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Ethical issues in Carrefour
2. Ethical Issues.
2.1 Enterprises and Social Responsibility
3. Carrefour Analysis.
3.1 Identify ethical issues in Carrefour
3.2 What did Carrefour do to solve those issues?
3.3 What Carrefour now is doing to handle the same issues?
The world’s second largest international retail chain, Carrefour established in 1959, is the pioneer of the hyper market format. Its business philosophy is based on low prices, excellent customer service and a comfortable shopping environment for consumers to provide the daily needs of various consumer goods.
This report will be divided in two parts. One is ethical issues which gives the company a reason to implement CSR and to reap the advantages of CSR strategies. The other part is that explains the ethical issues in Carrefour and how Carrefour balance ethical issues and profits.
Recently Carrefour came under attack regarding ethical issues. The problems with the chain shop ranged from poor supervision in regard changing the date, repackaging. Furthermore, there were bribery scandals between retailers and suppliers which led to bad impact on its business reputation. Finally, Carrefour also has energy saving problems which presents huge expenses on lightening. These are the main points in this report that we are going to highlight and analyse.
During the 1970s there was a concept called societal marketing. This concept maintained the view that an organisation should be responsible and gives back to the society in forms of better products and thus enhancing the society welfare. (Hitesh Bhasin, 2010)
Ethical means to be in accordance with the rules or standards for right conduct or practice, especially the standards of a profession (http://dictionary.reference.com/browse/ethical, 27th, April, 2012). Archie B. Carroll believed that, corporate social responsibility is a society in certain enterprises in the period of economic, legal, moral and charitable expectations. (Archie B. Carroll and Ann K. Buchholtz, 2000, p35) At present, this concept is being accepted by an increasing number of enterprises.
The classical economics has a basic hypothesis, namely thinks that the enterprises and the society should benefit in the course of interaction. Even Friedman believed that companies that look for social objectives will cause economic prosperity; the market competition causes the enterprise to pursue the profit, but also makes the profit to be maintained at one reasonable or suitable level and unwittingly increased the public welfare (Friedman. M, 1970, p122-126).
Generally it is than each Business ethic problem can develop into social responsibility problem if the Carrefour does not handle the problem on time. For example: companies selling fake and shoddy products, the false advertisement, misuse of unfair means to compete, not only affect the legitimate rights and interests of consumers, but also causes the huge harm to national and the social public interest. Carrefour has also had similar issues. This indicates that, the enterprise must undertake the corresponding social responsibility.
Responsibility is the moral self-control that may also call -business Ethics from the perspective of each individual own business ideas, marketing practices, constraints, and the norms and control; “Is the systematic study of what is right and good with respect to conduct and character.” (Bruce D. Weinstein, George W. Weinstein and John L. Burkard JR, chapter 68)
The products problems of Carrefour are repackaging with different date for foods with expired dates. Customers reflected these problems to relevant supervising department which lead to damage of reputation of Carrefour. (Food safety in Carrefour, 27th, April, 2012) Furthermore, suppliers bribed employees in Carrefour in exchange good placement of their products on the Carrefour’s shelves. (Eight Carrefour managers detained for bribery, 27th, April, 2012)
Another issue that recently arose in China was the flat salaries for almost 12 years which presents a weak welfare system. Employees were dissatisfied accordingly. (China Youth Daily, 27th, April, 2012) Last but not the least, the lightening expenses in the shop chain was significant which represented one environmental and financial problem. Who has responsible for saving the energy. The own-brand products of Carrefour have the problems with non-environmental protection problems such as battery. Even though it recycles battery, Carrefour sells them into the market which could pollute the environment. (Carrefour energy saving programme, 27th, April, 2012)
Because of the reports in media about changed production dates and repackaging, Carrefour apologised to the public and assured that it will maintain the supervision and never let those problems appear again. Carrefour also announced that customers who buy problem items could exchange them and get compensation with a shopping ticket.
In order to solve bribery problems, Carrefour adopted “for a local, sustainable and responsible supply” policy (The group and its suppliers, 27th, April, 2012). It provides a stable perspective for thousands of producers. This method helps small producers to develop and provides sustainable opportunities with longstanding partnerships. The policy is encouraging and supporting suppliers with regulatory requirements, thus reducing bribery opportunities. On the other hand high-quality products attract potential customers and lead to customer loyalty.
Carrefour adopts lowest wages and has not changed it for almost 12 years. Carrefour negotiated with relevant department to change the welfare of employees that could motivate employees and increase employees’ loyalty. It is said that a company has loyal staff, and then they could have loyal customers.
To strengthen the company’s reputation, Carrefour set up action plan to open energy-saving stores. This is how the company implemented environmental protection policy by focusing on lighting, environmentally friendly packaging, and water recycling (Chinese energy-saving lamps, 27th, April, 2012). In addition, this action plan is going to improve the reputation and builds good corporate image that increases the brand value. At the same time, brand value could create immeasurable benefits for Carrefour.
Carrefour not only recruited social food safety supervisors for monitoring, but also hold food safety week activity. (Food safety, 27th, April, 2012). It was hold in several cities to publicize “everyone cares for food safety, each family enjoys health life.” Through introducing and showing the actions that Carrefour takes to ensure the food safety, it makes customers know about the process of safety supervision and enhance their confidence.
