MGT301A Report: Ethics and Sustainability Issues at Coles Australia

This report provides an analysis of the ethical and sustainability challenges encountered by Coles Supermarkets in Australia, specifically focusing on the 'Little Shop' promotional campaign and its contribution to plastic pollution. The report examines the issue through the lens of stakeholder theory, evaluating the impact of the campaign on both internal and external stakeholders, including customers, the environment, and the broader community. It discusses the ethical implications of the campaign, which contradicted Coles' stated sustainability goals. The report further offers alternative solutions to mitigate the negative impacts and enhance the company's ethical and sustainable practices. These solutions include improving promotional initiatives, catering to stakeholder needs, and investing in research and development for sustainable alternatives. The report concludes by emphasizing the importance of ethics and sustainability for organizations in fostering a sustainable relationship with their customers and the environment, highlighting the need for a balanced approach that considers both business interests and stakeholder concerns.

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ETHICS AND SUSTAINABILITY IN COLES AUTRALIA
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1ETHICS AND SUSTAINABILITY IN COLES AUTRALIA
Executive Summary
Ethics and sustainability play an important role in determining the activities and decisions of
any business organization. Such business ethics aims towards establishing a sustainability in
the social and environmental relations of the organization. The significant objective of this
report is to analyze the ethical and sustainability problems faced by Coles Supermarket in
Australia, regarding the launch of their promotional campaign Little Shop. This campaign
contributed in increasing plastic pollution in the country, which goes against their
sustainability goals. Furthermore, this problem has been analyzed using the Stakeholder
theory, measuring the impact of the campaign on the organization’s internal and external
stakeholders. Additionally three alternative solutions have been provided along with
recommendations as to how this problem can be efficiently tackled. In conclusion, it is
mentioned how ethics and sustainability are essential for an organization in developing a
sustainable relation with its customers.

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Table of Contents
Introduction................................................................................................................................3
Discussion..................................................................................................................................3
Scenario at Coles Supermarkets Australia.............................................................................3
Stakeholder theory and Business ethics.................................................................................4
Analysis of Coles Supermarket promotional strategy............................................................6
Impact on Stakeholders......................................................................................................6
Analysis of problem through Stakeholder Approach.........................................................7
Alternative solutions..............................................................................................................8
Recommendations......................................................................................................................9
Conclusion..................................................................................................................................9
References................................................................................................................................10

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Introduction
Business organizations are expected to follow certain ethics that can be either
normative or descriptive. Normative business ethics refer to the standards that depict the
manner in which the business entity must act (Michaelson, Pratt, Grant & Dunn, 2014). On
the other hand, descriptive business ethics refer to the analysis of beliefs of morality that
govern the behavior and actions of the business entity. In order to ensure ethical behavior and
actions, various business organizations formulate strategies that aim towards sustainability.
Ethics and sustainability are correlated in the operation of business procedures and aim at
benefitting either the society or environment, or both (Crane, Matten, Glozer & Spence,
2019). The report will analyze the defects of ethics and sustainability in Coles Supermarkets
Australia and will provide alternatives that can resolve the issue. Additionally, certain
recommendations will also be provided that can help in improving the organizations social
and environmental responsibilities towards sustainability.
Discussion
Scenario at Coles Supermarkets Australia
Coles Supermarkets Australia Proprietary Limited, better known as Coles, is a
renowned Australian retail, supermarket and consumer services provider with its
headquarters in Melbourne (Colesgroup.com.au, 2019). Along with its prime competitor
Woolworths, Coles accounts for almost 87% of the market in Australia (James, 2016). Being
a leading firm in the industry, the organization has social and environmental responsibilities
towards its customers.
With climate change emerging as a major global issue, various organizations around
the world are involving in corporate social responsibility programs that aim to contribute
towards sustainability (Allen & Craig, 2016). However, one of the leading agents of plastic

