ASOS Supply Chain Ethics: A Case Study in Responsible Management

This case study delves into the ethical dilemma faced by ASOS, a British online fashion retailer, regarding supply chain ignorance and potential child labor exploitation. As a middle manager's report, it highlights ethical dimensions, social responsibilities, and relevant ethical theories applied to the si...Read More

Business Ethics & Responsible
Management-Case 4 Supply Chain
Ignorance

Table of Contents
INTRODUCTION...........................................................................................................................1
PART 1............................................................................................................................................1
A) Explanation of ethical dilemma and identification of key factors....................................1
b) Applying two ethical theories to the case study.................................................................6
PART 2............................................................................................................................................7
The qualities required for being an ethical leader or manager who can manage ethical issues
of business..............................................................................................................................7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................11

INTRODUCTION
Business ethics refers to form of applied or professional matters which examines
principles and ethical problems, arise in a company (Fearn-Banks, 2016). Present report is based
on a case study of supply chain ignorance, which arise ethical issues in ASOS. This company is a
British online fashion and cosmetic retailer which mainly target youngsters. As per BBC report,
this company found to be guilty of exploitation of child in supply chain. Therefore, as a middle
manager, I am going to make a report which highlight some ethical dimensions related supply
chain. As giving employment to children is strictly banned and shameful activity. Thus, in this
regard, any organisation who found to conduct such kind of activity is considered as ethical
dilemma. It may impact negatively on brand image and reputation of business. Therefore, I will
present it in front of senior manager to state my opinion for rectifying this shameful practise.
Along with this, some ethical duties, social responsibilities and some theories are also explained.
Furthermore, qualities required for being an ethical leader is also elaborated in this report for
raising ethical standard of business.
PART 1
A) Explanation of ethical dilemma and identification of key factors
Today organisations are mostly concern to bring revenue and achieve highest position in
their industry. However, achievement of this certain goal seems not to be always ethical at all
costs. Therefore, business ethics command organisations to conduct business with specific code
of conduct that prevents from unethical activities. If companies failed to do so, then it tends to
loss customer base and subject to bad publicity also. The main objective of present assignment is
related with ASOS which is being an ethical retailer and face dilemma including ignorance of
supply chain (Morden, 2016). Iconic retailers have been implicated under BBC investigation
where unethical practices of Turkish Textile industry has been found. This broadcasting
corporation has conducted a survey where famous retailer companies have been identified as
possessing child labour in supply chain process. This kind of scandals come under limelight
when several branded companies like M&S and ZARA were founded guilty. Under this case,
investigators of BBC have founded that children of age 7 to 8 years are engaged in sewing boxer
shorts. They have exhausted from 60-hours working under organisations therefore, unable to
attend schools.
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As a middle manager of ASOS, I have made an investigation report which is based on
ethical dilemma. It is further presented in front of senior managers with major purpose i.e. to
bring attention of them towards unethical practices in Turkish Textile industries. In this regard,
report revolves around an ethical dilemma from perspective of ethical management “Should
ASOS engage in scandal of child exploitation in supply chain services?”. Considering this
dilemma, I have made some argument that such practices are against of business policies and
procedures. As ASOS is run on specific initiative – 'fashion with industry'. Therefore, main
intention behind this initiative is to make sure that entire aspects of business are able to be
scrutinised. Thus, our seniors managers are unaware from unapproved outsourcing that is child
labour in Turkish factories. Henceforth, this report is made argument related to the ethical
dilemma that ASOS will not get engaged in any unethical practices.
Positive impact of duty-based ethics:
 Emphasises the value of each human being: Ethics of duty states to give equal respect
and introduce diversity at workplace. It gives rights to human beings to get equal
employment opportunity.
 Deals with intentions and motives: Duty-based ethics concerns on two main intentions as-
Company's policies or code of conduct framed in narrow manner. Second one is that a
company not intentionally do a wrong act, it was happened accidentally. Therefore, from
deontological point of view, such companies do not deserve to be a part of criticism.
