Case Study P&G and Unilever

Question1

As the case mentioned, we got that due to the fierce competition, P&G got some sensitive information about its rival Unilever via questionable tactics known as “dumpster diving”. According to Crane and Matten (2007), dumpster diving is a kind of unethical way to get information from a competitor. Because this kind of action goes against the obligation to be honest and truthful in business society (Boatright 2000 cited in Crane & Matten 2007). On the basis of deontological theories, we can understand the above idea more thoroughly. Kant’s theories as the most typical deontological theories point out that people’s ethical decision should be made based on the universal law (Donaldson, Werhane & Cording 2002). So based on this point we can conclude that dumpster diving is an unethical way to acquire information from a competitor, especially the action that one person of P&G sorted through the trash bins at Unilever’s Chicago office is obviously unethical. Firstly, getting information through questionable means as dumpster diving especially sifting another company’s rubbish to gain information will let P&G suffer a loss of trust. Secondly, if all the players of industry use questionable tactics such as dumpster diving to get information of their rivals in order to gain more in the business world, the whole order of business principles may be disordered. So due to the above analysis, we can conclude that dumpster diving as a means to get information from business competitor can’t became a universal law, because it is unethical according to Emmanuel Kant.

May be some people will hold the idea that if companies don’t take precautions, such as shredding vital documents, why should they be protected from prying eyes. In my personal view, although the companies may bear some responsibility to the exposure some of their information due to the lack of precautions, it is still unethical for another company to pry another company’s private information. Just as the case mentioned, P&G succeeded in obtaining Unilever’s intelligence from gathering the piles of unshredded documents in the trash bins at Unilever’s Chicago office. Although the action of P&G is not necessary illegal due to different countries having different rules on the legal status of rubbish (Crane & Matten 2007), it is the business ethics for a company to respect another company’s privacy even the other company is its rival. According to the view of some people, if there are no precautions for a company, this company shouldn’t be protected from prying eyes. For instance, if a house’s door is open, and nobody is in, is it ok to enter it according to some people’s view? If your colleague’s drawer is unlocked, is it ok for you to dig the privacy of him or her? If a car is unlocked and with nobody in, is it ok for another people to drive it away? In the above three examples, there are no precautions for each owner, but in my view, they should still be protected due to their rights of property. And meanwhile it is also an ethical issue to respect and protect other’s privacy. Just as in the case, even the documents are in Unilever’s trash bin, it’s still their property which should be protected.

While things may not always be so definite, it would make a difference if the dumpster were on private property or on a public street. Firstly, if the disposal documents of Unilever were on private property, the dumpster diving due to any means by P&G would be not only illegal but also unethical. Since these documents were disposed in the dumpster of private property, all of them should be treated as private property of Unilever, even they are rubbish. So digging information from the rubbish is still invading Unilever’s property rights and its privacy, which is illegal. And at the same time, detecting business rival’s private information through questionable tactics just as dumpster diving in other’s private property is unethical according to the deontological theories (Donaldson, Werhane & Cording 2002). Secondly, if the disposal documents of Unilever were on public property, the situation would be totally different. At first, digging rubbish of public property can’t be treated as invading other’s privacy which is just the same as the ragman does. And then, since the rubbish is disposed in public property, every citizen can dig it. Because the action of disposal things in public places means all the disposal things are not important which are just rubbish. So there is no ethical issue and legal item involved in the action of dumpster diving in public property. So if the disposal documents of Unilever were in public places, it is not illegal and unethical for P&G to do dumpster diving in order to get information.

Question 2

From the case, we can see that John Pepper the chairman of P&G acted courageously to notify Unilever their misconduct on obtaining Unilever’s information. In my own view, his action is ethical and morally required. Firstly according to Kant’s deontological theories that one’s ethical decision should be on the basis of universal law (Trevino & Nelson 2007). So what John Pepper did is exactly according to the universal law that the operation a company conducts should be with honesty, integrity, openness and respect the human rights and interests both to its employees and its competitors (Jordan & Finkelstein 2005). And gathering information via appropriate public and lawful means rather than collecting information illegally or inappropriate by others is more acceptable as the universal law to guide people’s behavior in business world (Jordan & Finkelstein 2005). So John Pepper action is morally required which can help his company to be alert to other unethical behaviors. Secondly, it is the obligation of the individual to have a sense of integrity and right conduct even when there is a conflict of interest occurs between his organization and the society. As a member of the society, one should be not only responsible for one’s organization but also be responsible for the society and other members. In this case, even though there is an ethical dilemma situation for John Pepper to handle, he still chose to notify Unilever the truth which is due to his obligation as a social member and his individual integrity. We can conclude that the action John Pepper conducted to notify Unilever their misbehavior is morally required.

