Table of Contents
Introduction 2
Question 1
A 2
B 5
i. Ethics Grid 5
ii. Five Ps 6
iii. Ethics Check 7
Question 2
A. Legislation Requirements 9
B. Issues Surrounding Health and Safety 10
C. Commentaries on Voluntary Codes in Place 10
D. Consequences of Possible Breaches 11
Question 3
A. Role of Sales Manager 12
B. Place of Sales Forecast 12
C. Role of Budget 12
Conclusion 13
References 15
“De Beers and Diamonds”
Introduction
The issue involving diamonds in terms of sales and market is one of the most complicated, dangerous, and expensive matters a particular business entrepreneur is able to deal with. Although selling and buying diamonds, most specifically owning one is equated with luxury, style, fashion, and extravagance, the issue of diamonds makes one shed blood and even lose their lives in the process of obtaining it from the diamond mines. In addition, because involving diamonds and other gemstones in business involves large sums of money, many business entrepreneurs venture into this kind of business in the hopes of acquiring more profit and personal gain. As such, a number of prestigious companies, including De Beers have been patiently and intelligently coming up with strategies that would provide them with millions and billions of profits.
In this regard, this paper will discuss the different aspects related to the case, such as ethical theories and models, sales and key account management, employment law, and employee health and safety promotion. At the end of the report, recommendations and conclusions will be provided in order to highlight important points discussed in the paper, and provide suggestions for the improvement of the situation featured in the case study.
Question 1: Ethical Issues in De Beers Case Study
a. One of the ethical issues that can be cited in the De Beers case study is the high price involved in the selling of diamonds. Aside from the fact that the obtaining the diamonds is difficult and risky, De Beers also makes the price of the diamond more expensive by their marketing and sales strategies. This is because the company sells the diamonds at a very high price in order to sustain their reputation of being the “most preferred supplier” of diamonds in the country. As such, because the other companies buying and selling diamonds have acquired the goods at a very high price, the tendency would be for them to further increase its selling price in the market. Thus, this is considered as an ethical issue, particularly in relation to the issue of overpricing.
The second ethical issue to be considered is related to the attempted burglary at the Millennium Dome, which was said to be having a plot similar to a James Bond film. The ethical issue to be stated here is the statement of the company’s chairman of publicity, Nicky Oppenheimer, who emphasized that if such an event can happen once in every six months then the company can do away with its advertising department. This statement can trigger an ethical issue because with his statement, he can encourage thieves or robbers to make plans of stealing diamonds from their company. In this sense, it can also be assumed that it is not impossible for the company to make similar scenes or plots in order for them to attract the attention of consumers. As such, it is possible for the company to come up with big lies just to make their goods even more controversial.
The third ethical issue to consider is related to the conflict diamonds from the jungles of Africa and from the mines of Canada. This is because encouraging consumers to buy the most expensive and the most extravagant diamonds may indicate that other peoples from different parts of the world do not care about what happens to the people in Africa, just so in order for them to produce diamonds. The recent movie shown in 2006 entitled, “Blood Diamond”, starring Leonardo DiCaprio, Djimon Hounsou, and Jennifer Connelly, shows how conflict diamonds are being taken out of Africa, and what events are involved before a single diamond can be taken to London to be sold as a precious and expensive jewelry.
The fourth ethical issue is related to the scandalous price of diamonds. Most of the interested parties, such as business entrepreneurs, jewelers, banks who finance diamond mines, and diamond owners do not agree to lower the prices of diamonds, as they are considered their investments and a source of security in the future. Therefore, lowering the price of diamonds would mean disaster, as many diamond hoarders would be surfacing, making the diamond cartel confusing and chaotic. In this regard, the ethical issue to be considered here is the fact that the issue of diamonds may involve insistence of one’s personal motives and gains, without putting others’ welfare and safety.
The last ethical issue considered is the influence of marketing to the image portrayed by the relationship of diamonds and the female gender. Because not all women from around the world can purchase diamonds, this creates discrimination, lack of confidence and self-esteem, and social stratification.
