Question

To what extent should companies make moral demands of the companies they do business with, including companies that supply them raw materials?

Answer 1

Solution

Every company has a number of stakeholders i.e., different parties.The stakeholders include it's customers,shareholders,promoters,regulators and the suppliers.The vision of any private company is to maximize the value to its stakeholders(shareholders as first priority).

They try to achieve this objective in an ethical manner.

The companies make moral demands of the companies they do business including with that of the suppliers.This is very essential and ethical in these modern days where there is intense competition between companies in the business world.

As a part of this process they enter into a number of agreements with their suppliers which include - Non-Disclosure agreements and/or anti-privacy agreements since their suppliers will be having all the information they needed which if given access to their other clients which lead to their competitive disadvantage i.e., to avoid competitive disadvantage.

They can also agreements like non-competent agreements.Ex: Company A is one of the supplier for Company B.But Company A is also one of the supplier for company C which is a competitor / player in the same industry as Company B is present.Then Company B signs a non competent agreement with A wherein the employees of A who were working in the project of company B cannot work in company C (at least up till say 2 years from leaving company A).

In a nutshell,the companies enter into agreements with their suppliers to ensure fair practices and to protect their data / information / maintain their competitive advantage.