1. How could Campbell Soup have prevented this allege from happening? List three possible actions and explain. 20marks
The challenge facing the company is concerned with the living standards of the workers and the wages paid to each worker. The conditions of living expose the workers to communicable diseases and health hazards that reduce the mortality rate of the workers. The workers are also paid at an hourly rate of less than 2 dollars which is below the approved minimum wage. The uprising of the workers will affect the sales of the organization and its reputation.
The first move that can enable the organization to deal with the challenge can be to increase the wages paid to the workers. This can be achieved by increasing the profit margins from the products produced to encourage the growers to increase the wages paid to the laborers. The company can ensure that the wages paid by the growers are above the minimum wage as part of the organizations corporate responsibility.
The organization should ensure that it engages in ethical practices. As part of the company’s corporate responsibility, the management should ensure that the growers supplying the organization engage in ethical behavior. The company should terminate contracts with those producers who engage in child labor in their farms. Regular inspections to the farms will enable the company to avoid the allegations of using child labour.
Ethical issues facing the company can also be solved by dialogue between the workers association and the company. The two parties can discus the available options and resolve the issues between them without engaging in protest. The company can hold talks with workers and evaluate the demands by both parties. The two parties can reach a decision compromising some of the requests to ensure that the company saves it image. The image of the company is important to the company and the labourers and a decline in sales will affect all stakeholders.
2. What are the consequences of the possible actions noted in question 1?
20 marks
Each cause of action decided upon by the management has advantages and disadvantages. By maintain that the growers pay their workers the minimum wage will intern force the farmers to increase the price of products sold to the company. Increased prices of raw material will increase the production cost which will require the company to incur the cost or transfer the cost to the buyer. Increased prices of the product will make the product lose its competitiveness in the market thus a reduction in sales. Reduced profitability of the company will affect the organisations operations.
Engaging in ethical practices increases the company’s overheads and force the company to increase commodity prices. The company has to increase its staff requirement or assign its current staff more duties to visit the farms to ensure that they follow ethical production methods. The company will also lose some of its suppliers through cancelation of contracts if they do not follow ethical production methods. A decrease in raw material will result in a decrease in the final product thus the company’s production will reduce. Decrease in production means that the company does not use its economies of scale thus high cost of production.
The company can engage in dialogue with the workers to prevent the demonstration by the workers from happing. The consequence of holding dialogue with the workers is that the company may end up signing an agreement that would bind the workers and the company. This would make the company directly responsible for the workers. The company stand to lose from the action of the workers thus the company is likely to be disadvantaged when signing an agreement with the workers.
3. List three internal and five external stakeholders in this situation and describe how each of them is affected by the issue. 20 marks
Internal stakeholders are people directly involved in the operations of the organisation. External stakeholders are people that can affect the operations of the organisation and they are not part of organisation. Internal stakeholders include the labourers, the management of the company and the growers. External stakeholders include the customers, the competitors, the government, labour union and credit organisations.
The issue of poor living conditions and poor pay affects the quality of work by the workers and the wages gained. The workers suffer health and economic problems which reduces the quality of life. The management will be affected by negative publicity which will affect the company’s image in the market. The management decision will also determine the profitability of the company and the faith of investors in the management.
The protest by the workers will affect the growers by reducing their annual produce and an increase in the wages would reduce their earnings. The customers as an external force will be affected by the pricing of the product in the market. The competition will be affected by being forced to mach the wages paid to the workers in the market thus increasing their production cost. The government interference will result to distortion of trade practices thus affecting the free market.
The credibility of the labour union is affected by the outcome of the protest and negotiation reached with the company. The creditors will shy away from investment opportunities form controversial investments. Reduced investment pool will affect the workers and growers. The internal and external stakeholders will be affected by issue facing the company thus the need to resolve the issue in a timely manner.
4. Which ethical approach is the best for dealing with this situation? Give clear reasons for your answer. 20 marks
The best ethical approach to deal with the issue at hand would be the use of dialogue with the major stakeholders involved in the production process and laying down the demands that will enable the organisation to resolve the issue. Dialogue is the best way to go about the ethical issue as all the opinions of the stakeholders will be discussed and a resolution reached by all the stakeholders involved is likely to hold for a long time compared to a decision by few stake holders.
The major stakeholders to be involved in this process include the farmers through their union, the growers and the company. These parties should lay out their issues and formulate a working plan that will ensure that all the parties benefit from the dialogue. The members should be open minded and embrace compromise during the dialogue process. The workers have to forgo some of the demands and the company has to provide some incentives for the workers. The growers also have to provide some incentive to ensure that the production process is not interrupted for a long time.
The government can play the role of mediator and custodian of the law to ensure that the agreement will benefit all the parties. The government should also ensure that some of the aspects of an ethical agreement are followed. Issues such as child labour and poor working conditions should be addresses and measures to prevent and evaluate such issues should be discussed. The government should also ensure that the parties sign agreements that will bind them to the issues agreed upon and ensure that ethical practices are promoted in the business.
5. In what ways could the Campbell Soup issue damage it as a company? List four different ways and explain. 20 marks
As a processing company, the issue will affect the processing capacity as the workers demonstration will reduce the workers working in the fields. If the issue is not resolved in time the reduced rate of supply will affect the overall capability of the company to maximise on production. The company will be forced to select alternative modes of production which will increase the companies operational cost.
The reputation of the company is at stake with the issue it faces. The image of the company affects the customer’s perception of the product. Customers will tend to avoid products that use unethical production processes. The use of child labour and exposing the labours to poor working and living conditions will result in a decrease in sales. A decrease in sales will affect the company’s ability to pay its suppliers. A decrease in sales will also affect the company’s ability to pay is workers.
The company’s production cost will increase affecting the company’s profit margins. Dialogue with the workers union will result in a list of demands the company will have to fund to prevent the demonstration. This will increase production cost and reduce the profits gained by the company. Increasing the prices of the product will result in a decrease in demand which may affect the company’s ability to compete effectively with other producers in the market.
The company’s relationship with investors will also be damaged by the issue affecting the company. The company needs investors to fund its expansion operations thus a decrease in the number of investors will affect the company’s ability to make profit. With the implementation of the changes affecting the organisation, the decrease in profits will affect the company’s ability to make profits.
