Business Values &

Ethics

ABS – MBA

STUDENT ID Ur A B S I D

BUSINESS VALUES &

UNIT TITLE BUSINESS VALUES & ETHICS UNIT CODE ETHICS

KAISHYAP BAHADUR SHRESTHA

Name (in Full) ____________________________________________________________

GENERAL INSTRUCTIONS
• All assignments are to be submitted on 13th May 2022 at https://www.atmsstudentgateway.com with the login
credentials shared earlier.
• Make sure to submit the assignment ONLY to examinationboard@atmsedu.org and afatima@atmsedu.org
• If assignment is not submitted on date, will follow with penalty of 10% deduction of marks for every day.
• Any Assignment submission extension request must come to Azra Fatima (Head: Examination | Academic) -
afatima@atmsedu.org 5 days before the date of submission with a valid reason and supported documentary evidence.
• Similarity between students work is strictly not accepted, any student found with similar work will be graded Zero
and fail for the course. However, Plagiarism is an academic offence and will not be tolerated.
• Any reevaluation request should come in one week of grade release. Any late request will not be obliged. (Form
and other details shall be shared based on request)
• Any rescheduling request should come and fulfilled within two months after the actual date of the assessment. Any
late request will not be obliged.
• Assignment once submitted to exam board is final for marking.
• Program participants are strongly advised to keep a copy of their work in case the submitted copy should go astray.

• Total 90 marks. 10 Marks for Class Participation. Final marks will be converted
to 90 marks.

GUIDELINES FOR ASSIGNMENT

a) If assignment is Question & Answer based then.

• Introduction is needed for each question.
• Question has to be answered based on the mark allotted for each question with references if any
idea or information is taken from other source.
b) If assignment is case based then,
• Executive summary
• Table of content
 • Introduction
• Body of assignment (questions related to case need to be answered)
• Conclusion / Recommendation if any
• References (in-text + citation) to be used.

Total Marks / 90
PLAGIARISM

Plagiarism is a form of cheating, by representing someone else's work as your own or using someone else's
work (another student or author) without acknowledging it with a reference. This is a serious breach of the
Academic Regulations and will be dealt with accordingly. Students found to have plagiarized can be
excluded from the program.

Plagiarism occurs whenever you do any of the following things without acknowledging the original source:

✓ Copy information from any source (including the study guide, books, newspapers, the internet)
✓ Use another person's concepts or ideas
✓ Summarize or paraphrase another person's work.

How do I avoid plagiarism?

To ensure you are not plagiarizing, you must acknowledge with a reference whenever you:

✓ use another person's ideas, opinions or theory

✓ include any statistics, graphs or images that have been compiled or created by another person or
organization
✓ Paraphrase another's written or spoken word.

What are the penalties?

The penalties for plagiarism are:

✓ Deduction of marks,
✓ A mark of zero for the assignment or the unit, or
✓ Exclusion from the program.
Plagiarism is dealt with on a case-by-case basis and the penalties will reflect the seriousness of the

breach. Please note claiming that you were not aware of need to reference is no excuse.
Read the case study: Wang, L. and Snell, R. S. (2013). A case study of ethical issue at
Gucci in Shenzhen, China. Asian Journal of Business Ethics. Vol. 2. pp. 173-183. URL =
https://link.springer.com/article/10.1007/s13520-012-0024-6

You have been called in by Gucci at act as a consultant to deal with the major ethical
issues highlighted by the case study. Write a 3,000 word for Gucci which addresses the
following requirements:

1. What are the ethical issues being faced by Gucci. Apply any two of these
approaches to business ethics:
• Utilitarian
• Universalism (Deontology)
• Virtue ethics.ssues
• Justice

After an evaluation of the approaches mentioned above, and the potential ethical
issue (s) what decisions would you make? Justify your answer using business
ethics concepts (15 marks).
2. Evaluate the organizational culture at Gucci and its preparedness for implement
new Corporate Social Responsibility initiatives. (15 marks)

3. Design the implementation of a Corporate Social Responsibility Program at Gucci.

(20 marks)

4. How can issues of corporate governance be examined from an ethical

perspective? Illustrate your answer with relevant examples. (15 marks)

5. Evaluate how the strategy of Gucci can be driven or constrained by ethical

behaviors and corporate values. (15 marks)

6. Write a conclusion and an introduction to the report (20 marks)

 CASE STUDY
Business Values and Ethics

MAJOR ETHICAL ISSUES in

GUCCI
Branch- Shenzhen, China
Executive Summary:

This report is based on Business Ethics and its important and how the principles of
ethics are breached in most of the iconic brand stores.

