Ethicsin business emerge from professional or practiced ethics asubdivision of ethics which explores into various ethical issuesobserved in environments of business. In simple terms, ethics addresselements such as wrong and right, justice and crime, and good andevil to mention but a few. According to Fritz and Anand (2008), therequirement for a person to be ethical supersedes the commitment torespect the laws stipulated by authorities. Marvin Bower, McKinsey &Company former managing partner once said that “There is no suchthing as business ethics. There is only one kind-You have to adhereto the highest standard.”Matt (2008) argues that money is a greedyitem, presents the need for businesses to adhere to business ethics.Business ethics scrutinize the rights is that all shareholders andstakeholders in a business ought to observe and the wrongs thateveryone should avoid like price gouging (Matt, 2008 Zwolinski,2008).There are various theories applied in business ethics includinglibertarianism, deontology, teleopathy and utilitarianism.
Corporatesocial responsibility abbreviated as CSR as defined by World BusinessCouncil for Sustainable Development (WBCSD) is the businesscommitment to participate in sustainable economic development, byworking with employees, their families and the local communities(Jamali & Mirshak 224). Some authors have defined it differentlyalthough maintaining a similar perspective to WBCSD’s definition.For instance, Kotler and Lee (2011) define CSR as an obligation toenhance community welfare through unrestricted business undertakingsand commitment of organizational resources. The term discretionary orunrestricted in Kotler and Lee’s definition emphasize that, CSR isnot only about business activities that are authorized by law or areethical or moral in nature, thus expected, but it is rather acommitment made by an organization in selecting and accomplishingthese activities and making these commitments. Kotler and Lee (2011)argue that, such commitments should therefore be demonstrated throughexercising fresh business activities and contributions whethermonetary or non-monetary. Furthermore, the term welfare in thisdefinition refers to both human and environmental issues. There arevarious elements of CSR which will be discussed and put through theperspective of PepsiCo. The benefits of CSR to the company includeavoiding litigation that may arise from conflict with the law,meeting customers’ needs, boosting employee morale and enhancingsatisfaction which lead to satisfaction and low turnover, andincreased profits. This paper will explore PepsiCo CSR and ethicalbusiness practices.
PepsiCois one of the leading global companies in food and beverage. It wasfounded by Caleb Bradham a pharmacist in the 1890’s. It producesand markets over 18 brands of beverages and snacks. Its retail salessurpass $98 billion. The company comprises of Pepsi Cola which is themajor company producing beverages, Tropicana, Frito Lay, Gatorade,and Quaker brands and offers its products to over 200 countries(PepsiCo, 2014). The company market share in the food industry is inthe United States alone is about 36 percent and 25 percent of the ofrefreshment drinks. Headquartered in New York, the company has morethan 200,000 employees. The company has over the years receivedrecognition for various achievements including being ranked in theleading 25 best brands in the world, ranked position four by varietyand earned the Green Award by the Environmental Protection Agency.Nevertheless, the firm has faced various criticisms over its foodproducts being unhealthy and causing obesity, pollution to theenvironment among other unethical practices (Horrigan,2010).The company has put various measures in place to enhance its ethicaland corporate social responsibility (CSR) (Bredeson,2012).
Theoriesof Business Ethics
Varioustheories of business ethics exist and include the following
Deontologyis a theory that was proposed by Emmanuel Kant, a German scientistwho argued that, morality is something that obliges individuals toact in regard to a certain set of values or rules despite the outcomethey anticipate (Fritzand Anand, 2008).In fact, deontology entails judging the morality of one’s actionsdepending on how people stick to the stipulated rules. As such, theinclinations of individuals, emotions and expected outcome of anaction should not influence maters of morality (Susan and Urgas,2011).
Thisis an ethical theory which suggests that, the moral obligation isachieved from what is desirable and right out of an action.Therefore, the consequences of one’s actions determine whethertheir actions are ethical or not. This reasoning is hence known asconsequentialism. Eighteenth century ethics classified teleologicalethics as utilitarian ethics because, in both contexts, it is theachievements or the outcomes that matter in proving the morality orethicality of an action.
Utilitarianismis theory in business ethics which proposes the appropriate course ofaction to be observed in any people. It is therefore a form ofconsequentialism as it is the outcome of the action that determinesits ethical value.
