Business and ethics

The primary goal of a company may be to make money but some companies nowadays also recognise that they have a responsibility towards the society in which they operate.

Read the text and then do the exercises.

Case study – James Carston, Fine Shirtmakers

Set up in the 1920s by James Carston, a Manchester tailor, the company has remained in the family and is now run by James’s grandson, Paul Carston.  Employing fewer than 50 people, the company has a reputation for producing high-quality men’s shirts, which it sells by mail order, and has a loyal customer base.  As Paul Carston says, ‘Once someone has tried our shirts, they tend to come back for more.  Our customers appreciate the attention to detail and the high-quality fabric we use.’ And it’s the fabric they now use that makes the company almost unique in the world of men’s shirt manufacturers.

When Paul Carston took over running the company in 1999, he inherited a business that prided itself on using local well-paid machinists rather than sweatshop labour, and looked upon its employees as members of an extended family. Paul, a committed environmentalist, felt that the company fitted in well with his values. The shirts were made from 100 per cent cotton, and as Paul says, ‘It’s a completely natural fibre, so you would think it was environmentally sound’. Then Paul read a magazine article about Fair Trade and cotton producers.  He was devastated to read that the cotton industry is a major source of pollution, and that the synthetic fertilisers used to produce cotton are finding their way into the food chain.

Paul takes up the story.  ‘I investigated our suppliers, and sure enough found that they were producing cotton on an industrial scale using massive amounts of chemicals.  Then I looked into organic cotton suppliers, and found an organisation of Indian farmers who worked together to produce organic cotton on a Fair Trade basis.  Organic cotton is considerably more expensive than conventionally produced cotton, so I did the sums. I discovered that if we were prepared to take a cut in profits, we would only need to add a couple of pounds to the price of each shirt to cover the extra costs.  The big risk, of course, was whether our customers would pay extra for organic cotton.’

Paul did some research into the ethical clothing market and discovered that although there were several companies producing casual clothing such as T-shirts in organic cotton, there was a gap in the market for smart men’s shirts.  He decided to take the plunge and switch entirely to organic cotton. He wrote to all his customers explaining the reasons for the change, and at the same time the company set up a website so they could sell the shirts on the internet.  The response was encouraging. Although they lost some of their regular customers, they gained a whole customer base looking for formal shirts made from organic cotton, and the company is going from strength to strength.

Task 1

Read the case study again and decide if the statements are true or false

James Carston was Paul’s grandfather.

⧠ True                         ⧠ False

The company has over 50 employees.

⧠ True                         ⧠ False

The shirts are sold in shops.

⧠ True                         ⧠ False

When Paul started running the company, he immediately decided to change to organic cotton.

⧠ True                         ⧠ False

Conventionally produced cotton is cheaper than organic cotton.

⧠ True                         ⧠ False

The company didn’t lose any customers when they changed to organic cotton.

⧠ True                         ⧠ False

Task 2

Read this case study about an ethical business and choose the correct profile for the company:  A, B or C.

A

• began trading in 1923
• has always been a family business
• has always paid its employees well
• now produces men's shirts using organic cotton

B

• began trading in 1919
• was sold to Paul Carston in 1999
• stopped using sweatshop labour in 1999
• now produces t-shirts in organic cotton

C

• began trading in 1999
• set up by Paul Carston
• all employees are members of his family
• produces formal and casual men's clothes in organic cotton

The correct profile is letter ______.

Keys

Task 1

True, False, False, False, True, False

Task 2

A