Business Ethics is a set of disciplines or practices which guide persons’ or

organizations’ behaviors for making the best choices that comprises to a common
benefit for all and that do not harm others. Business Ethics helps everyone in an
organization/ business; either small or big volume, to identify what is morally good or
bad and morally right or wrong by framing strategic decisions to ensure ethical
behaviors.

The purpose of this report is to outline the ethical issues in one of the flagship stores of
GUCCI in Shenzhen, China in terms of Business Values and Ethics. This study
showcases about the exploitation and ill-treatment of employees working at the store
evaluating the case based on different approaches to business ethics and why are such
violations generally occurs in any company.
 Table of Content
Page

Introduction ............................................................................................................................................................................... 1

What are the ethical issues being faced by Gucci? ...................................................................................................................... 2

Labor Law in China ......................................................................................................................................................................... 2
Two Approaches of Business Ethics: .............................................................................................................................................. 3
Justice ............................................................................................................................................................................................. 3
Virtue Ethics ................................................................................................................................................................................... 3

Organizational Culture at Gucci .................................................................................................................................................. 4

Recommendations / Corporate Social Responsibility: ................................................................................................................ 4

Corporate Governance & Business Ethics ................................................................................................................................... 5

Understanding Corporate Governance ......................................................................................................................................... 6
Ethical Perspective of Corporate Governance ............................................................................................................................... 7
Example of Successful Corporate Governance -PepsiCo ............................................................................................................... 7
Example of Poor Corporate Governance -Enron ........................................................................................................................... 7

Gucci Strategy- Ethical Behavior and Corporate Values .............................................................................................................. 8

Conclusion .................................................................................................................................................................................. 9

References ............................................................................................................................................................................... 10
12 MAY 2022 Case Study - Business value s & Ethics

Introduction

Gucci is an Italian fashion brand founded in 1921 by Guccio Gucci, making it one of the oldest Italian
fashion brands in operation today. The brand started out as a luggage manufacturer, producing luxury travel
goods for Italy’s wealthy upper-classes, as well as equestrian equipment. Gucci is a renowned name in the
world of luxury leather goods, fashion, watches and jewelry and the dynamism, creativity, artistic aesthetic
and detailing in its products represent the pinnacle of craftsmanship. Currently, it is owned by the French
luxury group Kering. In addition to Gucci, Kering and its proprietor Francois Pinault also own Yves Saint
Laurent, Balenciaga and Alexander McQueen. In 2018, Gucci operated 540 stores for 14,628 employees.
[Kering: French Luxury Group, 2022].

Though, these elite fashion brands which induces a sense of pride amongst the users and generating
billions of dollars revenue per year, the practices that these companies are known for its ethical breaches,
child labors, low wages, unhealthy and inhumane working conditions, animal cruelty, destruction of the
environment, re-packaging various such business practices as sustainability and the like. Some of such labor
violation cases are NIKE abusing labor rights in Southeast Asia [KASKY V. NIKE AND THE QUARRELSOME
QUESTION OF CORPORATE FREE SPEECH, 2007], Amazon, ASDA, Nestle, Tesco And Coca Cola (Hunt, 2022)

One such case is the violation that happened in one of the flagship stores of Gucci in Shenzhen, China
which grabbed attention of the whole internet world worldwide when the former employees working at the
China Store, wrote an open letter on the internet about the labor rights abuses and ill-treatment of
employees working at the store. [X. (2011, October 12)]

Hence, this paper has illustrated the case- based on the stories widespread over the internet and
based on the letter, analysis of the case has been done by two approaches of ethical issues faced in Gucci,
China Shenzhen branch and provide best solution to avoid such ethical breaches in general in over all
businesses, instead of considering only 1 case. In other part, this paper has also illustrated the importance
of Corporate Policies to maintain moral ethics for thriving business success. This report also highlights the
major issues why labor abuses happens when international franchises steps in and tried to analyze it from
different business ethics aspects.

