hosp

Karen E. Silva

HOSP 4060

White Paper on Ethics

Ethics has become a major talking point these days. It is discussed in the scope of

relationships, personal interactions, and business. What is ethics actually? Ethics is defined as

moral principles that govern a person's or group's behavior. It is our values, standards of

behavior, or principals that dictate our conscience. In expanding ethics to the business

community we find that business ethics are practices regarding potentially controversial issues,

such as corporate governance, legal compliance, discrimination, corporate social responsibility

and fiduciary responsibilities that a business deals with. It is their organizational values,

guidelines and codes used to manage individual and group behavior within the workplace.

In the business world today, issues of trust, respect, fairness, equity and transparency are

gaining more attention. So many businesses are being scrutinized for their practices and lack of

ethical leadership. It has become essential for global businesses to redesign themselves to ensure

they have a code of ethics or corporate governance to operate under. They should embrace areas

of social responsibility, sustainability, and green initiatives. In this paper I will look at two

business with a global footprint and evaluate them to see how they fair ethically. I have chosen

Takata Corporation, one of the world’s leading suppliers of advanced automotive safety

equipment and Starbucks Corporation, the world’s leading coffeehouse chain.

An ethically minded company must have a fully developed code of ethics or corporate

governance to guide them daily. Research into both these companies show that they have these

items in place. Takata has two four page corporate governance documents, one for internal

controls and a second for conduct guidelines for their employees. These documents were revised

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in 2013 to meet the global acceptance level. Takata has undergone a complete revision of their

ethical practices after their heavily publicized and documented faulty air bag crisis. This is an

event that is ongoing and has global ramifications on public safety. Starbucks not only has a

twenty eight page code of ethics for its employees, they also have a code of ethics that they use

to select their suppliers. The document advises employees on everything from the workplace

environment to intellectual property and proprietary information. Their code of ethics document

advises the employees on business practices and items such as conflicts of interest, compliance

with laws and regulations, and sales practices and advertising. They even discuss community

involvement and provide an ethical decision making framework as a guide.

In the realm of social responsibility and sustainability, businesses need to have a diverse

work force that understands cultural differences while being good stewards of the environment

and continually striving for ways to ensure sustainability in the products and services they

provide. In these areas Starbucks excels. The company is an industry leader in green building

with 500 LEED certified stores in 2014. These stores have saved an average of 25,000 gallons

of water annually. Starbucks dedication to energy conservation led the company to purchase

59% of their energy through renewable sources in 2014. Their commitment to people has led

the company to hire nearly 2,000 new partners over the past year as part of Starbucks multi-year

strategy to hire 10,000 veterans and military spouses by 2018. Starbucks worked with nonprofit

organizations to bring their partners, customers, and community leaders together to contribute

more than 520,000 hours of volunteer service around the world. Altogether, the projects have

benefitted an estimated 1.4 million people with a value of $5.2 million for their communities.

Diversity and inclusion are essential to Starbucks. The company dynamic in the U.S. is currently

about 40% minorities; 65% are women. Of their vice presidents, 48% are women and 15% are

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minorities. Among their top leaders – defined as senior vice president or higher – 18% are

minorities and 29% are women. In light of the ongoing Federal investigation into the air bag

crisis that has been linked to eight deaths thus far Takata Corporation has reached out to the

communities in which they operate. The company has attempted to improve awareness and

increase driver safety while displaying social responsibility. A majority of their production

facilities are ISO14001 certified. The company participates in traffic safety events conducted by

government offices and other groups. They engage in activities with obstetricians, pediatricians

and expecting mothers to communicate the importance and significance of using child-restraint

seats. "Takata Safe Driver" is a program that aims to prevent the tragedies of traffic accidents,

and is designed and taught by Takata personnel. The program, which makes use of a driving

simulator is used to educate less experienced drivers. Takata has partnered with MADD for

many years and has supported its activities for stopping, to the greatest extent possible, drunk

driving and the life-threatening dangers it presents. The corporation is working to eliminate the

waste of resources as much as possible at all of its business locations. Takata has formed an

Environmental Promotion Committee with the goal of reducing waste emissions to zero.

Although these are admirable efforts, Takata has been fined over $1 million thus far for failing to

fully cooperate with officials in the air bag investigation.

After researching and evaluating these two companies based on the definitions of ethics

and business ethics, I find that Starbucks is an extremely ethical company while Takata is not.

Starbucks is wholly committed to the communities and environments in which they operate.

They have been selected as one of the most ethical companies in the world for nine consecutive

years by Ethisphere Institute, a global leader in defining and advancing the standards of ethical

business practices. In an effort to reduce their environmental footprint, Starbucks has been

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implementing a climate change strategy since 2004, focusing on renewable energy, energy

conservation, and climate adaptation and mitigation efforts. They have focused on building to

LEED standards while also becoming the largest purchaser of renewable energy in their sector.

At the farm level, they have worked with Conservation International to include climate-smart

agricultural practices as part of Coffee and Farmer Equity (C.A.F.E.) Practices, their ethical

coffee buying guidelines. Starbucks is also committed to championing progressive climate

change policy in partnership with other businesses and organizations. They are a founding

member of Business for Innovative Climate and Energy Policy (BICEP), joining with other

responsible companies to advocate for stronger climate change and clean energy policies.

The praise for Takata has not been of the same caliber. The company has come under

fire for unethical business practices surrounding their defective air bags and poor safety

measures that led to the plant explosion in Mexico. Demands for increased productivity led to

cutting corners and reworking on the line of defective inflators. Adding to the problem is

evidence that issues with Takata’s air bags was known and covered up for years by corporate

management before they were finally forced to acknowledge the problem in 2013. The issue

involves defective inflator and propellant devices that may deploy improperly in the event of a

crash, shooting metal fragments into vehicle occupants. Eight people have lost their lives so far

as a result of these defective air bags. Approximately 34 million vehicles have potentially been

affected in the United States, and another 7 million have been recalled worldwide. Takata’s

failure to inform the public in a timely manner is negligent at best. Their actions impact other

businesses as consumers will steer away from products that have their devices in them. New

parents will certainly not buy car seats for their infants that bear the Takata name. This leads to

lost revenue not only for Takata, but for the businesses selling these products. As a result of

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these business decisions and practices, I find that Starbucks is an ethical company while Takata

Corporation is not.

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Works Cited

Adams, S. (2015, March 19). The World's Most Ethical Companies 2015. Retrieved October 19, 2015, from http://www.forbes.com/sites/susanadams/2015/03/19/the-worlds-most-ethical- companies-2015/

Chirico, L. (2013, April 4). World’s Most Ethical Companies List Sets Gold Standard. Retrieved October 18, 2015, from http://www.triplepundit.com/2013/04/worlds-ethical-companies-list-sets- gold-standard/

DeBord, M. (2014, November 20). A Takata Airbag Plant In Mexico Blew Up In 2006. Retrieved October 20, 2015, from http://www.businessinsider.com/r-special-report-plant-with- troubled-past-at-center-of-takata-air-bag-probe-2014-11

Isidore, C., & Marsh, R. (2015, May 20). Airbag maker Takata announces largest auto recall ever. Retrieved October 19, 2015, from http://money.cnn.com/2015/05/19/news/companies/takata-recall/

Starbucks. (2015). Retrieved October 18, 2015, from http://www.starbucks.com/

Takata. (2015). Retrieved October 18, 2015, from http://www.takata.com/en/

2015 Worlds Most Ethical Companies-Honorees. (2015). Retrieved October 22, 2015, from http://web.ethisphere.com/worlds-most-ethical/wme-honorees/