Ethical Capitalism

Rikia Edwards, Evan Krohn, Sean Miller, Woody Townsend, Preston Whited, Keith Wilson

What is Ethics?●A group or profession’s values

●Involves systematizing, defending, and recommending concepts of right and wrong conduct.

●Social Responsibility- an ethical framework which suggests that an entity, be in an organization or individual, has an obligation to act for the benefit of society at large.

●Study of standards between which we promote human welfare and the “good”

Why Care About Ethics?●It is about knowing what is right or wrong, and whether is it

practical

●Within a business, It is just as important as the actual production and business transactions that take place in order to make the business profitable.

●it is important that a business be consistent with both Ethical and Social practices. If not, it can cause conflict within an individual’s priorities which in turn can affect economic priorities (Ex: Revenue, Cost, etc..)

The Stakeholders●These are the people that are going to be affected by the practices

that an organization conducts.

●Internal - Board members, Executives, Employees, Trade Unions

●External - Customers, Suppliers, Creditors, Communities, Government

●Since the beginning in 1962 as a small business, it has expanded rapidly now operating over 7,000 stores in over 13 countries

●The goal is to provide quality products at an affordable price to its customers

Upside of Walmart●Walmart works close with its suppliers to cut back shipping and

packing costs to save their consumers money.

●In efforts to do so, they enforce strict requirements on their suppliers as to the production processes

●Within its presence in many areas, walmart is able to provide a lot of jobs

Downside of Walmart● Makes it harder for local businesses to

compete within the area, often calling for them to cease existence thus creating somewhat of a monopoly effect. This can correlate to a decrease in pressure to provide adequate wages and benefits in that area.

● Walmart has been known to lack proper working conditions and exhibiting discrimination among its employees.

● Walmart had been known for failing to provide healthcare to employees, and not even offering it at all to part time-employees

What’s Right? What's Wrong? How to Improve?●Overtime, Walmart has continued to work on their weaknesses

●Walmart has since offered health care to both fulltime and part-time employees. Their most popular plan starts at $18.40 per pay period.

●In efforts to improvement on their environmental concerns, Walmart came up with Sustainability 360

●Establishing the Global Ethics office

●Aiding in Times of Need

●Partnering with United Way and One Economy Corporation

• Starbucks founder and chair Howard Schultz has long been a public advocate for increased awareness of ethics in business.

• Involved in social development programs• Helps to improve the lives of the poor farmers

from whom Starbucks buys its beans.• Offers most employees a comprehensive benefits

package• Starbucks in 2005 even spent more money on

health insurance for its employees than on raw materials required to brew its coffee.

Starbucks (continued)• Starbucks embraces that diversity as an essential component of

doing business. The company has more than 146,000 U.S. employees and nearly 71,000 outside the United States. Of these, around 31 percent are minorities, and 67 percent are women.

• Starbucks launched the Shared Planet website which has three main goals:

1.to achieve ethical sourcing2.environmental stewardship3.greater community involvement

• Starbucks also actively partners with nonprofits around the globe. • Currently, 5 percent of total coffee purchases are Fair Trade

Certified.

• Starbucks has forced many smaller coffee shops out of business.

• In 2009 Starbucks made the decision to close 600 underperforming stores in the United States and 61 in Australia.

• Starbucks’ current plan includes closing hundreds of underperforming stores in the United States and Australia.

“It turns out the corporation with the very best CSR is Microsoft, the Washington-based software giant.”

(forbes)● Although Microsoft has their flaws, they still portray strong CSR in most

areas.

● Microsoft, according to Forbes in 2010, is a company that portrays a strong amount of Corporate Social Responsibility.

● Their business strategy isn’t only aimed at profitability but it is also aimed at the environmental and social consequences of their business.

● With that being said, “every business is prone to having at least some flaws.”

Microsoft’s Strong Support for CSR●Microsoft works with governments,

investors, nonprofits, and a wide range of other organizations worldwide to insure their commitment to social responsibility.

●Internally, Microsoft has developed many programs that take responsibility for unfortunate conditions and situations, nationwide and worldwide.

Microsoft & Social Responsibility● In 2012, Microsoft launched Microsoft YouthSpark which refocused much of their efforts

around creating opportunities for youths.

● The Initiative behind the program was simply to connect hundreds of millions of youth with opportunities for education, employment, and entrepreneurship.

● Thus, Microsoft is working to bridge the opportunity divide that separates youth who have opportunities from those who don’t to help young people secure individual futures.

● Microsoft is also involved in what they call the “Employee Giving Campaign.” In the 2012 Giving Campaign, employees managed to come up with $1 billion in contributions to more than 31,000 nonprofits around the world.

● Microsoft’s “Match Program,” lead to more than 2 million Microsoft employees volunteering their time. In total, the Match Program has provided more than $6.5 billion in cash, services, and software to nonprofits in the world.

Microsoft & Jobs●Microsoft provides thousands of jobs, not only for the US, but also

for the international economy.

●Microsoft provides 115,905 jobs worldwide while 60,515 of them are American jobs.

