The role of stakeholders
An Amway case study

Page 5: Ethical business

Ethical enterprises do more than simply provide goods and services for customers. They also make a real contribution to the communities in which they operate by:

  • creating employment and job security
  • providing products that give consumers good value for money
  • contributing to creating a more caring and cared-for community.

Competitive advantage

Businesses operate in a competitive environment. They may compete on a number of factors:

  • price
  • range of products
  • quality
  • speed of service
  • customer service.

Amway is a global enterprise. It must comply with the laws of the many different countries in which it operates. Its business ethics provide a framework to guide the behaviour of the company and its stakeholders.

As part of its business values, it protects its consumers through the quality of the products and by offering guarantees of satisfaction. It promotes and supports ethical selling behaviour amongst the ABOs through its codes of conduct.

However, in a highly competitive market where businesses are similar, Amway needs to find a way of achieving competitive advantage. Demonstrating a positive involvement in the community and attention to environmental issues can provide a business with competitive advantage. It shows that the company behaves in an ethical way, shares its values and enhances its image as a responsible organisation.

Amway recognises that to respond to CSR issues, it must base its business on the principles of 'relevance, simplicity and humanity'. For example, Amway set up the 'One by One' programme following discussions with various organisations involved in providing help to underprivileged communities worldwide.

Amway is also active in a number of programmes to reduce its impact on the environment, including:

  • supporting organic farms to grow the plants for its vitamin and mineral products
  • training employees to protect the environment, for example, encouraging re-use and recycling to conserve resources
  • changing product formulations to be more concentrated and biodegradable, which reduces packaging and waste
  • using sources of renewable energy, for example, a wind farm at its World Headquarters will provide 10% of energy needs
  • measuring its environmental impact by auditing its activities to internationally recognised standards

All these activities carry a cost, therefore Amway needs to balance the costs of its corporate social responsibility programmes against not only the benefits of doing so, but also the cost of not doing so.

Business practices that do not take account of ethical behaviour might lead stakeholders to reconsider their relationship with the company. Suppliers might stop trading or customers might stop buying (which would result loss of revenues). At the company level, it might lead to infringement of the law or loss of reputation, which would influence the wider public.

Amway | The role of stakeholders

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