Negative impact of duty-based ethics:
 Absolutist: Duty based ethics are set on absolute rules. Therefore, under this condition the
only way to overcome is to build a list of some assumptions or exceptions to rules.
 Hard to reconcile conflicting duties: Ethics of duty doesn't deal in such cases where
duties are in conflicts.
Thus, in context with ASOS, issue related to child employment is considered as an ethical
issue. As this would impact on business image in negative manner. Child labour is considered as
most serious moral issue which greatly violated the dignity as well as disregards Rights of
Children also. On contrary, Utilitarian ethics has argued that child labour should be taken as
morally right. As it gives poverty-stricken societies a source of earning. But as per ethics of duty,
it has caused various problems related to welfare of children around world. According to Rainey
III and Sigler (2016), children as innocent, transparent and future of country. They must get
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proper education, food and other necessities in appropriate manner. Giving job to them is
unethical and would impact on image of business in negative manner. Therefore, I have also
taken this issue as unethical for ASOS which affect reputation of business. It must be addressed
and examined appropriately so that business can be run effectively in other countries also.
Corporate Social Responsibility refers to core business activities by companies. The main
purpose of company behind this is to manage their business practices for creating an overall
impact on society in positive manner. It includes environmental protection and sustainability;
work in partnership with local communities; develop adequate relationship with customers and
employees; etc. This would lead organisations to generate revenue and gain high profitability.
Therefore, CSR activities consider as an important way to enhance competitive advantage, raise
and protect brand reputation, build trust among stakeholders and more. Therefore, possible
ethical conduct that ASOS needs to be performed is compliance business with applicable laws
and legislations. This will aid to make specific code of conduct through which every employee
bound to follow business policies. It will help in running business more ethically.
In context with ASOS, it operates business by following initiative as 'Fashion with
integrity', for managing all aspects of transparency (Rainey III and Sigler, 2016). Therefore, for
responding towards given allegations, this company has argued that such kind of practices were
contrary to its code of conduct. In Turkish factories, it has not allowed to give employment to
children. The evidence of this matter is found by its remediation programmes, which are run by
oversees partners of ASOS. These programs are campaigned for vulnerable people who found in
pity conditions. In this regard, by conducting proper investigation I have analysed that one
supplier of our company- Hazar Tekstil from Turkey's Industrial Hub (Istanbul), sub-contracted
its works with small workshops dealing in same area. These areas are considered as unregulated
and unapproved where children were forced to work in factories. In this regard, the evidence
which shows that ASOS conducts ethical activities- gives supports to children and Syrian
refugees as well as as dropped Hazar Tekstil also. However, this evidence is not sufficient for
claiming ignorance related to either for unknown suppliers or create an environment, under
which such unauthorized outsourcing has occurred. According to BBC report, companies are
founded to be responsible for conditions where goods are manufactured. It is responsibility of
ASOS to monitor operational activities of suppliers. Along with this, they must ensure that there
are high standards of visibility within supply chain management.
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ASOS is committed for being a responsible retailer at marketplace, where every worker is
respected as well as protected in supply chain (O'brien, 2015). In 2014, it has launched a new
Ethical Trade Programme, which is based on three main key pillars. It includes people,
partners and practices. As in garment factories, workers all around the world are found in
vulnerable conditions. Therefore, ASOS ensures that no factories in supply chain, fail to meet
criteria related to health and safety standards. It has implemented sourcing practices which set
out how business work, what are its expectations from workers and how it improves need of
suppliers. Henceforth, suppliers are considered as central to Ethical Trade Program. It has
removed all barriers that conflicts pressures on suppliers to share company's vision. Thus, main
purpose of this CSR activity is to improve conditions for near about 79,000 workers by supply
chain.
