Corporate Sustainability And Effectiveness -Myassignmenthelp.Com

Question: Discuss About The Corporate Sustainability And Ethical Effectiveness? Answer: Introduction: Ethics and ethical dilemmas have profound influences on the business operations of multinational companies. Ethical dilemmas and failure to deal with them appropriately attract controversies which prove fatal to their business both in short term and long term. The paper would shed light on the topic by analysis of a piece of news revolving around a controversial advertisement by Pepsi Co. featuring Kendal Jenner. The author would first introduce the company and then go on to explore the controversial advertisement involving ethical dilemma (pepsico.com, 2018). The advertisement and its impacts would be analysed on the basis of two managerial ethical theories, namely, Utilitarianism and Kantian deontology. This advertisement would be then analysed on the grounds of these two theories and their impact on business generation of Pepsi Co. Then the author would go on to study how ethical dilemmas impact business decisions and their importance in those decisions. The chosen organisation and its ethical dilemma: PepsiCo Limited is the second largest manufacturer and marketer of food and beverages in the world and has its headquarters in the United States of America. The company is listed on the NASDAQ in its home country and several other stock exchanges around the word which accounts for its huge capital base (nasdaq.com, 2018). The global giant uses aggressive business models like wholly owned subsidiaries and acquisition and merger models to dominate the global beverage and snacks markets. PepsiCo owns some of the top brands in the world like Pepsi, Tropicana and Lays. The company under the leadership of its present CEO Mrs Indra Krishnamurthy Nooyi conducts business in over a hundred countries around the world (pepsico.com, 2018). It is evident from the discussion that the multinational company comes under immense pressure to satisfy all its stakeholders which creates ethical dilemmas which attracts interventions from the apex management. The ethical dilemma: PepsiCo was trapped in the ethical dilemma when it released an advertisement which showed model and actress Kendal Jenner approaching a police officer with a can of Pepsi with an angry crowd mostly consisting of black people marching in the background (cnbc.com, 2018). The critics cited that Pepsi tried to show the democratic rights of the people of Australia, especially the blacks in lighter sense. Moreover, the advertisement showed Kendal Jenner, a white American offering Pepsi to a police officer. The Australian media interpreted this feature of the advertisement as a marketing flaw of Pepsi and showcasing of racism (Iphofen, R., 2016). The advertisement received such a huge criticism from the Australian people and media that it attracted managerial action from Pepsi. The apex management of the multinational company ultimately had to withdraw advertisement to recover from the ethical dilemma. It can be argued that the ethical dilemma identified stems from the companys accountabili ty to a large number of stakeholders simultaneously. The next section would analyse this dilemma on the basis of two managerial theories namely, ethical dilemmas and ethical relationship with stakeholders. Two theoretical concepts from managerial ethics and critical analysis of the dilemma: The Utilitarianism theory is the managerial ethical theory dealing with morality of the outcomes of actions. As far as organisations are concerned, they face utilitarianism situations due to the continuous compulsion of adapting the outcomes of their strategies to benefit the changing macro environmental influences like technological and social changes over which they have no control. The complex business situations require the top managers to take decisions to tackle these ethical dilemmas (Sharda et al., 2014). Thus, one can argue that failure of the apex management bodies to confirm to utilitarianism theory by ensuring benefits of the stakeholders by their business strategies lead to loss of goodwill and loss of their support, thus weakening their business position. Kantian deontology: The theory Kantian deontology delves into the levels of ethical quality of an act rather than the outcome of the act. This means that the theory tries to point how ethical and morally strong an act is rather than merely looking into the outcome if the act like profits earned. This is because the interests of the stakeholders often conflict and the business organisations are required to meet both the interests to sustain in the market (Madueo et al., 2016). Resentment from stakeholders like customers can attract legal actions from another stakeholder, namely government. One can argue that the management of multinational business organisation are compelled to consider protecting stakeholders interests in spite of the ethical dilemmas because the stakeholders are capable of influencing the later and even lead the latter to close operations. They must ensure that the methods and plans they take are ethical and follow the Kantian theory. Analysis of the ethical dilemma in the light of the two theories: PepsiCo being a public limited company raises capital by issuing shares in the securities market. The company is under ethical and legal compulsion to give high returns on investments (ROI) to its shareholders. The company employs thousands of employees and is responsible for providing them with legitimate compensation. PepsiCo is under continuous pressure from governments to pay high taxes. These immense utilitarian pressures from these stakeholders necessitate the company to promote its products to attract more customers and generate higher revenue (Archer Harrigan, 2016). Thus, one would consider the advertisement of Pepsi as an ethical strategy to generate revenue to give maximum return to the shareholders and governments. The high revenue would also enable the company to raise the compensation packages of the employees. Thus, one can argue from this discussion that Pepsi had operated in a perfectly ethical manner by following the Kantian deontology by advertising its products. The theory of utilitarianism exposes PepsiCo before the other stakeholders like customers, media and the society as a whole. The company is under ethical legal compulsion to fulfil their interests as well in order to operate in the international market as per the utilitarianism theory. It is this need to satisfy this large number of stakeholders which exposes the company to ethical dilemmas which invites prompt actions from middle and upper level management (Salvioni, Astori Cassano, 2015). The advertisement of Pepsi featuring Kendal Jenner attracted criticisms from a wide range of stakeholders