Improving Business Practices And Ethical Consumerism: A Report On Rana Plaza And L’Oreal

Executive Summary

On April 24 2013, 1134 people were killed and 2,500 were injured when the Rana Plaza building in Savar, Bangladesh collapsed on top of garment workers inside its factories. It would be known as the worst accident in the garment industry anywhere.

This happened only five months after a horrific fire at a similar facility prompted leading multinational brands to pledge to work to improve safety in the country’s booming but poorly regulated garment industry.

Labour groups, Western clothing companies, the Bangladeshi government and others have made some progress toward preventing similar tragedies, but more still needs to be done.

There was never any doubt that improving working conditions in Bangladesh, one of the world’s poorest countries, would be incredibly difficult. The collapse of Rana Plaza was just one, though by far the worst in a series of industrial accidents in Bangladesh’s garment industry, which has become one of the biggest exporters of clothes to the United States and Europe because of its low wages.

It was later discovered that 28 brands that sourced clothes from the plaza included Primark, Bennetton, Mango, Matalan and Bonmache, prompting public concern about the working conditions of garment factories around the world which contribute to western high street fashion stores.

Ethical consumerism encourages people to think about how the products they buy are sourced and produced which are not harmful to the environment and society. This can be evidenced through simply purchasing eggs that are free-range or boycotting goods/companies which promote child labour or unsavoury working conditions.

Ethical consumerism is a growing market. A recent report from the Co-operative Bank showed a third of UK consumers claiming to be concerned about ethical consumption, with a large number of the public willing to challenge and boycott companies which do not comply with ethical standards.

Required to write an analytical business report that covers the following tasks:

Task 1

Discuss the ways in which companies, like the ones mentioned in the extract above, that sourced clothes from the Rana Plaza can help improve business practices to prevent recurrence of events of this nature.

Task 2

Choose any company, research and evidence how they operate ethically, taking into account their approach to consumerism, values and environmental friendliness.

This report has depth with the ethics and principles that Rana Plaza didn’t follow and that lead to the collapse. Companies like Rana plaza need to follow the basic rules of employment and wages. The global companies receive low cost products from Bangladesh and other poor countries. This needs to be stopped and these companies also need to look into the supplier’s working conditions. If caught that the suppliers are practicing unethical ways and are not into SR rule, boycott of those companies need to be done.

This report deals with the ethical consumerism of L’Oreal products along with the ethics that this company follows that starts from manufacturing to selling of the products. L’Oreal maintains the trend of satisfying the customers with their natural products but also focuses on producing the cosmetic products using high class technology and clinically proven so that it doesn’t harm the skin of the users. In addition to this, L’Oreal is very specific about saving the animals and not testing the products on the animals. Moreover, the company also uses reusable, as well as recycled product bottles and containers for reducing the environmental pollution and has taken strong steps in the favor of reducing carbon footprint.

Task 1

Tyagi and Kumar (2008) commented on the fact that ethical consumerism is one of the most essential parts that need to be considered as it affects the business organization strongly. Previously Ethical consumerism is a generous word but in modern times ethical consumerism is essential for removing concepts regarding the typecasting of product selling according to personal choices. Ethical consumerism is the consumption that takes into consideration the issues that are related to human rights, animal welfare as well as social justice (Zemke, 2008).

This report deals with the unethical ways that Rana Plaza used to follow in the factory that lead to the downfall of the company. So, the report is focused on the issues that companies such as Rana Plaza need to implement in their business for enhancing the CSR activities. In addition to this the report takes into account the concepts of ethical consumerism of L’Oreal which is a cosmetic industry along with the overviews of the company.

Rana Plaza Garment Factory that was established in Bangladesh collapsed on 24^th April, 2013. It killed nearly 1134 people and injured nearly 2500 people. Though the 8 storied building was built for the purpose of offices as well as shops but at all for factories. The labors of the garment factory initially didn’t want to enter the factory due to large cracks on the walls but were forced to go inside by beating them up ad by threatening them for not paying. The investigation team reported that on that very day nearly at 8:45 am, there was a power cut that led to the starting of five generators. Immediately after that the building fell down with a loud thud (Henniker, 2014).

