products offered by retailers. According to research, consumers are usually drawn to reputable brands and are well-known for providing exceptional products and services (Bhardwaj et al., 2018). Avalon engages the clients in several ways, such as using surveys and focus groups on gathering feedback. Moreover, the corporation pledges to improve its customer experience further. The third category in the stakeholder group is the employees.
They are imperative in Avalon’s decision-making process since they help the syndicate achieve its goals and objectives. In this case, they are primarily interested in having job security and improved wages. Moreover, the employees expect the retailer to engage them on issues of importance to the corporation. Other aspects of value to this group are having high health and safety standards while also having equality and fairness throughout the corporation. Lastly, the workforce is interested in the learning and development programs provided by the leading retailer.
The last category of stakeholders and also regarded as the least prioritized, are the suppliers. They are primarily interested in ensuring their products are purchased by the customers and that it comes at a profit to the corporation (Lehtinen et al., 2019). Regardless of the revenues, the suppliers are also interested in having fair and transparent contracting and payment as per the terms and conditions. They also expect to have clear and relevant information on Avalon’s requirements and standards. Generally, as enterprises, the suppliers are interested parties that prefer Avalon to retail their products at higher prices. Therefore, a slight increase in prices may result in a significant benefit to them. While they are at the bottom of the prioritization pyramid, they are still regarded as imperative because they ensure the corporation has adequate inventories.
Managing Ethical Issues
Managing ethical issues is of significance to corporations that intend to achieve their long-term objectives. Avalon has adopted several ways to ensure that its corporate structure is not entirely affected by such problems. Avalon has a code of ethics which covers several areas most likely to impact the company negatively. For example, it has an anti-corruption policy that attempts to assist the corporation in accomplishing the highest standards of integrity in its operations. Under its training and communications, the company provides IT-based learning to its associates and procedural anti-corruption training for those most likely to work together with government officials. This guiding principle also disallows giving and receiving anything valuable to obtain a dishonest benefit for the corporation.
Avalon embraces an antitrust principle aimed at ensuring healthy competition in the global market. This policy involves several aspects, such as maintaining a well-defined antitrust and competition law acquiescence. It also entails providing current and practical antimonopoly guidance to relevant associates, covering both international standards and market-based guidelines. Moreover, it gives the partners transparent, reliable, and anonymous means of suggesting questions or concerns associated with competition law compliance (Bhardwaj et al., 2018). Lastly, it involves keeping track of antimonopoly and competition guidelines at an international level to update and improve its compliance procedures.
Another way of managing ethical issues at Avalon is through consumer protection. The company is dedicated to complying with buyer safety laws to ensure a fair environment. Therefore, this guiding principle involves communicating with the clients and advertising to analyze claims and offers raised to its consumers for transparency and accuracy. The program also includes consumer complaint management that allows the corporation to address their concerns effectively and effectively. Lastly, the retailer offers warranties to the buyers to address various issues of product malfunctions.
Ensuring food safety is essential in managing ethical issues for retailers such as Avalon. The former is devoted to complying with safety laws and regulations pertinent to its international businesses and to providing access to high-quality foods. Therefore, this program involves education and training involving food safety. It also ensures that the employees are conversant with food handling procedures to prevent food poisoning. It also partners with an independent body to conduct food safety audits in its retail stores. Therefore, the processes highlighted above are essential in managing ethical issues that may arise due to collaborating with the customers.
Under its labor and employment program, the retailer has stipulated various ways of ensuring an ethical process. For example, it complies with employment laws to ensure the employees are paid correctly for the work performed and maintain accurate payroll records. This policy also allows Avalon to ensure equality for opportunities in its organization. The corporation focuses on the fair and inclusive treatment of its staff members, suppliers, business associates, and consumers. This process involves providing equal access to employment opportunities and the prevention of discriminatory practices.
Having a health and safety program is vital for managing ethical issues in any corporation. At Avalon, the company is devoted to complying with such guidelines and standards in the market it operates. This process aims to safeguard consumers, employees, and business partners’ wellness by offering them safe facilities. The corporation contracts a team of safety experts responsible for the growth and incorporation of safety procedures for various operational layouts within the organization. This program includes processes such as hazardous communications, emergency action plans, fire extinguishers, and many more.
CSR Activities
Avalon’s CSR program incorporates several aspects which benefit its key stakeholders. For example, the company collaborates with governmental agencies as well as other charitable initiatives to support local communities affected by natural calamities. Its emergency management procedures are primarily responsible for identifying, assessing, and responding to natural disasters and other forms of crises such as disease outbreaks. This department plays a vital role in determining emerging risks, preparing resources and personnel for disasters, and monitoring the development of catastrophes.
Another significant aspect of its CSR is its environmental protection exercises. For example, under energy consumption, the retailer undertakes two crucial steps to avoid carbon-emissions. It minimizes energy demand through optimization and efficiency while also transitioning to renewable energy sources, which emit an insignificant percentage of carbon. Under waste management, Avalon has adopted various policies to tackle food and material wastes which originate from its industrial plants, warehouses, and distribution stations in an attempt to minimize greenhouse gas emissions. Moreover, it also participates in decreasing and diverting waste from landfills to improve its operational efficiency. Avalon also engages in minimizing redundant packaging while also embracing the use of better wrapping materials to promote recycling.
The corporation has taken the initiative to engage in effective practices in animal agriculture with the aim of ensuring better crop production. Another environmental protection process adopted by the company is to minimize deforestation through a variety of tools that can be utilized to maximize impact. It involves monitoring, joint action and advocacy, certification, and sustainable sourcing regions. Lastly, it obtains products that are energy efficient from its suppliers. Moreover, product manufacturers can assist in delivering innovative commodities to shelves by making sustainable material selections in the design of their items, such as implementing recycled content which minimizes the entire carbon footprint of the merchandise.