1|P a g e
12 MAY 2022 Case Study - Business value s & Ethics

What are the ethical issues being faced by Gucci?

A whistle-blowing event rocked the entire internet world, when on Oct. 8, 2011, 5 employees of the
Gucci store wrote an open letter on the internet about the exploitation and ill-treatment of employees
working at the store. It was said that more than 100 rules were imposed by the company on its employees,
including seeking permission for tea and snack breaks, limitation of restroom breaks to 5 minutes, standing
for over 14 hours a day continuously, unpaid overtime extending up to midnight. The employees were also
fined in case of stolen or missing goods despite having insurance for the same. As per the news published
on China Daily News Paper on 12th October 2011 by Xinhua- “One of the employees surnamed He estimated
that a total of over 70,000 yuan ($11,000) was deducted from employees' salaries when 16 items in the store
went missing from 2009 to the end of August. The company, though, had the products insured, which makes
them doubly compensated, according to an anonymous insider.” [X. (2011, October 12)]

These conditions were so abysmal that it led to a miscarriage of one of the women employees.
Moreover, there were discriminatory policies for the front-line workers and managers, arbitrary policies for
the exchange of goods, etc. All in all, they accused Gucci of lacking systematic and humane management
and complained that their rights and dignity were being abused. This was not only the first case reported
about the overtime scandal in Gucci store in Shenzhen. The same year on August, former operation manager
of Gucci (China) had also filed for overtime payment and submitted the labor arbitration application to
Chaoyang Arbitration Committee for Labor Disputes in Beijing – China Daily Newspaper disclosed in its
article- “Gucci Trapper in Overtime Payment Dispute”. (Xiaoji, 2011)

Labor Law in China

China’s Labor Law from The Chinese Constitution & (MOHRSS) Ministry of Human Resources and
Social Security; stated some of the following major key provisions and are given below for quick reference
which will help to understand the ethics violation by different entities in this case. (employment law china,
n.d.)

1) Providing minimum working conditions - An employer is required to provide a basic hygienic and safe
working environment to its employees. The employer is also required to conduct regular medical check-
ups of employees involved in the handling of hazardous substances.
2) Maximum working week – The Chinese law mandates the weekly working hours to be 40 for employees
working under the standard working hour system. The employer has to ensure that at least 1 resting day
per week is provided to the employees. Additionally, depending on the employee’s total years of service,
the employer is required to give annual leave. Apart from the above, paternity leave, sickness leave and
disability leave are also provided.
3) Overtime – The working hours can be extended by the employer in consultation with the trade unions;
this should, however, be limited to only one hour per day. In order to compensate the employee for
overtime work, the employer is required to pay additional wages, ranging from 150% to 300% of regular
wages.
4) Maternity / Pregnancy - Prohibited work for a pregnant woman which are classified as being of Grade III
labor intensity, any work considered taboo for pregnant women and extended working hours. Moreover,
alternative work should be assigned to pregnant women unable to perform their usual work.

2|P a g e
12 MAY 2022 Case Study - Business value s & Ethics

Two Approaches of Business Ethics:

In today’s paper, we are going to approach the GUCCI case from the perspective of two Business Ethics -
Justice and Virtue Ethics.

