1. Company Background

Curtis L. Carlson founded the company in 1938 as the Gold Bond Stamp Company. The Gold Bond Stamp Company supplied stamps to grocery shops, gas stations, and other businesses to enable them to create customer loyalty. The success of the Gold Bond Stamp Company enabled Carlson to enter the hospitality sector. From the 1970s, the Carlson Company acquired various other businesses. Carlson’s interest in philanthropy led him to create the Carlson Family Foundation. The Carlson Company is based on a participative leadership style where decisions are made through consultations between the people holding various leadership positions. The Carlson Company is made up of various units including Carlson Hospitality Worldwide, Carlson Wagonlit Travel, and Carlson Marketing group. Carlson Hospitality World Wide manages the Regent and Radisson hotel brands. Regent is a brand that serves high-end clients. The company operates through partnering with franchise owners in different geographical locations to establish hotel facilities (Linde 2).

1. The link between Carlson Company and sex trafficking

The TOURISM industry is closely associated with sex trafficking (Steinman 54). Companies in the hospitality industry serve clients that may potentially engage in sex trafficking and sexual abuse of children. The global environment also creates the possibility of some of the hotels being located in areas where child sexual abuse and sex trafficking may be prevalent. Carlson Company is exposed to the risk of child sexual abuse and sex trafficking due to its involvement in the hospitality industry. There is a risk that some of the guests may use the hotel room to engage in sex tourism. As was previously the case with Marriott, some of the employees may also enable sex tourism (Linde 10). Thus, the operations that Carlson engages in create the chance that the services it offers may be used to enable sex tourism with or without the permission or the awareness of the management team. The reputation of the company is susceptible to the actions of some of the unethical employees and guests.

iii. Pros and cons of development of Regent Hotel and Resort in Costa Rica

Pros. The pros are based on the financial benefits or losses that the company may experience from launching operations. Risks that lead to greater financial loss are ranked first.

1. An increase in profitability. Companies are created with the main objective of generating profits. Costa Rica presents the opportunity to increase revenue (Linde 7). Costa Rica generated 2.14 in billion from tourism in 2008, thus showing the size of the market.
2. Enable expansion into Central and South American countries (Linde 7).
3. Enable the diversification of revenue. Diversification reduces risk as a company does not rely on one region for income.
4. Costa Rica has a stable political environment. It is one of the most politically stable Central American countries (BBC). The political stability provides for an attractive business environment that would guarantee viable operations.

Cons

Cons are evaluated based on their impact on the profits and revenue, Cins ranked first lead to the highest value of financial losses.

1. Failure to support child trafficking may cause failure if Costa Rica’s tourism industry is dependent on child trafficking and sex tourism
2. Litigation- There is a risk that the company may face litigation from victims of child trafficking and which could be expensive (Linde 7)
3. Corruption in law enforcement and among politicians may make it difficult to enforce the code and laws on sex tourism and child trafficking (Steinman 66).
4. The company will have to allocate more resources to the venture, and which could have been applied on investments in other countries. There is an opportunity cost in investing in Costa Rica as other investment opportunities are forgone.
5. Increase in complexity of managing the company. Larger companies are more complex to manage. The company could experience a slowdown in speed of making decisions, reducing its ability to adjust to change.
6. Would ranking remain the same if Carlson was a public /company?

The ranking would not change if Carlson was a public company. Public and private companies operate in environments where they must meet the needs of various stakeholders. Font et al. explains that stakeholders make it necessary for companies to reveal their engagement in CSR activities (1). Thus, though Carlson Company would not be exposed to shareholder resolutions as Mariott Hotel is, it will still experience pressure from other stakeholders (Linde 4). Some of the other stakeholders whose response would affect Carlson Company’s performance are the ECPAT and other non-governmental bodies (NGOs), the government, the customers and the community in which it operates. Steinman explains that a company requires a social license from the community (94). A social license requires that the company be accountable to the community in which it operates.

1. Pros and cons of adopting the Code against Sex Trafficking.

Ranking of the pros and cons is based on the impact on the operations of the company

Pros of adopting the Code

1. Commitment to CSR may enhance satisfaction (Steinman 108). Adopting the code would be a sign that the company is committed to CSR and which may motivate the staff members, improving the performance of the company.
2. Enhance the reputation of the company as one that cares about the welfare of the community. The reputation of accompany influences customer decisions (Steinman 105)
3. The company will make a positive contribution through influencing a change in the hospitality industry towards fighting child trafficking and sex tourism.
4. Adopting the code will increase the company’s commitment to eliminating child trafficking due to the need to make annual reports to the ECPAT. The need to make reports enhances CSR performance of companies.

Cons of adopting the Code

1. Marriot could fail to meet its obligations under the End Child Prostitution, Child Pornography, and Trafficking for Sexual Purposes (ECPAT) code and experience public condemnation from the organization.
2. It may be expensive to implement CSR programs aimed at preventing child trafficking and sex tourism. The spending may not lead to financial benefits.
3. Signing the code could cause people to draw an association between Carlson Company and sex trafficking as a vice because other hotels have not signed the code (Linde 6). The reputation of the company may thus suffer.
4. It would become more difficult to work with suppliers and contractors as Carlson would be required to ensure that the contractors and suppliers would not engage in activities that promote or enable child trafficking and sex tourism.
5. Impact of the investment on Costa Rica if the project is successful

The tourism industry is a major source of employment in Costa Rica. The hotel project would provide jobs to the local people, thus providing them with a source of income. Costa Rica also generates significant amounts of foreign exchange from tourism. The hotel would enable the government to increase the amount of foreign exchange and taxes that are generated, thus enabling the delivery of public services. Thus, the standard of living in the country would improve.

