Question

1) What responsibility (if any) does a company bear for the conduct of its suppliers?

2) Is the company responsible for unsafe, unsanitary working conditions in a supplier factory that is 8000 miles away?

3) Nokia was selected to be one of the companies included in an “ethical” fund – a mutual fund made up of the stocks of companies that are well-known for their commitment to ethical decisions. Should every company behave as if it were on this select list of Ethical Companies?

4)Keeping two sets of books seems to be common practice in China. How do you address this issue if you have operations in China?

5) Should one society force its work standards and wage rates on another? Why or why not?

Answer 1

Solution 1

Companies usually sign suppliers with code of conduct and hence suppliers can be held liable as per contractual obligations signed in the Ethics code and companies can terminate them at any time.

Solution 2

Comapnies are only responsible for the persons they employ within their premises and cannot sue or held liable the suppliers manpower in majority of cases.

Solution 3

It is required and always best if all companies behave in ethical standards however in reality it is not the case. Companies do indulge in breach of conduct due to various ethical dilemmas they face and due to lack of ethical audit practices these misconducts dont come up.

Solution 4

Keeping two sets of books is common practice to explore loopholes. To avoid thismany firms are now looking to start business in common accounting standards where IFRS and GAAP are converged and thus misrepresentation or extrapolated figures dont come up while audit

Solution 5

No society should force work standards or wage rate onto another as this can create inequality or imbalance if high paying industrial activity is forced to get lower pay or vice versa. This affects employees morale and can lead to increase in attrition rate.