According to the comment of Alom (2012) the Ethical Trading Initiative (ETI), the MNCs need to be focused regarding the morals, rules and regulations. The Rana Plaza Garment Factory was very much unethical in their approach. On the basis of ethical consumerism, it is to be remembered that the people are free to choose any kind of profession and they cannot be compelled. It is to be noticed that the factory supplied clothes to the global companies such as Primark, Bonmache, Matalan, Mango etc. So, according to the rules of ETI, Timm (2009) commented that these companies need to initially take steps and enough information of the suppliers regarding their working condition, the working place, salary or wages to the labors and also about working hours. The working condition of the Rana Plaza was so bad and unhygienic as well as pressurized along with unethical, that the workers never treated like humans. In addition to this, Wright (2006) commented on the fact that the consumers are free to boycott any products that they think is linked with unethical behavior. In this process, the consumers blend towards choosing more and more goods that are manufactured ethically.

So, the companies trading globally always needs to focus on the Corporate Social Responsibility or precisely CSR for enhancing these practices that will help in taking the responsibility to see whether the suppliers are transparent, fair, and maintains sustainability (Dawar and  Philip 2008). It is the responsibility of the global organizations to maintain ethical consumerism such as if it sees that the suppliers are using unethical ways of business, and then they need to boycott all those companies.  In addition to this, Becker et al. (2009) commented on the fact that the fair labor, honoring the human rights, protection of human health, sustainability, advertising, ethical marketing, recyclable packaging etc. are all considered in ethical consumerism. Moreover, ethical consumerism also includes the activities that are related to price, quality as well as payment techniques of the cosmetic industry that is doing business globally (Corstjens and Lal, 2008).

Task 2

Tungate (2008) commented on the fact that in order to improve the business and practices within it, the companies like Rana Plaza need to adopt ethical measures regarding the employee satisfaction, employee retention as well as employee safety. Buildings that are built for shops and offices need to be used for that purpose only and the factories built for that purpose also need to be used for that purpose. This gives a safety to the labors and employees working over there. Fixed working hours along with fixed holidays also need to be given that will not only improve the working conditions, but also will improve the employee retention.

Ethical Consumerism

According to Balaram and Adhikari (2010) the terminology ethical consumerism can be defined as fair trading that involves the moralities that are accepted globally and influences the purchasing decisions to the maximum extent. Dawar and Philip (2008) opined that now days the world is becoming more fashionable and trendy and in order to keep oneself beautiful, gorgeous and attractive, the customers now days are trending Moreover, L’Oreal also has received many awards as well as recognitions due to ethical consumerism, sustainable strategy development, ethics as well as product innovation that all are included in ethical consumerism (Carpenter and Fairhurst, 2009).

L’Oreal is French Cosmetic Company having it’s headquartered in France and has developed a good marketing team that is concentrated on cosmetics. The company involved high class technology in production of the products that involves dermatology, tissue engineering, toxicology as well as nanotechnology along with biopharmaceutical research team for production of organic and natural products. The company is ethical in their approach and is produces products in the most ethical way (Bearden and Teel, 2007).

The ethical considerations that the cosmetic industry L’Oreal are adopting are as follows-

Usage of natural products keeping focus on the customers – Berry (2007) commented on the fact that in this modern world, with the increasing trend of becoming fashionable, the consumers lean towards the products that are made from natural ingredients. It is statistically seen that the market regarding the usage of natural products has risen to nearly 20% (Boulding et al. 2010). To keep a pace with the modern trend and emerging environmental friendliness, the global companies should adopt the usages of natural ingredients for manufacturing the products.  Chang et al. (2010) commented on the fact that the L’Oreal is very ethical in their trading. The ingredients that are used for manufacturing the products are all clinically tested and have passed the dermatological tests. Through innovative research and laboratory tests, the natural ingredients are tested in the laboratory before using those ingredients in the product (Dahlén et al. 2010).

Employee Engagement and development- Alvarez and Casielles (2008) commented on the fact that L’Oreal is very much focused on the employee engagement within the organization. In order to engage the employees and keep the employees within the organization in order to retain them, L’Oreal pays incentives to the employees and is also focused regarding the problems faced by the employees. Timely salary, fair incentive structure, small get together of the employees is conducted in order to engaged the employees as well as maintain a healthy relationship with one another. According to Becker et al. (2009) the more the employees will be retained within the organization, the more the company will be developed.