(Source: Stakeholders Influence Matrix, 2018)
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Illustration 1: Stakeholders Influence Matrix

With the help of interest/influence matrix, where interest shows concerns about change
and influence reflects abilities for resistance as well as stimulate the concern, importance of
stakeholders can be analysed. It helps in earning trust and belief of stakeholders and make long
term relationship with them as well. Thus, it is important for ASOS to give priority to concern of
stakeholders while making business policies. The unethical practice or scandal of child labour
has affected to both internal and external stakeholders of ASOS. It includes investors, customers,
vendors, suppliers, distributors and more, as stakeholders who always seeks to gain transparency
in business policies. As a middle manager, I have analysed that certain kind of behaviour i.e.
ethical or unethical impact largely on morality of stakeholders. When a company conduct
unethical activities in order to gain high profitability then associated employees found guilty.
They feel helpless and publicly ashamed to indulge in dishonesty. In this regard, unethical
behaviour such as using organisational property for personal use, dishonesty in financial dealing,
exploitation of children etc. affect image of stakeholders and company in negative manner. In
context with ASOS, the worst effects of unethical behaviour on business is unable to maintain
trust of stakeholders. In addition to this, company also can manage long term relationship with
customers and becomes vulnerable towards expensive litigations also.
There are various examples have shown where companies dealing in same sector face
same kind of ethical dilemmas. M&S found guilty to use child labour in factories. It has offered
legal employment to refugee and pledged that it will never to same activity again in future.
Similarly, BBC claimed that workers in ZARA are worked on 12-hours basis in vulnerable
conditions (Woodburn and McDonald, 2012). With this assistance, duties of ethics concern on
activities of organisation instead of consequences of their actions. As per this regard, companies
have responsibilities to operate business in ethical manner even if, it creates loss in revenues. In
this context, ignorance in supply chain management where child labour is found, will negatively
affect the reputation of business.
Apart from this, I have made an analysis on ADIDAS which is considered as best
example of sustainable fashion company. As per fashion report, which give labour rating on the
basis of payment, worker empowerment initiatives, transparency and more. In this regard,
ADIDAS received A-grade for its supplier code of conduct. In order to improve image of
business, its managers are always concerned on ensuring that employees in supply chain, get a
living wage. Thus, from this analysis, I have got inspiration how to rectify ethical dilemma
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within ASOS. I have made suggestions for senior managers to monitor supply chain process so
that any unethical activity could not happen in future.
Recommendation:
As per above mentioned report, I have recommended to senior managers of ASOS to
formulate adequate policies and procedures as per legal laws. It has to change its monitoring
processes, managing ethical trade as well as the way to oversee sourcing practices. It would help
in reducing the occurrence of unethical activities in supply chain processes. Furthermore, senior
manager also needs to develop a new Sourcing Department that gives support to work in
collaboration with suppliers and local audit teams. This division helps in reviewing the sourcing
practices in regular manner to ensure that any unethical activity will not conduct in supply chain.
b) Applying two ethical theories to the case study
Utilitarianism- theory of ethics
According to Brunt, (2016), utilitarianism can be defined as an ethical or philosophy
theory, given by Jeremy Bentham and John Stuart Mill. As per this theory, it is essential for
organisations to act in a certain way by which maximisation of goods can be delivered to large
number of people. According to present case study, ASOS have faced ethical issues related to
child labour. But, its managers have strictly opposed to this ethical issue by stating that it is
contrary to mission of company. The code of conduct of this company is based on a specific
initiative- 'fashion with integrity' i.e. to manage entire business in transparent manner. In this
regard, Utilitarianism may be utilised to consider on both negative and positive consequences.
These consequences are linked with a particular policy to reduce all such aspects which leads to
generate unethical activities (Smith, 2012). In context with identifying the consequences of
actions within business, utilitarianism is relied upon intrinsic value theory. It stated that if
something is happened to be good in itself, rather than consequences then it leads to obtain result
in ethical manner. To relate with the case mention as employment of children have impact of the
large number of stakeholders and large section is not satisfied so, as per this theory they tend to
change their perspectives.
