The Power of Business Module 1

Transcription

1 The Power of Business Module 1 Student name: Instructions to teachers: This module can be completed online or on paper. For many of the learning experiences, students need access to the Internet. The Power of Business is also supported by: Instructions to students: Sweatshops and Coffee Revolution issues presentations. Human Rights, Decision Making, Fairness and Social Justice, Social Change This module gives an overview of the ethical turn in business, providing you with some information and case studies to follow. It is the first in a series of four modules produced by Trade Aid. Whether or not you are completing the work on paper or in a Word document or similar, we would recommend that you have appropriate headings and complete either all the options or just those your teacher wants you to do. Concepts are highlighted in the table at the top of each section help you consider what concepts may apply to the issues being studied. E.g: Key to Icons Critical Thinking Concepts Action Class: Overview Businesses, whether small, medium or the very large global corporations have a lot of power over people. This is because they can make choices over where they source their products, how they treat their workers and the environment, to how they treat their customers. Things in the business world have been steadily changing towards more consideration of people s rights and sustainable business practices so that businesses can keep operating long into the future. In this module there are examples of the difficult decisions that businesses make and how new and innovative businesses are doing things a bit differently. Human Rights When a appears, this is to encourage you to consider some wider critical thinking concerning an issue. Issues Extra Resources MODULE 1 THE POWER OF BUSINESS PAGE 1

2 1) Decision time 1. In your opinion who, or what, forces most businesses to change their way of doing things? Fashion trends (consumers), price wars, environmental concerns, government policy, technology or something else? Decision Making ISSUES [Slideshow Presentations] Sweatshops 2. List at least three of the hardest decisions a business might have to make. Any person in any form of business makes lots of decisions every day. Most decisions are made with the end goal of helping maintain and improve the business. Some decisions directly affect the product or service; others affect the workers, the environment or the public image of the business. There are many types of decisions. Have a brainstorming session with two or three people near you in class. List as many decisions as you think businesses have to make on a daily, weekly and yearly level. 3. Should workers be paid according to the amount of work they do, or their level of responsibility (power to make decisions)? How are politics on a national or global level involved? Asking critical questions Describe the forces (social, economic, political) that are present in this issue How difficult do you think it might be to bring about change in this issue? MODULE 1 THE POWER OF BUSINESS PAGE 2

3 2) The rise of business ethics Decision Making Fairness and Social Justice The way a business conducts itself depends on its ethics and is about the combination of profit-maximising activity with non-economic concerns. Since the 1990s business ethics have come under increasing attention. When many big corporations shifted their production overseas in the 1980s (think of shoes getting made in factories in China) they made use of lower labour and environmental standards to make a big profit. They could produce things in other countries far cheaper than they could at home. People started to raise some questions about fairness. Across the world, different countries have different levels of wealth. There is no international minimum wage set by some international body. A standard item, like a Big Mac can be US$3 in every country in the world, but, in some countries that would be half a day s wage for the average person, and in other countries it would be small change for most people. Wikipedia describes business ethics as: The rules or standards that govern our decisions on a daily basis. Many equate ethics with conscience or a simplistic sense of right and wrong. Others would say that ethics is an internal code that governs an individual s conduct, ingrained into each person by family, faith, tradition, community, laws, and personal mores. According to this definition, ethics is affected by our world view, our religions and culture and on a global scale these can be remarkably different, so some ethical complexities and disagreements arise. Business ethics is also a reflection of the time and geographical context in which the business operates. In history, businesses used to be involved in things like slavery and drug running. Today, such practices are illegal in most countries. 1. Give a definition of business ethics in your own words: 2. Write your opinion on this statement: The primary purpose of any business is to make a profit, especially if that is a responsibility to its shareholders. As the world is unequal, it is easier to make a profit. The poor are easily exploited as they are simply paid less. Bringing ethics into business decisions is tricky. What exactly are ethics? 3. Even if a business obeyed all the laws in a country, could they still be acting unethically? How might this situation occur? Asking critical questions To what extent do you think your community or New Zealand is affected by this issue? MODULE 1 THE POWER OF BUSINESS PAGE 3

4 3) Swazi and Icebreaker Decision Making ISSUES [Slideshow Presentations] Sweatshops Both Swazi and Icebreaker are New Zealand outdoor clothing companies. Their main difference is that Swazi designs and makes all its products here in New Zealand. Icebreaker, on the other hand, designs products in North America and makes them overseas, in places like China. The founders of both companies made ethical decisions for their companies. Draw up two columns, one for Swazi and one for Icebreaker as shown. Preview all of these video clips and websites before completing the table audio/ /fashion-industry-graded-for-first-time-onethics Company Swazi Icebreaker Founder Type of products Examples of ethical decisions they have made MODULE 1 THE POWER OF BUSINESS PAGE 4

