Analysis of Ethics and Sustainability in Timberland's Business Model

This report provides an in-depth analysis of the ethical and sustainability challenges faced by Timberland, a company known for its apparel. The report begins with an executive summary and introduction, followed by a detailed overview of the scenario, focusing on the company's philanthropic initiatives and the subsequent concerns raised by shareholders regarding profitability. The analysis employs Edward Freeman's Stakeholder Theory, emphasizing the importance of considering all stakeholders, including customers, employees, and the community, rather than solely focusing on shareholders. The report examines the impact of ethical considerations on corporate decision-making and financial performance, referencing studies that both support and contradict the positive correlation between social responsibility and financial success. Three alternative solutions are presented: Utilitarianism, Individualism, and the Moral Rights Approach, each offering a different framework for addressing ethical issues. The report concludes with recommendations for dealing with ethical issues, emphasizing justice-based decisions and the importance of long-term sustainability and corporate responsibility. The report emphasizes the need for businesses to balance profit with ethical practices to ensure long-term success.

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AUTHORS NOTE:
Running head: ETHICS AND SUSTAINABILITY

ETHICS AND SUSTAINABILITY
1.Executive summary
Ethical decision and choices are difficult to illustrate and these in general are code of moral
principles and values that surrounds and controls behavior of individual as well as enterprises
with context to right or wrong based on ethical set of standards. So firms these days
increasingly focus on maintaining internal values as part of their corporate responsibility to
demonstrate a culture where their decisions are influenced on social and ethical
responsiveness as well as their response to impact that can occur due to actions in terms of
people or parties involved. Hence ethical solution are based on philosophies of utilitarian,
individualism and moral rightness.
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Contents
1.Executive summary.............................................................................................................................1
2. Introduction.......................................................................................................................................3
3. Summary of scenario.........................................................................................................................3
4. Description of theory used for analysis.............................................................................................4
5. Analysis..............................................................................................................................................5
6. Identification of 3 alternative solutions.............................................................................................7
7. Recommendations.............................................................................................................................8
8. Conclusion.........................................................................................................................................8
References.............................................................................................................................................9
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2. Introduction
The principles of ethics and sustainability are base of numerous corporate concepts and
business enterprises that widens the individual and corporate priorities beyond conventional
objectives of profitability and shareholders growth. In today’s scenario ethical components
are important for firms that goes along with conventional business objectives of delivering
service quality and cost management and hence several firms largely participate in ethical
considerations that influences trade and corporate environment (Hodges & Sulmasy 2013).
In this report a business case is identified and alternative solution are discussed followed by
recommending best choice to address ethical issues.
3. Summary of scenario
One such case of ethics and sustainability is being discussed for Timberland which is a
company widely acclaimed for men shirts and climbing boots and has a strong financial
stability in terms of revenues and profitability. Philanthropy started its root in Timberland
during 90’s when employees started donating free boots and uniforms to community non-
profit projects and later Jeffrey Swartz (CEO) started shutting down 1 day
operations/annually at Timberland so that their employees would volunteer and company
started paying their employees 16 hours of paid leave each year but it did not come cheap as
on average these annual volunteer events costed around 2 mn USD for Timberland in loss of
sales, project expenses. Many of the shareholders raised concern over Timberland’s focus on
community causes and found them hurting profits at large and advocated cut off for these
ethical and civil considerations to regain business losses. The company faced questions of
ethics and sustainability and identified may be the managers were failing business and
stakeholders by turning up too many resources into ethical considerations. Other questions of
ethics was whether cutting out charity and focusing on returning to profits was an ethical
decision for Timberland and was Timberland being ethical by spending money on community
projects and at same time laying off employees.
