THE ETHICAL AND SOCIAL RESPONSIBILITY OF THE PURCHASING PRACTICE IN INDUSTRIES

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Purchasing had been practiced right from ancient times. Organizational purchasing started in Nigeria Seriously after Independence. Before Independence, the Industry was mainly administrative and not manufacturing, manufacturing firm started shortly after Independence in Nigeria in earnest.

Purchasing department was developed immediately in Industries an assigned with major roles such as:

1.        Finding and approving suppliers

2.        Ensuring delivery at the right time

3.        Warning of delays

4.        Verifying invoices

5.        Organizing all discussion with suppliers.

6.        Speculative buying

7.        Advising on prices and

8.        Acting as a window on the world

These major roles cannot be achieved except purchasing principles and practice are fully employed.

Many industries failed because ethical and social responsibilities of the purchasing practice for buyers in industries were ignored. The theoretical discussion of ethical and social responsibilities naturally prescribes the behaviour that is appropriate or expected of purchasers. But the pertinent or crucial question is whether in reality purchasers are adhering ethically and socially responsible? Are purchasers attaching importance to the satisfaction of industries in acquisition of material and enhancing high level of productivity? How far in reality are buyers being ethically and socially oriented in their purchasing activities?

Looking at Nigerian industries, therefore, we observed the prevalent tensency among some of the purchasing officers who embezzle money in their purchasing activities as against the interest of their company’s use. This selfish attitude causes a lot of problems for the industry if they are not honest in discharging their responsibilities.

The purchasing principles are yet to be adopted or practiced by some Nigeria’s business enterprise. There are a lot of things being practices which negates the purchasing ethics. Ethical and social responsibilities of the purchasing practice in industries are desperately needed in Nigeria and should be adhered to or practiced by purchasing officers, especially in this era of grave economic and social ills prevalent in many transactions in Nigeria business. There are a lot of vices being committed by purchasing officers who do not have purchasing orientation. For instance, we have the following unethical practices in Industries.

1. OVER INVOICING: This unethical practice is similar to commercial bribery. In this case a purchasing officer asks the supplier to inflate the invoice value of the order place for his company use.

2. BRIBES, GIFTS OR KICK BACKS: In some organization purchasing officers demand bribes, gifts or kick-backs from suppliers and sales managers.

3. POOR QUALITY OF MATERIALS: In some organization purchasing officers embezzle money in their purchasing activities as against the interest of their company by buying poor quality materials for the company’s use.

All the foregoing practices constitute unethical behaviour. Unethical behaviour can be described as anything on the part of the purchasing officers who betrays the confidence their employers and consumers repose on them. This unethical acts have anti-social affects on the products by Nigerian industries. Unethical acts run counter to objectives of purchasing officers to abide by the codes of conduct of the organization or professional body.

The researcher therefore, focuses his study on how ethical and social responsibilities of the purchasing practice for buyers in industries can improve the level of productivity and the general standard of the industries performance and to erase the notion that purchasers are failures and further project the ethical and social conduct expected of a professional buyer in industries.

Golden Guinea Breweries Plc, have their major roles which cannot be achieved except purchasing principles and practice are fully employed. In many organization the need for ethical and social responsibilities of the purchasing practice for buyers in Industries can easily be identified. This is because the Industry, we observed the prevalent tendency among some of the purchasing officers who embezzle money in their purchasing activities as against the Interest of the company’s use. Besides, for further experience on the job, which will attract more advancement and responsibilities. Infact ethical and social responsibility is important that without it the industry will suffer from managerial obsolescence.

Golden Guinea Breweries Plc being a production firm has purchasers, stores managers etc. It is a state government owned enterprise established to meet the industrial and social needs of the state to a large extent, it has been striving to achieve these goals, although there is still room for improvement to this and there fore, the background of the study is aimed at the finding out how effective the ethical and social responsibility could help in achieving this goal.

1.2 Statement Of The Problem

As for the manufacturing industry, the relation between organizational ethics and social responsibility and organizational productivity has not been examined extensively, and the few existing studies offer conflicting evidence. In spite of the existing of some literature about the role of corporate social responsibility in the aspects of environment and society, there is a significance gap about how corporate social responsibility improves organization performance due to lack of documented evidence of the benefits hence the researchers focus was to find out the effect of CSR on organization performance based on Golden Guinea Breweries Plc as we find out whether this organization realize any benefits from the much they spend.

Industries with good operating results and strategies can reduce screening and monitoring costs and diversify risk across different projects and overcome liquidity risks which ultimately provide savers with high return. Having long term financial success can attract investment in long-term projects while allowing investors access to their savings at short-term notice (Levine, 1991).

These institutions allow cross-sectional diversification across projects, allowing risky innovative activity while guaranteeing contracted interest rate to savers (King and Levine, 1993). Industries can boost the rate of technological innovation by identifying the entrepreneurs with most promising technologies. Successful institutions can help reduce liquidity risk and enable long-term investment (Diamond and Dybvig, 1983). Organizations with sound long term performance can offer job security to its employees, create new employment opportunities, assure government of continuous revenue apart from satisfying their shareholders’ expectations. These problems necessitate the need to carry out a study on ethical and social responsibility of the purchasing practice in industries.

1.3    The Objective Of Study

The main objective of this researcher project is to investigate into how ethical and social responsibilities of the purchasing practice at Golden Guinea Brewery Plc can improve the level of productivity of the establishment.

It is also a pre-requisite for the award ordinary National Diploma and this will go a long way to serve as a source of reference to students and lecturers alike in institutions of higher learning.

Specifically, the study sought to:

1.        Examine the perceptions of managers on the benefits of Ethics and CSR to purchasing practice.

2.        Examine the drivers of ethical and social responsibility.

3.        Examine the barriers of ethical and social responsibility.

1.4 Research questions

1.        What are the perceptions of managers on the benefits of Ethics and CSR to purchasing practice?

4.        What are the drivers of ethical and social responsibility?

5.        What are the barriers of ethical and social responsibility?

1.5  The Relevance Of Study

Purchasing provides services on which most economic activities depend. The extent and efficiency with which such services are provided vary among industries.

The need to keep pace with rate of development in the modern world and enjoy the economic blessings engendered in industries have led the researcher to investigate how ethical and social responsibilities of purchasing can improve the level of productivity in industries.

The research is also geared towards creating a sound ethical and social responsibilities of the purchasing function in Golden Guinea Brewery Industry. Also, this work is aimed to expose purchasers in carrying adequate purchasing practices free of unethical practices in Industry. The researcher went a step further to investigate and recommend corrective measures for adoption.

1.6   The Scope Of The Study

The activities of purchasing practice in industry among the industries are the same throughout the country. They have problems and objectives, except in policies and management style which are at individual industries discretions, since this project explores how ethical and social responsibilities of purchasing practice improves the level of productivity in industries. However, there are a lot of industries in Nigeria. And as a result it will be extremely difficult and impossible for the researcher to study all of them considering the time given.

The researcher, decided to use Golden Guinea Brewery Plc Industry to enable him carryout an in-depth study of the organization.

1.7 Limitation of the study

The following limitations were anticipated in this study:

Since the study was only carried out in only one province, the results may not be generalizable to the whole country. The researcher collected data on his own without research assistants.

Financial constraints were also anticipated in the current study. Although the researcher received assistance from the bursary, it was not possible to carry out the study at national level.

The researcher is a full-time employee so time to carry out the study was limited.