5 Key words or aspects of their decisionmaking (their core values) Your opinion of their decisions Extension: Criticisms of their decisions by others: You may do your own Internet searching beyond these video clips, especially to find any criticisms people might have of their business decisions. Criticisms of their business decisions Asking critical questions Who benefits from the outcomes and who might be disadvantaged? Does finding these criticisms change your opinion of their decisions? MODULE 1 THE POWER OF BUSINESS PAGE 5

6 4) Cotton On There s a lot to consider in business ethics. Take Australian fashion company, Cotton On, as an example. They re committed to an ethical business at all stages. From design through to retail they try to consider what is best for everyone and the environment. They are taking their ethical concerns to all aspects of the supply chain. Making decisions about putting other aspects first, before a profit may seem like bad business or is it better business? Task: Head to Cotton On s Website page that details their ethics manifesto: You will see that they have a separate page for their ethics in design, sourcing, production, logistics and retailing. Study each page and if possible, give an example, or answer, to each of these questions or comments as you read them. Work in pairs if possible. 1. They manufacture all their clothing in cheaper labour countries like Bangladesh. How can they be sure that there are no sweatshop situations? Decision Making Social Change ISSUES [Slideshow Presentations] 2. Whose rules do they follow? Sweatshops In Australia there s been a move towards ethical decision-making in the clothing industry. Watch this video as an introduction to this learning experience: 3. What makes them different from other fashion retailers? Extra Resources Video to watch (6 min, by 7.30/ABC news): australian-fashion-companies-fail-todisclose/ MODULE 1 THE POWER OF BUSINESS PAGE 6

7 4. Do you think they are reacting to what customers are wanting or are they creating a new way of conducting an international manufacturing business? Cotton On s rating by Baptist World Australia s Fashion Report of 2016, gives the company a mixed report. Grading companies from F to A, Cotton On s grades were as follows: Policies A+ Knowing Your Suppliers A Auditing and Supplier Relationships B+ Worker Empowerment C+ A closer look at the company s record on providing its workers with a living wage reveals that it s not doing so well. The Australian Baptist Aid Report is an independent check (audit) on companies and so while Cotton On may have good intentions there is room for improvement. 5. Do their ethical practices persuade you, as a potential customer, to shop at Cotton On? Why, or why not? You can download the Baptist Aid s Fashion Report for 2016: Can you trust what you read on a company s Website? Asking critical questions What assumptions can you identify in the information you are reading? MODULE 1 THE POWER OF BUSINESS PAGE 7

8 5) (extension): Corporate Social Responsibility (CSR) Helping out by giving money or time to local initiatives or the local community is one way of being socially responsible, but there are many others. Check out Air New Zealand s actions on their website: corporate-governance Responsibilities CSR, is a process by which businesses aim to embrace responsibility for the company s actions. It s undertaken to create a positive impression by reporting on the consequences of its activities on the environment, consumers, employees, communities, stakeholders and the public at large. In a 2014 report by Grant Thornton, only 14% of New Zealand businesses report what they do for their CSR, and most of this is around helping local not-for-profit organisations. CSR can be thought of as business thinking about how they can act responsibly in their own communities as well as overseas. 1. What kinds of actions are they taking for their staff, the NZ economy and for the environmental impact of flying planes? 2. Do you think CSR is really a type of marketing PR exercise? Explain your answer. From 3. Is CSR a form of charity that replaces what governments should be doing anyway? For example, sponsoring breakfast or milk in schools in New Zealand? CSR could be applied to: The producer s community Communities in the supply chain The local community 4. Respond to this statement: CSR is a form of bribery to the community. MODULE 1 THE POWER OF BUSINESS PAGE 8

9 5. When you shop somewhere and are about to pay for your things, you notice a box for your small change. The box is for some worthwhile charity. Is this CSR? What do you think? 6. Which might be easier for a company CSR that involves the environment, or CSR that involves people? 7. Think about CSR that is for producers and people in the supply chain, like those Cotton On wishes to support. What advantages and disadvantages are there in providing CSR at the producer end and not in the local community? CSR can also extend beyond national borders. Companies like Trade Aid are passionate that their business benefits everyone in the supply chain and the environment. Trade Aid produce a three-yearly account of their social responsibilities to their trading partners, in addition to their financial accounts. These accounts can be found in the extra resources box. MODULE 1 THE POWER OF BUSINESS PAGE 9