Justice
Justice in business ethic is an approach in the leadership and business practices where all stakeholders
receive equal treatment regardless of their creed, racial background, professional rank or even social classes.
If there are any act of prejudice, favoritism, isolation segregation and unfair compensation or treatment
among workers, this is considered as unethical business practices and hence must not grow such behavior
in any company. Fairness is the key in this approach which must be applied to all stakeholders to built an
environment of trust and openness. In Gucci case, this went completely opposite where the employees in
the china branch were ill-treated. Despite of working for extra hours, the overtime was not paid and even
when the 5 former employees, the writers of the letter, demanded apology from Gucci which was not
received as per the employees as stated in China Daily Online News portal. However, Gucci public relations
department declined the comment, further stated in the news. [X. (2011, October 12)]
The pregnant woman was forced to work at frontline standing which not only violated the labor rights but
also human rights and moral codes. The restriction on drinking water and using toilet free are clear abuse.
But for managers, these restrictions did not apply and discrimination was seen. Moreover, for any items
missing or stole, it was deducted from the employee while the company, though, had the products insured,
which makes them doubly compensated. In continuation to this, such types of labor rights breaches in China
are deep rooted and sometimes unseen by the government as well due to a motive to achieve high end
revenue in short terms and economic targets of the country. Overall, no justice towards the workers was
seen in this case study.

Virtue Ethics
Virtue ethics is one of the important approaches in business ethics and it emphasizes the person’s traits or
character in moral thinking. Generally, in this type of ethics, it does not provide the moral agent with specific
principles or rules to guide any actions during any dilemmas. This is about practical wisdom of an individual
in decision making doing good. Truthfulness, integrity, and honesty. In this approach, it is said that if an
individual is good, he will do good because his character is good/ moral. In Gucci- Shenzhen China, it is seen
that the management was ill treating to its employee violating the moral rights which is non-ethical and not
virtues. However, it is important for a company and its stakeholder to be virtues for the better work
environment and fairness, truthfulness and honesty. Further to this, legal imperatives are to be introduced
that would remind managements about the need to listen, understand, and respond to the needs of their
employees. Confucian values originated in ancient times, when “rule of man” prevailed and when modern
rule of law was inconceivable. China, having rapidly and breathtakingly developed into a modern society
within the last two decades, is probably ready now to undergo the truly revolutionary process of blending
Confucian morality and the Western rights-based paradigm into a moral compass that is more suitable for
the contemporary world

After evaluating this case based on the letter and other online articles, following preliminary decisions
might be considered-
1. Redesigning Gucci policies and agreement with other host countries to protect the labor rights in
Gucci branches.
2. Reviewing Corporate Governance policies of other countries branches, restructuring it- if needed and
ensure that the policies are implemented strictly.
3|P a g e
12 MAY 2022 Case Study - Business value s & Ethics

3. Gucci headquarter to strongly urge its China branch to remunerate the workers who were ill-treated
during the work.
4. Assigning audit committee to audit the branches timely in other countries and strictly taking it further
if any discrepancies are found.
5. Urge Labour Supervisor departments to step up efforts in protecting unarmed employees.
6. Educating the workers about their rights in order to empower them against any such violations.

Organizational Culture at Gucci

There are some key theoretical and managerial implications of this case. The first of these concerns
the limitations and possible distortions of the virtue-based approach to business ethics as it has been applied
in China. While some managers may recognize that a virtue-based Confucian firm should seek harmony by
expressing benevolence to its employees, who would reciprocate with loyalty and gratitude, some key
aspects of this approach can be forgotten when facing modern economic pressures. What may be
remembered by managements is that Confucian ethics is based on the premise of inequality between the
senior and junior parties in the relationship and that the junior party is expected to go along with whatever
treatment they receive without direct protestation. What may be forgotten by managements is that all this
is premised on the assumption that the senior party should consider, respect, and be responsive to the needs
of the junior party. Such empathic concern is unlikely to flourish without a channel for listening and without
a powerful incentive to listen. In their absence, all-powerful managements become de-sensitized from the
concerns of their employees, and labor abuses will ensue. From this, a second implication can be inferred.
In order to prevent labor abuses in the PRC, it is necessary to institute strong, legally based mechanisms for
enforcing and protecting labor rights. Conveying legitimate bargaining rights to labor Ethical issues at Gucci
in Shenzhen, China organizations that correspond to their independent trade union counterparts in the West
is one key step in this process. The second key step is for the national and local governments in the PRC to
join hands in assigning a higher priority to encouraging and supporting corporate social responsibility, no
longer relegating this to an after-thought or empty, token slogan. This, in turn, implies a role for foreign firms
and foreign governments. Strengthening legal safeguards for labor rights in Chinese organizations is likely to
require cross-national dialogues within corporations and between foreign governments and the government
of the PRC. Although concern about the Confucian virtues appear insufficient to constitute a safeguard
against ethical violations in China-based firms, the picture may be radically transformed if legal imperatives
are introduced that would serve to remind managements about the need to listen, understand, and respond
to the needs of their employees. Confucian values originated in ancient times, when “rule of man” prevailed
and when modern rule of law was inconceivable. China, having rapidly and breathtakingly developed into a
modern society within the last two decades, is probably ready now to undergo the truly revolutionary
process of blending Confucian morality and the Western rights-based paradigm into a moral compass that is
more suitable for the contemporary world.

