Group Assignment Business Ethics

Executive Post Graduate Diploma in International Business (VSAT:2011-12)

GROUP ASSIGNMENT On
BUSINESS ETHICS

BY
HARPREET SINGH BOPARAI (ROLL No. 29 Rajiv Kumar (Roll No. 52)

EPGDIB-VSAT 2011-12

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Group Assignment Business Ethics

Executive Post Graduate Diploma in International Business (VSAT:2011-12)

PART I
Constitution Acts (Laws) against Unethical Practices
1. Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995
The Act has been enacted under Article 253 of the Constitution. It gives effect to the proclamation on the full participation and equality of the persons with disabilities in the Asian & Pacific Region and provides for their education, employment, creation of barrier free environment, social security, etc. The implementation of the Act requires a multisectoral collaborative approach by the appropriate governments, including various Central Ministries/Departments, States/Union Territories, local bodies. "Disability" means blindness; low vision; leprosy-cured; hearing impairment loco motor disability; mental retardation; mental illness Key aspects of this Act Preliminary This Act may be called the Persons With Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995. It extends to the whole of India except the State of Jammu and Kashmir. The Central Coordination Committee The State Coordination Committee Prevention and Early Detection of Disabilities Education Employment Affirmative Action Non-Discrimination Research And Manpower Development Recognition of Institutions for Persons with Disabilities Institution for Persons with Severe Disabilities The Chief Commissioner and Commissioners for Persons with Disabilities
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Group Assignment Business Ethics

Executive Post Graduate Diploma in International Business (VSAT:2011-12)
Social Security Miscellaneous

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Group Assignment Business Ethics

Executive Post Graduate Diploma in International Business (VSAT:2011-12)
2. The Consumer Protection Act, 1986
The Act seeks to provide for better protection of the interests of consumers and for the purpose, to make provision for the establishment of Consumer councils and other authorities for the settlement of consumer disputes and for matter connected therewith. It seeks, inter alia, to promote and protect the rights of consumers such as a) the right to be protected against marketing of goods which are hazardous to life and property; b) the right to be informed about the quality, quantity, potency, purity, standard and price of goods to protect the consumer against unfair trade practices; c) the right to be assured, wherever possible, access to an authority of goods at competitive prices; d) the right to be heard and to be assured that consumers interests will receive due consideration at appropriate forums; e) the right to seek redressal against unfair trade practices or unscrupulous exploitation of consumers; and right to consumer education. Key Features of The Act Enacted to provide for the better protection of the interest of consumer Act applies to whole of India except Jammu and Kashmir Chapter I, II and IV came into force on 15.4.1987. Chapter III came into force on 1.7.1987 The act was amended in 2002 and the amendments came into force w.e.f. 15th March 2003. Consumer Dispute Redressal Agencies A Consumer Dispute Redressal Forum at the District level. A Consumer Dispute Redressal Commission at the State level. A National Consumer Dispute Redressal Commission at national level. Jurisdiction Forum / Commission District Forum State Commission National Commission
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Where the value of the goods or services and the compensation, if any claimed, Does not exceed Rs. 20 lakhs Rs. 20 lakhs and above but not exceeding One Crore Above One Crore
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Besides, State and National Commission have appellate jurisdiction also. Filing of Complaints A complaint may be filed by The consumer to whom the goods are sold or services are provided Any recognised consumer association One or more consumers with same interest The central government or state government Sr. No. 1) 2) 3) 4) Value of Goods / Service and Compensation Upto Rs. 1 lakh rupees Rs. 1 Lakh and above but less than Rs.5 lakhs Rs. 5 Lakhs and above but less than Rs. 10 lakhs Rs. 10 lakhs and above but less than Rs. 20 lakhs Amount of Fees Rs. 100 Rs. 200 Rs. 400

NOTE ON CONSUMER PROTECTION ACT, 1986 A person may be consumer of goods, or services. When I purchase a fan, a gas stove or a refrigerator, I could be the consumer of goods. When I open a bank account, take an insurance policy, get my car repaired, I could be the consumer of services. The consumer protection Act, 1986 tries to help a consumer when for example, the goods purchased are defective or the services rendered to him are subject to so deficiency. Prior to the consumer Protection Act, 1986 for any consumer complaint one had to go to an ordinary Civil Court. He had to engage a lawyer, pay the necessary fee, and be harassed for years or decades before any outcome, positive or negative, was there in that litigation. Under the Consumer Protection Act, no Court fee has to be paid and the decision on the complaint is much quicker, as the Court can evolve a summary procedure in disposing off the complaint.

