Business Ethics: Goodpaster's Stakeholder Analysis and Supermarkets

This assignment analyzes business ethics and stakeholder analysis, focusing on Goodpaster's theories and their application. It defines strategic stakeholder synthesis and contrasts it with the nonfiduciary approach, exploring its implications for stakeholder interests. The assignment examines ethical duties of supermarkets, particularly in their relationships with suppliers, referencing a radio program for real-world examples. It also evaluates the consistency of Woolworths' practices with both narrow and stakeholder-based views of business ethics, providing reasons to support the conclusions. The paper uses the concepts of ethical management, stakeholder analysis, and ethical decision-making to critically assess the ethical responsibilities of businesses.

Running head: BUSINESS AND PROFESSIONAL ETHICS
BUSINESS AND PROFESSIONAL ETHICS
Name of the Student
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Author Note

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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?
(Goodpaster 1991) states when companies or organisations identify stakeholders who can have a
huge impact on the business of an organisation and include them in the decision making process
assessing their impact on the business then this is known as the strategic stakeholder synthesis.
According to Goodpaster, organisations need not introduce ethics and values in diverse decisions
and their associated systems as the primary focus of an organisation is mainly because of their
own benefits and profits and thus they do not include stakeholders with minimum impact on the
business in their decision making. Functioning systematically and properly is enough in this
approach (Goodpaster 1991).
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) argues that is important to practice an approach which avoids both
strategic stakeholder synthesis and multi-fiduciary stakeholder approach and thus presents a

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nonfiduciary approach, Nemo Dat Principle where he states that it is not important for
organisations to think about the expectation of the communities in terms of ethics as it is
important for them to generally create products and services complying with the consumer’s
demands and thus the prime focus of the managers should be to increase profits.
This approach suggests that it is the moral obligation of the business is to not cheat and harm
the stakeholders and the shareholders of the organisation. This approach in comparison with the
other approaches is better as multifiduciary stakeholder approach states that organisations have
no nonfiduciary obligations to third parties revolving around the fiduciary relationships. This
approach is feasible when compared to strategic stakeholder approach as the organisations do not
consider the stakeholders having low power important which can have negative effects on the
company later.
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 interest of the stakeholders can be protected if the non-fiduciary approach is taken into
consideration which is provided Goodpaster as it aims on providing the consumers with the
services and products which meet their expectations and demands making it ethical.
This approach helps in treating the stakeholders’ more than just corporate ends as providing
quality products and services not only help in catering to their demands but also show that they
are valuable to the organisation and thus establish a concrete positive relationship with the
customers and the stakeholders.

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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.
Big supermarket chains that operate in Australia are seen to have dismissed the basic and
important moral duties for which Goodpaster had argued and this has been derived from the
accounts that had been given to Background Briefing, a radio program (ABC Radio National
2020).
The fundamental moral duties according to Goodpaster is not to lie, harm or cheat the
stakeholders of an organisation however from reports and confessions made by many supplier
anonymously, it has been seen that major supermarkets in Australia misuse their power and
threaten the suppliers that they will stop doing business with them if they ask for share in their
profits. Ian McLeod, Managing Director of the supermarket, Coles had agreed to have passed on
the costs of discounts to some suppliers (ABC Radio National 2020).
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.
Major supermarkets operating in Australia have been violating basic moral duties. It has
been seen that supermarkets have been blackmailing the suppliers that they will stop doing any
kind of business with them which can shatter the business of the suppliers so that they do not ask
for any share from the profits made by the supermarkets.

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It is important for the supermarkets to provide some benefits to the suppliers like increase
the amounts paid by each passing year and also give a basic share as the supplies help in
contributing to the success of the supermarkets.
In the retailing industry, the suppliers have a major and important role to play in order to
help the industry function successfully. It is the moral duty of the supermarkets not to lie or harm
the suppliers however not providing proper amounts and blackmailing falls under harming the
suppliers. From the program, Background Briefing I can be understood that the suppliers have
been suffering and are unhappy with the way the supermarkets have been oppressing them thus it
is vital for the supermarkets to operate ethically.
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.
While considering business ethics, it can be seen that the request of Woolworths for Mind
the Gap payments from their suppliers are unjustified.
It has been seen that big supermarkets do not provide the suppliers with the amount they
deserve and also do not provide any profits from what they generate from their products thus
asking them money during their loss is unjustified as there might be other reasons for which the
business is not generating profits and it is not the responsibility of the suppliers to carry this
burden. The other reasons is that Woolworths when started business with their suppliers,
nowhere in their contract did they mention about this scheme in their contract which makes this
scheme highly unethical (Locke 2016). The federal court however supported the supermarket as

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they stated that it is the duty of the suppliers to support them during the time of crisis (Low
2016).
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.
In context and the view of the stakeholder approach to business ethics, it can be seen that
this request by Woolworths s not favourable as the main aim of the stakeholder approach is to
satisfy the stakeholders of the organisation and this scheme does not satisfy the needs of the
stakeholders of the organisation. This scheme is seen to have pressurized the stakeholders.
It is important for Woolworths to consider the basic needs of the stakeholders and keep
them happy so that they can be beneficial and fruitful to the organisations. Woolworths does not
provide extra benefits or share profits with the stakeholders thus asking the suppliers to pay for
their losses are not valid. Danckert, Mitchell and Low (2015) states the scheme introduced by
Woolworths does not make sense as the reasons provided are vague and it harms the suppliers.

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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].

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