Ethics of care theory
According to Corvellec and Hultman (2014), concept of ethics refers to those ideas which
concern on both the nature of normative and morality ethical theory. Ethics of care mostly relies
on principle of morality actions viz. Utilitarianism, Deontology and Justice theory. As per given
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scenario, for dealing with ethical dilemma of ASOS, this theory concerns of four stages. It
includes attentiveness, responsibility, competence and responsiveness (Eye on ethics, 2018).
Here, attentiveness is crucial factor for ethics of care as it requires a recognition of needs of
others for responding. While, responsibility is a second element of ethics of care. It assists
managers of ASOS to monitor supply chain process properly so that occurrence of ethical
dilemma can be reduced. Similarly, to provide care also reflects competence i.e. only to
acknowledge need of care and accept responsibility is not enough. It is also necessary to follow
enough adequacy to meet the criteria of competence (Savage, Gorman and Street, 2013). The last
section i.e. responsiveness specifies moral problem within care i.e. care is only concerned with
vulnerability and inequality. Therefore, ethics of care consider as distinct moral theory which can
be added with other influential moral theories. It includes Kantian morality, utilitarianism, or
virtue ethics. It is arise out of feminists’ appreciation which states ASOS to concern on workers’
need.
PART 2
The qualities required for being an ethical leader or manager who can manage ethical issues of
business
It has concluded from this specific report that business ethics is highly reliant on leader
for articulating shared values. They also develop a vision of a company for future in ethical
manner. If an organisation gets success to run business successfully the credit will go to leaders
more. As they provide a clear and consistent future by decreasing ethical dilemma in adequate
manner (Sheehan and Quinn-Allan, 2015). Therefore, it is necessary for an individual to develop
ethical skills for being a good leader. Ethical leaders are defined as those individual who gives
priority to own values and opinion while executing their responsibilities. It refers to certain
characteristics of leaders that are trust-builders, honesty, fairness, transparency and more.
Therefore, this concept used to motivate leaders or individuals to perform duties within ethical
boundaries.
In this regard, there I have been analysed that there are various conditions occur in
working environment, that develops the requirement of ethical leader. The main purpose behind
such situations is to attain targeted goals and set objective of business within certain period of
time. In order to become an ethical manager of a company, I need to possess certain qualities
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which makes me able to manage entire job responsibilities of business. By enhancing my skills
and abilities related to ethics, I can handle major operations in systematic manner. I can also
prevent business from scandals and unethical activities which impact on image of business
negatively.
Aristotle theory is usually based on virtual ethics that suggests leaders to give moral
advice in case of difficult situations. It concerns on two main ethical concepts that are
deontological and teleological ethics. Here, concept of deontology reveals that leaders concerns
mostly on how well their followers follow certain rules and regulations. On the contrary, in
teleological ethics states that leaders judge their part of leadership on the basis of outcomes.
Thus, both concepts reveals judgemental and thinking power of effective leaders. However, I
have analysed that it is sometimes difficult for a leader to perform their responsibilities in ethical
manner, when company wants instant results. This would ultimately lead to create dilemma
between me and my part of work. Similarly, when a company wants to avail competitive
advantage then it pressurises its managers and leaders to obtain results. Under this condition, as a
manager I have to take certain actions which oppose my ethical opinion and forces me fulfil
demand of business.
It has seen that if a leader fails to develop ethical skills or performs in unethical manner,
then it will adversely impact on subordinates. In this regard, destructive leaders could be
considered as person having worst behaviour. They violate the legitimate interest of companies
and undermine the job satisfaction, motivation of subordinates. They also impact effectiveness of
organization by targeting goals, resources and tasks. A manager, leader or any senior who have
possessed destructive leadership, harass subordinates. Therefore, members who work under their
guidance nevertheless perform well on assigned projects. Furthermore, toxic leaders also create a
negative environment at workplace. They force employees to adopt company's rules and endure
physical hardships for obtaining certain outcomes. In addition to this, they have high levels of
naracissism and a personalised need for power. Thus, people follow such types of toxic leaders
only to get promotions within organisation.