Thisis the unbalanced pursuit of objectives. Shaw (2010) argues that,teleopathy ethics is a stress for corporate and individuals to “walkthe talk”. Shaw (2010) continues that, organizations ought to meetthe view of the society and greater public. As entrepreneurs followtheir own objectives, they usually ought to stick to business ethicsas stipulated.
Thisterm emerges from the term liberty, which means the right to rule anddirect oneself on basis of free will. In fact, libertarianismemphasizes on nominal influence and optimization of personal libertyand free will as stated by Susan and Urgas (2011). Itinvolves the right to lead and control oneself with the moralperception that means entirely control themselves and are liable toethical powers of property acquisition as stated by Shaw (2010).
Thisis an ethical approach which argues that, the morality of an act isdetermined by whether that action satisfies or meets one’s needs.This theory emphasize on personal interest. In the business worldegoism influences decisions, but can be detrimental in the long run(Kaler, 2000).
Evaluationof PepsiCo business ethics to stakeholders
Tomaintain its commitment to stakeholders and the communities in whichthey operate, Pepsi has a very high standards and measures forquality. Through adherence to processes and procedures and ensuringsound governance, the organization tries to maintain itsresponsibilities and earn stakeholders confidence.
Developmentand sustainability of PepsiCo business ethics
Pepsihas developed and practiced a code of ethics that concern differentbusiness ethics including bribery issues and conflict of interest(Fernando,2009).The firm anticipates and obliges its employees to be conversant withits business code of conduct and has a chief compliance officer inplace to implement this code. The company offers yearly ethicstraining and enforcement courses for workers and witnessed a 49% risein employee ethics training between the years 2008 to 2009, aproportion that has continued to rise over the years. Trainingsessions are available on net or through workshops (Ferrell,Fraedrich, & Ferrell, 2010).Over 44,000 employees among them top managers in the companyundertook the Code of Conduct trainings. The company’s complianceprograms are regularly evaluated and refined by sovereign thirdparties to highlight any particular pitfalls. In particular, thecompany’s compliance programs such as commitment to environment areexternally audited. Pepsi also has an “Internal Audit Methodology”whereby employees are free to call around the clock and report anycases or concerns of ethical violations. To monitor its growth and toensure that it remains focused, the company has developed 6principles to help guiding and sustaining its commitment.
At Pepsi We Must Always Strive To
Care for our customers, our consumers and the world we live in
Sell only products we can be proud of
Speak with truth and candor
Balance short term and long term
Win with diversity and inclusion
Respect others and succeed together
Elementsof a Successful CSR
Businessesare sometimes engulfed in the dilemma of doing business andpracticing CSR. In the 21stcentury, it is not just enough to do a bit of green management andsome community participation here and there. Organizations need toestablish a comprehensive framework of activities which are aimed atenhancing their responsible business practice. As such, there aredifferent elements that make a successful CSR. Since CSR involve bothexternal and internal components, each of these elements will bediscussed in both external and internal components.
Thisshould always be the starting point of the business’s CSR practice.It has to be clearly defined with future goals clearly stipulated.
Internalaspects of CSR strategy: Before going out to define what the businesstends to achieve with this strategy, there is need to build strongsupport for the strategy. It is important for such strategy to getand maintain the support and commitment from several high levelmanagers in any organization and to recognize and identify andinvolve these people who are passionate on CSR within theorganization (Glac,2009).
Externalaspects: The strategy of CSR acts as the founding plan for thebusiness activity of the organization. Stakeholders as well as thecommunity and customers expect a future creative plan that exhibitsambition and goals.
Settingup the CSR management system is an important element of CSR. The CSRmanagement system within the organization outlines what theorganization needs to actually do to make the strategy successful.
Internalaspects entail engaging more and more individuals within theorganization. Gathering information on the degree of acceptance ofCSR strategy helps find the most suitable group to work with. Afterforming a sound and a strong team, pooling their knowledge andestablishing a strong management on how to deliver the strategyensues (Glac,2009).
Externalaspects entail the CSR tools that will lead to questions after it isset up. CSR management becomes the vehicle through which theorganization receives external recognition for its sociallyresponsible activities.