As a signatory to the ECPAT, Carlson could also make a positive contribution in the community towards reducing child trafficking and sex tourism. The code requires that Carlson takes steps including training the employees and members of the local community on how to overcome child trafficking. The training would be beneficial to the community as it would reduce the vice. Further, Carlson could positively influence the other companies to develop policies for eradicating and eliminating child trafficking. Moreover, companies are expected to spend their resources towards enhancing the welfare of the communities in which they operate through effective CSR programs. Carlson could implement programs to deal with the major issues that lead to sex tourism and child trafficking. Winter explains that at the family level, hardships are a factor for child trafficking (139). CSR programs that Carlson implements could address the main issues that lead to child trafficking.

Carlson Company should consider the positive effects that it will have on Costa Rica and the community in which the hotel will be located. Companies do not only exist to create profit, but also to serve the needs of the community. Thus, even while considering the profit motive, Carlson Company should consider the possibility that its operations could lead to n improvement in the lives of a significant number of people. Ethical operations in Cost Rica and a positive effect on the neighboring communities could positively affect operations in other geographical locations as it could attract new customers.

vii. The most challenging implementation issue

The most challenging implementation issue on the code is the requirement to introduce a clause that requires a contract between the suppliers to eliminate any practices that lead to the sexual exploitation of children. Carlson Company operates through franchise owners. While it could be possible to control the train and encourage employees of the company to take measures to prevent sexual exploitation of children, it could be more challenging to require the franchise owners to adopt the code (Linde 8). Local franchise owners could be seek to show their loyalty to different kinds of people. It could then be possible that they could not be reliably expected to maintain the brand name of Regent Hotel as an international company.

Implementing the code requires the creation of an effective reporting framework through which the employees can notify the management or policing authorities of any case of sexual exploitation of children. Creating then structures would however be challenging if the company depends on franchise owners who may not be fully cooperative. The use of a franchise model thus significantly reduces the power of Carlson Company in guaranteeing that no activities associated with sexual exploitation of children will occur. Local employees even after undergoing training may not effectively adhere to the code. It is thus possible that the company may find it challenging to monitor events in the hotel. There is a possibility that some of the employees may enable people that seek to exploit children sexually to fulfil their selfish financial interests without regard to the reputation of the company.

Carlson company is thus in a situation where instances or events that may potentially lead to sexual exploitation of children may not be effectively prevented. The company would then be susceptible to lawsuits from the victims, clients and other stakeholders and a destruction of the reputation of the company due to public condemnation from the ECPAT. Carlson does not have complete control over the implementation and observance of the code of conduct due to the use of a franchise model where they are dependent on outsiders.

viii. Steps for implementing a code of ethics

In creating the code of ethics, it would be important to involve the management team. The first step would be to consult the various departmental heads and discuss the importance of creating a code of ethics that would regulate then behaviors of all the employees. The second step would be to hold discussions between the departmental heads on what should be contained in the code of ethics. During this stage, the departmental heads would be required to consult and seek opinions from the employees in their respective departments. Involving the employees in the creation of the code of ethics would be vital to guarantee that the codes are accepted as a product of all the employees in the company. It is of essence to engage the employees in the decision making to prevent the employees from feeling excluded. It would also make the employees more willing to adopt and implement the codes of conduct. The fourth step would be to communicate the code of ethics to the employees through announcements and strategically placed posters. Constantly reminding the employees of the code of ethics and encouraging them to follow the codes would enhance adherence.

Elements of code  to include regardless of industry

1. Not engaging in activities that harm the neighboring communities.
2. Reporting any instances of non-compliance to the management team or government authorities.
3. Training the employees on the code of conduct to guarantee that they are certain of what is expected of them.
4. Imposing penalties on people that fail to adhere to the provided codes.
5. Monitoring the performance of the company and employees regarding the codes.
6. Providing products of acceptable quality that meet the expectations of the clients.
7. Obeying the rules and regulations provided by the government and local authorities.
8. To create an inclusive environment in which all people have equal access to employment opportunities.
9. Consulting employees when making decisions that affect their activities at the work place at all times.

Elements of code that would be specific to the manufacturing industry

1. Not to engage or enable child labor within the workplace.
2. Not to engage in activities that would be harmful to the community such as releasing harmful waste to the environment.
3. To adopt sustainability in operations through conserving energy and preventing wastage of various inputs.
4. Ensure the safety of all the employees within the manufacturing environment. Respond quickly to any emergency that arises.
5. Guarantee that suppliers and other stakeholders do not utilize child labor at any stage within their production process.
6. Manufacturing quality products that are not harmful to the consumers. Consumers expect quality products that do not contain harmful substances.
7. Adhering to government laws and regulations pertaining to the manufacturing industry such as in matters regarding taxation.

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