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pollution in Australia are the plastics bags produced by Coles. However, the company also
devised means to counter the problem by introducing reusable plastic bags that can be
purchased by the customers (Knox, 2015). Soon after this effort, the Company introduced
mini collectibles made of plastic for its customers that created an outrage in the society
(Abc.net.au, 2019). These collectibles were launched by the organization in order to emulate
their rivals, Woolworths, who had introduced discs of Marvel superheroes and animal cards.
This promotional activity went against the social and environmental standards of ethics and
sustainability. It is so because the sustainability goals of the organization include creating a
positive influence on the environment with a focus on recycling waste, ethical sourcing and
efficient utilization of resources. However, their introduction of synthetic plastic collectibles
adds to the plastic pollution in Australia. Moreover, after having faced the outrage regarding
environmental concerns, the organization also released a second edition of the collectibles,
with greater plastic options in the form of shopping trollies. According to reports by
Au.news.yahoo.com (2019), the second edition of collectibles released by Coles could
provide the customers almost 20 minis for every transaction. This promotional initiative by
the Company showed a strong disregard for environmental sustainability through the
conduction of unethical practices.
Stakeholder theory and Business ethics
According to the stakeholder theory, organizational management should be conducted
in a manner that is ethical and protects the interests of the various stakeholders of an
organization like suppliers, investors, customers, employees, local communities and the
society at large (Harrison, Freeman & Abreu, 2015). The theory was popularized by Edward
Freeman in 1984, who identified the basic stakeholders of an organization, providing
recommendations to give regard to their interests. The theory addresses the values and morals
involved in management of organizations entailed through corporate social responsibility,

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social contract theory and market economy. Stakeholder management and the social
responsibility of an organization is interrelated because the firm is directly responsible for its
business activities to the interests of the stakeholders as well as the society (Mason, &
Simmons, 2014).
One of the major aspects of the stakeholder theory is that organizations must create
value for all the stakeholders and not just the shareholders alone. The stakeholder theory
further integrates resource based and market based views on a socio-political level. Through a
definition of the particular stakeholders in an organization, an analysis can be made as to how
the resources and market must be managed in order to satisfy the interests of all the entities.
With the help of this analysis, the organizations can formulate strategies aimed at building
ethical environment of operation. Furthermore, another imperative of the stakeholder theory
is that the business organizations must strategize in a manner that gives them an advantage in
the competitive market, but this must not be done at the cost of the fundamental vision of
corporate responsibilities.
However, the stakeholder theory also encompasses within its scope a flaw that
concerns the degree to which the business processes of an organization to cater to ethical
needs rather than business needs. In other words, it is often argued by critics that, the
stakeholder theory shifts the focus of an organization from ensuring success in business, to
the entities who share the success (Bridoux & Stoelhorst, 2014). However, the success of this
theory lies in the attainment of a balance between business interests and stakeholder interests.
In order to do so, the organizations must identify the interests of which stakeholder is likely
to be affected by the business decisions of the organization. Moreover, the organization
should also try to evaluate the success criteria of each stakeholder thereby creating a
sustainable environment that provides value to maximum entities. A utilitarian approach is

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necessary in ensuring the success of stakeholder theory, by providing the greatest benefit and
least harm to all those who are involved in the business procedures.
Analysis of Coles Supermarket promotional strategy
Maximization of sales and profitability is a major goal of any business organization.
Coles Supermarkets in Australia attempted at maximizing their sales by providing incentives
to the customers in the form of mini plastic collectibles. The organization claimed that for
every purchase worth 30 dollars, the customers would receive a miniature grocery collectible.
The purpose of this promotional strategy as stated by the organization can be listed as below:
 Encourage customers to eat healthy – The Little Shop campaign of Coles was
endorsed by the Australian Healthy Kids Association. This endorsement helped in the
marketing of the campaign as a method of encouraging children to eat healthy fruits
and vegetables (Grimmer, 2018). For this, the organization introduced plastic
collectibles in the shape of fruits and vegetables, apart from other food items.
 Encourage the joy of collecting – As proposed by the Chief Marketing Officer of
Coles Supermarkets, Lisa Ronson, the Little Shop campaign promoted the traditional
hobby of collecting among all generations. The miniature plastic items produced by
the Company is claimed to be enjoyable to the customers, thereby increasing the
revenue by 2%.
Impact on Stakeholders
The promotional campaign launched by Coles Supermarkets in order to obtain a
competitive advantage over Woolsworth has had an impact on its internal and external
stakeholders. The internal stakeholders of an organization are the entities that are directly
affected by its business processes and decisions, like the managers, owners, investors and
employees. The external stakeholders on the other hand are the entities that are indirectly