Thisis the third element of CSR which involves the reporting of the firstresults of the organization’s CSR initiatives. Normally,organizations report on an annual basis. The reporting is the firsttest of whether or not CSR strategy has been appropriate for thestakeholders or not (Jeffrey,2009).
Internalaspects of CSR reporting are complex and tests CSR management andcoordination abilities. The main objective is to produce a meaningfulpublication for stakeholders.
Externalaspects of CSR reporting are the fact that, CSR reporting forms animportant tool of CSR. The CSR report and CSR management act as theimage of the organization. Thus it requires professionals orexperienced individuals to execute successfully (Mullerat,2010).
Stakeholders’participation and communication
Thisis an element of CSR which ensures that all the other elements of CSRare connected. Without engaging stakeholders, CSR cannot succeed.
Criticalevaluation of the rewards of CSR to PepsiCo
Thereare various benefits that a company gets from CSR practice. CSR helpsa company safeguard its brand image. PepsiCo knows this too well andhas continually emphasized its commitment and plans to sustainabledevelopment and its objectives on produce healthy financial profitsat the same time giving back to the communities it deals with. In its“Performance with Purpose” project, Pepsi appreciates people,societies and stakeholders while upholding optimal standards, settingand achieving goals, and producing achievable outcomes (Werther& Chandler, 2011).
CSRalso helps a company reduce and prevent litigation. Through engagingin ethically and legally acceptable parameters, Pepsi avoids being inconflict with the law. The company engages in practices that ensurethe environment is clean and meets standards set by EPA (Soule,2009).In addition, the company treats its employees with a lot of regard inconformation with employment law, hence avoiding litigation whichcould taint the company’s image.
CSRhelps in satisfying the needs of consumers (Pompeand Michiel, 2010).When Pepsi engages in producing healthy products, it is able to meetthe customers need for health foods, particularly in times whenobesity is becoming a concern in the society (Porterand Kramer, 2006).
CSRis beneficial to the company as it protects stakeholders’interests. Pepsi for example, through its ‘going green’ projectsthat involve environmental protection through its production andconsumption of its products not only for social responsibility, butalso for the benefit of the organization (Stohl,Mendes, and Popova, 2007).Since the company uses water and actually produces water for sale,saving resources helps in preserving one of its main resources.
Inaddition, by engaging in employee support and commitment, the companyis able to boost the morale of its employees hence reduceabsenteeism, turnover and general improvement in productivity.Maintaining mutual respect and workplace safety in Pepsi inspires acollaborative culture, through hiring and maintaining a competitiveworkforce through employee satisfaction Stohl,Mendes, and Popova, 2007.
Ultimately,PepsiCo involvement in different projects that are directed to helpimprove the lives of the people in different communities’ worldover has had significant impact. Besides being ethical, the companyhas largely improved its brand loyalty and identity through engagingwith the communities.
Businessethics are important practices that every business must adhere to inall its operations. They are the code of conduct that guidesinhabitants of the world of business. They involve the “rights”that businessmen should maintained and the “wrongs” that theyshould avoid. There are various ethical theories that can be appliedto business including teleological, deontological, utilitarian,egoism and teleopathy ethics among other theories. PepsiCo has welllaid ethical considerations in its operations. Pepsi ensures that itproduces healthy products to meet the demands of its customers. Italso ensures that production and consumption of their products issustainable. To its employees, PepsiCo ensure that its employees aretreated with respect and that safety in the workplace is observed. Assuch, they increase productivity which is beneficial to investors.
Inaddition, CSR can be termed as part of business ethics. It is anyother business that the business does for the welfare of thecommunities it serves. PepsiCo has been in the frontline in CSR.Among the practices that it engages in include environmentalconservation among other practices. The benefits that a company reapsfrom practicing CSR are undeniable. First it enhances employees’morale, improves productivity, and helps meet customers’ needs andfinally increase profits for the shareholders. Although PepsiCo hasfaced different criticism in some countries it operates in, such asIndia, it has remained active in CSR and research and development toensure that it meets its obligations to stakeholder. It is thereforeimportant for a company to consider CSR since it is not only meantfor the communities or stakeholders, but also to the success of thecompany as a whole.
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