MGMT 8 Business Ethics Report: Australian Wheat Board Case Analysis

This report provides a comprehensive analysis of the Australian Wheat Board (AWB) case, focusing on the ethical breaches that occurred, particularly the bribery scandal involving Iraqi government officials. It examines the case's basic understanding, the stakeholders affected (internal, connected, and external), and the ethical issue of white-collar crime. The report delves into the concepts of business ethics, sustainability, corporate social responsibility, corporate governance, and integrity, highlighting how these principles were violated. A detailed mitigation strategy is presented, including goals, actions, and an action plan to regain trust and prevent future misconduct. The importance of business ethics is emphasized, concluding with a discussion on the lasting impact of unethical behavior on both the AWB and its stakeholders. The report references relevant academic sources to support its findings and recommendations. The report underscores the significance of ethical conduct in business for long-term survival and success. The AWB's unethical conduct and its repercussions are thoroughly examined, offering valuable insights into ethical challenges in the business world.

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Business Ethics [Pick the date]
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Contents
Introduction................................................................................................................................................2
Case study and ethical issue..................................................................................................................2
Basic Case Understanding..................................................................................................................2
Stakeholders..............................................................................................................................................2
White-collar crime as an ethical issue....................................................................................................3
Ethics and Sustainability in Business.....................................................................................................3
Ethics and principles that were disturbed..............................................................................................4
Corporate social responsibility (CSR) and Loyalty...........................................................................4
Corporate governance and Fairness..................................................................................................4
Integrity...................................................................................................................................................5
Mitigation strategy.....................................................................................................................................5
Goals......................................................................................................................................................5
Action......................................................................................................................................................5
Action plan.................................................................................................................................................6
Importance of Business Ethics................................................................................................................6
Conclusion.................................................................................................................................................6
References................................................................................................................................................7

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Introduction
Business Ethics are the principles or the morals that employees follow in the workplace.
Ethics is a subject of social science that is related to social values and morals. Business
ethics is a study of honest business policies, and decision making regarding unethical
issues like bribery, and social responsibility. Responsibility, honesty, integrity, and open
environment are some key elements of business ethics. Business ethics are more
intense, it states that there is a basic level of trust between brand and consumers, fair
dealing, and values in the company (Calabretta et al., 2011). This discussion will
highlight the Australian wheat board’s (AWB) unethical behaviour. An ethical issue here
is bribery or kickback. Further findings state that senior managers at AWB placed profits
and sales as their priority (Fallon & Cooper, 2015). Below given is a detailed analysis of
"the case of the Australian wheat board", its impact on stakeholders, and identification
of its future goals, action plan, and actions.
Case study and ethical issue
Basic Case Understanding
Australian wheat board (AWB) was a major grain marketing organization. It was a
government body until 1999. After that AWB transformed into a private company, owned
by wheat growers. AWB got involved in white-collar crime in between 1999-2002.
Inquiries started in 2004. AWB got involved in unethical behaviour when few
employees accepted bribes from the Iraqi government officials for "trucking fees". This
increased wheat cost per tonne to Iraq. This was Australia's biggest scandal. The
corrupt culture and greed were much noticeable (Frain et al., 2013).
Stakeholders
Stakeholders are groups or individual that can affect or can get affected by the positive
or negative results of an organization. Stakeholders can be classified into three
categories internal stakeholders, connected stakeholders, and external stakeholders.
Directors, managers, and employees are internal stakeholders. Shareholders,