like the Australian media, customers and the Australian society in general (independent.co.uk, 2018). The blacks living in Australia are suffering oppression and exploitation in the hands of their white counterparts. They often protest demanding for their rights and dignity. The advertisement of Pepsi shows one such protest march in its background. The police and the government of Australia treat the protestors strictly which was evident by the showcasing of police officers in the advertisement. The showcasing of Jenner approach of police officer ready to retaliate one such march and the subsequent merriment of the protestors clearly shows that Pepsi has tried to show the plight of the Australian blacks less seriously (YukhymenkoLescroart, Brown Paskus, 2015). This analysis shows that the advertisement which was designed to market Pepsi in the Australian market to generate reven ue to give high ROIs to investors, an important stakeholder of Pepsi, did not protect the interests of the Australian society, another important stakeholder. The advertisement of Pepsi Co showcases its brand ambassador Kendall Jenner handing a Pepsi can to a police officer ready to take on the protestors. The critics like Bernice King, the daughter of Martin Luther King Junior opined that the advertisement demeaned the black Australians (Hsu Lawrence, 2016). It was also argued that the advertisement was said to encourage racism because it showed Jenner, who is an American white more prominently than the black Australians. Thus it can be argued that the advertisement was unethical from the side of the customers and society of Australia though it apparently did not have anything unethical as far as stakeholders and governments were concerned. The above discussion apparently shows that stakeholder interests are conflicting and lead multinational companies into ethical dilemmas. However, a closer look into the needs of the stakeholders would reveal that in reality their interests are interlinked and interdependent. The advertisement of Pepsi raised controversy in its Australian market that led to criticisms from customers particularly, black customers. This led to fall in sale of Pepsi products in Australia which is one of the important markets of the company which impacted its revenue generation. The controversial advertisement according to market experts actually showed the dwindling marketing prowess of the multinational company (cnbc.com, 2018). All these controversies on the ethical grounds damaged the market goodwill of Pepsi considerably. The shareholders interpreted this fall in revenue generation and market goodwill as the dwindling power of Pepsi Co to pay its investors high ROI and dividends (dailymail.co.uk, 201 8). This loss of investors trust led to fall in the share price of Pepsi that in turn affected its capital generation. Thus, in the first instance, Pepsi launched the advertisement in the Australian market to market its products and generate revenue to give high ROI to shareholders and taxes to governments, thus protecting interests of these two important stakeholders. However, the company lost support of the shareholders when it failed to protect the interests of two other important stakeholder groups namely, the media and the Australian society (Daboul, 2016). Thus, it can be argued that the apex management bodies of multinational corporations should maintain Kantian deontology (second theory) to deal with utilitarianism dilemmas (first theory). Influence of two ethical theories on managerial decision making process: The following are the ways in which Utilitarianism and Kantian theories influences managerial practices: Decision-making: Multinational business organisations like Pepsi Co. should take into accounting utilitarian theory to ensure that the outcomes of their strategies are ethical and the Kantian theory to ensure that the strategies taken are ethical while making decisions. The analysis of the advertisement clearly shows that ethical dilemmas resulting from faulty managerial decision making in crucial areas of business like marketing and consequent dissatisfaction of stakeholders can lead to massive losses like dwindling of revenue and weakening of market goodwill. A critical analysis of the devastating impact of the controversial advertisement shows that breach of utilitarian and Kantian theory are capable devastating both capital and revenue generation of companies. Thus, it can analysed that ethical dilemmas and ethical stakeholder relationship should be given due consideration by apex management while forming business decisions (Noval Stahl, 2017). Market competitiveness: The utilitarianism and Kantian theories ensure that the strategies the companies make are ethically strong in terms of outcomes and methods respectively which ensure business growth and competitive advantage of companies in the market. The ethical dilemmas and resultant controversies from different important stakeholders like media render massive damage to the market images of the organisations involved. The discussion above shows that loss of goodwill reduces both capital and revenue generation of organisations, thus impeding their business operations. This results in loss of competitive advantage in the market to competitors (Fiksel, 2015). For example, Pepsi shares its market with its toughest international competitor, Coca Cola. The products of Coca Cola Company like Coca Cola and Pepsi Co like Pepsi are substitute of each other. This, ethical dilemmas due to breach of these two theories and consequent controversies result in Pepsi in losing its customers to Coca Cola. This means Pepsi would lose its market competitiveness to Coca Cola which weakens its market position (Block et al., 2016). This shows that ethical dilemmas have very strong impact on the market competitiveness of the multinational companies. Conclusion: One can reflect on the discussion above and point out light several important facts. First, apparently conflicting interests of stakeholders lead multinational organisations into ethical dilemmas. Second, failure of comply with interests of one of group of stakeholders (Australian society in the example) lead the organisations to lose support of other groups of stakeholders (shareholders) as well. Thirdly, this loss of stakeholder support leads to reduction of revenue generation and capital generation power of the companies. Fourth and finally, the ethical dilemmas are capable of damaging the goodwill of the business organisations and leads to weakening of their competitive advantage. Thus, this critical analysis of the importance of ethics in business operations makes it clear that business leaders of multinational organisations should form decisions giving ethics due importance. 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