Ethical Dilemmas – Creative Commons – Case Study
In corporate life as well as in personal life, people are faced with various ethical dilemmas. How we behave and what decision we make in these situations are influenced by several different factors, like social norms and objectives. In this essay I will look deeper in to 3 cases; two company based cases and 1 individual case by choosing one stakeholder as the decision maker. By looking from the decision makers’ perspective, I will try to gain more understanding and knowledge of the complexity that is ethical decision making today.
The first case I will look into, is the case of Dov Charney (former CEO of American Apparel) versus Irene Morales, former store manager who was sexually harassed by her boss. For the second case I chose the false marketing of Coca- Cola owned Glaceau Vitamin Water. The Centre for Science in Public Health field a lawsuit against Glaceau for their misleading marketing in 2009. My third and last case, will examine Chiquita International and their cooperation with paramilitary troops in Colombia that lasted for several years. The company paid huge sums for protection. Case 1 – Sexual Harassment
The US clothing manufacturer American Apparel has been the subject of controversy on several occasions, not only because of their highly sexual advertisements but their now former CEO Dov Charney and the sexual harassment cases held against him. As stated in an article by The Guardian, ever since starting to work at a New York based American Apparel store in 2007, Irene Morales continuously confronted sexual harassment in various forms and psychological abuse from the CEO of the retail chain, Dov Charney. Almost immediately after her 18th birthday, Morales was personally invited to Charney’s apartment.
There she was held by force for several hours while preforming sexual acts against her own will. After an eight month period of ongoing harassment, Morales resigned from the company and sued Dov Charney for 260 million dollars. While resigning from American Apparel, Morales had signed an agreement stating that she had no pending claims against the company. As a reaction against the lawsuits, launched by Brooklyn Supreme Court on behalf of the victim, American Apparel used this particular contract signed by Morales to file a lawsuit against the victim (Adams, R. 2011). Sexual harassment in the workplace is not an unusual event.
Some estimates indicate that the number of women facing sexual harassment on some level in the workplace is reaching one out of every two women (Schneider et al, 1997). Keeping that in mind, it is easy to assume that the harasser would have done similar things to other employees. By choosing to confront the harasser in a public way, Morales made it easier for other potential victims to come out as well. The other alternative outcome could have been to keep quiet, thus letting the harasser get away with his actions while potentially closing the door for other women to step forward.
While the dilemma whether to confront the harasser or not might have been difficult to solve, the goal of the victim is relatively easy to establish. By taking legal action, Morales was pursuing justice for herself and give the harasser what he deserved. Although it would be easy to assume that the case would mainly affect the two parties involved, the case certainly had an impact on several other stakeholders. Among them, the company itself with the interest of making profit and keeping a clean image also the consumers and brand users were touched by this harassment case.
Consumers hearing about the case, might choose not to support a store chain that has been linked with a sexual harassment suit, thus making a difference in sales of the company. As an employee of American Apparel, the victim had the right to freedom from discrimination, covering the issue of sexual harassment (Crane and Matten, 2010, p. 293) which was severely violated when the harasser forced himself on her. Surely the psychological trauma and emotional fear caused by taking these rights away from the victim, was one of the factors influencing her behaviour and decision.
The behaviour of the harasser is complicated to understand, since it is contradicting the social norms that are ruling in the workplace and society itself, which is to condemn sexual harassment. The situation could have been avoided if the harasser, in this case the company CEO, would have kept a professional relationship between himself and the employee or at least stopped the harassment earlier. The harasser should not have taken the advantage of his position as her boss and there by abusing is power.
The victim should could have come forward with the case already form the beginning and inform higher level staff about the situation. Case 2 – False marketing of VitaminWater The Coca-Cola owned, hugely successful Glaceau VitaminWater brand faced their first lawsuit launched by the Centre of Public Interest in 2009 on the behalf of consumers, opposing the company’s use of false statements on their product labelling. The focus was especially set on the claims that the beverage would ‘promote healthy joints, support optimal immune function, and reduce the risk of eye disease’.
As stated in the article, the company reacted by altering the ingredients, replacing the fructose sugar with stevia. The new taste did not reach the favourable outcome among the consumers which led the company to return to the original recipe. As the class action suits against the company increased and soon was turned into a single case, Coca-Cola had to eventually give in on a $1,2 million settlement (Ross, 2015). The company also agreed to change and add some statements on the bottles, such as adding the words “with sweeteners” (Associated Press, 2015).
The way Vitamin Water is marketed in not unusual, when looking at the distortion of truth. As stated by Crane and Matten, even though consumer rights are being preserved by various regulations like UN Guidelines on Consumer Protection and EU regulations, companies are still misleading the consumers with perhaps not entirely false information but altered truths (Crane & Matten, 2010, pp. 342-343). Looking from the decision makers, the company’s, point of view, it is crucial to note the dilemmas and ethical issues they were facing.
First of all, Vitamin Water contains 32g sugar (cane sugar and fructose) (Vitamin Water, 2014) therefore it is safe to state that the drink has a high level of sugar. Vitamin Water was and still is popular, growing since 2007 to $ 1 billion in sales by the year 2010 (Ross, 2015) with a marketing strategy promoting the health benefits of the drink. This marketing method is controversial considering the recommendation made by the American Heart Association saying that the maximum amount of daily sugar intake should be 25g for women or 6 teaspoons (American Heart Association, n. . ), thus is the drink not promoting health.
