Theories and frameworks of ethics applied by organizations
Your task is to examine ethics and sustainability theories/models/frameworks as they are applied in understanding sustainable practice, and to apply those theories/models/frameworks to an analysis and commentary on a chosen case-study organisation.
The ethical considerations that are undertaken by the organizations help in maintaining the sustainable approach of the business in the market. Identification of the different theories helps in undertaking the smooth performance of the business through the maintenance of the goodwill and the loyalty of the customers. Ethics play a major role in defining the key attributes of sustainability of the business organizations while operating in the international markets. The ethics of the organization is dependent on right action and the development of the virtues of risk taking abilities, compassion, wisdom, and temperance (Tota & Shehu, 2012). The key elements of the change in the structure of the organizations and the decisions that are taken by the management help in identifying the ethics that are applied to bring forth positive outcomes.
The identification of the theories and frameworks of ethics like the Kantian theory, virtue theory and the utilitarianism helps the organizations in identifying the key elements of the change in the systems and the performance of the businesses while operating in the respective markets. The application of the theories and the manner in which they can be implemented to determine the ethical considerations of the organizations helps in maintaining the moral. Pepsi.co has encountered an ethical dilemma that was found based on the utilization of inappropriate packaging material, which is non- biodegradable in nature. On the other hand, the content of the beverages are researched to have contents that cause obesity and diabetes. It also causes lower bone density that affects the health of the customers who consume the beverages. The dilemma that is faced by the organization is dependent on the identification of the manner in which the company could not balance the profit levels through the delivery of quality products.
The purpose of the research is dependent on the identification of the different ethical considerations that are undertaken by the organizations and the manner in which the different theories can be applied on the structure and the performance of the business to bring in considerable levels of change in the systems of the Pepsico. The ethical considerations will be helping the business to bring in sustenance in the markets and helps in identifying the ethical issues and the manner in which they can be mitigated through certain recommended actions.
Ethical dilemma faced by PepsiCo: inappropriate packaging and unhealthy ingredients
The PepsiCo is a multinational food, snack, and beverage company which is headquartered in in Purchase, New York. The company has undertaken steps to evaluate the needs of the consumers and thereby develop FMCG as per the needs of the consumers in the world market. The company was formed through a merger with the Pepsi-Cola Company and Frito-Lay, Inc and expanded since its inception in the year 1965. The company has undertaken sustainable development measures and thereby undertook ways to bring forth modifications in the product offerings through continuous innovations in the market. The different actions that are undertaken by the business in the market have helped in maintaining the different levels of changes in the systems of the business. The ethical dilemma plays a major role in identifying the issues that has affected the productivity of the organization in the market. The revenue of the organization computed at the end of the fiscal year 2017 US$63.525 billion. On the other hand, the operating income of the organization was estimated to be US$10.509 billion (2017). The net income reflected an increase from the other fiscal years, which is estimated to be US$4.908 billion (2017) (Stanford, 2012). However, apart from all the improvements in the systems and the performance of the business in the markets, the organization faced an ethical dilemma that affected the loyalty of the customers in the market. The rendition of poor packaging material and the content that might cause health ailments has affected the ethical consideration of the organization while operating in the international markets it has also affected the proper functioning of the business as per the objectives of the same.
The ethics of the business is dependent on the CSR (Corporate Social Responsibility) of the organization and the manner in which the company takes steps to bring in changes in the systems and the performance of the business to delineate the different level of clean practices rather than focusing on the profitability of the business. Gregory (2018) stated that the profitability of the business is an capitalist approach that is supported through compromising the ethical needs of the organization to according to the welfare of the people. The key elements of the change in the functioning of the organization as per the goals of the organization is dependent on the identification of the ethical issues that are faced by the company and the manner in which the issues can be resolved to bring forth changes in the systems of the business. Dion (2012) delineated that the utilitarian approach of the organization helps the same in identifying the different issues that are faced by the organization relating to the ethical backdrop. The utilitarian approach helps ion identifying the right and wrong actions of the business depending on the outcomes that the actions will bore in the future. It depends on the futuristic predications of the actions that are undertaken by the management of the business to bring forth changes in the systems of the business in the market. The key elements of the change in the systems of the business will be dependent on the functioning of the organization through the prediction of the outcomes that might affect the functioning of the organizations.