To become ethical leader, I have adopted the concept of Kohlberg and Hersh Moral
Development. This model states that morality is an essential part for becoming an ethical leader.
It reflects ability for distinguishing between right and wrong. By understanding this concept
about what is true and lie, I can develop morale ethics and become responsive to perform
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functions in right manner. This theory states three models and six stages- Preconvention
(Hereronomous and Individualistic); Conventional (Inter-personality and Social system
Morality); Post conventional (Human rights and Reversible morality). Here, first stage i.e.
conventional stage states that on personal interest instead of social norms. While, second stage
assists leaders to interact with peers and influence them towards right goals. Apart from this, the
last stage- post conventional states to understand opinion of others then take right decisions.
Thus, through all these stages I have developed my ethical skills. It gives me advantage to
perform business in right manner and reduce occurrence of ethical dilemma. Kohlberg theory
helps in promoting fundamental rights and values under a person. This would aid me to deal with
dilemma and unethical situations in organisations appropriately. In addition to this, in order to
become an ethical leader, I have followed below mention steps :-
 Define organisational goals: As a manager or leader, I need to set an example in ethical
leadership. As every organisation has set certain rules and behaviours for workers,
therefore, in this regard I need to communicate the same with team-members. This would
help in giving awareness among staff members about why ethical behaviour matters
while working.
 Know personal values: Good leaders must follow organisational as well as personal
values in order to raise ethical standards.
 Effective communication skills: To influence people towards ethical goals, it is essential
for leaders to must develop communication skills. By proper communication I can
influence team-members to work in ethical manner.
CONCLUSION
It has been concluded from this assignment that business ethics is the most important
concept in an organisation. It states the concept of good practices within business so that
occurrence of issues can be reduced, which impact on brand reputation negatively. Ethical
responsibility as well as its impact on supply chain management has become a crucial issue
within business. As per ethics of duty and virtual ethics theory, a company should monitor its
supply chain process. They should ensure that no illegal activities like exploitation of workers,
child labour and more, are not happened at workplace. This would help in running business
ethically and prevent it from ethical dilemma also.
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REFERENCES
Books and Journals
Brunt, C., 2016. African managers’ stories and cultural awareness: An exploratory classroom
exercise. Africa Journal of Management. 2(4). pp.444-465.
Corvellec, H. and Hultman, J., 2014. Managing the politics of value propositions. Marketing
Theory. 14(4). pp.355-375.
Fearn-Banks, K., 2016. Crisis communications: A casebook approach. Routledge.
Morden, T., 2016. Equality, Diversity and Opportunity Management: Costs, Strategies and
Leadership. Routledge.
O'brien, J., 2015. Category management in purchasing: A strategic approach to maximize
business profitability. Kogan Page Publishers.
Rainey III, J. L. and Sigler, K., 2016. Securing an IT Organization Through Governance, Risk
Management, and Audit. Auerbach Publications.
Raufflet, E. and Mills, A. J. Eds., 2017. The dark side: Critical cases on the downside of
business. Routledge.
Savage, N., Gorman, M. E. and Street, A., 2013. Emerging technologies: socio-behavioral life
cycle approaches. Pan Stanford.
Sheehan, M. and Quinn-Allan, D. eds., 2015. Crisis communication in a digital world.
Cambridge University Press.
Smith, A. D., 2012. Green supply chain management and consumer sensitivity to greener and
leaner options in the automotive industry. International Journal of Logistics Systems
and Management. 12(1). pp.1-31.
Woodburn, D. and McDonald, M., 2012. Key account management: The definitive guide. John
Wiley & Sons.
Online
Eye on ethics. 2018. [Online] Available
Through:<https://www.socialworktoday.com/news/eoe_0916.shtml>.
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