Business Law

Business Law



Everybusiness must be in the front line to defend its reputation throughits practices in order to remain competitive and avoid legal suitsthat can destroy their business. Even though, business findthemselves in ethical tussles that go down ruining them or costingthem huge sums of money in form of compensations, penalties or legalsuits or much worse destroy the business relationship with itsstakeholders especially its customers. Businesses just likeindividuals are regulated by the law. The law permits, restricts orcontrols every human activity which influences other individualswhether directly or indirectly (Mann &amp Robert, 2007). Sincebusinesses are run by individuals, the role of the law applies bothdirectly and indirectly to business. The law permits business tocarry out their activities as long as they meet the stipulatedmeasures under the law. In addition it prohibits businesses fromcertain practices that affect other people including environment,human rights among others. Besides, businesses have a choice toengage or not to engage in certain practices without the influence ofthe law. In this essay, we are going to explore real businessesengagement in unethical practices, how they handled the issues andhow better they could have handled such issues.


Nestleis a world leader in the manufacture of infant formula and otherproducts including Nescafe coffee and Kit-Kat chocolate bars is knownfor all the wrong things when it comes to ethics. According to aWorld Health Organization report, children in developing countrieswho were fed on Nestle infant formula had a higher mortality rate ascompared to those who were exclusively breastfed. This was due to thecompany’s sinister promotion of appointing nurses who were notuniformed to distribute the infant formula to poor mothers for free.The problem was that the supply was too much to allow the mother’slactating milk to dry up. This led the mother and the child to becomedependent on the formula though they gave their children just a smallportion since they could not afford the product. Besides, the formularequired clean water to mix which was obviously not available placingNestle in a tussle with the World Health Organization in regard toits practice. The allegations also prompted a hearing in the Senate. Castle defended itself and has over the years tried to improve itsrelationship with NGOs. With the growing social media effect, Nestlehas concentrated largely on corporate social responsibility but thishas not helped it stay out of trouble though. Recently, a Swiss basedcourt found Nestle guilty of spying on Attac, an NGO that opposesglobalization (Shaw,2013).Nestle had contracted Securitas AG to spy upon Attac’s activities.The company was ordered to pay the group significant amount of moneyas compensation. Although incitement to infiltration is contra to thecorporate business ethics of Nestle, it is clear that it did not liveto its principles.

Severalcompanies have found themselves in similar positions withnon-governmental organizations. Kentucky Fried Chicken popularlyknown as KFC is one business that has had issues with NGOs. KFC wasaccused by animal rights activists in particular People for theEthical Treatment of Animals (PETA) for using animal welfarestandards that are not acceptable. Chicken supplied to KFC werecruelly slaughtered as alleged in 2003 (Schröder&amp McEachern, 2005).Several letters were written by PETA and phone calls regarding thisissue. However, KFC remained silent on the issue not returning asingle letter or phone call. This damaged the reputation of the giantfast food store. Various demonstrations were held across the UnitedStates and the United Kingdom branding KFC as “Kentucky FriedCruelty”. The company only reacted a little bit late by releasingstatements on how the company is committed to ensuring that itssuppliers are committed towards adopting more acceptable ways ofkilling chicken like using gas. However this was not effective aspeople continued holding negative views of KFC’s practices (Shaw,2013).

KFCshould have been swift in responding to the claims as soon as theysurfaced in the public glare. They should have done like theircounterparts McDonalds, Wendy’s and Burger King by responding tothe claims and committing to acceptable practices of handlinganimals. This is in contract to its competitors McDonald, Wendy’sand Burger King who made changes to their practices followingcriticism from PETA (Shaw,2013).


Onecannot talk of unethical practices without mentioning Adidas. Thepractices of this global sportswear maker are a textbook example ofdisastrous ethical business practices. From child labor to poorworking conditions, Adidas is known to engage in unethical businesspractices. Like most sweatshop companies, Adidas outsources itssupplies from developing countries in Asia. In China, Adidascontracts various companies to produce their products which findtheir market in the developed economies of the United States andEurope. However, there are concerns over unethical practices by thesuppliers. It is alleged that, Adidas suppliers employ children asyoung as 12 years, subject workers to poor working conditions,overtime that is poorly compensated and poor pay as well asmistreatment (Marks,2012).When these issues came to light, Adidas confirmed that it iscommitted to ensuring fair labor practices, safe working conditionsand fair wages throughout their global supply chain. The company nowconducts several audits in its supplier companies in 69 countriesglobally (Marks,2012).Nevertheless there are claims by workers in Indonesia factories thatthese audits are a fuss as workers are forced to lie on their workingconditions, wage and general treatment. According to employees,Adidas announces before the visits and workers are told what toanswer to given questions (Marks,2012).Some workers are also told to hide in the bathroom so that it appearsas if the place is more efficient. These kinds of issues have donemore damage than good to the company’s reputation.

Nikeis also a leading sweatshop and has faced such allegations before. Ithas been on the spotlight for poor working conditions, poor wage,child labor and even sexual harassment. However, unlike hiding likeAdidas, Nike came out boldly and stated its stand that it iscommitted to ethical practices. Nike responded swiftly to claims ofunethical practices with a factory code of conduct that was expectedto be implemented by all factories across the world including in Asiawhere most of their suppliers come from (Nisen, 2013). Though theproblem persisted, Nike established a department which worked toimprove the lives of people working in its factories. To eliminateany doubt, Nike once tasked a diplomat and an activist Andrew Youngto examine its labor practices in other countries, although hisreport was criticized for appearing lenient on Nike. The creation ofthe Fair Labor Association later in 1999, a not for profitorganization that brings together companies, labor representativesand human rights to establish impartial monitoring and a code ofconduct, entailing minimum wage, minimum age, 60hour of work perweek besides pushing other brands to join (Nisen, 2013). Nike becamevery open about its audits and started publishing reports on theworking conditions of its companies abroad. These moves brought aturnaround in Nike’s reputation which had been badly tarnished.

Adidasshould have learnt from Nike’s approach. Instead of hiding, itshould have been brave enough to accept its shortcomings and look forways to regain public trust through improving its operations abroad.It could have for example established a factory code of ethics,invite independent agencies to do audits to its factories and usetheir reports and recommendations to improve the conditions (Shaw,2013).This way, stakeholders and shareholders would see its seriousness ingoing ethical.

Inconclusion, businesses are faced with various ethical issues. In thecurrent world where the population is well informed, activists aremore aggressive than before, and social media has taken overcommunication, it is very easy for a company to destroy or make itsreputation. Whereas it is difficult to be perfect, companies shouldalways be guided by a code of ethics (Mann &amp Robert, 2007). Thelaw is also very clear on the business practices includingcorruption, unfair competition among others. Thus, there is no excusefor a business being unethical for the sake of maximizing profits.


Mann,R. &amp Robert, B. (2007). Essentialsof and Legal Environment-11thEdition.Thompson Learning.

Marks,K. (2012 April, 14). Factory workers are `forced to lie` duringAdidas safety inspections. Retrieved September 26, 2015)

Nisen,M. (2013 May 9). HowNike Solved Its Sweatshop Problem. Retrieved September 27, 2015).

Schröder,M. J., &amp McEachern, M. G. (2005). Fast foods and ethical consumervalue: a focus on McDonald`s and KFC. BritishFood Journal,107(4),212-224.

Shaw,W. (2013). Businessethics: A textbook with cases.Cengage Learning.

TheGuardian (n.d). Nestlé baby milk scandal has grown up but not goneaway. Retrieved September 27, 2015)