Professional Documents
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Businessethics,simplyput,areasetofprinciplesthatservesasaguideforthe
wayabusinessbehaves.Trustandintegrityaretwocommonwordsthatarestrongly
linkedtobusinessethics.Theyaredriversofethicalpracticesthatfosterthethinking
thatisabovetheconventionalpurposeofmaximizationofprofitinanorganization.
Therefore,fromashorttermperspective,ethicalpracticescancomeattheexpenseof
greaterprofitofbusinessbutitisbelievedthatitwillbebeneficialtothebusinesson
longterm.Unlikelaw,anybusinessorganizationisnotcompelledtofollowcertain
ethicsandhaveachoicetodenytoadheringtothem.Besidesthat,ethicsmay
sometimesbeconflictingwithmorals.Forexample,alawyersmoralsmaysuggest
thatmurderisdeplorableandmurderersdeservedtobepunished.However,according
toherethicsasaprofessionallawyer,sheneedstodefendherclientalbeitknowing
theclientisguilty.Thelawunderhumanrightsstatesthateverypersonisentitledtoa
fairtrial(Doebbler,2006).
Corporatemalfeasancehasbecometheonedefiningthemetorivalterrorism
inthelastdecadeandahalf.Someofthebignamesthatmadetheethicalviolations
headlinesroughlyadecadebackwereEnron(2001),WorldCom(2002),LaSenza
(2006)andLehmanBrothers(2008).Withaspectrumoflegalscandalsrangingfrom
insidertradingtochildlabormakingthenews,businessesareincreasinglyattentiveto
theirethicalbasis.Nevertheless,todate,therearestillalargenumberofcorporations
foundguiltyofethicalwrongdoing.Hence,thisessayaimstoanalyzecurrentbusiness
misconductcasesofvariousclassificationsfromyear2014to2015andapplying
relevantethicstheoriesrespectively.
CHILDLABOUR
Childlabourisanactthatismajorlyfrowneduponbythepublic.However,
onemustconsidertheextentchildlabourisjustified.Oneexampleofthisethical
conflictwaspresentedbyfoodgiant,Nestle.InSeptember2015,theFairLabor
Association(FLA),commissionedbyNestlediscoveredthatthefarmersintheirIvory
Coastcocoasupplychainwereusingchildlabour(TheGuardian,2015).TheFLA
found25workersbelowtheageof15workingin17ofthecocoafarmsthathas
engagementswithNestle.InWesternAfrica,ithasbeenanormforgenerationsfor
familyfarmerstousetheirchildrenaslabouroutofdesperationofbeingunableto
affordtohirewagedhelp(HRBDF,2015).Nestlehassincetakenactionstotackle
childlaborintheirsupplychainsuchasprovidingbetteraccesstoeducation,
improvingtheageverificationsystemsatfarmsandpromotingawarenessofNestles
codeofconduct.Tosome,thisgaveNestleanethicallymoralimage.Fromthe
perspectiveofconsequencebasedapproach,egoismtheory,acorporationsself
interestwouldbethemaximizationofprofit(Quelin&Duhamel,2003).Thisisin
linewithFriedmansstatementthatthesocialresponsibilityofcorporationsisto
obtainprofitsforitsstockholders(Ukoha,2013).Hence,itisdeducedthattheyarefor
childlaborasitcanlowerthecostofproductionandincreaseprofit.Thisislooked
uponasahighlyunethicalpractice.Childlabourcanbegooddependingonthe
contextinwhichitoccurs.Prohibitingchildrenfromworkinginfamilyfarmsmaynot
bepracticalinapovertystrickencountrylikeWestAfrica.Parentsmayresortto
sellingtheirchildrentotraffickerstoearnalivingworkinginanothercocoafarm.
Thisrelatestotheethicalrelativismtheorythatarguesthereareuniquesituations
whencircumstancesorculturalnormsdeterminewhetheranactionisrightorwrong
(Thompson,StricklandIII,&Gamble,2009).
EXPLOITATIONOFLABOUR
Unethicalbusinesspracticeshavecausedmanyforeignworkersworkinginthe
productionlinesandsweatshopsofgloballyestablishedcorporationstobeoppressed.
