BECG.l-6_A.ethical Ser. Cond.1

7/29/2019 BECG.l-6_A.ethical Ser. Cond.1

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Ethical Issues in

Supplier Relations andService Conditions

Lecture- 6A (BECG)

Prof. C. Anand

Faculty IBS, Hyderabad


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Contents

Typical Problems in Business Ethics:

Ethical Issues in:

(a) Supplier Relations

(b) Service Conditions


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Ethical Issues in Supplier Relations

(a). Supplier Relations:

Purchasing is one of the main activities of business

and the purchase manager plays a major role in

getting the right quality of material, in the right

quantity at the right time. The purchasing

department is in direct contact with the suppliers. A

long term relationship with these suppliers is

possible only if there is an open communication and

trust between the suppliers and the buyers. By behaving ethically, purchasing department can

build up a good image of the company and become

profitable.


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1. Supplier Relations(Contd.)

The Role of Purchasing Department with reference to

the Suppliers:1. To ensure continuity of suppliers of raw materials.

2. To identify and develop new vendors (suppliers)and maintain good relationship with existing

vendors. Vendor relations, vendor monitoring, orvendor evaluation and development of newvendors is an integral part of the purchasingexecutives job.

3. To develop good procedures and systems for the

purchasing department.4. To co-ordinate with other functional departments

to achieve continuity of information flow for closerbuyer- supplier relationship.


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Ethical Issues in Purchasing

Most purchasing managers resort to the followingunethical practices:

Accepting free gifts (Buyers are reluctant to

acknowledge that suppliers are bribing them;but most buyers are honest and ethical inworking with suppliers)

Deceiving Suppliers (Asking exaggeratedquestions about quality of suppliers andpressurizing them to cut prices and get orders,which may destroy trust that is vital formaintaining vendor relations. Encouraging freeand honest communications can eliminate such

practices)


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Ethical Issues in Purchasing (contd.)

Showing favoritism to some suppliers(Discrimination to some suppliers and favoritism toothers is unethical purchasing behavior). Purchasemanagers often favor suppliers who are also good

customers, thus developing a mutually beneficialrelationship. They also favor some suppliers whoare close to top management so that they can gainthe support and confidence of top officials. Thisdiscourages other good suppliers who can supply

better quality products. Disclosure of confidential information to suppliers

leads to suppliers confidentially rewarding thepurchase manager and getting benefit of selection

in tender/bid system.


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Forward buying (Sometimes, instead of

buying the stock to meet future requirement,

future stock is bought to make speculative

profit against the inventory, which isunethical).


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Following will help reduction of unethical practices inBuyer-Supplier Relationship :

Reducing the differences between buyers andsuppliers perceptions

Minimizing the deceitful practices of buyers Ethics Training (Helps buyers to behave ethically) Causing least damage to long-term buyer-supplier

relationship rather than striving for short-termsuccess.

Disregarding the suppliers relationship when theyare most involved in unethical practices.

Understanding that the suppliers perform lesseffectively when they behave unethically.


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(b) Ethical Issues in Service

Conditions

These include:

Harassment at work

Stress at work

Congestion at work

Poor sanitary conditions

Individual problems (Health, financial, social)

Irrational processes

Hazardous working conditions (Safety Issue)

Gender problems (Female & Male managed Orgns.)


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(b) Ethical Issues in Service

Conditions

Unique challenges faced in certain

industries [ Exp. (i) IT Industry: PAPA-

Privacy, Accuracy, Property, Accessibility

with regard to information or MIS; (ii)Genome research]

Irrational Processes

Anxieties (Social groups withinorganizations defend individual workers)


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Undue Exploitation (Sacrificing people for profit)

Negligence of employee care

Unethical attitude of the management (Apathytowards just and fair practices)

One positive solution to the above issues would bethe Psycho Analysis Approach and implementationof Psycho Dynamics Approach which viewsOrganizational Development similar to IndividualDevelopment because like individuals, theorganizations are living organisms that have somesort of collective consciousness that nurtures theorganization.


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The End

BECG.l-6_A.ethical Ser. Cond.1

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