Because the stores in Carrefour have too much power, Carrefour was found some bribery problems. In the recent years, Carrefour set up 15 CCU purchasing centre (City Control Unit) for deep supervision under 4 large areas. It also changed the line of duty of staff which could avoid bribery issues. (A success formula for supermarkets, 27th, April, 2012)
Carrefour realised the low welfare and salary of employees. It talked negotiation to deal with these problems which could increase the salary of staff and motivate them for work. Carrefour resets the salary and welfare system for staff.
Carrefour also rolls off environmental plastic bags for protecting environment. The plan for Carrefour saving energy is undertaking which achieved good efforts. Carrefour spent 250 million to remake the stores. Finally, each store could save 1 million RMB. (Chinese energy-saving lamps, 27th, April, 2012)
Corporate social responsibility is of significant to Carrefour. These ethical issues in Carrefour are presented that lead to bad impact on its reputation and image. It is essential for Carrefour to deal with these problems and win more loyal customers. Furthermore, Carrefour could enhance the supervision avoiding producing these problems again. Below are recommendations.
(1). Carrefour adheres to business ethics, Set up social marketing concept, enhancing corporate social responsibility. Carrefour pursue profits, should proceed from the interests of the community, when pursue profit, must not harm other people and society’s benefit, follow comply with national laws and regulations, and pay attention to ethics morals.
(2). the ethics and morals of the managers of the chain shop should be strengthened with codes of conduct and transparent rules. From the business requirements of modern society, the ethical construction is more and more important. (Zhang Linhua, 2009, p19-20)
(3). Great importance to the supervision of marketing activities is to strengthen the control of non-ethical behavior. Marketing activities related to the production, circulation and consumption, therefore, in order to strengthen supervision and management of all marketing activities of Carrefour to minimize and eliminate the occurrence of illegal and unethical behavior. The Carrefour must carry on the surveillance to marketing process each link, those staff or intermediaries who do not abide by business ethics rules, should be punished.
(4). Improves the enterprise leader’s quality to set up the Carrefour’s ethical image. As the enterprise leader’s status, they have power over their group; so, have the important influence to the marketing activity.
Archie B. Carroll and Ann K. Buchholtz. Business and Society: Ethics and Stakeholder Management, 4th ed. Cincinnati, Ohio: South-Western Publishing Go., 2000, p35.
China Daily (2nd December, 2011). A success formula for supermarkets. Available from: http://usa.chinadaily.com.cn/weekly/2011-12/02/content_14201227.htm (assessed 27th, April, 2012)
Bruce D. Weinstein, George W. Weinstein and John L. Burkard JR. Volume 5, Ethical Issues in Ophthalmology, Chapter 68.
Battery Recycling. Available from: http://www.carrefour.com.cy/index.php?option=com_content&view=article&id=82&Itemid=100&lang=en (assessed 27th, April, 2012)
Carrefour (China) Foundation for Food Safety, available from: http://www.carrefour.com.cn/other/foodSafety.aspx (assessed 27th, April, 2012)
Carrefour energy saving programme (5th, June, 2009), available from:
http://www.carrefour.com.cn/carrchina/protection.aspx (assessed 27th, April, 2012)
China Youth Daily (11th, February, 2011). Employee in Carrefour has not change their wages for almost 12 years. Available from: http://news.xinhuanet.com/food/2011-02/11/c_121064436.htm (assessed 27th, April, 2012)
Chinese energy-saving lamps (5th, January, 2012). Energy conservation into new point of retail profits foreign stores Compare. Available from: http://www.looklamp.com/news_2012-1-5/42658.html (assessed 27th, April, 2012)
Carrefour: problem items are all removed from the shelves. Xuguang Fan (17th, March, 2012) place of publication: The Beijing News .Available from: http://www.iceo.com.cn/renwu/34/2012/0317/244048.shtml (assessed 27th, April, 2012)
Dictionary.com. available from: http://dictionary.reference.com/browse/ethical (assessed 27th, April, 2012)
Eight Carrefour managers detained for bribery, available from: http://www.chinacsr.com/en/2007/08/28/1638-eight-carrefour-managers-detained-for-bribery/ (assessed 27th April, 2012)
Food safety in Carrefour, available from: http://www.carrefour.com.cn/carrchina/foodsafety.aspx (assessed 27th, April, 2012)
Friedman, M. (1970). “The social responsibility of business is to increase its profits”. New York Time Magazine, 13 Sept., p122-126.
Hitesh Bhasin (2010), societal marketing concept, available from: http://www.marketing91.com/societal-marketing-concept/ (assessed 27th, April, 2012)
The group and its suppliers. Available from: http://www.carrefour.com/cdc/responsible-commerce/our-social-and-ethical-approach/the-group-and-its-suppliers/ (assessed 27th, April, 2012)
World Business Council for Sustainable Development. Meeting Changing Expectations: Corporate Social Responsibility. WBCSD, Geneva, Switzerland, 1998.
Zhang Linhua (2009), ‘Strengthen Moral Construction and Build Harmonious’. Selected from Observation and Reflection-Special Column of Morality and Civilization. 09(2), P19-20. Available from: http://oldweb.cqvip.com/qk/default.aspx?url=/qk/80457X/ (assessed 27th, April, 2012)