4. Description of theory used for analysis
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ETHICS AND SUSTAINABILITY
Stakeholder Theory was proposed by Edward Freeman which emphasizes that the aim of a
business is to develop value for its stakeholders and not just shareholders, as such a firm
needs to meet needs and expectations of their customers, suppliers, employees, community
and shareholders. In todays business context it is largely accepted that a firm requires to
consider more than their shareholders and more than gaining profits so as to add valuable
sense to stakeholders within the stakeholder ecosystem that includes getting each of them
involved and invested with a firm to attain real success. The stakeholder theory states that a
firm’s stakeholders consist of just anyone who is being impacted by the firm and their
operations and it holds in opposition to shareholder theory that was given by Milton
Freidman where it was stressed that the only stakeholder a firm needs to care about are their
shareholders and should be driven towards profits to satisfy shareholders to ensure positive
development. But this was later redefined by Freeman’s Stakeholder theory with the opinion
that firms firm’s need to support all group of their stakeholders including customers, media,
employees, community, government etc to build a healthy corporate environment and
maintain sustainability in long term (Harrison, Freeman, de Abreu & Cavalcanti 2015). The
stakeholder theory states that in order to maintain a healthy and growing firm it is required
that it never loses focus of everyone who is engaged with firm to drive its success. For
example the theory depicts that if a firm treats its shareholders say employees badly then in
long run the firm will fail to grow. Similarly if a firm enforces its projects on community to
lead to damaging effects then the same detrimental impact would return and occur likely to
firm, as such the theory clearly states that a firm should not neglect any of its stakeholders so
as to succeed truly as in long run a firm cannot grow and survive if it dis-satisfies its
stakeholders and make them feel neglected.
5. Analysis
Sine past few years there has been a wide counter action over the belief that firms have no
liablity other than their shareholders value creation and this has been redefined by the idea
that there are other groups along with shareholders to whom an enterprise has liablity which
is widely accepted as stakeholder theory. However there are philosophical complexities in
giving credible support of principles for managers of firms while dealing with ethical
consideration like impact of enterprise on environment and nature that has no direct
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involvement of humans with business or engagement with transactions of firms. But these
ethical consideration have impact over corporate decision that consist of appreciating these
ethical values along with increasing awareness to social responsibility of enterprises (Van
Buren, Harry & Greenwood 2013). This observation of rising value given to ethical decision
and choices has been possible due to rise in awareness of consumers towards quality of life
other than narrow economic benefits that have evolved and extended ethical consideration in
the economy and in business behaviour of corporates. According to Bautz (2016) these days
consumers largely consider social and environmental well being during their purchase
decisions and intentions and also several institutional investors while making investment
decisions base their screening on social and ethical activties of business before agreeing to
invest in firms. Moroever government across the world also make and execute robust
environmental and social policies to drive more emphasis on enterprises for ethical and
sustaianble considerations of community and all these are directly and indirectly impacting
the behaviour and performance of firms.
According to Giddy (2014) the relationship between a firm’s social and ethical responsibility
and its financial performance are based on different contexts and arguments both positive and
negative. Where some studies suggest a negative correlation between social and ethical
responsibility and financial performance of firms thus arguing that high level of focus on
social and ethical consideration often results into additional costs for firms thus leading them
to economic disadvantage in contrast to other firms that are less ethically and socially
responsible. These additional costs can tend to extend a drop in cash flow of firms. While in
contrast to these arguments some studies present that there is positive correlation between
social and ethical responsibility and performance level of firms due to improved outcomes
and impact where it is argued that there exist a positive relation of ethical and social
consideration over better employee and customer goodwill which are outcomes of social and
ethical responsibility that has high level of impact on employee morale and productivity.
Also framework such as stakeholder theory specifically underpins that corporates have large
responsibility to provide value to all stakeholders equally depending on the cost and hence
ethical and social consideration have large impact on the work and operations of business not
only in explicit claim but also in implicit claims which means that if an enterprise does not
act in a socially and ethically resposive way then stakeholder such as employees,
government, partners, customers etc who tend to get intrinsically associated with a firm based
on perspective of social and ethical responsibility of firm may tend to tranform their radical
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agreement or behaviour into explicit acceptance that can become more costly eventually for a
firm in long run (Miles 2017). Further socially and ethically responsive actions can spread
over to other implicit stakeholders who may doubt whether an enterprise would satisfy their
claims and needs. As such enterprise who have image of high ethical and social responsibility
tend to have more low cost implicit representation than other corporates which hence drives
large financial performances.