Ethics is defined as the science or study of morals, and refers to how individuals determine what is good for the flourishing of people in society, and what rules individuals need to prevent people from being harmed (Melia et al 2000). Based on such ethical issues, it can be seen that the decisions made by the persons involved in De Beers may not be for the common good.
b. One of the theories of ethics that can be applied in this ethical issue is the ethics theory of Immanuel Kant, which was termed as Kantianism. It has been reported that Kant argues that a person is free when he or she is bound by his or her own will and not by the will of another person. For Kant, the only truly moral action is generated by a pure motive, where the truly moral person will do what should be done, regardless of the intensity of pros and cons of the consequences, but simply because one knows, he or she must obey the moral law (Johnson 2008).
In addition, Kant’s ethical theory can be divided into three parts. The first part is the general dictum, which emphasizes that, “if you wish to act morally, act as if your action in each circumstance is to become law for everyone, yourself included, in the future”. The second categorical imperative states that, “if you wish to act morally, always treat other human beings as ‘ends in themselves’ and never merely as means”. Lastly, the third categorical imperative stresses that, “if you wish to act morally, always act as a member of a community where all the other members of the community are ‘ends’, just as you are” (Seedhouse 1998).
i. Ethics Grid. Using the ethics grid, it can be shown that De Beers has done activities and decisions that are right in operational sense but ethically wrong.
Business
Ethics
Good
Bad
Good
- Providing jobs for the people in the society particularly in developing countries
- Providing “happiness” to consumers, as diamonds can be deemed as source of wealth, luxury, and status quo
- Abusing natural resources in host countries, such as Africa to extract diamonds
- Discrimination of peoples in the society
Bad
Consensus are realized but not implemented
- Reversing policies at the expense of small-scale entrepreneurs
- Trading of conflict diamonds
Decisions of the company that falls under Good/Good pertain to the decisions of the company that uphold ethics, such as providing employment opportunities for peoples around the world and sources of wealth to those who can afford them. On the other hand, the decisions that fall under Bad/Bad can be seen as the decisions that will contribute to adverse effects in the environment, to the business itself, and to other individuals, thus, can be avoided easily. The decisions that fall under Good/Bad or Bad/Good cells pertain to the decisions that must be given enough attention and importance, for they are the ones that would present conflicts.
ii. 5Ps of Ethical Power. The five Ps of ethical power include Purpose, Pride, Patience, Persistence, and Perspective. Purpose is said to be the basis upon which a particular company builds its ethical behavior. In this sense, De Beers failed to comply with its purpose, as it focuses only on its personal gains by upholding their reputation as the best supplier of diamonds in the world though pricing their goods irrationally. Another element is organizational pride, which makes every experience or situation in the company a win-win reflection of the company’s attitudes. However, because the company serves to monopolize the diamond market, it takes all the gains supposedly received by other diamond businesses in the industry. Thus, in this sense, only De Beers is able to partake in the success and profit. The third aspect is patience, which exhibits a virtue of trust to the values and beliefs of the organization. One of the activities that contradicts this aspect is the fact that the company participates in hoarding diamonds, which serves to be their most effective way of acquiring wealth in the industry. Persistence involves the creation and establishment of their brand in the market, which may serve to be what the company is effectively upholding. However, this persistence led De Beers to somehow not fulfill its corporate responsibility to the society and its industry. Lastly, the perspective of the company entitles it to have an effective strategic plan, which aims at focusing on long-term goals. However, despite the perceived effectiveness of the company’s plan, it failed to have evaluative processes in terms of upholding ethical or moral standards. An example of this is the company’s participation in the trade of conflict or blood diamonds.
iii. The Ethics Check. This is comprised of three questions, which can be used to explain the different aspects of an organization’s decision-making and ethical standard observance (Peale and Blanchard 1988). Such questions include, “Is it legal?”, “Is it balanced?”, and “How will it make me feel about myself?”.
- “Is it legal?” – The answer to this question is YES. This is because there are no universal laws or regulations regarding the control of De Beers in the diamond industry. In addition, De Beers has secured the necessary documents and requirements for their operation, such as permits from federal, state, civil, and local regulations and policies.
- “Is it balanced?” – The answer to this question is NO, as the decisions of the company do not create a win-win environment. It has already been mentioned that the company participates in the hoarding of diamonds and overpricing in order to sustain their position in the industry as the number 1 supplier of diamonds in the world. This situation then emphasizes that the company has monopolized the diamond industry.
