B120: An Introduction to Business Studies

B120: An Introduction to Business Studies

First Semester 2013 – 2014

Cut-off Date: December 8, 2013

Ethical business practices - A Cadbury Schweppes case study       

The importance of ethics in business

Ethics concern an individual's moral judgements about right and wrong. Decisions taken within an organisation may be made by individuals or groups, but whoever makes them will be influenced by the culture of the company. The decision to behave ethically is a moral one; employees must decide what they think is the right course of action. This may involve rejecting the route that would lead to the biggest short-term profit.

Ethical behaviour and corporate social responsibility can bring significant benefits to a business. For example, they may:

• attract customers to the firm's products, thereby boosting sales and profits
• make employees want to stay with the business, reduce labour turnover and therefore increase productivity
• attract more employees wanting to work for the business, reduce recruitment costs and enable the company to get the most talented employees
• attract investors and keep the company's share price high, thereby protecting the business from takeover.

Unethical behaviour or a lack of corporate social responsibility, by comparison, may damage a firm's reputation and make it less appealing to stakeholders. Profits could fall as a result.

Along with good corporate governance, ethical behaviour is an integral part of everything that Cadbury Schweppes does. Treating stakeholders fairly is seen as an essential part of the company's success, as described here: 'A creative and well managed corporate and social responsibility programme is in the best interests of all our stakeholders - not just our consumers - but also our shareowners, employees, customers, suppliers and other business partners who work together with us. *'

Ensuring that employees understand the company's corporate values is achieved by the statement of 'Our Business Principles' which makes clear the behaviour it seeks from employees.

Ethics at work

a) Dealing with suppliers

Cadbury Schweppes deals with tens of thousands of suppliers around the world and aims to work closely with them to ensure they receive fair treatment.

In the case of cocoa farmers for example, Cadbury Schweppes is a member of a global coalition, which is comprised of industry, governments, non-government organisations and special interest groups created to improve working practices on cocoa farms. The coalition has funded independent surveys into cocoa farming in West Africa that have contributed to the development of programmes to help local communities.

Another practice is Fair Trade. Under this scheme cocoa is paid for at a fixed minimum price with a premium going to the farmer co-operatives in exchange for using the Fair Trade logo and accreditation.

It is Cadbury Schweppes aim to help all cocoa farmers improve their standard of living by helping them develop sustainable crops of quality beans. In Ghana, for example, where Cadbury Schweppes buys most of its cocoa, the company supports farming communities through programmes on sustainable tree crop management and building wells for drinking water.

b) Manufacturing

As a major international company Cadbury Schweppes recognises its environmental responsibilities and the need to care for its workforce, local communities and all those who may be affected by its activities. For example, its environmental responsibilities include:

• treating waste water prior to disposal
• looking to improve its energy efficiency
• controlling the release of gases into the atmosphere.

c) Distribution - to wholesalers and retailers

The company aims to keep within acceptable limits the fuel consumption and air emissions that result from transporting its products. In the UK, for example, drivers are trained in the most efficient ways to operate their vehicles, which are also regularly maintained to keep them running at optimum efficiency.

d) Dealings with consumers

Cadbury Schweppes is committed to providing a range of high quality treats, refreshments and confectionery based oral care products which are marketed truthfully, labelled clearly and meet the highest safety standards.

For that reason the Cadbury Schweppes corporate social responsibility agenda now reflects growing consumer interest in issues of diet, nutrition and healthy lifestyle, and the way brands are marketed, especially to children.

Ethics and employment policies

When recruiting staff, Cadbury Schweppes is eager to encourage diversity in the workplace. It therefore encourages applications from a wide range of people. Greater diversity in the workplace encourages different ways of looking at and solving problems and may lead to greater creativity.

To achieve such diversity, the company provides equal opportunities for its recruits regardless of gender, age, marital status, disability, race or religion. Vacancies are advertised worldwide via the company's websites and intranet so that employees can switch from one part of the organisation to another.

Once employed, Cadbury Schweppes provides career opportunities to enable staff to develop personally and grow in terms of experience and skills. The company's performance appraisal system provides a regular opportunity to review an individual's strengths and progress and construct development plans for each person. By allowing each individual employee to develop, the company can develop as a whole.

Other factors in its treatment of staff that reflect a socially responsible approach include:

• High levels of consultation that involve employees in decision-making. The company values discussion so that employees understand the nature of a problem, feel part of the process of finding a solution, and identify with the outcome.
• Offering appropriate levels of remuneration and rewards. Cadbury Schweppes regularly benchmarks its levels of pay against other companies to ensure it is competitive. Staff are also encouraged to have shares in the company and can purchase shares at a reduced price.
• Development and training is offered so employees are better able to carry out their duties and are more motivated in their work.
• The creation of a healthy and safe working environment so employees feel safe at work.

Cadbury Schweppes has produced a formal statement of its policies towards employees that is part of a document called its Human Rights and Ethical Trading (HRET) Policy.

Conclusion

Cadbury Schweppes aims to lead the way with its ethical approach in business. Its core underlying values influence all its decisions throughout the value chain. Its stance on issues is clearly communicated both internally and externally to ensure its position is fully understood and to invite its stakeholders to share in it.

This approach has contributed to the success of the business and has enabled it to become the world's leading confectionery company and third largest soft drinks company.

The case study was adopted from www.businesscasestudies.co.uk

Answer the following questions: (All your answers should be in an essay format)

Question one (350 words, 35 marks)

Identify and discuss the perspectives of ethical responsibilities adopted by Cadbury Schweppes. Support your answer with evidence from the case study.

Question two (350 words, 35 marks)

Explain what is meant by Corporate Social Responsibility (CSR) and discuss the importance of business ethics to an organization. Support your answer by evaluating the benefits of business ethics at Cadbury Schweppes.

Question three (300 words, 30 marks)

One method of conducting SWOT analysis is to conduct it in relation to the different business functions. Conduct SWOT analysis in relation to the Human Resource Business Function at Cadbury Schweppes.