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customers, advisors, suppliers, and consultants are connected to stakeholders.
Government, local communities, and pressure groups are external stakeholders.
Organizations should maintain long-term relations with stakeholders, the company runs
more efficiently and smoothly. Sometimes stakeholders can provide feedback during the
process of product development. That can help in organizations' success (Matos &
Silvestre, 2013). Australian wheat board’s directors had to suffer financial loss because
of employee’s unethical decision making. Employees who were involved in the scandal
were legally punished and also lost their personal reputation. Customers and suppliers
lost their trust in Australian wheat board. AWB lost their loyal suppliers and customers.
AWB’s shareholders also suffered heavy losses. Government got involved because
international relations were disturbed because of the scandal. All the stakeholders
internal, external or connected were affected because of the scandal.
White-collar crime as an ethical issue
Goodwill or reputation is an intangible asset of any business. Loss of this intangible
asset can destroy an organization, to a point where the last option left for the
organization would be shut down. White-collar crime is financial misconduct committed
by a trusted person or employee. Australian wheat board's employee made an unethical
decision and accepted the bribe from the Iraqi government. Later this scandal came to
light and the Australian wheat board lost the trust of the stakeholders. It is important to
understand the need for ethics in business. Every business proprietor desires for the
long run and economic growth of the business but only a few can achieve desired goals.
It is essential to create an ethical environment in the organization from the very
beginning (Gottschalk, 20107).
Ethics and Sustainability in Business
Ethical actions are those which are morally accepted as right. It is important to work with
ethics to build trust between an organization and its customers. Honesty and
responsibility of employees earn the reliability of customers that helps in the survival
and growth of the company. To develop good relations with traders, shareholders, and
stakeholders it is essential to behave and work ethically. There are three characteristics

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of sustainability environmental, social and economic. Environmental sustainability is
taking action in business to protect the environment or making decisions in support of
human life. Taking care of environmental sustainability reduces the negative impact of
the business on the environment. Social sustainability is a process that states
businesses should grow while promoting the wellbeing of future generations and
supporting the planet. Economic sustainability refers to maintain long-term economic
growth without wrongdoings in the organization (Norton & MacVaugh, 2017). Keeping
up with sustainability is difficult. Australian wheat board and Iraq government’s scandal
increased wheat cost and because of the inflation human life was directly affected.
Businesses that follow ethical values and morals stay in the market for a longer time
with economic growth (Schaltegger et al., 2015).
Ethics and principles that were disturbed
Corporate social responsibility (CSR) and Loyalty
CSR supports ethics oriented practices. No ethical behaviour is created without trust.
The executives working in the organization should be worthy and remain loyal. From the
very beginning, organizations should train their employees with values and Morals.
AWB's employees accepted bribes. Iraq‘s government officials and AWB’s employees
had to face legal consequences. Australian wheat board lost its stakeholders' trust and
confidence. International relations between Australia and Iraq faced disturbance
because of the scandal. Thus, none was benefited. Sooner or later the organizations
have to face problems because of unethical behaviour (Homburg et al., 2013).
Corporate governance and Fairness
Treating stakeholders equally, treating every deal equally is fairness in business.
According to corporate governance principles stakeholders should be treated equally.
Board of directors must ensure diversity, fairness and transparency within corporate
governance. Employees should not take advantage of the organization's blind trust.
Australian wheat board employees and Iraq's government officials neglected the ethical
principle "fairness" and because of this both organization and their stakeholders were
affected negatively (Waytz et al., 2013).

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Integrity
Employees who are completely honest and have strong values and morals are
considered to have integrity. In organizations, everyday situations come when
employees have to choose between right and wrong. For example, maximize the profits
with accepting kickback or be ethical and give up on short- term profits (McMurrian &
Matulich, 2016). The superiors should teach courage and personal integrity to every
subordinate. Employees should have courage to blow the whistle and report the wrong
doings happening in the surroundings (Zhang et al., 2016). Employees need to
concentrate on long-term profits instead of short-term profits. Australian wheat board
employees and Iraq's government officials gave up their integrity. They faced
consequences and were later punished, that destroyed their reputation and harmed
both organizations and stakeholders involve.
Mitigation strategy
Mitigation strategy involves three main components goals, actions, and action plans for
implementation.
Goals
Mitigation goals are guidelines that explain what the organization wants to achieve with
a set plan. After the scandal, AWB decided to regain the trust that was damaged. To
prevent illegal practices AWB fixed some guidelines to create a serious ethical work
environment. AWB decided to promote an ethical and responsible decision-making
process, separate team for recognition and management of risk, and laying solid
foundations for oversight and management.
Action
Mitigation actions are activities and projects that help the organization to achieve the
goals. AWB has provided an enforcement mechanism to motivate employees. To regain
the trust of stakeholders AWB also mentioned the creation of a multi-disciplinary inquiry
committee.

