Encyclopedia of Business and Professional Ethics

Running head: BUSINESS AND PROFESSIONAL ETHICS
BUSINESS AND PROFESSIONAL ETHICS
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1BUSINESS AND PROFESSIONAL ETHICS
Question 1
a) What does Goodpaster mean by ‘strategic stakeholder synthesis’? Why does
he think that businesses that operate according to the principles of strategic
stakeholder synthesis do not really introduce ethical values into business
decision making?
According to Goodpaster, strategic stakeholder synthesis is when an organisation
identifies the stakeholders who have a high influence in their organisation and then included in
the decision making process of the organisation (Goodpaster, 1991).
Goodpaster, (1991) states that organisations that consider strategic stakeholder synthesis
do not need to introduce ethical values in the decision making process of a business as they only
include the stakeholders in the decision making process assessing their importance to the
business and do not consider other stakeholders who cannot effect the business in any kind of
way which means they only consider someone based on their own profit.
b) Goodpaster argues that we need an approach to business ethics that avoids
business without ethics (strategic stakeholder synthesis) and ethics without
business (a multi-fiduciary stakeholder approach). Explain Goodpaster’s
nonfiduciary approach to business obligations, making sure you distinguish it
from both the multifiduciary stakeholder approach and the strategic
stakeholder approach.
(Goodpaster, 1991) provides a nonfiduciary approach which is the Nemo Dat Principle
where the shareholders cannot expect the manager of an organisation to be less people and make

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sure ethical. Companies always do not have to consider ethical expectations of the communities
because they have generally built according to the demands of the consumers thus managers
need to consider how to make profits.
The approach suggested is better than the multifiduciary stakeholder approach as
organisations do not have any nonfiduciary obligations to any third parties which revolve around
fiduciary relationships and it is also better than the strategic stakeholder approach where the
organisations do not include stakeholders with low influence in their decision making process
sometimes making organisations selfish.
c) Does Goodpaster’s nonfiduciary account of business obligations provide
sufficient protection for the interests of stakeholders other than
shareholders? Does it avoid the problem of treating stakeholders as mere
means to corporate ends? Give reasons for your answer.
The non-fiduciary account of business obligations that is suggested by Goodpaster is to some
extent sufficient in protecting the interest of the stakeholders as they products and services of an
organisation are already developed in a way in order to cater to the needs of the consumers
which automatically make it ethical.
This to some extent helps in avoiding the issue of treating stakeholders as a mere means to
corporate ends as considering the needs of the customers helps to satisfy the needs of the
customers which also paves way for building of a positive relationship between the stakeholders
and the organisation.

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Question 2
a) Do you believe, based on the accounts given in the radio program, that the
major supermarket chains in Australia violate any of the fundamental moral
duties which Goodpaster argues for? Provide details to support your answer.
From the accounts that have been given to radio program, Background Briefing it can be
seen that many supermarket chains operating in Australia have violated the fundamental moral
duties which Goodpaster has argued for.
Goodpaster states that an organisation should not lie, cheat or harm their stakeholders as
well as their stockholders however, from the confessions by anonymous suppliers to the radio
show that most of the major supermarket chains have taken advantage of their power and have
blackmailed suppliers to keep thin margins for their products (ABC Radio National 2020). The
Managing Director of Coles has also conceded to the fact that the organisation had passed on
costs of the heavy discounts to few suppliers.
b) What moral duties, if any, do you believe the large supermarkets owe to their
suppliers? Answer this question using your own moral reasoning and
examples from the program to illustrate your points.
The large supermarkets that operate in Australia like Woolworths and Coles are seen to
have violating basic moral duties. In order to increase the profits they are causing harm to the
suppliers of the companies. Thus, the companies if not give them a huge profit share but should
provide them with minimum share of their profits and should not make them pay for the benefits
of the organisations.

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Suppliers have a huge role to play in empowering the business expansions, especially as
the retailing industry is experiencing a dynamic growth. It is morally incorrect to harm or
blackmail the suppliers who play a huge role in the success of an organisation. It is important for
companies to treat their suppliers properly and give them the fare share that they deserve. From
the radio program it can be understood that large supermarkets blackmail the suppliers to take of
their products from the stores which is unethical and also has the potential to harm their business.
Thus, it is important for the major supermarkets to function ethically to benefit themselves and
also their suppliers so that they grow together.
Question 3
a) Is Woolworths’ request for ‘Mind the Gap’ payments from suppliers consistent
with the narrow view of business ethics? Provide reasons to support your
conclusion.
The request for Mind the Gap payments from the suppliers by Woolworths are not logical
and questionable when viewed from an ethical perspective.
One of the major reasons, the scheme, Mind the Gap is unethical and illogical because
the supermarkets generally do not share their profits with the suppliers and according to reports,
while making the business deal, Woolworths did not mention about this scheme in their
contracts as well (Locke 2016). Thus, extracting payments from suppliers because of their own
loss is not justified and violates the moral duties. However, the federal court has later stated that
the Mind the Gap scheme is not unethical and questionable because of the reason provided by
the Woolworths which sates it is natural for suppliers to support the business (Low 2016).

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b) Is Woolworths’ request for ‘Mind the Gap’ payments from suppliers consistent
with a stakeholder approach to business ethics? Provide reasons to support your
conclusion.
Woolworths request for Mind the Gap payments from their suppliers with the view of a
stakeholder approach to business ethics suggests that the decision is highly unethical as it does
not satisfy the needs of the stakeholders rather pressurizes them for vague reasons.
Woolworths is one of the largest retail chains operating in Australia and it is their duty to
ensure that they satisfy their stakeholders for the long-terms success of the organisation however
it has been seen that bug supermarkets do not provide their suppliers with any profits that they
acquire thus it is completely unreasonable to request payments for their loss from their suppliers.
According to reports, the demands of Woolworths are unconscionable as the reasons provided by
them do not make sense and pressurizes the stakeholders (Danckert, Mitchell and Low 2015).

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Reference
ABC Radio National (2020). Casualties in the supermarket war. [online] ABC Radio National.
Available at: https://www.abc.net.au/radionational/programs/backgroundbriefing/5158628
[Accessed 2 Jan. 2020].
Danckert, S., Mitchell, S. and Low, C., 2015. ACCC accuses Woolworths of unconscionable
conduct. [online] The Sydney Morning Herald. Available at:
https://www.smh.com.au/business/companies/accc-accuses-woolworths-of-unconscionable-
conduct-20151210-glkfz2.html [Accessed 2 Jan. 2020].
Goodpaster, K.E., 1991. Business ethics and stakeholder analysis. Business ethics quarterly,
pp.53-73.
Locke, S., 2016. Supermarkets told not to treat suppliers like children. [online] ABC Rural.
Available at: https://www.abc.net.au/news/rural/2016-11-11/woolworths-case-points-to-tighter-
scrutiny-of-contracts/8012784 [Accessed 2 Jan. 2020].
Low, C., 2016. Woolworths did not break any law with Mind the Gap scheme: Federal Court.
[online] The Sydney Morning Herald. Available at:
https://www.smh.com.au/business/companies/woolworths-did-not-break-any-law-with-mind-the-
gap-scheme-federal-court-20161208-gt6t1t.html [Accessed 2 Jan. 2020].