UnethicalBehaviors in Business
Ethicalpractices can affect the image of a business, especially whenunethical practices are discovered and published by the media.Damaging the image of the company can result in the loss of marketshare, a decline in profitability, or closure of a business. Thispaper will analyze the case of poor working condition by a Bangladeshtextile supplier firm that operated in Rana Plaza and sold itsproducts to Wal-Mart.
Describingsupplier and the buyer
Unethicalbehavior considered in the present cases involved Bangladesh-basedsuppliers of textiles and Wal-Mart. Bangladesh textile suppliersoperated in substandard building, named Rana Plaza (Manik 1). Thesupplier was accused of overworking employees, employing children inthe textile plant, and forcing employees to work in unsafe and poorworking conditions. For example, the owner of the building had beenwarned and required to stop the textile operations before it couldcollapse, killing some employees and injuring others (Manik 1).Wal-Mart, on the other hand, is the world largest retail networkcorporation based in the U.S. Wal-Mart was accused of sourcingtextile products from unethical supplier based in Bangladesh. Forexample, over one million boxer shorts produced for Wal-Mart werediscovered when Rana building collapsed on April 24, 2013 (Instituteof Global Labor & Human Rights 1).
Impactof the ethical issue on buyer, Wal-Mart
Therelationship between Wal-Mart and Bangladesh textile supplier damagedits reputation (IGLHR, 1). However, the effect was short-lived sincethere was no significant reduction in the Wal-Mart’s market shareor a decline in profitability that could be directly associated withunethical practices of the supplier.
Effectof the ethical issue on supplier
Thesupplier suffered significantly following the unethical practicesassociated with mistreatment of employees and employment of children.These unethical human resource practices had persisted forundisclosed period, and were only discovered when Rana plazacollapsed (Manik 1). The textile plant owner was sued and forced toclose down the business.
WhyWal-Mart overlooked unethical practices by Bangladesh supplier
Althoughmany companies source from unethical suppliers unintentionally,Wal-Mart was aware of mistreatment of employees, poor workingconditions, and employment of underage in textile plants, butcontinued trading with the supplier. Wal-Mart ignored these unethicalpractices because Bangladesh textile firms are among the plants thatsupplier products at the cheapest price in the world (IGLHR, 1).Therefore, buying from the Bangladesh textile firm could helpWal-Mart increase its net profits or enhance its competitiveadvantage by selling textile products at the lowest price in themarket without incurring losses.
Actionstaken by the buyer
Wal-Martdemonstrated its reluctance to take action for preventing unethicalpractices among its Bangladesh-based suppliers when it refused tocompensate the families of employees who died when Rana collapsed.Other companies (such as Primark and El Corte) that sourced textileproducts from the same supplier signed an agreement indicating theirwillingness to contribute towards a compensation fund (Ovi 2). Theincident could be prevented in the future by requiring all Wal-Martsuppliers to adopt the code of conduct that will ensure that thesupplier observe safety standards for all employees. The suppliershould also allow Wal-Mart representatives to investigate its workingconditions.
Inconclusion, unethical practices by the supplier may affect the buyer,but the impact of such practices on the buyer is less than theireffect on the supplier. However, both the supplier and the buyer cancollaborate to enhance ethical compliance. For example, Wal-Mart (thebuyer) can require its suppliers to adopt the necessary code ofconduct.
Instituteof Global Labor & Human Rights. Wal-Mart, wrangler, ASICs caughtusing child labor in Bangladesh fire trap. IGLHR.23 May. 2013. Web. 28 November 2015.
Manik,J. Building collapse in Bangladesh leaves scores dead. AsianPacific.24 April. 2015. Web. 28 Novemner 2015.
Ovi,H. Buyers’ compensation for Rana Plaza victims far from reality.DhakaTribune.17 November. 2013. Web. 28 November 2015.