Recommendations / Corporate Social Responsibility:

Corporate Social Responsibility (CSR) is when a company operates in an ethical and sustainable way
and deals with its environmental and social impacts. This means a careful consideration of human rights, the
community, environment, and society in which it operates. According to Hopkins (2004) and Abd Rahim, et
al (2011) CSR can be defined as treating the stakeholders of the firm ethically or in a responsible manner.
Koestoer (2007) offered definition is: Ways of companies in addressing various social issues in their operating
areas, individually or collectively, are known as Corporate Social Responsibility (CSR).

4|P a g e
12 MAY 2022 Case Study - Business value s & Ethics

Following solutions can be considered in order to build sustainable and ethical work environment
considering the Gucci, China case.

1. Gucci must lead efforts in developing and implementing industry-wide and worldwide codes of
ethics, thereby creating a comprehensive set of explicit norms and expectation about ethical
standards. The code should require every branch and stores of companies in the luxury industry to
embrace ethical principles and embed them into management systems and policies and internal
review processes. This code could include items on the following: use of written employment
contracts with all workers, avoiding abuse of the dispatch system, equal pay for work of equal value,
prohibition of compulsory and unpaid work, adherence to laws and regulations on working hours,
provision of wages and benefits not below minimum legal requirements, anti-discrimination, anti-
harassment, anti-abuse, and respect for occupational health and safety. Gucci, Italy, should strongly
urge and encourage its branches in China to comply with the necessary ethical standards in China
(and every other host country).
2. Chinese Government has to revise the entire monitoring and regulations of labor rights. In order to
organize in mainland China (i.e., to establish an NGO), one has to register the organization according
to the Social Organizations Registration and Administration Act but due to a complex process, it is
virtually impossible to form an NGO in China. Another barrier is that every NGO will be co-
administered by a civil affair governmental office. This unique “Chinese way” of double
administration weakens the independence of an NGO. China, referring to the biggest customer group
and labor force of the luxury industry worldwide, should consider giving permission to set up such a
non-governmental organization with independent powers, to monitor these luxury multinational
companies’ operations in China.
3. The international foreign governments to be responsible to enforce the same laws to maintain the
standard of the working space, work environment and benefits of the employees not only in
multinational companies’ home countries but also in the outsourced countries like China.
4. To protect employees, they should be encouraged to get together and make their voice heard (like
writing a public letter on the Internet). By voicing their grievances, they can attract more attention,
thus win more support, and the relevant government departments are more likely to investigate into
their concerns. Furthermore, the workers should be made aware about the labor laws and violations.
5. A stakeholder approach is the survival of the firm. To survive in difficult environment, management
must direct a course for the firm, not merely optimize current output. To successfully change course,
management require huge support of those who can affect the firm and understand how firm will
affect others. Hence, understanding stakeholder relationships is the most important ethical behavior
in order to achieve the organization’s objectives which matters for long-term survival of the business.
(Freeman and McVea, 2001)