Importance of ethical considerations in maintaining CSR efforts and goodwill
On the other hand, the utilization of the virtue theory helps in mitigation of the issues as the theory emphasizes on the duties and responsibilities that affects the functioning of the business in the market. Crane and Matten (2016) stated that the proper functioning of the organization in the market is dependent on the ethical considerations and the manner in which the organization brings in different levels of changes depending on the duties and responsibilities of the organization that will bring forth positive outcomes. Hartman, DesJardins and MacDonald ( 2014) stated that the proper functioning of the organization is dependent on the adherence to the ethics that governs the performance of the business in the market.
The company, PepsiCo faced different ethical dilemmas based on the beverage quality and the quality of the packaging material that was used by the business to cut the costs. The higher sugar levels of the carbonated drinks have affected the health of the consumers adversely. It has caused different health ailments like obesity, diabetes and the like which has affected the general lifestyles of the people. On the other hand, the lower bone density and the other ailments that are faced by the consumers who intake the carbonated flavored drinks was researched to be growing in numbers (Hartman, DesJardins & MacDonald, 2014). The report caused serious damage to the functioning of the organization and thereby affect the goodwill of the organization in the market. The key elements of the change in the systems of the business is affected through the compromise of the standards of the beverage quality that affected the functioning of the business in the markets (The Search for Hidden Figures., 2018). On the other hand, the utilization of the non-biodegradable plastic material has affected the ethics of the organization as the impact of the over usage of the plastic would result to adverse outcomes on the environment. It affected the CSR ratings of the organization while operating in the market depending on their objectives to grow in the international markets. The different outcomes of the organizational undertakings are identified through the application of the utilitarian approach, which affected the functioning of the business in the market.
The ethical considerations that are faced by PepsiCo are dependent on the quality of the products and the manner in which it affects the health and the wellbeing of the consumers largely. The different considerations of the business is dependent on the identification of the issues and the manner in which the company might take actions to resolve the issues that are faced by the same in the market. The compromise of the goodwill of the business is dependent on the factors of the change in the systems and the performance of the business in the market. The ethics of good work and the manner in which the ethics can be applied to the functions of the business helps in maintaining the different levels of change in the performance of the business.
Significance of effective leadership and ethical decision-making process
The current CEO of the organization PepsiCo is not only famous not only for her effective leadership style but also for the ethical decisions made by her. Many scholars are of the opinion that the effective leadership style of Nooyi and the “ethical decision making” process used by her are the key reasons for the considerable success gained by the organization under discussion here in the recent times (Hartman, DesJardins & MacDonald, 2014). As already mentioned the organization is one of the largest soft drink and beverage manufacturing organization of the world (Hartman, DesJardins & MacDonald, 2014). However, it is generally seen that the products as well as the services offered by the organization though very popular among the customers from the different parts of the world poses a considerable amount of health risks to the customers who take the help of these products and services (Crane & Matten, 2016). It is significant to note that “the number of people with diabetes has risen from 108 million in 1980 to 422 million in 2014” (Crane & Matten, 2016). Furthermore, currently more than 13% of the population is suffering from the problem of obesity (Crane & Matten, 2016).
Many scholars are of the opinion that the soft drinks as well as the beverages provided by the various beverage industries of the world are one of the main reasons for the increasingly number of health risks faced by the various people of the world (Crane & Matten, 2016). Therefore, it would be apt to say that this particular phenomenon acted as a kind of “non-market risk” to the organization under discussion here. Therefore, the CEO of the organization PepsiCo, Indra Nooyi took the decision in the 1990s decided to remove the products which posed a high health to the customers who used to take the help of the products offered by them (PepsiCo, 2018). Therefore, with the objective to provide better quality healthy products to the customers the CEO of the organization in the 2000s introduced new kinds of products, namely, “good-for-you products, including Quaker Oats, Naked Juice, and Tropicana orange juice” apart from removing the unhealthy ones (PepsiCo, 2018). In addition to these, Nooyi also reallocated the priorities of the organization and it is a reflection of this particular fact the organization started taking the help of recyclable materials for the process of the packing of the products as well as the services offered by the to the customers (PepsiCo, 2018).
Health risks associated with products and services offered by PepsiCo
The changing world of contemporary business has made it imperative for the various organizations to reconsider the policies followed by them. A recent trend seen in the business world is the fact that in addition to focusing on the means by which the various organizations can enhance their profit the organizations also focus on the means by which they can make a positive contribution towards the cause of the environment as well as the community from which they derive the majority of the resources needed for the process of their business (Tota & Shehu, 2012). It is a reflection of this particular fact that the strategies of “Sustainable approach” as well as “Stakeholders approach” have gained a considerable amount of importance in the recent times (Hartman, DesJardins & MacDonald, 2014).