10 6) Social Enterprise Table matching: Match the definitions on the right with the terms on the left Responsibilities Social Change When is a business a charity and when is a charity a business? Take a look at the following continuum: Charity Business with profit as the bottom line Answer: Answer: A. This is where making money is the number one responsibility. In terms of impact on society, the trickle-down theory is implied. As people make money they will spend it on others. B. This is where a charity has actual components of what it does that sit closer to social business. Charity with enterprise comes from a charity lens. It is a charity that is running a profitable business. Charity Charity with Enterprise Social Enterprise Social Business Business Charity with enterprise Social Enterprise Social Business Answer: Answer: Answer: C. An emphasis both of charity and business models. It has ethical practice in the staffing, the use of profits and has investment back into the community as well as back into the business itself. The business model stacks up and it is profitable. D. This is a business that is not just sourcing the ethical product, they are employing people who otherwise would not get work. Or, they are sourcing an ethical product and all the profits after the business bills have been paid are going back to the producers. E. An organisation working for social aims. There is no economic engine, and all its funding comes from philanthropy, business or government. Extra Resources Read Listener article 11 Nov 2017 Social enterprise about the growth and impact of social enterprises in New Zealand. This can be found in the extra resources box. (from Durbin, 2015, p56) Answers: Charity E, Charity with Enterprise B, Social Enterprise C, Social Business D, Business A MODULE 1 THE POWER OF BUSINESS PAGE 10

11 1. After discussion with a partner, discuss where these would be along the continuum. You may have to Google their Websites if you do not know anything about them. Trade Aid Salvation Army Op Shops Just Food: An enterprising charity addressing employment and community engagement Air New Zealand MacDonald s 4. In this globalised world, who counts as the community people geographically close, or far away producers? What do you think? 5. If you were running a small business (such as a café or butcher or garage) in your neighbourhood, would you get involved in any kinds of social action? Why, or why not, and if you did, what might it look like? Consider these examples, then add your own that you might come up with: 2. Is being involved in social aspects a risk for a company? Explain some of the risks and why some businesses want to be involved in their community. Employing school kids to give them experience and train them on the job Pay everyone the living wage if you can afford it Donate one day a year when all your staff get out and do a local environmental project Give free advertising space to local charities Support a local school or charity, like a hospice with a regular (and quite large) donation Only stock items in your shop that have come from places where there are good labour standards. 3. Do you think businesses should make a profit first before they think about giving back to the community? Explain your answer. MODULE 1 THE POWER OF BUSINESS PAGE 11

12 7) It s not easy being a socially-minded business Decision Making Responsibilities ISSUES [Slideshow Presentations] The Coffee Revolution The Mt Roskill Coffee Project in Auckland began when three community minded friends got together to start what they hoped would be a sustainable social project a café that sold fair trade coffee and gave young people who were struggling to find employment a chance to get training and work experience. What went wrong? One of the key problems was the location. Tucked away in the Council-owned Wesley Community Centre, there was not enough foot traffic for the café to survive. In an interview with Stuff.co.nz, co-founder Anashuya Fletcher says the business in its current context isn't sustainable. "Poor Rowan sits there every week and looks at the figures. He has done a superb job of keeping us going," she said, "But there are too many days where it is just too hard," she said. The trio are confident that they can find a better location, with a better kitchen as well to be able to compete with other cafés. Co-manager Paul Fletcher said that they will bring their values with them. This includes composting all their leftover coffee grinds and food, as well as providing work experience for young people. Paul said in the interview that Auckland Council has been incredibly supportive of their business and its community focus. Giving disadvantaged young people an opportunity to work in the café and gain some experience has been a highlight, Paul said, "Seeing them thrive, it is just the stuff you live for." Fifteen young people have come through the Roskill Coffee Project work experience programme. (from: 1. What factors would you need to consider if you wanted to start a café business? The doors opened in 2013 but just over a year later, the café has had to close. 2. This venture sounds more like a social project than a business. How can such projects be good for society and make money? 3. The managers of this project had very high principles do you think this helped or hindered their project? MODULE 1 THE POWER OF BUSINESS PAGE 12

13 8) Starting something new Little Yellow Bird Little Yellow Bird is a New Zealand company that manufactures clothing overseas. Smaller than Swazi or Icebreaker it is an example of a much smaller enterprise. If you completed Option 3 (Swazi and Icebreaker), describe some similarities and differences between this company and Icebreaker or Swazi. Visit the Website of this company: and view their video clip about their ethical practices. Company Little Yellow Bird Icebreaker / Swazi Founder Type of products Examples of ethical decisions they have made Key words or aspects of their decisionmaking (their core values) Your opinion of their decisions MODULE 1 THE POWER OF BUSINESS PAGE 13

14 1. What factors influence people to make ethical decisions in their businesses? 2. Is it less economic to be an ethical business? Write your thoughts here 3. How might a company like Little Yellow Bird compete against the main clothing brands? MODULE 1 THE POWER OF BUSINESS PAGE 14

15 9) Design your own business Decision Making 2. Create a business case for a new business that has some social aspects to it. It can be located in your local area such as your neighbourhood, or as wide as your city or region. List what service or goods your business will be providing. Describe the social aspects that your business will bring to the community (beyond some new jobs and the actual products or service). 1. Using the information you have learnt about already, discuss what kinds of things you would have to be aware of when it comes to being a business with a social aspect. MODULE 1 THE POWER OF BUSINESS PAGE 15