Business Ethics: Gap Inc.

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Business Ethics and Corporate Social Responsibility
Case Study: GAP Inc.

Business ethics can be described as the ethical dilemmas that arise within a business setting. GAP Inc., similar to most other multinational corporations (MNCs), has faced numerous ethical issues in the past. Since 1995, GAP’s image has been continuously tarnished through allegations of exploitive working conditions, cheap labour, and hostile environments overseas. One ethical issue surrounding GAP Inc. emerged from the “Made in U.S.A.” labels, resulting in the deception of American customers. This is an ethical issue because all of the clothing was made in Saipan. While Saipan is technically part of the U.S., it does not have to follow the same labour laws and standards as North America. As a result, GAP customers falsely believed the clothes they were purchasing were American made and subject to the strict policies and regulations America must follow. GAP followed through with the deception of consumers, which only began to tarnish their image. The second ethical issue surrounding GAP was the implementation of its “Code of Conduct” but the failure to enforce it. In 1993, GAP created a Code of Conduct aimed at preventing discrimination, fair wages relative to national standards, no employment of children, and no penalization for union formation. The Code of Conduct was to be signed by the individual suppliers in order to uphold the agreement. However, the Code of Conduct was not effectively enforced. In El Salvador, a GAP supplier, minimum wage standards were not met, and children were not only employed but also were not compensated for their overtime efforts. This is an ethical issue because GAP provided a hostile work environment in which workers right were no longer protected. The third ethical issue occurred when GAP claimed they were not aware of the exploitive working conditions abroad. Their denial of responsibility stemmed from the fact that a third party was put in place in order to evaluate the conditions of the factories overseas. This is an ethical issue because it is GAP’s moral responsibility to be aware of the inner workings of their company. Pleading ignorance, for a company that produced $1.03 billion in profits, seems unfathomable. The fourth ethical issue occurred when GAP falsely advertised jobs to the workers of the Saipan factory. Women were recruited under the assumption that they would be getting “well-paying jobs in the USA” only to find out the jobs were in Saipan and paid only $3 an hour. This is an ethical issue because this sort of advertisement would persuade people from developing nations to enter a workforce that they may usually avoid.

The first ethical issue that was discussed in this paper was the deception of consumers through the labels “Made in USA” while in reality the clothing was made in Saipan. In order to deem this an ethical issue, we must look at this issue from both a utilitarian and deontological perspective. Arguing from a utilitarian perspective, more specifically act utilitarianism, the ethical issue is morally just if it produces the greatest good for the greatest number. It involves looking at the consequences rather than the discrete action involved, namely the misrepresentation of the production destination. Due to the fact that the consumers believed the clothing with “Made in USA” labels were made under the strict U.S. labour laws, they believed that no harm was done to the workers who produced the clothes. This, in turn, allowed the consumers to feel good about their purchases and diminished their feelings of unhappiness. This act would be considered to be morally just as it produces the greatest good for the consumer and the employer. Deontological perspective argues that an issue is morally just if it can be universalized. Unlike utilitarianism, it does not focus on consequences but rather unconditional moral laws. In this instance...
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