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Do business objectives get in the way of trust?

Whether trust is driven by society’s expected behaviour or is imposed by rules and regulations is often a matter of culture but without some levels of trust being in place it is hard to see how trade can take place.

The requirement to meet local objectives and attempt to gain a short term advantage often means that how people think and behave falls far short of the ideal of a free and fair commercial environment in which their trustworthiness is at the core of how a person behaves.

We have therefore a series of necessary rules and regulations intended to control and limit the choices of behaviour in the commercial space so that the strong do not take advantage of the weak.

We also need to recognise that often people are not aware of existing threats to their wellbeing and so we need some rules and regulations which are designed in their best interests to control what they do so that they remain safe and secure from the possible dangers.

In this area the whole range of health and safety at work laws can be seen to be important. (See Health and Safety Executive’s website for British examples). However we need to recognise that these are intended to be positive measures rather than be seen as difficulties to be overcome or worse, rules to hide behind to avoid taking sensible actions.

Of course these rules and regulations apply in different parts of the world in different ways and so in international contracts you need to be thinking about these local details and possible variations.

In the circumstances of supplies being provided from other parts of the world there can be the problem of what are generally acceptable standards of behaviour in one part of the world are not accepted in another.

A good example is the use of child labour which, for example, was normal in the UK at the time of the Industrial Revolution (late eighteenth century to early nineteenth century) but is now outlawed.

As consumers put price pressures on suppliers they can choose to source from an area where the attitudes are different and the use of child labour allows the reduction of the manufacturing costs.

Most of the time consumers do not ask about the nature of the suppliers and their work practices who work for major brand owners to provide their goods but once consumers find out they can rapidly decide that they do not want to buy that brand until the situation is changed.

You may be interested in reading this article from on ‘Building Sustainable and Ethical Supply Chains’.

Major brand companies therefore have to be very careful to ensure that their suppliers follow the brand company’s rules on such issues and that the suppliers do not then sub-contract work to another company without the same controls in place.

However customer companies have a major responsibility to ensure that their suppliers are also treated fairly but often behave badly because they can and there are no current rules to control them.

See, for example, this article ‘Tesco scandal could spark a long overdue shake-up of the retailer-supplier relationship’ on the Telegraph website highlighting how there is currently no set of rules controlling the relationship between suppliers and retailers in the UK.

So the question remains, does a good customer take advantage of poorer practice in its supply chains or is it driven by its own ethical standards and expected behaviour? What are your thoughts?

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This article is from the free online course:

Contract Management: Building Relationships in Business

University of Southampton