- “How will it make me feel about myself?” – If I am working at De Beers and given that I know the decisions of the company in relation to the different mentioned ethical issues, I would feel that I am enslaved by a powerful opportunist, hypnotizing me to do similar things to the people in society. I would also feel that I am also responsible for deceiving them in persuading them to purchase an overpriced and blood diamond. If I am a diamond miner, I would feel that I am in a very desolate situation, being forced to do something that I do not want to do. If I am a diamond collector or savvy, then purchasing a diamond from De Beers would actually be one of my greatest dreams. However, given the many flaws or issues involved in diamonds, I would feel really devastated, but would still persist on my dreams of owning one.
Question 2: Legislative Requirements
a. There are a number of applicable codes, regulations, and legislations for the business industry, particularly to the banking industry. Such legislations include the Code of Banking Practice, Telecommunications Ordinance, General Agreement on Trade in Services or the GATS, and the Consumer Goods Safety Ordinance. Such laws or policies guarantee that consumers are being protected from unfair business practices, including fraud, lack of product quality, unjust trading, and misleading advertising.
1. Code of Banking Practice – This is a voluntary code that is issued jointly by the Hong Kong Association of Banks or HKAB and the Diamond Trading Company Association. The Code of Banking Practice aims to promote good banking practices along with holding on to just and transparent relationships between authorized institutions and their consumers. In addition, the code encompasses banking services that include current accounts, savings, deposits, loans, and other types of services (Hong Kong Monetary Authority 2001).
2. Telecommunications Ordinance – This was enacted upon to improve provision for the licensing and control of telecommunications, services, and equipments. It includes guidelines regarding the delegation of authority and power, issues of license, permits and tariffs provision, consultations, control of prices, accounting practices, inspection of facilities, and practices in terms anti-competitiveness (‘Bilingual Laws Information System’ 2008).
3. General Agreement on Trade in Services or the GATS – This policy underlies internationally-traded services, such as banking, telecommunications, tourism, and professional services, which pertains to activities on how the government can sustain its rights in setting qualification requirements, in setting standards that would guarantee the health and safety of customers, and in introducing new policies in its aim to pursue other trade policies. Following the agreement involves four ways in trading or delivering services, namely, (1) cross-border supply, (2) consumption abroad, (3) commercial presence, and (4) movement of natural persons (‘Hong Kong WTO Ministerial’ 2005).
4. Consumer Goods Safety Ordinance – This ordinance compels manufacturers, importers and suppliers of certain consumer goods to provide safe and high-quality goods to consumers, and for the intended purpose. General safety standard include the manner in which the products are marketed or sold, the purpose, the use of any logo or mark, instructions or warnings, compliance to published safety standards, and the presence of any reasonable mean that makes the consumer goods safer (‘Consumers Goods Safety Ordinance’ 1997).
b. Issues surrounding Health and Safety
Some of the issues that surround health and safety in the workplace, which have been reported by the Hong Kong Occupational Safety and Health Association or HKOSHA, include near-miss reporting, behavioral risks, quality control, fatigue, and stress. It also includes injury prevention and occupational rehabilitation.
c. Comments on Voluntary Codes in Place
The existing codes overlap with other existing codes and legislations, thus, leading to conflicts. These present conflicts that directly affect how employees must be trained and have inherent contrasting ideas with the Uniform Consumer Credit Code or UCCC, which is a challenge for one-off banking services where terms and conditions are not included. The provision for third party guarantors further complicates lending activities.
d. Consequences of Possible Breaches
For Code of Banking Practice, possible breaches can be due to terms and conditions for card services, problem of debts of card holders, disagreement with exemptions issued by Money Lenders Ordinance, quoting annualized percentage rate of interest (APR) and cost indemnity provision. For Telecommunication Ordinance, possible breaches are on exemptions from licensing order on the use of low power devices, closed-circuit television systems, control of interference and fixed telecommunications network services.
For GATS, possible breaches are on transparency provisions, licensing requirements and protocols, qualification requirements and procedures and technical standards. For Consumer Goods Safety Ordinance, possible breaches are on general safety standard compliance, consumerism within Hong Kong that includes the supply of goods as retailer and not supplying of goods as new goods.