Corporate Governance & Business Ethics

Many companies must understand that to encourage positive behaviors and repeat business with
their customers, they need to undertake their business in the right way. Companies therefore must draw up
their values, embed them with their employees and monitor that they do business according to them,
knowing they will be held accountable if they do not. And to do this, there should be a method which includes
a structure of rules, ethical practices, and process to use in order to direct and manage the company to meet
up with the expectations of stakeholders and this method is called Corporate Governance - which helps to
facilitate effective, entrepreneurial and prudent management in order to deliver long-term success of the

5|P a g e
12 MAY 2022 Case Study - Business value s & Ethics

company. These are to be considered under social responsibility, socio-cultural-environmental dimension of

business procedure and legal and ethical practices focus on various stakeholders of the company.
The importance of Corporate Governance may be summarized as below.
❖ To meet the expectation of the different stakeholders.
❖ Accomplishment of the task within the provided target.
❖ Customer Satisfaction.
❖ Employee awareness about the company policies and local government rules & regulations.
❖ Reserve employee benefits and rights.
❖ Remuneration Planning in order to motivate employees, commitment and attract new talents.
❖ Integrated Management and Compliances.

Understanding Corporate Governance

Shareholders/ Owners are important stakeholders who indirectly affect governance and the board of
directors is pivotal in governance, and it can have major ramifications for equity valuation. When an owner
opens a business, the owner appoints Board of Directors to run the business and to run the business for long
run and financial viability, a set of principles/ policies are made which is called Corporate Governance.
Corporate Governance defines about Leadership, Effectiveness, Accountability, Remuneration, Relations,
Transparencies and Ethical Practice.

The following tree structure is created based on the idea shared on YouTube by - (Practice Tests Academy, 2021) &
(Agrawal, 2020) to have general idea of Corporate Governance

6|P a g e
12 MAY 2022 Case Study - Business value s & Ethics

Ethical Perspective of Corporate Governance

It would be expected that the way the board members ought to behave in carrying out their role would be
central to ideas of good governance as set out in guidance and policy. Also, salient would be a requirement
for oversight of the values and culture of the organization, as well as of the appropriate structures, processes
and controls to ensure decision-making and behaviors that are in line with ethical principles. Finally, ethics
can be seen in terms of a requirement for appropriate governance structures and mechanisms at board level
so as to facilitate ethical behaviors by the board. What is judged as ethical, and what an ethical choice would
look like, is subjective and varies among individuals, and among and within cultures and organizations.
However, there are typical ethical value words that are used by businesses to articulate their commitment
to ethical standards, behaviors and practices. These include, for example, fairness, honesty, respect,
integrity, openness and responsibility. Also, reference to leadership attitudes and traits relating to setting an
ethical tone might be expected in corporate governance guidance; including fair-minded, courageous,
respectful, open.

Figure- [Casson. J., 2013]

Example of Successful Corporate Governance -PepsiCo

It's common to hear of bad corporate governance examples, mainly because it is the reason some companies
blow up and end up in the news. It's rare to hear of companies with good corporate governance because it
is the good corporate governance that keeps them out of the news as no scandal has occurred.
One company that has consistently practiced good corporate governance and seeks to update it often
is PepsiCo. In drafting its 2020 proxy statement, PepsiCo took input from investors to focus on six areas:
• Board composition, diversity, and refreshment, and leadership structure
• Long-term strategy, corporate purpose, and sustainability issues
• Good governance practices and ethical corporate culture
• Human capital management
• Compensation discussion and analysis
• Shareholder and stakeholder engagement
The company included in its proxy statement a side-by-side graphic that depicted the current
leadership structure, which shows a combined chair and CEO along with an independent presiding director,
and a link between the compensation of the company's "Winning with Purpose" vision and changes to the
executive compensation program. (Maiden, B., 2020)

Example of Poor Corporate Governance -Enron

Another good example of failure to follow Corporate Governance is Enron scandal where private partnerships were
used to hide Enron’s debts and liabilities. If the Corporate Governance ethics was followed strictly, this would have
prevented the create of these entities to hid the losses. This shows that the one of the principles of Corporate

