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Rubrik: News

ETH Alumni Business Event
Ethics - a profit factor

Published: 01.02.2007 06:00
Modified: 01.02.2007 08:05

(fw) Speakers at Alumni Business Events usually explain how they steer their company through the everyday storms of business life. Franziska Tschudi, CEO of Wicor Holding, chose a different approach at the first Business Event of the year. She spoke on the subject of “Corporate Ethics – a balancing act between profit and conscience”. Based on concrete examples, she illustrated the dilemmas that can face the head of a company group with international operations. Wicor Holding – also known as the Weidmann Group – operates in two branches of industry. Firstly, the company manufactures insulating materials and systems for transformers. Secondly, it operates in the plastics technology field, “a very tough business area” as Tschudi explained. The company produces specialised components for the automobile industry among others. Wicor Holding operates in Europe, Asia and in North and South America and achieves an annual turnover of more than 600 million Swiss francs.

A positive end result

The first corporate ethics question arises with globalisation. Is it defensible for a business enterprise to relocate production to low labour cost countries, thus endangering jobs in Switzerland? Tschudi’s answer to the question is a clear Yes. "Thanks to globalisation, jobs will be created in the longer term in Switzerland as well. Therefore, I judge this development to be beneficial." She says that a rather more difficult question is whether people in low wage economy countries should be exploited by the lower standards there. The actual case described by Tschudi involved a plant that her company was no longer allowed to operate in England for environmental protection reasons. A Romanian partner offered to carry on operating the plant in Romania. To the annoyance of customers, and even though it brought about profit reductions, Wicor decided against the offer. Tschudi argued that in the medium term it was foreseeable that standards similar to those in England will have to be adhered to in Romania as well. Therefore this deal was not worthwhile even from a financial point of view.

Franziska Tschudi, CEO of Wicor Holding. ( SwissLife)

Thinking in the longer term

She said it was also difficult for a company to decide whether it wanted to operate in a country that did not respect human rights. Tschudi thought that if a company like Wicor backed away from involvement in China, then the human rights situation in that country would scarcely change as a result. However, as a western business enterprise operating in the country, there would be opportunity to set a good example by conducting affairs ethically and behaving decently.

Tschudi is convinced that as a rule sensible financial thinking also leads to ethically correct decisions. She stressed that "Ethics is not a cost factor, it is a profit factor." However, a precondition is that as an entrepreneur one does not lose sight of the longer term prospects. "Several major companies will have to pay dearly for their mistakes long after their unethical behaviour."

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