Using Three Ethical Principles of the Global Business Standards Codex (GBSC), Evaluate the Fairtrade Practices of the Fresh Food Industry.
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| Order Instructions: using three of ethical principles of the global business standards codex, two arguments, one counter argument to write. Ethical principles of the global business standards codex : 1 – Fiduciary Principle: Is concerned with money and finances Each officer has a legal fiduciary duty to act in the best interests of the stakeholders and other employees within the firm. An implied fiduciary duty for every employee to act in a way that generates positive benefits for the firm. � Examples: conflicts of interest, good faith efforts for carrying out responsibilities. Prudence with the company�s resources, loyalty. 2 – Property Principle: � Based on the belief that every employee should respect property as well as the rights of the owners of the property. � Expected that the employee should be a good steward to the resource that he/she has access to. � Examples: theft, misappropriation of funds, wasting resources, misappropriation of intellectual property 3 – Reliability Principle: � Based on the belief that it is the employee�s responsibility to honor the commitments he or she has made to the firm. � Examples: breaching a promise or contract, not fulfilling a promised action, ensuring that suppliers and other business partners are paid in a timely manner. |
Introduction
Codex was established by two United Nation’s Organization, FAO (Food and Agriculture Organization) and the World Health Organization (WHO) in the year 1963. Codex is the organization that establishes the international standards for food. Codex provides the guidelines that promote and implement the fair trade practices in the food trade. The principles of Global Business Standards Codex govern the entire fair trade practices in all business universally. This paper evaluates the fair-trade practices in the fresh food industry especially in the context of the value chains that enhance the supermarket business operations. Supermarkets provide useful and informative materials on fair and ethical trade practices that complement the basic concepts quality as applied in the convention theory. (Gereffi 1994)
Fairness Principle
Fairness principle stems from fair trade which refers to a trading partnership that’s based on transparency, dialogue, respect and equity in the international trade. The association of fair trade major objective is to facilitate fairness even to the small traders or producers in the international market by providing guarantees and fair trading terms and prices, access to credit, stable supply relationships and other fair conditions for their produce in the international market. (Smith & Barrientos 2005) Large multinational organizations have been known to frustrate the growth of smaller companies in the emerging markets in the hope of minimizing any threats to their business operations and profitability. (Vorley 2004)
Fairtrade is principally concerned with business terms and prices between the producers and buyers, the ethical trade main concern is the working environment of the workers. The conditions like favorable working environment, good ventilation and adequate sunlight or visibility. Ethical trade ensures that the employers provide safe and comfortable working environment for all the employees. (Lee & Billington 1992) For many years, workers in the supermarkets were overworked and their counterparts in the factories worked under very poor working conditions like in the agricultural, garment and foot-ware industries. (Dolan & Humphrey 2004)
The impersonal capitalist markets and the characteristics of the unfair trading practices that dominated the international market in the early 1960’s that marginalized most producers were greatly challenged by the introduction of the fair-trading practices. (Murray & Raynolds 2000)
Reliability Principle
Reliability principle is hard to address when the buyers exert pressure on the suppliers to deliver goods on time with such instruments as insecure supply contracts, shortening lead times, falling prices and irregular orders of goods. These suppliers offset their costs by passing on the loses to the poor workers who have to work through short term contracts, increased workloads, low wages and impromptu long periods of work with unpredictable rates of overtime compensation. These practices are in direct violation of the codes that buyers and suppliers are supposed to promote and which the buyers insist that the suppliers must adopt and implement positively. The labor laws that the suppliers are supposed to honor are difficult to implement because of the harsh trading terms that the buyers insists on the suppliers to adopt. (Halbenwang 2004)
For many years, the South African Grocery market favored large and well established suppliers whose reliability can’t be matched with the small suppliers hence the ineffectiveness in the application of the equity principle. (Louw, Vermeulen, Kirsten & Madevu 2007) To guarantee the small supplier’s consistency on food quality, safety and volumes is very difficult due to competition from the large producers hence the apparent discrimination. (D’Haese & Huylenbroeck 2005)
However, the brands that are popular and available are not necessarily the best in terms of quality as most consumers rely heavily on the information available from the media through advertisement and other sources of information. Smith & Barrientos (2005) contends that the information available to the public is mostly limited and the imbalance that exists between the consumers and the retailers is associated with the search costs that may be prohibitive and unaffordable hence the customers may not be in a position to discover and also compare the food prices and services at all levels of each individual value chain. The brand loyalty ones created can attract more customers by virtue of the market power that the brand name has on the consumers.
