Multinationals Act More Ethically as They Are More Successful Dissertation

Multinationals Act More Ethically as They Are More Successful - Dissertation Example The Body Shop 14 Ben & Jerry's 14 Multinational companies that are more ethical after facing 15 the repercussions of unethical behaviour Nike 15 McDonald's 16 Research on ethical trading and customers 16 The Institute of Business Ethics 17 Research on Coffee Labelling 17 Summary of findings 18 Conclusion 18 Introduction In today's ever changing business arena, there is still one constant force that drives multinational companies - profits. No matter the nature of the business, most companies still seek to maximise shareholder value as this tangible financial measure epitomizes corporate success. Nevertheless, in the last two decades, there has also been a noticeable shift in business priorities as multinational companies recognise that fulfilling shareholder value may not be sufficient to acquire the results they need. Henry Ford once said that, "business must be run at a profit, else it will die. But when everyone tries to run a business solely for profit then also the business must die, for it no longer has a reason for existence." (Roddick, 2000, p. 23) This essay examines the role ethics plays in multinational businesses and the intricate link between ethics and profits. To do this, the definitions of shareholder and stakeholder values are scrutinized in order to understand the motives behind companies acting ethically. Here, shareholders are characterized as financial investors and stakeholders are individuals or bodies of people like employees, customers, partners, and pressures groups who have emotional and long-term ties to a company. Delving further into the issue of stakeholder influence on ethics and profits in... In order to reinforce the essay's arguments, successful companies like The Body Shop and Ben & Jerry's whose competitive advantage is cemented in ethical trading from day one are contrasted with business leaders like Nike and McDonald's who have jumped on the social responsibility band wagon after suffering the repercussions of unethical behaviour. To further understand company motivation for ethical business, research and studies on the consumer's point of view are also examined. Shareholder vs. Stakeholder Before the 1990s, business success was dictated solely in financial terms. Shareholders are normally financial investors rather than individuals with emotional and long-term personal ties to a company. In short, they are profit-driven. Today, the advent of social messages tied to company mission statements prove that besides shareholders, there are stakeholders that are not interested in the financial side of businesses, but who are just as crucial in the development of almost all aspects of a business. In Appendix F, Price Waterhouse Coopers (2006) believes that in order to protect a company's reputation, there are five stakeholder groups, including shareholders (capital), employees (manpower), customers (revenue), partners (suppliers), and pressure groups (a license to operate) that need close attention. The following section examines each stakeholder group and the value they provide in addition to exploring the impact each group has on shareholder value (which provide tangible financial assets).