Herbalife Story From March 28 2002 Term Paper

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Herbalife: Ethical Issues

Herbalife is a company selling herbal products for health and dietary purposes. In order to do this, the company recruits interested people to help them sell their products. The way in which this is done is however questioned for its apparent unethical nature. The aspects of the case, together with the ethical issues involved, are discussed below.


Donaldson (127-128) provides three broad theories of ethics that can be applied to the situation of Herbalife. The first of these is deontology. According to this theory, a sense of duty accompanies all actions. This dictates that some acts are morally obligatory, regardless of the practical or economic consequences of such an act. The second theory pertains to rights. Especially during the new millennium, the issue of human rights has been at the top of business agendas. This then is also one of the major theories regarding ethics in business. Finally Donaldson cites utilitarianism as the third major theory of ethics. This entails the idea of rightness in terms of more good than ill being produced through the actions taken.


If each of the above theories is applied to the Herbalife situation, it becomes clear that the norms of accepted business ethics are not followed in this situation. In terms of deontology then, the first offense committed by Herbalife is its nondisclosure. Its "Work From Home" advertisements attached to telephone poles and other public places for example feature only a toll free number, with no associated company name. When the number is dialed, a recorded message invites the caller to leave mailing information. A booklet is then mailed containing stories of successes with the company. This is a second instance of dishonesty, as very few people actually do attain the fabulous levels of success purported by these documents. Furthermore there are the costs and initial investments that are not disclosed until they are required during the various stages of becoming involved with the company. The actual name of the company also is only revealed later on through the process.

Obviously the fundamental dishonesty displayed by the above actions are not in keeping with accepted business practices. Honesty is a fundamental obligation not only in business, but also to ensure the smooth functioning of society as a whole. This principle is not adhered to by the Herbalife. The company obviously harbors no sense of duty towards its associates or society.


Secondly, in terms of rights, Herbalife has no regard for the rights of its distributors. The right to choose from a position of full knowledge is compromised by the company's non-disclosure policy. As a result, any hopeful person signing up for the "Work From Home" position has to invest at times thousands. These thousands are reported to be very difficult to make back. Thus the openly dishonest actions perpetrated by Herbalife infringes upon the rights of citizens to earn what they are promised.

A further right that is violated is the citizen's right to live in an environment that is pleasing in both a healthy and aesthetic sense. The "Work From Home" advertisements attached to public places results in a loss of the aesthetic sense. The advertisements are both cheap and unpleasing to the eye. Furthermore the citizens cannot complain to any concrete party, since no business name is displayed on the advertisement.

Solomon (363) identifies four stances relating to disputes regarding rights in business. First, there is the absolute stance, which precludes any tolerable alternative. Only one opinion is seen as the correct one. Secondly the hypothetical stance is more empathetic, providing for a recognition of the other view. Thirdly, the procedural approach does not adhere to substantive principles, but is a fair process to resolve disputes. Finally there is the local agreement, by which substantive principles and systematic procedure are replaced by consensus reached by means of negotiation.

Because of Herbalife's non-disclosure policy, it precludes any possibility of amiable dispute resolution. The stance forced upon its opposition is then one of absolutism. It is very hard to contact the company's managers regarding complaints about its practices. This lack of communication results in a lack of ability to proceed in an amiable fashion. This also violates the rights of citizens to complain about any actions they do not see as fitting with their own well-being. And this…

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