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Action plan
The action plan expresses the implementation process of the plans or strategies. The
mitigation action plan also states how actions will be prioritized, incorporated and
administered into the organization.
Importance of Business Ethics
Business with values and ethics survives in the market for a longer time. It improves
consumer confidence in the product. Business ethics helps in protecting stakeholders'
trust in the organization. It develops good relations between business and society. For
the smooth functioning of business, an organization needs to work with ethics. An
ethical communication system helps the workers to report all the wrongdoings in the
organization if needed. No business can survive without ethical means. Business needs
to remain ethical for its profit and survival (Floyd et al., 2013).
Conclusion
A business or society that neglects ethics or ethical principles is bound to fail sooner or
later. Ethics is all about being right, being fair and taking tough decisions for the sake of
honesty. Business ethics is a growing issue in today's environment. To make a
continued difference in society and business culture it is important to understand the
need for morals and values. The above-given discussion will elaborate and enlighten
the importance of ethics. The discussion will express key features of business ethics
concerning the case. Further, it will discuss the mitigation strategy of the Australian
wheat board for rebuilding its reputation. The discussion also mentions unethical
behaviour of organizations can affect its stakeholders. In conclusion, we as people in
society need to understand the importance of right and wrong. We all should consider
taking the path of morality though it will be tough.

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References
Calabretta, G., Durisin, B. & Ogliengego, M., 2011. Uncovering the Intellectual Structure
of Research in Business Ethics: A Journey Through the History, the Classics, and the
Pillars of Journal of Business Ethics. Springer, 104(4), pp.499-524.
Fallon, F. & Cooper, B.J., 2015. Corporate Culture and Greed — The Case of the
Australian Wheat Board. AAR, 25(1), pp.71-83.
Floyd, L.A., Xu, F., Atkins, R. & Caldwell, C., 2013. Ethical Outcomes and Business
Ethics: Toward Improving Business Ethics Education. Springer, 117(4), pp.753-76.
Frain, F.M., Bell, D.P. & Lauchs, D.M., 2013. International Journal of Business and
Commerce. The Australian Wheat Board Scandal: Investigating International Bribery,
2(9), pp.1-19.
Gottschalk, P., 20107. Convenience in White-Collar Crime: Introducing a Core Concept.
Deviant Behaviour, 38(5), pp.605-19.
Homburg, C., Stierl, M. & Bornemann, T., 2013. Corporate Social Responsibility in
Business-to-Business Markets: How Organizational Customers Account for Supplier
Corporate Social Responsibility Engagement. Sage journal, 77(6), pp.54-72.
Matos, S. & Silvestre, B.S., 2013. Managing stakeholder relations when developing
sustainable business models: the case of the Brazilian energy sector. Elsevier, 45(1),
pp.61-73.
McMurrian, C.R. & Matulich, E., 2016. Building Customer Value. Journal of business
and economic research, 14(3), pp.83-90.
Norton, M. & MacVaugh, J., 2017. Introducing sustainability into business education
contexts using active learning. International Journal of Sustainability in Higher
Education, 24(4), pp.439-57.
Schaltegger, S., Hansen, E.G. & Ludeke-freund, F., 2015. Business Models for
Sustainability: Origins, Present Research, and Future Avenue. Sage journal, 29(1),

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pp.3-10.
Waytz, A., Dungan, J. & Young, L., 2013. The whistleblower's dilemma and the
fairness–loyalty tradeoff. Elsevier, 49(6), pp.1027-33.
Zhang, F.-W., Liao, J.-q. & Yuan, J.M., 2016. Ethical Leadership and Whistleblowing:
Collective Moral Potency and Personal Identification as Mediators. Social Behaviour
and Personality, 44(7), pp.1223-31.