It is obvious that if the decision maker would have labelled the bottles truthfully, stopped advertising the drink as healthy and making it easier for the consumer to get the right information, sales would have taken a turn for the worse while damaging the image. The goals of the company are not hard to recognize. As any other given firm, the company wanted to keep up the sales and make profit. In this case, sell the product under false assumptions and keep up the healthy image.
As previously stated, the company faced lawsuits which led the sales to drop between the years 2012 and 2013 by over a quarter (Ross, 2015) In this case there are several stakeholders to take into count. Looking from the decision makers point of view, the main value is to maintain the picture the consumers are expecting. When observing the consumers side, the value lies in the righteous marketing and getting the relevant information about the given product. CSPI, being the party that first launched the lawsuit has in interest to protect the customers as far as labelling and marketing is considered.
Taking a social perspective, the norm that is mutual for the last two stakeholders mentioned is the value of honesty. One of the major factors influencing company level behaviour is the over-all strive of healthier living that consumers are aiming for. Therefore, marketing the brand as such, is helping the consumers achieve these goals while the company is gaining profit. As in the other cases, the company could have chosen a different path: to label their product in a truthful way from the beginning. By doing so, they could have avoided the lawsuits made against them and not been accused of false marketing.
In another scenario, Coca-Cola could have changed their marketing tactics. Instead of using phrases that indicated the health benefits of the drink, they could have used different statements that targeted another group of people. Although these two options might seem like less profitable alternatives, these could have saved the company the contaminated image. Case 3 – Chiqiuta Brands International and AUC Since 1899 Chiqiuta Brands International has been conducting business in Colombia, with a well-established banana production.
As the company got a new board of directors in 2002, replacing the old one after nearly going bankrupt, it was soon revealed to the board what was going on behind the scenes. On the 3rd of April, the General Counsel exposed the protection payments made to the notorious paramilitary group, AUC (Autodefensas Unidas de Colombia) to the new board. The board summoned a meeting with assistant attorney general in charge of the Criminal Division of the U. S. Department of Justice (DOJ) and relevant staff on the 24 of April 2003 to discuss the issue.
The problems were thoroughly debated and the decision to secure the workers by continuing these payments was made (White et al. , 2012). According to the Guardian, the first suspicion aroused in 2001 when former general counsel noticed some unusual payments done by the company to a third party. The payments were not acknowledged within the company before that time. This started an investigation and soon the truth was out. Prosecutors stated that Chiquita had made payments worth almost 1 million dollars to AUC between the years 1997 up until 2004.
After confessing that these payments were indeed made, the US department of justice set up a deal, making the Chiquita Brands International to pay a fine of 25 million dollars (The Guardian, 2007). When looking at the events that have occurred in this case, it is logical to note that the ethical dilemmas and issues are highly complex. Not only because there are human lives at stake, which makes the problems extremely serious but also because it involves two nations and a huge international corporation.
Should the company keep up their involvement with this guerrilla military group, although it is against laws of the United States, and in that way keep employees safe. At the same time, United States had agreed to help the Colombian government to disarm the paramilitary group in question. As stated in the case study, ‘Hills had thought the DOJ understood Chiquita’s position and its concern for employee safety should the payments stop; however, complicating political circumstances surrounding the payments provided numerous additional challenges’ (White et al, 2012, p. 6).
It is important to note that not only the workers, the company, the governments of the given countries are stakeholders, but also consumers of the product. Consumers are making ethical decisions every day, like choosing to buy Chiqiuta bananas, regardless of the ongoing cooperation with AUC. Looking from the United States governments point of view, their values lies within the frames of justice and safety. As stated by White et al (2012, p. 5), since September 10th 2001, AUC has been considered as a foreign terrorist organization, thus making it illegal for the United States or any U. S. based companies or representatives thereof to conduct business with AUC or any such labelled organizations. ’
The company itself and their board members’ (both new and old) assumingly had the company’s image and profitability in interest while dealing with the given ethical dilemmas. At the same time the workers of Chiquita Brands International, facing the everyday reality of the working environment, surely had their own safety at high interest. As stated by Crane and Mattens, the employees of a company should have the right to healthy and safe working conditions (Crane & Mattens, 2010, p. 93).
There were several different factors influencing the behaviour of the company. First of all, it is necessary to note that Colombia, being the place of the enterprise since 1899 (White et al. , 2012), has gone through a rough history, especially with the AUC right-wing paramilitary that has been active since 1980’s (BBC, 2013). The consequences of stopping these protection payments, might have been dangerous and ended up in sacrificing lives and causing trauma for the families involved.
Although the decision made by Chiquita Brands International was in conflict with one of the most crucial and obvious social norms, not breaking the law, it is not impossible to see why the company decided to act like they did. Secondly, the potential loss of customers and therefore profit, if the truth would have been set out earlier is certainly a big factor influencing the behaviour of the company. It is not difficult to recognize the fear that the previous board and newly elected board was facing.
Setting aside the option of moving the place of business to another country, there would have been an alternative option, although it might have been a risky one: to keep the production in Colombia, but refusing to pay AUC in order to get protection for the workers. What the consequences of that alternative might have been is impossible to predict, but that certainly would have saved the company lawsuits and damaged reputation. Conclusion The 3 different cases examined in this paper, are examples of various ways companies can behave unethically.
Although the cases I have chosen for this text are seemingly different, they all still share mutual factors for example, each case, including the individual one, have several stakeholders that are directly or indirectly influenced by the decisions that are made by the corporation. After writing this paper, I have truly realized the importance of business ethics studies in order to prevent harmful situations in the future. By looking deeper in to all cases with the help of the text book and various forms of publications, I have gained more knowledge and insight into the world of corporate life and the grey area that is business ethics.