Advocating for human rights is also another critical aspect of Avalon’s corporate social responsibility. As such, the company prioritizes treating its employees with respect, which involves giving them incentives, freedom of association, and significant opportunities for individuals to be heard. It also participates in promoting a safe and healthy work environment which constitutes physical safety and security of premises. By providing the workforce with a fair and inclusive environment, Avalon adopts an anti-discrimination and harassment policy to promote diversity, inclusion, and gender equity. Lastly, combating forced and underage labor involves eradicating human trafficking, the susceptibility of migrant employees, and child labour.
Avalon also participates in educating children, especially the ones from low-income communities. As such, the corporation takes a variety of steps to ensure that the less fortunate youngers have smooth and prosperous learning. For example, the retailer is involved in the delivery of exceptional training opportunities for these families with a focus on primary education. It also addresses ecological issues in the local communities where these schools are situated. Moreover, it ensures the improvement of curricula and teaching methods by donating learning materials and foodstuffs to ensures the entire process is a success.
Lastly, Avalon participates in disaster relief efforts through funding and in collaboration with other charitable foundations. This exercise ensures the delivery of support to communities regarded as vulnerable to calamities. The organization also guarantees support which may include the development of infrastructure such as child-care stations and again rebuilding of productive assets for agriculture.
Stakeholders and Their Interests
Table 1. Stakeholders and Their Interests.
Position Statement
In the business world, enterprises have their position statement to give the organization a sense of direction. Therefore, it refers to a written declaration that highlights some of the core products and services and how they match the customers’ needs (Liang & Renneboog, 2017). In the case of Avalon, the following position statement was identified:
“For customers who opt for having access to a wide variety of products to chose from, Avalon offers one of the most exceptional product portfolios ranging from consumer goods to groceries. This company differentiates itself from other retailers by focusing on giving the consumers sustainable and high-quality products. It is our utmost priority to ensure that these commodities adhere to safety standards while also striving to commit to operational excellence.”
Activities in Its CSR Strategy
Avalon adopts a particular corporate social responsibility strategy which focuses on developing its core stakeholders. Its CSR program is a mix of different approaches ranging from environmental, economic and philanthropic responsibilities. In essence, this organization’s CSR primarily focuses on the environment and philanthropic responsibility, while an insignificant part of this strategy promotes economic efforts. Therefore, the activities predominantly present in this program are its ecological exercises which involve limiting pollution and minimizing greenhouse gases. Generally, companies are expected to fulfill their economic role because awareness of sustainability issues is growing largely among the clients and today, they prefer businesses to take essential steps to safeguard and nurture the eco-system (Liang & Renneboog, 2017).
As such, Avalon has made it a priority to engage in practices which address air, land, and water pollution. For example, its values carbon emission initiatives as in its participation in transitioning to renewable sources of energy. In addition, the retailer has opted for a waste management program to address the issue of food and material debris coming from its industrial plants, distribution stores, and warehouses in the hope of decreasing greenhouse gases.
Philanthropy is one of the vital components of corporate social responsibility. It involves the actions taken by individuals or organizations to promote the wellbeing of others shown by donations or other initiatives (Liang & Renneboog, 2017). It generally targets the underprivileged people in society in a bid to give them a better life. In the case of Avalon, this company participates in educating and empowering children, especially in underdeveloped countries. The retailer provides them with opportunities by giving them scholarships to study without having any financial difficulty. Moreover, the management also supports the students by ensuring they have access to better and developed infrastructure. The most significant effort has been seen in the provision of facilities and learning materials to guarantee a smooth learning process.
Activities not Included in the CSR Strategy
The reason for the existence of any business is to primarily make profits. Therefore, economic responsibility is a unified field that specializes on bring balance between environmental, philanthropic and enterprise activities. As such, it complies with the predetermined standards of ethical and moral guidelines. In the case of Avalon, the corporation does not entirely exclude this aspect of CSR, but it prioritizes the needs of the community and the environment over its profit-making ventures. Its economic decisions are made by considering their entire impact on society and other businesses simultaneously. While it is not a priority for the corporation, it improves its operations while engaging in sustainable initiatives.
Potential Implications
The approach adopted by the retailer comes with some positive and negative consequences. For example, engaging in environmental responsibility not only benefits society as a whole but also improves the brand image of the company (Bhardwaj et al., 2018). Generally, organizations which participate in social and ecological initiatives have a positive public perception as compared to brands which do not. Therefore, the customers find it more appealing to approach and enter into a long-term relationship with such companies (Liang & Renneboog, 2017).
However, the negative aspect of engaging in environmental and philanthropic efforts more than the economic goals is because these processes are time-consuming and require massive resources to undertake. Another challenge is that the requirements and needs of the community always change, making it difficult for corporations to adhere to their CSR strategy. Therefore, organizations should balance between their components of this approach to have effective results.
Conclusion
This paper has explored some of the significant aspects of business ethics and corporate social responsibility in the face of one fictional company, Avalon Group. The former is a multinational conglomerate specialized in providing customers with a wide range of products such as consumer goods and groceries. It operates in one of the most competitive industries dominated by brands such as NextWave Food, SkyBlue and Greenfield Buy. In essence, this paper covered the significant aspects which constitute the organization’s corporate social responsibility.
With its massive size, its operations pose a risk to the environment in ways such as water pollution, carbon emissions, and habitat loss. Avalon has a group of stakeholders who are interested in its organizational procedures, and they include customers, investors, communities, employees and suppliers. Moreover, it incorporates several guidelines in its code of ethics to manage ethical issues. Examples of such policies are antitrust and anticorruption principles, consumer protection, food safety, and labor and employment practices.
References
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