The strategy of stakeholders approach focuses on maximizes or prioritizing the needs of the various stakeholders who are reacted to the organization (Tota & Shehu, 2012). It is generally seen that the top priority of the stakeholders related to a particular organization is make a positive contribution towards the cause of the environment. Furthermore, the sustainable approach focuses on the concept of gaining “sustainable competitive advantage” through ethical means (Tota & Shehu, 2012). Therefore, it would be apt to say that the above mentioned factors has made it imperative for the various organizations to take the help of various ethical theories.
The ethical decisions of Nooyi came under much criticized and many people even went to extent of saying that the ethical decisions made by Nooyi would the reason for the failure of the organization under discussion here (Gregory, 2018). It is significant to note that most of the business organizations of the world including the organization PepsiCo follow the “concept of Kantianism” which believes in the concept that the “end justifies the means which has been taken to achieve that particular end” (Gregory, 2018). Thus, it is seen that the earlier leaders of the organization used to justify the unethical practices of the organization on the basis of this particular theory. However, in the present day business world it is seen that another ethical theory has gained a considerable amount of significance (Friedersdorf, 2014). The “theory of Utilitarianism”, on the other hand, believes in “taking the help of the kind of actions or activities which is likely to cause the maximum amount of benefit or utility to the maximum number of people” (Friedersdorf, 2014).
The decision of Nooyi to remove the unhealthy products as well as services provided by the organization can be explained on the basis of this particular theory of ethics. The decision of Nooyi also finds adequate support from the “virtue theory of ethics” which articulates the need for following a virtuous course of action (Friedersdorf, 2014). The decision of Nooyi when seen in the present day context and especially in the light of the recent success attained by the organization would seem to be a completely rational one. Many scholars are of the opinion that the ethical decision of Nooyi not only helped the organization to mitigate the high amount of “non-market risks” which the organization was facing at that particular point of time but also helped in a significant manner to enhance the brand image of the concerned organization (Stanford, 2012).
The decision of Nooyi can also be justified on the basis of the concept of ethical consumerism. In the present times it is seen that the various customers have become much more conscious about not only the product or the service which they take the help of but also about the way that particular product or service has been manufactured (Dion, 2012). Therefore, it would be pat to say that the ethical decisions made by the CEO of the organization Nooyi has contributed in a significant towards the creation of a positive brand image for the organization which indirectly has contributed in a significant manner towards the success which the organization in the recent times (Dion, 2012).
The recommended actions that might be undertaken by the business are as follows:
- The introduction of the fruit based drinks that help in bringing forth changes in the product offerings of the organization. The fruit drinks with lower sugar and carbon contents will be helping the organization to bring in changes in the situation of the business in the market. This introduction of healthy drinks will be helping the organization to target the health conscious consumers in the market. It will be helping the organization to bring forth positive changes in the structure and the performance of the business in the market.
- The company can also take steps to reproduce the containers, which are biodegradable in nature as it will be helping the organization to adhere to the changes in the systems of the business in the market. The biodegradable plastic materials will be helping the organization to bring in rapid changes in the systems of the business depending on the needs of the environment in the market.
Conclusion
Therefore, from the above analysis it can be stated that the proper functioning of the organization can be initiated through the identification of the ethical considerations and the manner in which they helps in making the organization grow in the international markets. The key measures that are undertaken by the business help in maintaining the different levels of change in the systems of the business in the market. The adherence of the organization to the outcome of the processes and thereby planning the operations helps in maintaining the level of ethics in the organizational structure.
References
Crane, A., & Matten, D. (2016). Business ethics: Managing corporate citizenship and sustainability in the age of globalization. Oxford University Press.
Dion, M. (2012). Are ethical theories relevant for ethical leadership?. Leadership & Organization Development Journal, 33(1), 4-24.
Friedersdorf, C. (2014). Why PepsiCo CEO Indra K. Nooyi Can’t Have It All. Atlantic.
Gregory, J. R. (2018). Performance with purpose: ThePepsiCo challenge. Journal of Brand Strategy, 6(4), 328-355.
Hartman, L. P., DesJardins, J. R., & MacDonald, C. (2014). Business ethics: Decision making for personal integrity and social responsibility. New York: McGraw-Hill.
Stanford, D. (2012). Indra Nooyi rediscovers the joy of Pepsi. Bloomberg Business, 2.
The Search for Hidden Figures. (2018). PepsiCo. Retrieved from https://www.pepsico.com/
Tota, I., & Shehu, H. (2012). The dilemma of business ethics. Procedia Economics and Finance, 3, 555-559.
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