An additonal element that comes with high level of ethical and social responsbility image is
positive repuatation of corporate due to their corporate social responsibility intiatives and
support for sustainable development of people, profit and planet. These positive identity helps
to attract talented resources towards firms as well as help to meet the needs of employees in
fulfiling their philanthrophic or community obligations to remain ethically and socially
satisfied along with their association with firms who have good CSR image. This is because
of the fact that high ethical and social consideration levels signals stakeholders high
maangerial skill levels and a high corporate social resaponsiblity image and goodwill level
results into high corporate value that increases because the employees of a firm earn a
minimisation in their explicit cost in return for a low implicit charge so as to improve and
extend reputations (Enyinna 2013). Because of these positive impacts the financial
performance as well as individual or corporate performance along with corporate image
becomes strong to drive interest and confidence of all stakeholders towards the firm because
of strong ethical and sustainablity corporate practices and approaches.
6. Identification of 3 alternative solutions
The decision on solution to address the ethical and sustainability concerns or issues at both
individual and organizational levels can be based on the following three alternative
approaches.
Utilitarian: the solution and decision to address the ethical issues using utilitarian approach is
based on moral behaviour that creates greatest good for largest numbers. Under this decision
is made by considering the effect of each alternative solution on all parties involved and then
best one is chosen that optimizes the fulfilment (May, Luth & Schwoerer 2014).
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Individualism: the solution and decision to address the ethical issues can also be based on
individualism that contends that actions are moral if they facilitate individual’s best long term
undertaking and states that individual self-direction is foremost and external forces that
obstructs self-direction should be restricted while making decision for ethical solution. It
states that individual calculates long term benefits to themselves as tool to evaluate decision’s
goodness or fairness. As such solution that intends to provide larger ratio of good to bad for
individual or organization as compared to other alternative choices is right one to perform
and in practice organization with their self-direction can pursue larger goodness that can
ultimately serve more number of people as they learn to accommodate each other’s interest
(Remisová, Lasáková & Búciová 2014). So ethical solution that are based on individualism
directs behaviour or decision that fits standards of behaviour people or firms look for towards
themselves thus ensuring to value ones understanding.
Moral Rights Approach: in this solution or decision to address ethical issues are based on
fundamental right and freedom of people and states that an ethically right decision or solution
is that which best maintains the right of people who are affected by ethical issues. Under this
solution should be identified based on six moral consideration while making decisions which
are right of consent, right to privacy, right to freedom of conscience, right to speech, right to
due process and right to life and safety (Bliss 2014). Hence under this firms avert
interference to fundamental right of others while making solution and decision for ethical
issues.
7. Recommendations
It is recommended that issues of ethics should be dealt with solution or decision that are
focused on justice where decision must be founded on standard of fairness, equity and
impartiality. Hence it is recommended that Timberland in event of decline in their profits
should have looked to provide compensatory justice while laying off their employees so as to
cut cost that was additionally incurred due to more focus on philanthropic activities to remain
fair to employees ethically where employees should have been compensated for the cost of
their losses (in this case job) by their employer Timberland as employees should not be held
responsible for matters over which they had no control.
8. Conclusion
Thus it can be concluded from analysis that enterprises that undertake strong perspective and
consideration for maintaining social and ethical responsibility gain in three different aspects
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ETHICS AND SUSTAINABILITY
i.e. related to strong financial performance where high profits can be ensured due to high
demand and consideration for firms and their services in market and among customers. The
second aspect is good image that builds reputation in market and third is high impact over
employees moral thinking which helps to attract and retain competent resources who share
growth and long term sustainability of firm.
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