Question 3: Role of Sales Management
a. Roles of Sales Managers – Sales managers are said to have five major roles in the organization, namely, acting as controllers, as treasurer and finance officers, as credit managers, as cash managers, and as risk and insurance managers. Taking such roles, financial managers are said to be accountable in the preparation of different financial reports, such as income statements, balance sheets, and the various analyses of future earnings and expenses. In addition, they are accountable in providing summaries and forecasts in relation to the financial position of particular companies (US Department of Labor 2007).
b. Place of Sales Forecast – Aside from the general roles of financial managers as controllers, they can also be considered as treasurers and finance officers, who are responsible for directing the budget of the company in order for it to meet its financial goals. This is done by the sales manager by managing the various investments, taking care of associated risks, supervising and directing cash management activities, implementing the different activities that will support capital-raising, which would be useful for the expansion of the firm in the future, and dealing with mergers and acquisitions (US Department of Labor 2007).
c. The Role of Budget – Budget provides the main resource for the business in terms of directing it to a certain path, as guide and basis for expenses, investing or saving. Without a clear budget in mind, the business would not be able to achieve profitable returns since it cannot anticipate the risks and costs involved in its future transactions. As such, having the role of a cash manager, the sales manager takes on responsibility of accounts collection, decisions, and credit-rating. They also take on the role risk and insurance managers by managing the various programs that can help to lessen various risks and losses that can be faced due to the different business transactions and operations being dealt with by the company, along with handling the insurance budget of a given company or organization (US Department of Labor 2007).
Conclusion
Based on the discussion, it can be understood that the activities and decisions of the prestigious diamond company, De Beers can be understood and analyzed based on Kant’s theory, which states that some of the actions or decisions of the company are operationally right but ethically wrong. Some of the issues being raised include hoarding, trading of conflict diamonds, overpricing, and advertising. In this regard, it can be understood that because some of the decisions of the company may lead to unethical actions, it can be recommended that they can come up with internal policies that are directly in compliance with universally-accepted regulations.
Four main regulations or policies that banks typically comply with, namely, the Code of Banking Practice, Telecommunications Ordinance, GATS, and Consumer Goods Safety Ordinance. Through such laws or regulations, it would be easier for any company to comply with universal laws, thus, enabling it to function effectively and efficiently in its own industry. Lastly, the sales manager takes on a number of roles, which are deemed essential for the effective functioning of any organization. With such roles, it can be perceived that sales managers assume heavy responsibilities that determine the financial capabilities of a particular organization. In this regard, they are important and significant individuals in the organization.
References
Bellingham, R 2003, Ethical Leadership: Rebuilding Trust in Corporations, 2nd ed., HRD Press, Inc., Amherst, MA.
‘Bilingual Laws Information System’ 2008, Legislation.gov.hk, viewed 14 April 2008, <http://www.legislation.gov.hk/blis_ind.nsf/CurAllengDoc?OpenView&Start=106&Count=25&Expand=106#106>.
‘Consumer Goods Safety Ordinance’ 1997, viewed 14 April 2008, <http://www.justice.gov.hk/eng/home.htm>.
Hong Kong Monetary Authority 2001, ‘Review of the Code of Banking Practice’, pp. 1-55.
‘Hong Kong WTO Ministerial’ 2005, World Trade Organization, viewed 14 April 2008, <http://www.wto.org/english/thewto_e/minist_e/min05_e/brief_e/brief04_e.htm>.
Johnson, R 2008, Stanford Encyclopedia of Philosophy, viewed 11 April 2008, <http://plato.stanford.edu/entries/kant-moral/>.
Melia, KM, Thomson, IE and Boyd, KM 2000, Nursing Ethics, 4th ed., Elsevier Health Sciences, Churchill Livingstone.
Peale, NV and Blanchard, K 1988, The Power of Ethical Management, William Morrow.
Seedhouse, D 1998, Ethics: The Heart of Health Care, Second Edition. New York: John Wiley & Sons.
US Department of Labor 2007, Financial Managers, pp. 1-3, from http://stats.bls.gov/oco/pdf/ocos010.pdf.
Credit:ivythesis.typepad.com
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