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affected by the business processes and decisions of the organization like the suppliers,
creditors, government and society.
 Impact on internal stakeholders – The internal stakeholders of the organization
initially benefitted from the Little Shop campaign as it increased their sales due to the
popularity of the collectibles. The company incurred huge profits due to increased
sales, promoted through effective marketing strategies including advertisements. The
collectibles were sold out immediately within the first eight weeks of the campaign,
accounting to a sales growth of 2% (Thewest.com.au, 2019). However, the developers
of the campaign received a huge backlash from the customers and environmental
activists for contributing to plastic pollution in Australia.
 Impact on external stakeholders – The external stakeholders of the organization,
particularly the customers, government and society faced a negative impact from the
Little Shop campaign. The campaign was initially popular among the customers,
particularly children because of the design and packaging of the collectibles.
However, with the rise of concerns regarding the increased use of synthetic plastic in
the collectibles, the organization received a huge outrage. Environmentally conscious
customers created a petition to ban the mini collectibles (Spring, 2019). The products
also had a negative impact on the society as the plastic was contributing to the
landfills and was not recyclable. Moreover, initiatives taken by the Department of
Environment and Energy to promote environmental sustainability, was disregarded
through the Little Shop campaign.
Analysis of problem through Stakeholder Approach
As the Stakeholder theory suggests, the business activities and decisions of an
organization should be aimed at fulfilling the interests of the maximum stakeholders. The
external stakeholders of Coles Supermarkets consists of the maximum Australian population.

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The interests of the society and the environment should therefore be catered to through
socially responsible and sustainable business activities. However, the organization failed to
meet these requirements by only fulfilling the interests of the internal stakeholders (Spring,
2019). The utilitarian and common good approach of ethics suggest that business
organizations must involve in activities that promote the common good for maximum people.
In this respect, the Little Shop campaign can be considered a failure as it compromised the
interests of the society.
Alternative solutions
The problem posed by the Little Shop campaign of Coles Supermarkets can be
provided with the following alternative solutions:
 Improving promotional initiatives – The Little Shop campaign was aimed at
promoting the brand image of Coles Supermarkets to gain a competitive advantage
over Woolsworth. However, instead of engaging in the use of plastic goodies for
promotion, the organization can engage in other means of promotion like social media
and print media advertisement. Moreover, Corporate Social Responsibility activities
can be undertaken by the Company to improve its brand image.
 Catering to the needs of the stakeholders – Future business processes of the
organization must aim at sustainability towards the society and the global
environment, keeping in consideration the global social and environmental issues
(Welford, 2016). For this, they may engage in activities that address the major
problems concerning the interests of the external stakeholders. The petitions and
requirements of the customers must be adhered to by the organization so that they can
ensure customer satisfaction and build a sustainable relation with the society.
 Improving research and development – The Company can also invest in research and
development to identify sustainable means of product promotion. For example, the

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use of recyclable plastic for the collectibles or developing paper bags for the
customers can help in protecting the interests of the society and environment. By
monitoring the kind of quality of plastic that is acceptable by the legal and
environmental standards of the country, the Company can develop alternatives to
produce collectibles that are not as harmful to the environment.
Recommendations
The ethical and sustainability issue faced by Coles Supermarket regarding their
promotional campaign of Little Shop can be solved using certain recommendations. Firstly,
the Company must take responsibility of their business activities and discontinue their
promotional strategy of the mini collectibles. Instead of this, they can engage in other
charitable activities that will improve their Corporate Social Responsibility. These activities
may include the donation of food or clothing to needy people in the world for every purchase
over 30 dollars. Secondly, they must also engage in developing their promotional and
marketing strategies keeping in consideration the local and global environmental laws that
must be adhered. The global concerns like climate change and plastic pollution must be
addressed adequately through their business procedures.
Conclusion
From the above analysis of the ethical and sustainability problems faced by Coles
Supermarket, it can be deduced that ethics plays an important role in determining the
business strategies of any organization. An efficient organizational structure integrates ethics
and sustainability goals within its processes so that the interests of the internal and external
stakeholders are catered to duly. Thus in order to solve the ethical problem, Coles
Supermarket must engage in Corporate Social Responsibility programs that can address the
local and global issues like climate change and plastic pollution. This will not only help in

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improving the promotional sales and brand image of the organization but also help in
developing a sustainable relationship with the customers and the society.
References
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over-giving-away-plastic-toys-again/11317904
Allen, M. W., & Craig, C. A. (2016). Rethinking corporate social responsibility in the age of
climate change: a communication perspective. International Journal of Corporate
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