And we also got the reaction from Unilever to P&G’s action of dumpster diving such as asking for the compensation from $10 to $20 million, third party’s investigation on P&G and so on. And Unilever even threatened P&G of legal action if P&G can’t give Unilever a satisfactory settlement. Although the reaction of Unilever is a little bit excessive, it is still reasonable and wise of John Pepper to notify Unilever their misdeeds. Firstly, it is common to have such an incident in the hyper competitive business market of the US, while the disclosure of P&G obviously became a noteworthy one. Although this disclosure would cost P&G much, it would also help P&G protect its image due to its voluntarily admitting the mistake. This kind of voluntary action can help P&G build its reputation as an upright and honest business player. And compared with Unilever’s over reaction, P&G’s ethical behavior would help it gain good reputation which is good for the long term profit. Secondly, sometime it is prudent to be straightforward when encountering ethical dilemma (ICMR 2004). Supposing P&G had kept this incident silently, once it was found by Unilever what would happen then? At first, the good image and reputation of P&G would be hit heavily. And then, P&G would not only have to face bigger sum of compensation compared to the $10 million one but also be sued by Unilever. So take this possibility into account, John Pepper’s action is reasonable and wise.

Generally speaking, John Pepper’s action of notifying Unilever of P&G’s misdeeds is not only morally required but also wise even facing the over reaction from Unilever.

Question 3

According to the case, we got that P&G had obtained intelligence about its competitor Unilever including the information on the detailed plans for a product launch in February and other unknown intelligence. Although P&G’s chairman John Pepper had notified Unilever their misdeeds and fired three executives as well as promised not to use any of the obtained information, Unilever is still owed compensation from P&G from my personal view, because Unilever has suffered harms, this paper will discuss in the following.

Let’s take compensating the owner of an automobile in a crash for example to analyze the case of P&G versus Unilever. A great number of car accidents occur every year which not only injure people but also damage their property. The compensation to the automobile accident is often due to the degree of damage such as minor accident and serious accident (Free Advice 2010). If the accident is minor which means no body is hurt, people only need to inform their insurance company and pay for the loss. If the accident is serious, it is necessary for people to realize that the compensation for the accident should be included both the damage to the vehicle and other damages. So if the car accident is a serious one, especially people are injured, the compensation for the medical treatment, car renting or taking a taxi when the car is under repairing and rehabilitation should also be take into consideration (Free Advice 2010). Compared with the compensating the owner of the car accident, some views about the compensation to Unilever due to the incident in this case can be got in the following.

At first, superficially P&G hasn’t done some substantial harm to Unilever except the information getting via “dumpster diving” which just as the minor car accident, nobody is really hurt. So maybe just as the owner of the car in the crash, what Unilever should get is a promise not to use any of the information gained by P&G from “dumpster diving” and an apology. While the whole situation is not as simple as it is seemed from the surface. The harm what Unilever suffered is more than a minor one, because Unilever was hurt by P&G’s misdeeds. Firstly, although P&G fired three executives and made a promise not to use any of the information obtained, nobody can make sure P&G would really follow its promise especially without the restriction of laws. So if P&G broke its promise and used the obtained intelligence of Unilever, it would be a heavy blow for Unilever. Secondly, supposing P&G would follow its promise and do no harm to Unilever from the obtain information, Unilever also accepted and didn’t asked the compensation as the case mentioned, other rivals of Unilever may do the same thing to Unilever as P&G did since Unilever is so lenient. It would be a big headache for Unilever’s development. From the above analysis, we could conclude that what Unilever suffered from P&G’s misdeeds is just the same as the owner of the car in the serious accident, because both of them were hurt. So it is reasonable of Unilever to ask for compensation from P&G.