Positive working environment (Safety, Diversity as well as integrity) – The more the organization will be having a positive working environment sand culture, the more the employees will be satisfied working there. According to Berry (2007) the better the working environment will, the better the employees will be retained. In addition to this, the safety measures also need to be integrated into the company that L’Oreal has already done for retaining the employees and making them feel safe. The positive working environment gives a positive vibes to the employees that help the employees in working fair (Vavra, 2008).

No testing on the animals- According to Vavra (2008) previously, animals like guinea pigs, white mouse etc were used in the laboratory for testing the products on them. Now days, it is a global ban to use the animals in the laboratory for testing purposes and this law is enforced worldwide. Tungate (2008) commented on the fact that still there are certain companies who don’t follow any kind of ethical considerations and uses animals for testing purposes. From that side, L’Oreal is very clear since it is ethical company and is totally abided by the international laws of protection of animals. (Wolf, 2009).

Banning the usage of disposable packaging and usage of reusable and recycled packages- You (2008) commented on the fact that the usages of disposable packages are another major issue that is totally unethical. In this modern world, people have become more concerned towards the environment and lean towards the products that are ethically manufactured and sold. It has seen statistically that the disposable products add nearly 46% of the waste to the environment. These products are generally made of bad plastics and other bad materials which on disposal can’t be reused or destroyed but on contrary they continuously add pollution to the society and environment (Wilson, 2008).

Reducing the carbon footprint and adoption of CSR- According to Wagner and Zubey (2006) reduction of carbon footprints is essential to reduce since it adds the environment a high level of pollution. It is to be remembered that the company needs to be ethical in its approach since the customers now days are very ethical in their decisions of making purchases. The more the company will be ethical; more the customers will be satisfied with the company that will ultimately lead to the huge customer database. Zikmund (2008) commented that L’Oreal is very much ethical in their business and are also environmental friendly. For that it takes strong measures fir reducing the carbon footprints. The waste of the company are also processed and treated well before disposal. This proves that the company is inclined towards environmental friendliness.

Triple Bottom Line Concept- Anderson and Cunningham (2008) commented on the fact that this TBL concept consists of three parts- social, environmental as well as economic. L’Oreal follows the TBL that covers up the people, planet as well as profit. Bateman (2007) had an opinion that the companies include the healthy and safe place for the people to work methodically. The company also focuses on minimizing the pollution that the company emits from the waste materials L’Oreal is highly focused in it so treats the waste materials before disposing. Moreover, L’Oreal operates while keeping in mind the profit of the organization. But for doing that, the company also keeps in mind the customer satisfaction while taking up the profit of the company.

Sustainability- In order to sustain in this competitive world, L’Oreal has taken measures that help the organization in reaching to its maximum extent. According to Willemsen (2011) L’Oreal is having a sustainable market position and sales that help the company in reaching to the maximum level.

Conclusion

This report has well explained the collapse of Rana Plaza factory that was when collapsed injured as well as killed many labors. This was somewhat an eye opener to many of the MNCs. The global companies also need to understand the business ethics as well as ethical consumerism that enhance the CSR practices within their suppliers. If it would have been done, then Rana Plaza incident would not have happened. The Throughout the report it is seen that the L’Oreal is very much inclined towards the ethical consumerism and has adopted several measures for manufacturing as well as selling the products ethically to the customers. The company has adopted many ethical considerations such as reducing the carbon footprint, as well as adopted CSR. In addition to this, the other ethical measures that are adopted are: usage of natural ingredients, usage of recyclable products as well as no testing on animals.

In order to stop the incidents like Rana plaza, the companies need to be ethical in their approach and also need to be abided by ETI rules. By doing this, it will fix the employees working hours, leaves, salary, and wages etc that are abided by the employment rules. Moreover, the traders can boycott those companies. This will teach them a lesson and hence forth will be an eye opener to many other companies. The company can endorse the celebrities and can show them how the products are produced. Through advertisements, a part of their manufacturing procedure can be shown to the customers. This will help the organization in reaching the extreme level of honor among the global customers.

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