Onegoodexamplewouldbethecaseofthecomputergiant,Apple.ChinaLabor
Watch(CLW)reportedonFebruary2015,thatApplehadengagedcheaperproduction
ordersfromPegatron(CFO,2015).WorkersatPegatronwerepaidpeanutsand
workedmorethan60hoursperweekwithhalftheworkersworking90hours
overtimepermonth.Theyhadnochoicebuttoworkextrahoursasthebasewages
wereinsufficienttosupportminimumlivingstandards.Ithassincetakencorrective
actionsbytrainingmillionsofworkersin2014onemployeesrightsandApples
codeofconduct.Thedeontologicalstatementagainstexploitationwritethatitis
alwayswrongtousehumanbeingasmeanstoanendandinApplescase,as
instrumentsofprofit(Wood,2004).ItisaccusedthatAppleslowcostpursuithas
encouragedsupplierstocutcornersbyworkingtheworkerslongerhoursatalower
pay.However,avoluntaristmayarguethatexploitationisjustifiableifandonlyifone
freelyandknowinglychoosestoputhimorherselfintothesituation(Arneson,2001).
Although,exceptionscanbemadeiftheslavewasnotgivenachoiceoristooyoung
toknowanybetter.
FINANCIALFRAUD
Financialfraudisoneofthemostcommonbusinessethicalviolations.
ToshibainSeptember2015admittedtotheclaimthatithadoverstateditsearningsby
approximately$2billionovertheperiod7years(TheWallStreetJournal,2015).
HisaoTanaka,CEOoftheelectronicsconglomeratethenresignedfromthefirm.
InvestigatorsalsofoundthatToshibapracticesthecorporateculturewhereby
managementdecisionsarenottobechallenged.Fromautilitarianismperspective,a
personsactionsarerightifitresultsinthemostpossibleutilityforthemostamounts
ofpeople(Alexander,2002).Inotherwords,theethicalvalueofanactionis
determinedbytheconsequencesoftheactionandnottheactitself.Therefore,
Toshibasaccountingfraudisseentobeunethicalasitharmedstakeholders,investors
andthepublic.Nottomentionitsoppressiveculturethatforceditsemployeetosee
noevil,hearnoevilandspeaknoevil.Nevertheless,onthebasisofthesametheory,
Toshibatookgoodactionsofsettingaside8.4billiontopayforpotentialfinesand
reorganizedthefirmsmanagement(TheWallStreetJournal,2015).Thismaximizes
utilityinthesensethatithelpedstakeholdersregaintrustandgoodreputation.
Similarly,TescointheUKmadetheheadlinesofaccountingfraudin2014.
Thecompanyconfirmedthatithadoverstateditsprofitsbyasumof263million
poundsthroughdefermentofcostsandaccelerationinrecognitionofincome
(Fortune,2014).Thisresultedintheresignationofitschairman,SirRichard
BroadbentandaplungeinTescosstockprices.Thechairmanmayhavebenefited
monetarilyfromtheunethicalaccountingpracticesintheshortterm.However,inthe
longrun,hewasforcedtostepdownwhichdidnotservethecompanyanygoodat
all.Otherthantheutilitarianismapproachmentionedabove,accountingviolation
casescanbeviewedfromthedeontologicalethicsside.AccordingtoKant,themoral
dutyofanindividualbetterpredictstheproperethicsratherthantheconsequencesof
theact(Herman,1996).Meaning,amoralpersonwilltendtodowhatisrighteven
whenitisnotrequested.Broadbentwhochosenottoconductinanethicalmanner
lackedthedutytodowhatwasright.
ENVIRONMENTANDHEALTHVIOLATIONS
InSeptember2015,Volkswagenrevealedthatithadinstalledsoftwarethat
distortsthereadingofthehazardousgasemissioninmillionsofcars(Fortune,2015).