7|P a g e
12 MAY 2022 Case Study - Business value s & Ethics

Governance – “Transparency” was compromised due to dishonest people who made illegal moves in the markets.
(CHEN, 2021)

Gucci Strategy- Ethical Behavior and Corporate Values

Gucci is one the most renowned and influential elite brands in the world today, a genuine global
reference for fashion and accessories, and a benchmark for a modern, innovative users and brand lovers. So
being one of the most elite, demanding and high rated brands, this adds high level of values to the brand.
Sometimes dilemmas are seen among the leaders while trying to maintain this cultural trend and company
values in the market and to its external stakeholders and this put pressure on leaders in the business to live
and breathe with them. If the leader does not, they will loose personal creditability in the business. Now,
this is when it becomes very important that the leaders act most ethically, with open eyes rather than
implying the random and inhumane rules in the organization and enforce these to their sub-ordinates
without caring anything about anyone because they have given a set of targets and they require to meet the
shareholders expectations or else their performance will be questioned. Though most of the companies
comply with Corporate Governance but still in some cases we might see that these policies just remain in
the paper and not being followed equally in the other department of same business entities. Bad corporate
governance OR any party failing to comply with the policies in the corporate governance can put a doubt on
the company reliability, integrity or obligation to shareholders, which can have adverse effect on the
company financial health. The tolerance or support to the ill activity, wrongdoing, immoral activities, policies
not being followed by the directors, non-transparency, illegal act etc. leads to scandals like the open letter
from the former employees of Gucci- Shenzhen China that rocked the entire world and put Gucci reputation
on stake. The Company’s directors, officers and employees are required to comply with codes defined under
Corporate Governance. The purpose of the Company’s Code of Business Conduct and Ethics is to deter
wrongdoing and to promote, among other things, honest and ethical conduct and to ensure to the greatest
possible extent that the Company’s business is conducted in a consistently legal and ethical manner. The
unethical behaviors towards the employees in China branch as illustrated in the letter from the former
employees, it suggests that Gucci branch failed to follow the codes of ethical behavior. There might be
various aspects which may led this incident to occur in the branch – bad Corporate Governance, corrupted
and ill board structure, the policies not defined clearly, bad executive compensation package, poorly
structured boards that make it too difficult for shareholders to oust ineffective incumbents, lack of audit and
poor nomination committee. These all factors become important to the franchise owner to investigate
before making any expansions in other countries and equally, all boards in a company must strictly comply
and follow the ethical policies in order to thrive through the long-term success by reserving the employee
rights towards the sustainable culture.
Gucci in its Code of Ethics – clearly stated that Gucci respect its colleagues and employees with fair
treatment, motivation in work, providing working environment that respects human rights and labor laws,
encourage freedom of expression for employees, free exercise of union rights, work environment free of
harassment, non-discrimination etc., but these policies were found not being followed in its china branch.
(CODE OF ETHICS - GUCCI, n.d.)

8|P a g e
12 MAY 2022 Case Study - Business value s & Ethics

Conclusion

Business ethics is seen by many as an oxymoron. However, research has shown that following ethical
practices enhance the profitability and sustainability of the business for the long run and in return it benefits
all the stakeholders. In this particular case, though it is easy to argue as to what is right and what is wrong,
it does raise larger questions about the system; and systemic issues are always complex as there are various
factors, cultural boundaries, pressures of various groups, high stakes, etc. and hence, require equal efforts
by all parties to understand the codes of ethics and corporate governance. So, it is up to businesses, societies,
and individuals alike to take a step towards the ethical path and do the right things. The aim of this Paper
was also to identify the ethical aspects of corporate governance policy debates and frameworks and to look
into the case from different aspect of Business Ethics. The bottom line here is a strong, transparent policies
leads a company to make ethical decisions that benefit all of its stakeholders, allowing the company to excel
itself as an attractive option to investors if its financials are also healthy. Bad business ethics leads to a
breakdown of a company, often resulting in scandals and bankruptcy.

