Chapter 9 'Think Theory' answers

Suppliers, Competitors, and Business Ethics



What are the ethical issues when an organization (mis)uses its power to promote a good cause, such as by imposing its own ethical code on its supplier, even if it is not entirely suitable or relevant to them?

Beyond the ethical issues related to the use of coercive power in making individuals or organisations do what they do not want to do, there are a number of possible of other ethical issues which may arise. For example, where an organization imposes its own values on another, it may not be giving due regard to the societal or religious principles which it might be forcing the organisation to contravene. Furthermore, the organization exerting their power may cause the organization which is being influenced to unnecessarily incur cost to comply, as well as the principles or values which the organization is imposing being unsuitable to context of the supplier organisation. It also must be considered if the values that the organization are trying to impress will achieve what they wish to, and the ethics of the tactics they are using to force another organisation to adhere to what they want, for instance threatening penalties for non-compliance.


How would you apply deontological reasoning to the question of supplier loyalty? Does this offer, in conjunction with the consequentialist argument above, a sufficient rationale for judging the actions of companies such as General Motors to be ethical or unethical?

Deontological reasoning is interested in the principles behind an action, rather than its consequences. A theory of duties is interested in consistency and dignity, and whether specific actions would be acceptable to all. A rights perspective is concerned with ensuring that basic rights are respected and protected. A justice approach is concerned that people are treated fairly and get what they deserve. None of these is really applicable to the question of supplier loyalty, except for the general point that companies should treat suppliers fairly and with dignity. A deontological position based on relationships and responsibilities, on the other hand, values relationships highly, and would suggest that supplier loyalty is desirable. Students will need to make their own decisions about whether such reasoning offers sufficient rationale for judging the actions of firms like General Motors (GM) to be ethical or unethical.


To what extent is it appropriate to protect local businesses from ‘unfair’ competition from MNCs? Consider this situation from the perspectives of theories of justice and utilitarianism.

A justice-based approach would seek to answer the question with reference to the fairness of the competition. In particular, the question would be whether there was procedural justice. Applying Rawls’s theory of justice would lead to the key question of whether any competitive inequalities were arranged so that the least advantaged were to benefit. A utilitarian approach would be more interested in the outcome. Thus, if allowing MNC competition with local business would lead to more innovation, better products, lower prices and economic growth, then a utilitarian would argue against protection. On the other hand, if MNC competition crowd were likely to lead to social and economic decay, then a utilitarian would likely argue in favour of protecting local businesses.


Fair trade is presented as a fairer means of doing business – benefits are distributed more equally, and basic rights are protected. However, some critics have argued that such schemes might be deemed unethical. What arguments might there be against fair trade practices, and which theoretical bases do you think they are derived from?

Consequentialism – critics argue that corporations gain the most from benefit from Fair trade and not farmers, and therefore the system does not promote the highest possible positive benefit or utility.

Egoism – consumers in countries argue that Fair trade unfairly rises the prices that they have to pay for certain goods and are thus bearing the weight of ethical production, instead of corporations, hence the cost is unfairly burdened upon them.

Ethics of duty – critics of Fair trade argue that the nature of the system means that much corruption occurs, therefore contravening Kant’s principles of consistency and universality.