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Group Assignment Business Ethics

Executive Post Graduate Diploma in International Business (VSAT:2011-12)
3. The Competition Act, 2002 (Prohibition of Certain Agreements, Abuse of Dominant Position And Regulation of Combinations)
An Act to provide, keeping in view of the economic development of the country, for the Establishment of a Commission to prevent practices having adverse effect on competition, to promote and sustain competition in markets, to protect the interests of consumers and to ensure freedom of trade carried on by other participants in markets, in India, and for matters connected therewith or incidental thereto. 1) The Chairperson and other Members of the Commission shall be appointed by the Central Government from a panel of names recommended by a Selection Committee consisting of the Chief Justice of India or his nominee ---- Chairperson; the Secretary in the Ministry of Corporate Affairs ---- Member; the Secretary in the Ministry of Law and Justice ---- Member; two experts of repute who have special knowledge ---- Members. of, and professional experience in international trade, economics, business, commerce, law, finance, accountancy, management, industry, public affairs or competition matters including competition law and policy 2) The term of the Selection Committee and the manner of selection of panel of names shall be such as may be prescribed. Orders by Commission after inquiry into agreements or abuse of dominant position direct any enterprise or association of enterprises or person or association of persons, as the case may be, involved in such agreement, or abuse of dominant position, to discontinue and not to re-enter such agreement or discontinue such abuse of dominant position, as the case may be; impose such penalty, as it may deem fit which shall be not more than ten per cent. of the average of the turnover for the last three preceding financial years, upon each of such person or enterprises which are parties to such agreements or abuse: [Provided that in case any agreement referred to in section 3 has been entered into by a cartel, the Commission may impose upon each producer, seller, distributor, trader or service provider included in that cartel, a penalty of up to three times of its profit for each year of the continuance of such agreement or ten per cent. of its turnover for each year of the continuance of such agreement, whichever is higher.]

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Group Assignment Business Ethics

Executive Post Graduate Diploma in International Business (VSAT:2011-12)
direct that the agreements shall stand modified to the extent and in the manner as may be specified in the order by the Commission; direct the enterprises concerned to abide by such other orders as the Commission may pass and comply with the directions, including payment of costs, if any:; pass such other order or issue such directions] as it may deem fit.

Division of enterprise enjoying dominant position The Commission may, notwithstanding anything contained in any other law for the time being in force, by order in writing, direct division of an enterprise enjoying dominant position to ensure that such enterprise does not abuse its dominant position. Acts taking place outside India but having an effect on competition in India The Commission shall have power to inquire in accordance with the provisions contained in sections 19, 20, 26, 29 and 30 of the Act into such agreement or abuse of dominant position or combination if such agreement or dominant position or combination has, or is likely to have, an appreciable adverse effect on competition in the relevant market in India.

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Group Assignment Business Ethics

Executive Post Graduate Diploma in International Business (VSAT:2011-12)
4. The Securities And Exchange Board of India Act 1992
An Act to provide for the establishment of a Board to protect the interests of investors in securities and to promote the development of, and to regulate, the securities market and for matters connected therewith or incidental thereto. Functions of SEBI Board regulating the business in stock exchanges and any other securities markets; registering and regulating the working of stock brokers, sub-brokers, share transfer agents, bankers to an issue, trustees of trust deeds, registrars to an issue, merchant bankers, underwriters, portfolio managers, investment advisers and such other intermediaries who may be associated with securities markets in any manner; registering and regulating the working of 1[15][venture capital funds and collective investment schemes],including mutual funds; promoting and regulating self-regulatory organisations; prohibiting fraudulent and unfair trade practices relating to securities markets; promoting investors' education and training of intermediaries of securities markets; prohibiting insider trading in securities; regulating substantial acquisition of shares and take-over of companies; calling for information from, undertaking inspection, conducting inquiries and audits of the 2[16][ stock exchanges, mutual funds, other persons associated with the securities market] intermediaries and self- regulatory organizations in the securities market; performing such functions and exercising such powers under the provisions of the Securities Contracts (Regulation) Act, 1956(42 of 1956), as may be delegated to it by the Central Government; levying fees or other charges for carrying out the purposes of this section; conducting research for the above purposes;