●Microsoft is also diverse in their hiring practices as they offer a wide variety of job titles.

●They hire in engineering, sales and marketing, finance, human resources, and in typical business functions.

Microsoft & Employees● Microsoft provides employees with flexible work hours treating employees with

respect and continue to provide increased benefits such as maternity leave, paid holidays and bettered 401(k) plans.

● 8 weeks of fully paid maternity disability leave are provided for new mothers plus 12 weeks of Parental Leave for all parents of new children with 4 weeks paid leave and also provide increased paid Holidays.

● Microsoft recently announced that by 2016 they will add MLK Day and Presidents Day to the list of paid Holidays for which employees have a break.

● In 2016, Microsoft will increase the company’s 401(k) match from 50 percent of the first 6 percent that employees defer, to 50 percent of all regular deferrals.

● The current IRS deferral limit is $18,000. Microsoft’s new 401(K) plan will match employee’s contributions up to the 50% of regular referrals thus it could save employees up to $9,000. This tax-advantaged savings plan saves employees money which allows them to grow their retirement savings faster.

Downside of Microsoft● Microsoft has been known to develop its own competing standards thus acting in a

monopolistic manner and eliminating the competitive companies by forcing customers to have to purchase Microsoft products.

● Microsoft forces its partners to guarantee their loyalty by means of contracts for which they falsely persuade continued loyalty by threatening their partners that they will lose competitiveness with others so they will not back out of arrangements.

● A report by the National Labor Committee hones in on conditions at a factory, run by a company called KYE, which produces hardware (mice, webcams, and some Xbox components) for Microsoft.

● It was stated that workers worked extremely long shifts, typically making $0.65 an hour, and like manufacturing operations in China, are forced to live onsite.

Nike

●Nike was an early target for the very reason it's been so successful. Its business model was based on outsourcing its manufacturing and using the money it saved on aggressive marketing campaigns.

Nike Turmoil•After prices rose and labor organized in Korea and Taiwan, Nike begins to urge contractors to move to Indonesia, China, and Vietnam.•1996: Kathy Lee Gifford's clothing line is shown to be made by children in poor labor conditions. Her teary apology and activism makes it a national issue.

Nike Turmoil Continues•Abuse continued to emerge, like a report that alleging that a Vietnamese sub-contractor ran women outside until they collapsed for failing to wear regulation shoes.•1997: College students around the country began protesting the company.•1998: Nike faces weak demand and unrelenting criticism. It has to lay off workers, and begins to realize it needs to change.

Improving Nike•1998: Ceo Phil Knight announces Nike will raise the minimum age of workers; significantly increase monitoring; and will adapt U.S. OSHA clean air standards in all factories.•1999: Nike begins creating the Fair Labor Association, a nonprofit group that combines companies, and human rights and labor representatives to establish independent monitoring and a code of conduct, including a minimum age and a 60-hour work week, and pushes other brands to join.

Nike Standards•NIKE, Inc. has a code of ethics for all employees called Inside the Lines.•It defines the standards of conduct they expect employees to follow and includes a range of topics on employee activity, ethical behavior, product safety, legal compliance, competition and use of resources.•Each year, all NIKE, Inc. employees are required to verify that they have read and understand Inside the Lines.

Nike Success•NIKE, Inc. also operates a global toll-free AlertLine for employees to confidentially report any suspected violations of the law or our code of ethics.•Any reported concerns around accounting, auditing or internal control are communicated to the Board's audit committee, which determines appropriate action.

Nike Success•While Inside the Lines addresses the behavior of NIKE, Inc. employees, the Code of Conduct addresses contractors that manufacture Nike-branded products•It directs them to respect the rights of their employees and to provide them with a safe and healthy work environment.

Concluding Nike•Nike was known for outsourcing factory jobs to countries with less strict labor laws, paying very low wages, and using sweatshops•They were not the only company to use these practices, however they were one of the biggest to do it, therefore they received a lot of criticism•This public criticism forced Nike to review its business practices and code of ethics•Nike has since changed some of its business practices and ethics to try to improve its image, but still has some work to do

ConclusionWe should care about ethics in capitalism because if companies

ignored ethics and just focused solely on profits, then many people would suffer consequences from their actions.

The environment would suffer because companies would get rid of their waste the cheapest way they could, which would mean dumping it in rivers and lakes; endangering not only the animals that live in and around the water but also the people that rely on the water for drinking and using it for their homes

Conclusion (Continued)Their customers would suffer because companies would charge the

maximum amount possible in order to make as much money as possible; this means that these customers would have less money to spend on other products and services which would make them choose between certain products and services, damaging other businesses’ sales

Small and local businesses would suffer because the big corporations would be able to charge their product for a lower amount than they could (Walmart and Starbucks cases) due to economies of scale, which would drive the smaller companies out of business

Conclusion (Continued)Companies that focus on ethics can improve their overall value

because their employees and their customers will be happier, the environment will be stronger and less polluted, and this will reflect the stock price; making the company and its shareholders happier