And then, since Unilever would suffer a lot as the above analysis, the compensation it asked for as the case mentioned is reasonable. The first compensation is on the issue of money which is about $ 10 to $ 20 million. Since we have discussed, there is no definite guarantee of P&G to follow the promise of no using the obtained information. So the monetary compensation asked by Unilever for the possible loss is understandable. The second requirement of Unilever is to ask P&G to reassign the key personnel who had read the obtained intelligence from Unilever which is also reasonable to avoid leakage of the information. The third compensation is to set a monitor for years in P&G which is just to make sure the promise not to use the obtained information to hit Unilever is carried out by P&G. Technically speaking, the monitor is an independent third party and its task is just to make sure Unilever will not be hit by the obtained information, which will arouse almost no harm to P&G. so it is also reasonable.

Question 4

According to the situation in the case, I personally advocate P&G to accept a monitor. Firstly, due to the legal background of the monitor which would be bound by a confidentiality agreement, it would be relatively safe for P&G to accept the audit from the monitor. That is because it’s the legal responsibility of the monitor to keep the private information of P&G secretly. So the possibility of intelligence leakage is at a relatively low rate. Secondly, due to the threats from Unilever that if the incident can’t be settled properly, Unilever might sue P&G in court with uncertain results, P&G had better accept the monitor. And we can see if Unilever sued P&G, things would become worse. As we all know the law suit would be a long and complicated issue which would costs both P&G and Unilever a big sum of time as well as money. So no matter which party would win the case, it would also cost both partied a lot in the end. So due to the above analysis, it is recommendable for P&G to accept a monitor from an independent third party.

Meanwhile, superficially speaking, a monitor may not do harm to P&G. Generally speaking, the harm which a monitor would bring to P&G almost lies on the leakage of intelligence part. But technically speaking, the risk of intelligence leakage from a monitor is very low. At first, on the basis of the confidentiality agreement, the monitor of an independent third party has the legal obligation to keep all of the private business intelligence of P&G secretly. And any leakage of the private intelligence of P&G due to the responsibility of the monitor would make the independent third face legal troubles. So the harm rising from the monitor to P&G may be ignored. And then the aim of the independent third party audit namely the monitor is just to make sure P&G doesn’t use any of the information obtained from dumpster diving. Since the aim of the monitor is just to audit, there is no need for them to leak out any crucial intelligence of P&G to the outside. Because any leakage of the private information would arouse lots of trouble even legal problems, there is almost no possibility for the monitor to do harm to P&G.

While just referring to the effectiveness of a monitor, this paper will have a further discussion in the following. Firstly, the monitor for P&G is just for short time purpose to avoid any embarrassing situation in that sensitive period. Generally speaking, it would be effective to some extent. For example the monitor may conduct an investigation on a new product of P&G to check whether P&G use the obtained information such as Unilever’s marketing plan on its new product’s promotion. Once finding the suspicious action of P&G, the monitor can immediately inform Unilever to adopt proper reaction towards P&G. At the same time, due to the existence of a monitor, P&G would restrict some of its inappropriate actions to some extent.

Secondly, this kind of monitor may only lie on the surface. The function of the monitor is similar to the function of some companies’ online monitor towards their employees. The function of the online monitor is aimed to investigate whether employees are using the internet resource of company for personal use such as on line chatting with friends, playing on line games or using internet to deal with other personal issues. Once employees are caught, they would be punished by the company. While to some extent, the online monitor software can help company monitor the online behavior of its employees, there are means for employees to avoid the monitor, such as some anti-monitor soft ware or shielding means. So if the employees do want to avoid being monitored, they can find means to deal with company’s monitor, which is the same situation for P&G. A monitor for P&G is just like the online monitor for the company employees. What the monitor can investigate is just some superficial issues. And the most important business intelligence of P&G would definitely be protected by P&G and avoided being touched and investigated by the monitor. Meanwhile if P&G really wanted to use the obtained information from Unilever, it can have their own ways to avoid the investigation from the monitor just as the employees in some companies have done to their company on the online monitor issue.