9|P a g e
12 MAY 2022
References
Lifestyle Asia Kuala Lumpur. 2022. Know the history of
the luxury fashion brand before you watch 'House of
Gucci'. [online] Available at:
https://www.lifestyleasia.com/kl/style/fashion/histor
y-of-gucci/
(Li Wang & Robin Stanley Snell, 2022)
Link.springer.com. 2022. Li Wang & Robin Stanley
Snell. [online] Available at:
https://link.springer.com/content/pdf/10.1007/s1352
0-012-0024-6.pdf
(Casson, 2013) Casson, J., 2013. A Review of the
Ethical Aspects of Corporate Governance Regulation
and Guidance in the EU. [ebook] pp.7 & 8. Available
at:<http://boardinsight.co.uk/pdf/articles/IBE_PAPER
_FINAL_19_6_13.pdf>
(CHEN, 2021) CHEN, J., 2021. What Corporate
Governance Means for the Bottom Line. [online]
Investopedia. Available at:
https://www.investopedia.com/terms/c/corporatego
vernance.asp
(Practice Tests Academy, 2021) Practice Tests
Academy, 2021. The basics of Corporate Governance.
[image] Available at:
https://www.youtube.com/watch?v=7CMUfDZ0Kzk
(Agrawal, 2020) Agrawal, C., 2020. Corporate
Governance Class. [image] Available at:
https://www.youtube.com/watch?v=r9ylcVczEVA
(Maiden, 2020) Maiden, B., 2020. PepsiCo finds
governance success through evolution. [online]
Corporate Secretary. Available at:
<https://www.corporatesecretary.com/articles/share
holders/32385/pepsico-finds-governance-success-
through-evolution>
(CODE OF ETHICS - GUCCI, n.d.) n.d. CODE OF ETHICS -
GUCCI. [ebook] p.10. Available at:
https://www.gucci.com/documents/kering_codeethique20
19_english.pdf
(Kering: French Luxury Group, 2022) Kering.com.
2022. Kering: French Luxury Group. [online] Available
at: https://www.kering.com/en/
Case Study - Business value s & Ethics
(KASKY V. NIKE AND THE QUARRELSOME QUESTION
OF CORPORATE FREE SPEECH, 2007) 2007. KASKY V.
NIKE AND THE QUARRELSOME QUESTION OF
CORPORATE FREE SPEECH. [ebook] p.67. Available at:
https://www.researchgate.net/profile/Don-Mayer-
2/publication/261754591_Kasky_V_Nike_and_the_Qu
arrelsome_Question_of_Corporate_Free_Speech/link
s/5fc52c3ca6fdcc6706c574b7/Kasky-V-Nike-and-the-
Quarrelsome-Question-of-Corporate-Free-Speech.pdf
(Hunt, 2022) Hunt, T., 2022. Five unethical companies.
[ebook] Available at:
https://www.ethicalconsumer.org/retailers/five-
unethical-companies
X. (2011, October 12). Gucci under fire for alleged
employee abuse in China. Chinadaily.Com.
http://www.chinadaily.com.cn/bizchina/2011-
10/12/content_13877144.htm
(employment law china, n.d.)
n.d. employment law china. [ebook] pp.10-14. Available at:
https://knowledge.leglobal.org/wp-
content/uploads/sites/2/LEG-Employment-Law-Overview-
2021-2022_China_27.03.21.pdf
(Xiaoji, 2011)
Xiaoji, Q., 2011. Gucci trapped in overtime payment
dispute again | Companies | chinadaily.com.cn. [online]
Chinadaily.com.cn. Available at:
http://www.chinadaily.com.cn/bizchina/2011-
10/10/content_13863967.htm
(Freeman and McVea, 2001)
Freeman, R. and McVea, J., 2001. A Stakeholder
Approach to Strategic Management. [ebook] p.12.
Available at:
https://deliverypdf.ssrn.com/delivery.php?ID=5560090
7300610508301512608706410707805608102204102
4036031091114120123073114039051121111024003
0910051250920651021090000040860350071180940
9011211810601908100807203302210511000308807
5093002106127121027124096074109105122025117
080103068001019127126&EXT=pdf&INDEX=TRUE
10 | P a g e