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Group Assignment Business Ethics

Executive Post Graduate Diploma in International Business (VSAT:2011-12)
SEBI in the interests of investors or securities market, take any of the following measures, either pending investigation or inquiry or on completion of such investigation or inquiry, namely: suspend the trading of any security in a recognized stock exchange; restrain persons from accessing the securities market and prohibit any person associated with securities market to buy, sell or deal in securities; suspend any office-bearer of any stock exchange or self- regulatory organization from holding such position; impound and retain the proceeds or securities in respect of any transaction which is under investigation; attach, after passing of an order on an application made for approval by the Judicial Magistrate of the first class having jurisdiction, for a period not exceeding one month, one or more bank account or accounts of any intermediary or any person associated with the securities market in any manner involved in violation of any of the provisions of this Act, or the rules or the regulations made thereunder: direct any intermediary or any person associated with the securities market in any manner not to dispose of or alienate an asset forming part of any transaction which is under investigation.

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Group Assignment Business Ethics

Executive Post Graduate Diploma in International Business (VSAT:2011-12)

PART 2
Real World Cases of Corporate Unethical Practices

McDonalds Mclibel Case McDonald's Corporation v Steel & Morris, known as "the McLibel case" was an English lawsuit filed by McDonald's Corporation against environmental activists Helen Steel and David Morris over a pamphlet critical of the company. The original case lasted ten years, making it the longest-running case in English history Handing out leaflets on the streets was one of the main activities of the small activist group London Greenpeace, who'd been campaigning on a variety of environmental and social justice issues since the early 1970's. In the mid 1980's the group began a campaign focusing on McDonald's as a high profile organization symbolizing everything they considered wrong with the prevailing corporate mentality. In 1985 they launched the International Day of Action Against McDonald's, which has been held on October 16th ever since. In 1986 they produced a 6-sided factsheet called 'What's Wrong With McDonald's? - Everything they don't want you to know'. The leaflet attacked almost all aspects of the corporation's business, accusing them of exploiting children with advertising, promoting an unhealthy diet, exploiting their staff and being responsible for environmental damage and ill treatment of animals. The contested allegations made in the leaflet can be divided into seven broad categories: nutrition, rainforests, recycling and waste, employment, food poisoning, animals and publication buys from greedy rulers and elites and practices economic imperialism; wastes vast quantities of grain and water; destroys rainforests with poisons and colonial invasions; sells unhealthy, addictive junk food; alters its food with artificial chemistry; exploits children with its advertising; is responsible for torture and murder of animals; poisons customers with contaminated meat;
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Group Assignment Business Ethics

Executive Post Graduate Diploma in International Business (VSAT:2011-12)
exploits its workers and bans unions; hides its malfeasance

Meanwhile, McDonald's were busily suing (or threatening to sue) almost everyone who criticized them - from the BBC and The Guardian to student unions and green groups. They appeared to ignore the London Greenpeace campaign, and instead threatened a food cooperative called 'Veggies' in Nottingham, who were distributing the same leaflet. McDonald's then made an agreement with Veggies, accepting the circulation of the leaflet with some minor amendments to a couple of sections only. The company didn't even complain about the majority of the leaflet. Veggies continued distributing the leaflets in bulk. In 1989, as the campaign grew and was taken up by more and more groups around the world, McDonald's produced their own 'Mc Fact cards' detailing their position on many of the accusations made in the leaflet. They also decided to take extreme action against London Greenpeace. Between February and April of that year the court heard evidence on one of the most controversial allegations in the leaflet: that McDonald's are responsible for the destruction of rainforest in Central and South America to make way for cattle pasture. Witnesses appearing for the defense testified that they visited one of the particular areas in Brazil under contention 20 years ago and that it was rainforest then. The Judge says that this is the most important evidence heard so far on this issue.