The vertical market power that exists in big chains and brand names makes the fair trade play second fiddle as they can use their economies of scale to influence the prices that are payable by final consumer and also they can minimize or influence the prizes negatively that are receivable by the raw material suppliers. The Australian market has positive attributes but double marginalization arises where two companies that are vertically adjacent can seek or scheme to maximize their profits. (Cotterill 2006)
These activities may raise the prices of the retail markets, lower the supply profit or limit the final output. These inadequacies can be addressed by applying the vertical integration where a particular chain cannot be allowed to buy all the suppliers or allow a supermarket to dominate and monopolized the sales of a supplier. The private label companies can be utilized to minimize double marginalization.
Dignity Principle
The principles of human rights have to be adhered to in an organization. The rights of the employees to have a safe and secure working environment that is well ventilated and well lit is mandatory. The dignity of the workers have to respected by offering competitive compensation and also treating all the employees fairly without any discrimination based on gender, color, race, disability or nationality. According to the fair trade practices, all the employees should be compensated adequately and their working environment and conditions must be acceptable and standardized. The workers are entitled to a safe working environment that is well lit and ventilated. (Young 2003) Fair trade ensures that the employers provide safe and comfortable working environment for all the employees. For many years, workers in the retail outlets and supermarkets were overworked, underpaid while others in the factories worked under very poor working conditions like in the shoe factories, agricultural sector and the shoe industries. All the employees have a right to a dignified treatment under the fair trade agreements.
For the consumers, the fair trade allows the consumers to have an opportunity to choose branded products from the international markets. The small scale producers and suppliers are given equal opportunities to participate in the market and trade openly with other big players in the market. The multi-actor approaches as illustrated by Louw et al (2007) confirms the importance of the fair trade practices that aim at reducing the bottlenecks that are in the supply chain and which promote the collective actions that facilitate equity and competitiveness.
References
Murray D, Raynolds L., 2000, Alternative trade in bananas: obstacles and opportunities for progressive social change in the global economy. Agriculture and Human Values 17: 65–74.
Gereffi G., 1994, Capitalism, development and global commodity chains. In Capitalism and Development, Sklair L (ed.).Routledge: London; 211–231.
Vorley, B., 2004, Food Inc. Corporate Concentration from Farm to Consumer. UK Food Group: London.
Young, G., 2003, Fair Trade’s Influential Past and the Challenges of its Future. King Baudouin Foundation: Belgium.
Dolan C, Humphrey J., 2004, Changing governance patterns in the trade in fresh vegetables between Africa and the United Kingdom. Environment and Planning 36(3): 491–509.
D’Haese, M & Van Huylenbroeck, G., 2005, The rise of supermarkets and changing expenditure patterns of poor rural households: a case study in the Transkei area, South Africa. Food Policy, 30: 97–113.
Louw, A., Vermeulen, H., Kirsten, J. and Madevu, H., 2007, Securing Small Farmer Participation in Supermarket Supply Chains in South Africa, Development of Southern Africa, 24:4, 539 – 551.
Smith, S., & Barrientos, S., 2005, Fair Trade and Ethical Trade: Are There Moves Towards Convergence, Sustainable Development, Sust, Dev. 13, 190 – 198. Wiley InterScience, online publication, www.interscience.wiley.com. Doi: 10.1002/sd.277
Halbenwang, B.B (Ed.) 2004, Urbanisation trends in South Africa. Social Environment, Vol. 9, April. Institute for Futures Research, University of Stellenbosch.
Lee, H.L. & Billington, C., 1992, Managing supply chain inventory: pitfalls and opportunities. MIT Sloan Management Review, 33(3): 65.
Cotterill, R.W. (2006). Antitrust analysis of supermarkets: global concerns playing out in local markets, The Australian Journal of Agricultural and Resource Economics 50, 17–32.