In a word, the effectiveness of a monitor to investigate P&G whether fulfill its promise to Unilever is largely based on whether P&G is willing to cooperate or not.

Question 5

According to the situation as the case mentioned, Unilever’s reaction to P&G’s misdeeds includes three parts. The first one is that Unilever asked for $10 million to $20 million compensation. The second one is that Unilever asked P&G to resign key personnel related to the dumpster diving incident. The third one is Unilever proposed P&G to allow an independent third party to be the monitor on investigation P&G business action, which is aimed to make sure P&G wouldn’t use the obtained intelligence. Generally speaking all of these above proposals from Unilever on coping with the incident of dumpster diving is not overreaching even the chairman of P&G acted properly. The reasons are in the following.

Firstly, even John Pepper the chairman of P&G notified Unilever and promised P&G would never use the information gained but nobody can really guarantee P&G would really keep its promise. Based on this reason, it is reasonable for Unilever to ask for compensation from P&G for the unpredictable risk in the future due to the incident. So the proposal of such a big sum of money is understandable. Because once P&G breaks its promise to use some of the obtained information or the information is exposed to outside by P&G, the loss to Unilever can’t be evaluated. And just for business itself, the ultimate aim of it is to make money, including Unilever’s aim (The Times Newspapers Ltd and MBA Publishing Ltd 2010). So the big sum of money compensation asked by Unilever is understandable.

Secondly, Unilever asked P&G to resign the key personnel involved in the incident. This point is reasonable. It is also a relatively direct way to avoid the utilization of the gained information by P&G. If the related people would never involve in the business of P&G, the risk of the obtained information utilization would become lower.

Thirdly, the monitor part may be the most controversial point. But it is also reasonable. Because the promise of P&G not to use any of the obtained information didn’t have any legal guarantee, it is very easy for P&G to break its oral promise. Due to this situation, the proposal from Unilever to let P&G allow an independent third party as a monitor to investigate P&G whether used the gained intelligence is not overreaching. It is only a relatively reassuring means for Unilever to ensure the safety of its information.

As for the function of a monitor itself, it can really help Unilever to settle the incident in a way. Just as we have discussed in question 4, due to the existence of the monitor, P&G would have to act very carefully and consider deliberately even they would like to use some obtained information. That means the monitor does have some constraint on the behavior of P&G. While the idea of monitor couldn’t be considered as a creative solution, it has the shortage as the following description.

Firstly, whether the monitor can function well is based on the attitude of P&G. in other words, if P&G really keep its promise not to use the gained information, it is easy for the monitor to handle its task. But if P&G just pretended to keep its promise, the monitor wouldn’t function well. And what the monitor investigates would be just on the surface, if P&G did want to do something behind Unilever’s back, the monitor wouldn’t find some clues because the monitor is just an third party, it can’t investigate every corner of P&G thoroughly. For example, if P&G planed to promote a new product, the monitor had the right to investigate the promoting plan. But if P&G intended to avoid the investigation, it would just give the monitor some superficial documents to check. So if this kind of situation happened, the existence of the monitor is out of function and totally can’t help Unilever to settle this incident.

Secondly, as the monitor is an independent third party, it must be paid. So there would be an extra cost required by the monitor. And since there would be an extra expense on the existence of the monitor, who should be responsible for the cost would be a problem. If Unilever asked P&G to pay for the bill, it is obvious unfair and it is difficult for P&G to accept. If Unilever would like to pay for the bill, it should also consider whether it is worth paying. If the monitor can really help Unilever to settle the incident, the payment for Unilever is worthwhile. But just as we analyzed above, the function of the monitor may not be effective and creative enough for Unilever to settle that trouble. So the cost on the payment for the monitor may be even a loss.

Reference

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Crane & Matten 2007, Business ethics: Managing corporate citizenship and sustainability in the age of globalization, 2nd edn, Oxford University press, New York.

Donaldson, Werhane & Cording 2002, Ethical issues in business: A philosophical approach, 7th edn, Prentice Hall, New Jersey.

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Trevino & Nelson 2007, Managing business ethics: Straight talk about how to do it right, 4th edn, John Wiley & Sons, Inc, USA.

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