Product assessment within ethical sourcing : the case of Nordic Choice Hotels

University essay from SLU/Dept. of Economics

Abstract: After the turn of the twentieth century, sustainable development has been a well-discussed area between economists, environmentalists and politicians. Reports show that human activities have an essential impact on today’s climate changes. Additionally, our way of living has a negative impact on other environmental conditions and human wellbeing. Business mindsets have changed perspectives over the years, concerning what is an acceptable way of running a business. Furthermore, stakeholders do put pressure on organizations to take more responsibility for their actions, both for their own actions but also actions that are connected to their business. Large outsourcing of production has in some cases resulted in low environmental standards and unethical behavior among suppliers of large and well-known corporations, which have mainly raised this concern. Ethical scouring has the aim to assess and improve social and environmental conditions within suppliers and to assess what procurement processes could be used in order to avoid doing business with firms involved in unethical behavior. This ethical sourcing assessment can be difficult for organizations within business-to-business procurements, because the businesses themselves are not part of the manufacturing or processing connected to the purchased product. Which often leads to a lack of insight of how products are produced. The aim of this research is to explain conditions for ethical sourcing that can help to ensure good procurement processes when organizations purchase products. To reach this aim, theories within ethical sourcing and sustainable development has been used, from these theories a conceptual framework has also been developed which, have been used when the empirical data was analyzed and discussed, resulting in the empirical findings presented. The project includes a case study of Nordic Choice Hotels on how to assess fast moving consumer goods focusing on ethical sourcing. Considering the aim of this study, the research was conducted with an abductive approach, which is a combination of the inductive and deductive approaches. Furthermore, the empirical data was collected with multiple sources and semi-structured interviews with employees from the Nordic Choice Hotels. The hospitality business has potential in improving various aspects within the sustainable development area. Still hotels are perceived as a luxury service and that is what most guests expect. It can be difficult for hotels to focus on sustainable development aspects simultaneously as they are trying to fulfill guest demand of a luxury service. The study shows that ethical sourcing is an essential part for businesses today and that there is no general framework how to perform ethical sourcing. Organizations need to find their own way to assess ethical sourcing within their business context. Ethical sourcing challenges increases when organizations are in a buyer situation and not included in the processes of manufacturing. The study also indicates that ethical sourcing is an important part for organizations to include if they want to conduct a good sustainable development performance. Still, ethical sourcing is just one part when focusing on sustainable development initiatives. There are various factors that need to be included in a holistic ethical sourcing initiative; both in-house activities, assessment of suppliers and products to avoid negative performances and prevent trade-offs between social, environmental and financial factors when performing business.

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