Can business ethics be described as an outdated concept?

It appears that a certain well-known retailer is now starting to squeeze all its suppliers for a longer credit period; good business if you can get it because it means that the retailer is in effect working with capital provided by the suppliers, most of whom have a simple option; take it or leave it. Most of them will have to accept the new terms, whether or not their businesses will survive despite this remains to be seen.

The most famous stores group to use this sort of tactic shall remain nameless; I have no wish to be sued by their very wealthy legal department; used to deal almost exclusively with British manufacturers and their modus operandi was quite simple; they would lure these manufacturers into a trap by first of all giving them fairly small orders, then larger ones, and then larger ones still. The unsuspecting manufacturers would then borrow money for new equipment and take on additional staff in order to expand their manufacturing capacity, blithely unaware that slowly but surely they were relying almost 100% up on the goodwill of one single customer. Once they were hooked in this way the trap was sprung; the managing director would be invited to a friendly meeting at which he or she would be politely informed that the terms of service had now changed and that prices had to be lowered forthwith, credit terms had to be extended, and sometimes even a backdated price decrease had to be repaid to the retailer! By now our poor manufacturer had been sucked into the situation in which there was no choice but to comply because the alternative would leave the company with a large manufacturing capacity but no market for the goods! Unless a new retailer could be persuaded to stock the entire production line, hardly a realistic prospect, yet another company was about to have the financial life squeezed out of it.

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The latest company to use this particular technique on it's providers is claiming that only a very small proportion of them are affected since all the rest of them are already providing the reduced prices or extended credit terms that are being demanded, no doubt out of the goodness of their own hearts since any suggestion that they had been forced into providing financial support to a company which is itself already heavily in debt would no doubt be a travesty of the truth. As it is, providers are being asked (sorry, instructed) to give 90 days credit to this company; as smaller companies themselves they are no doubt having enormous cash flow problems already and, like every other business, finding that their bankers are being somewhat less than helpful. Tough! What a small businesses matter in this economic climate??

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