It was a public relations disaster for McDonald's. The judge ruled that they had exploited children with their advertising, had produced misleading advertising, were culpably responsible for cruelty to animals, were antipathetic to unionization and paid their workers low wages. The major fallout of the case was that Ed Rensi, President of the McDonald's Corporation, had, along with his staff, been removed as Chief Executive following falling US market share, promotional flops and franchisee discontent.

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Group Assignment Business Ethics

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Wall Marts Case of Gender Discrimination

Wal-Mart was criticized for several anti-employee practices other than gender discrimination. In June 2001, employees accused the company of failing to record extra hours of work, altering time records, and preventing them from taking rest breaks in violation of federal labor laws. A lawsuit filed by Taylor Vogue and Sally Mussmann in June 2001, on behalf of Wal-Mart employees, stated that, "Wal-Mart gives its employees work assignments impossible to complete within scheduled hours, and then pressures the workers to complete them anyway through intimidation and threats of adverse employment consequences. At the same time, the staffers are prevented from clocking in extra hours worked." However, Wal-Mart denied the above allegations. Bill Wertz, WalMart's corporate spokesman, said, "The allegations here are completely contrary to WalMart policy. This is an issue that Wal-Mart feels strongly about." Defending its stand, the company spokesperson said that Wal-Mart required employees to take permission from the management before working overtime.

Facing the Consequences

As a result of all the above negative publicity, Wal-Mart lost a lot of its carefully built up goodwill. In January 2003, the company was declared the winner of the Sweatshop Retailer 'Peoples Choice Award' for being connected with the most number of sweatshop in 2002. Wal-Mart also did not feature in the Fortune Magazines 2002 list of the '100 Best Companies to Work For' for the first time in four years. Reportedly, this was a direct result of the company's failure to provide affordable healthcare coverage to its workers, which forced them to forgo health insurance. Allegations that Wal-Mart monitored union activities and asked employees to spy on co-workers added to the company's problems.

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Group Assignment Business Ethics

Executive Post Graduate Diploma in International Business (VSAT:2011-12)

Nike Sweatshop Operations

Nike is one of the multinational companies that have been hammered in the Western press over the last decade for unethical business practices in the production of apparel, equipment, and footwear in grim factories with dismal conditions that are labeled as sweatshops. The organization was accused of operating in working conditions where workers are subject to extreme exploitation, such as hazardous working conditions, arbitrary discipline, lack of a living wage and benefits. The workers are exposed to abuse or harassment and child labor is quite common. Social injustice prevails in a sweatshop environment and the workers usually suffer extreme poverty, despite the long working hours they put in. Often times, the workers are uneducated and so are unable to advocate for their rights. Another issue involved is environmental damage because the manufacturers generally ignore regulations and safety precautions. But after a decade of denying any wrongdoing, Nike now admitted that their workers have been exploited and abused, and have pledged to improve the conditions of the millions of people who are paid a few pence a day to make their topselling goods. The wholesale reform is being hailed as a victory for anti-sweatshop campaigners who just a few years ago were being derided and dismissed by the big brand names. With consumers becoming increasingly concerned with "ethical shopping", activists say firms are realizing that being linked with sweatshop labor can lead to a dip rather than a rise in profits. Nike published details of the 700 factories that make its goods in an effort to create more transparency for customers. The company pledged to set up a task force to ensure that its codes of conduct on pay, hours and conditions are complied with. Extraordinarily, Phil Knight, the founder and chairman of Nike, also admitted that the firm had failed to respond to previous allegations of exploitation, and disclosed that a quarter of its factories were still not meeting minimum standards. Just two years ago, Nike aggressively defended a court case in which it was accused by activists of lying and making misleading claims about its working practices in a corporate and social responsibility report. The company eventually donated $2m (1.1m) to the American Fair Labor Association as part of an out of court settlement.
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Group Assignment Business Ethics

Executive Post Graduate Diploma in International Business (VSAT:2011-12)

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