ASDA is among the companies which have controversial ethical issues. The firm has received several awards regarding its profound contribution to humanitarian responsiveness to the society and its employees. For instance, the company was awarded the Nestle Social Commitment prize in 2002 (Schwartz & Harris, 2013). However, the company has been cited as the one whose business undertakings are unethical. In the U.S., the company has been criticized for raising the living conditions of its workers. The enterprise has been only focusing on earning more profits through scrupulous means. This article explores the ethical issues facing the ASDA firm.
Many people have been accusing the company of neglecting fundamental human rights and environmental concerns when carrying out day to day activities. However, the management of ASDA has come out strongly to issue a counter statement terming the ethical issues raised as baseless and unreliable. Even though ASDA has been stressing so much on ethical policies, they do just the opposite. Some of ASDA's plans include Ethical Trade Policy, in it commits itself that all the goods that it sells are produced in a way that is free from exploitation of workers and in an acceptable condition. The company has been at the forefront in advertising the very policy, saying it is in line with Ethical Trading Initiatives' base code since 1998 (Schwartz & Harris, 2013). The company has been a member of this organization whose aim is developing good practice and providing a universal standard for its performance. However, ASDA is among companies that have been blamed and criticized for breaching ETI codes. Some of the criticism are that the firm has breached continuously international labor standard's which has presented a glaring contradiction.
Some organizations have been supporting ASDA's stand on the ethical issue by pushing off accusations of exploitation. Simon McRae argued that it is a contradiction for companies to have ethical companies (Schwartz & Harris, 2013). Companies do sign up moral labor codes, but when they decide to push and push prices down, they would be actively hindering ethical practice. McRae, further said that the company could not keep on pushing suppliers for cheap clothes at the same time advocate for workers' rights. McRae's assertion was based on the fact that voluntary codes are usually a substitute for mandatory ones. Hertz was also in support of such contention when he argued that voluntary measures are sometimes meaningless as companies can opt not to adhere to them at all. More often than not, companies do sign voluntary codes for social responsibility to serve as a tactic that is used by business enterprises in the world of business to avoid binding rules and constraints on their corporate power. The reason for this has been a company could be seen as acting responsibly when in real terms, they are carrying out their business as usual. In this regard, therefore, such measures have been criticized as mere public relation exercise, as most of the firms do neglect the concern for the people, but focus on their reputation and prosperity. Highlighted above and discussed below are some of the cases where ASDA has been facing criticism for neglecting ethical issues when executing their daily business operations.
Insensitive to Community Concerns
ASDA has been claiming that its services are community-centered. Some of its websites proclaim the same story stating that ASDA stores are stores for society. Similarly, the sites say that the company has been on more front as it plays a decisive role in all aspects of local life. The websites further states that the companies has been doing a lot in terms of investments, where it has created 25,000 new jobs for the past five years (Brasseur, 2020). The company has also been claiming that it provides opportunities by opening new stores. This fact has been criticized by a survey done by the British Retain Forum, citing that an average of 275 people has been losing jobs for every new supermarket the firm has opened in the U.K (Brasseur, 2020). According to the study, ASDA had only opened in 2004, his first town center store; thus, the community has never been on its top priority on its development agenda.
In 2003, another study was done to evaluate the effectiveness of the new Wal Mart supercenter proposal (Brasseur, 2020). Californian Suburb Contra Costa County was very critical in their research on the plan projecting that if ASDA establishes new supercenters, it was to affect the community negatively. According to the research done by San Diego County Taxpayer Association, the influx of such stores would negatively cause a decline in annual benefits and wages between $105 million to $220 million and an increase of nearly $8 million in healthcare costs (Brasseur, 2020). As such, therefore, only a handful of ASDA's employee who was under health insurance would have benefited and leaving the rest of the cost to be met by taxpayers. Despite the fact that the firm has considerably lowered prices for its products, a move that has enabled customers to shop more frequently because they are in first place taxpayers who pay indirectly to its workers' medical insurance cover and its retired employees. The research was backed up by the study done by the University of Califonia at Berkely, which estimated that the company costs the country $86 million annually from public assistance techniques (Brasseur, 2020). One day, the times described the company as "an American largest gun seller"- as it was directly contributing to community destruction.
