Australian Wheat Board Study

Topics: Ethics, Business ethics, Social responsibility Pages: 9 (3027 words) Published: July 18, 2007
A United Nations report on October 27, 2005 found that the Australian Wheat Board (AWB) had paid $US221.7million in kickbacks to the Iraqi government under the United Nations Oil-for-Food program (Whitton 2007). Acting in such a manner they cheated their shareholders out of those monies as well as damaging Australia's trade reputation. This paper will examine the environments the organization was operating in, the managerial ethical issues and corporate social responsibility. The academic theories behind each managerial issue will be identified and other relevant cases will be introduced as well in an attempt to understand the situation in greater depth and what led to such decisions being made.

Part A: The environment

A.1 External
Four main groups make up the specific external environment (Robbins et al, 2006), customers, suppliers, competitors and public pressure groups. "Each has a direct and immediate influence on managers' decisions and actions and is directly relevant to the achievement of the organization's goals". In this case factors in the external environment encouraged the organization to behave in an unethical way.

A.1.1 Customers
In an unusual twist, it was the customer that was asking AWB to conduct business in an inappropriate manner. As part of the sale of wheat to Iraq, AWB was asked to pay "discharge and land transport" fees to transport wheat to silos throughout Iraq (Attorney General's Department 2006). They were informed that, should they not pay this fee, Iraq would not purchase any wheat from them. All companies exist to serve the needs of their customers. The old adage "the customer is always right" is not always true, but the seller must always behave as though it is. Generally a company will not question how the customer would like to do business, but rather go out of their way to ensure their needs are met.

A.1.2 Suppliers
The suppliers of an organization are also key to its success. For AWB, its suppliers are Australian grain growing farmers. AWB's corporate structure and constitution requires AWB to act in a manner that maximizes net returns to growers who deliver to the AWB National Pool (AWB 2006), acting more as a distributor than a traditional customer. The farmers/suppliers expect AWB to get the highest possible price for the grain they have placed in their care. The largest hurdle to success for a company is often its competitors. AWB faces competition from around the globe and every country that is producing a surplus of wheat. While this is challenging enough in and of itself, it was one of their competitors that led to the illegal payments being discovered. Canada was turned down for a wheat contract with Iraq when it refused to pay the additional fees. Iraq alluded to the fact that Australia was happy to pay them, and so should Canada (AGD 2006). This led to a complaint being filed with the United Nations regarding the payments and their eventual discovery.

A.1.3 Pressure Groups
Like many large companies, AWB faces pressures from a variety of groups encouraging environmentalism, social responsibility and other special interests. In response they have a variety of programs that give back to the community, provide international aid and show stewardship of the environment. AWB is aware of the importance of its public reputation, but apparently gave no thought to it when undertaking the activities that now see them being sued by their own shareholders.

A.1.4 General environment
The general external environment (Robbins et al 2006) includes a variety of factors that may affect the organization. Economic conditions, political and legal conditions, sociocultural and demographic conditions and technological and global conditions should all be monitored for possible market changing affects. In respect to AWB's current position it has been the political and legal conditions that they did not account for. Neither war in Iraq has...

References: Gettler, L (2006) ‘UN chief takes swipe at corporate behaviour ' The Age, 5/4/06, p.12
Gettler, L
Heller, R. (2007) Business Communication: Corporate Culture and Communicating in Management. [Accessed 20/05/07]
Kohlberg, L
Kotler, P. and Lee, N. (2005) Corporate Social Responsibility. Hoboken, NJ: John Wiley & Sons
Overington, C
Robbins, S., Bergman, R., Staff, I. and Coulter, M. (2006) Management 4th ed., Australia: Pearson Education Australia
Seligson, A
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