Utilization of Illegal Labor Force
The company was exposed in a documentary by the name Paranoma in 2000, showing how it has been buying produce from the supplier by use of exploitative and illegal labor (Brasseur, 2020). The firm had to present forged documents to Fenmarc, which has been the main supplier of potatoes. In the documentary, it depicts how the lives of immigrants who are barred from entering the country illegally but bribe gang-masters for forged documents using a lot of money. Immediately the immigrants paid, they take part of their returns to pay gang-masters and are only left with almost nothing to live on. The issue of illegal labor was also cited by trade union researcher Don Polland who argued that illegal labor supply forms a substantial part of most supermarket's labor supply. And in the event, such labor force are removed from the supermarket, it would end up affecting the entire supply chain. However, ASDA's, spokesperson Christina Watts dismissed such allegation saying that it is not their responsibility to check on the legality of a casual laborer (Cooper et al., 2015). He went further to say that it is the work of the government to ensure that controls illegal laborers from other countries because they are not ASDA's colleagues.
Bad Relationships With Suppliers at Home
The firm has directly linked to the collapse of farming in the U.K. It should be noted the firm seem to be too concerned with farmers by organizing events so that farmers can pay visits to its stores but with hidden indention. However, this contradicts how the firm is portrayed in the supply as it concern has always been to exploit the farmers. In 2002, a survey was contacted by National Farmers Union that established that a farmer would receive an average of $4 for a basket of food costing $25 (Cooper et al., 2015). Secondly, it was found out that the supermarket failed to support the British farmers in the quest for the lowest price, but instead, they resorted to sourcing their supplies from abroad where products are produced cheaply due to the availability of cheap labor and land. However, the farmers are not willing to make any comments about unethical practices of the supermarket for fear of retaliation; thus, it is very difficult to get information.
It has been established that ASDA has entered into many ethical codes of contact with the hidden agenda. Despite the fact the company pretending to adhere to code contacts fully, it has been indirectly exploiting the consumers. From the research done by British Retain Forum, it found out the company has contributed immensely to unemployment because once it establishes a new firm, millions of people do lose jobs. Secondly, the firm has been alleging that since it started has employed 25000 people, and it is a mere lie, so many have instead been rendered jobless (Plevak, 2013). In the same way, it has been it established the taxpayers had been burdened by the program where they fund insurance contracts, which do not benefit them at all.
Secondly, it has been noted that the firm has been using illegal labor force to supply them with produce through exploitative means. The management claims that it is not their role to control illegal immigration; therefore, they cannot be blamed. They blame the police for not being responsible for controlling people entering the country. The firm also has been insensitive to farmers as it has been found out the supermarkets rely more on suppliers from abroad as opposed to local produce, which they term as expensive, thus failing to cushion the local farmers. Lastly, the firm has been focusing on maximizing its profits only but has no concerns about the community in which it operates. They had not shown any attempt to address the needs of society as a corporate responsibility.
ASDA, as a company, has failed to uphold the principles of corporate responsibility. The firm has embarked on exploitative practices to maximize their profits. Secondly, the firm remains insensitive to the needs of their local suppliers as they rely more on international supplies at the expense of the local producers. The management has been the forefront to give a counter statement on any ethical issue raised instead of looking into the matter and addressing it. In this regard, therefore, the continued existence of ASDA in the market is going to impact negatively to people and the government. The government has been indirectly incurring costs to pay for medical insurance for ASDA's employees unknowingly through unethical practices. In essence, the firm does not meet the ethical standard, for it continues establishing new firms as its intention is to exploit the country.
Brasseur, K. (2020). Apple, Walmart among compliance winners of 2019: Strong social stances, a dedication to doing what's right, and leading by example highlight the qualities exemplified by our list of ethics and compliance winners of 2019. Compliance Week, 182.
Cooper, R. W., Clapham, S. E., Frank, G. L., & Kemp, R. A. (2015). Ethical Issues for Supply Managers: Then and Now? Journal of Business & Behavioral Sciences, 27(1), 48-64.
Plevak, D. J. (2013). Human Rights : Theory, Developments, and Ethical Issues. Nova Science Publishers, Inc.
Schwartz, M., & Harris, H. (2013). Research in Ethical Issues in Organizations: Vol. First edition. Emerald Group Publishing Limited.
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