ThecarsmanagedtopasstheEnvironmentalProtectionAgencyemissiontestwitha
moreenvironmentallyfriendlyreadingthanwhattheyreallyare.Asaresult,thefirm
hadtopaycustomercompensation,potentialfinesandsufferareputationalhit.Under
theutilitarianismtheory,oneshouldthinkabouthowtheiractionswouldaffectall
partiesinvolvedandweighouttheprosandconsoftheaction.InVolkswagenscase,
itsfoolishacttoattempttotricktheemissiontesterhascausedquitealargeexpense
tothecompanyandalsomarredtheenvironmentalconditions.Therefore,thecons
outweighedtheprosleadingtotheconclusionofanunethicaldoing.Kantianism
suggeststhatbusinessesshoulddowhatisrightbecauseitisarightthingtodoand
alsohelpothermakerationaldecisions(Herman,1996).Volkswagenfailedtoprovide
consumerswithaccurateinformationabouttheirproductinorderforthemtomakea
rationalpurchasingdecision.Hence,thisactishighlyunethicalinrelevanceto
Kantianism.
In2014,Yum!,theownerofKFC,TacoBellandPizzaHutwasfoundselling
taintedmeatinKFCChinasuppliedbyShanghaiHusi(Forbes,2014).Itwasreported
thatthefreshmeatwasmixedwithexpiredmeatintheproduction.Yum!instantlycut
anycontractswiththesupplier,althoughtheactiondidnotwinbackthesameamount
ofloyalcustomerslost.AccordingtotheprinciplesofKantianismtorespectpeople,
actrationallyanddowhatisright,ShanghaiHusihasviolatedeveryaspectofthis
theory.Itactedirrationallytoharmconsumershealthintheaimsofincreasingits
profits.Thisisalsoinlinewiththeegoismtheorymentionedearlierintheessay.
ShanghaiHusialsoviolatedconsumersrightstotheactualnutritionalfactsofthe
foodtheyconsume.Ontheotherhand,Yum!reactedinanethicalandresponsible
mannerthatistoimmediatelycuttieswiththesupplier.UndertheVirtueethics
concept,anindividualshouldactbasedonhisorherinnatecharacterratherthan
relyingonexternallaws(Arneson,2001).Theconclusionunderthisconceptissimilar
tothatoftheKantianismtheory.ShanghaiHusiclearlydidnotshowsignsofmoral
conscienceintheirdoings.WhereasYum!shouldbeapplaudedfortheirprompt
actiontotackletheproblemasitistherightthingtodo.
WORKPLACEDISCRIMINATION
In2015,BMWManufacturingCo.agreedtopay$1.6millionandrehirea
totalof70blackemployeesintheSouthCarolinafacilityintheattemptsofsettlinga
racialdiscriminationlawsuit(ibtimes,2015).Itwasclaimedthatthecompanys
criminalbackgroundcheckproceduresunequallyaffectedblacks.BMWsguidelines
statethataslongasapersondoesnotpossessacriminalrecordwithinthepastseven
yearscouldbehired.Nevertheless,in2013,theystarteddismissinganyonewitha
criminalrecordfromanyyearatall.Consequently,80workerswerelaidoff,of
whom70ofthemwereblacks.BMWclearlydidnotmeetthetraitsofthevirtue
theoryduetothefactthattheydidnotactethicallywhendecidingtofireitsmajority
blackworkerswithnovalidreasons.Thefirmasalsonothonestasitbreachedits
codeofconductofnotallowingtheemploymentofworkerifandonlyiftheyhavea
criminalrecordwithinthepastsevenyears.Undertheutilitarianismtheory,BMW
failedtoacknowledgetheconsequencesoftheiractionstowardstheinnocent
employeeswhowerelaidoff.Hence,basedonthistheory,BMWdidnotactinan
ethicalmanner.
Otherthanthat,thetechfirmgiant,Microsoft,wasaccusedofdiscrimination
basedongenderbyaformeremployee,KateMoussouris.Sheclaimedthatshewas
passedformorethanonepromotionwhereashermalecounterparts,whowereless
qualified,gotthepromotion(CNNmoney,2015).Shealsomadeaninternalcomplaint
aboutsexualharrassmentbyasuperior.Althoughmeritswerefoundinthecase,the
firmmerelyreaassignedhimwithoutfurtheractions.Sheclaimedthatheretaliatedby
cuttingherbonusanddiminishingherresponsibilities.Asacompanythathasa78
percentmaleworkforceand88percentofmenholdingtopexecutivepositions,it
failedtopresentitscommitmenttoadiversedworkforce.Morever,theCEOof
Microsoft,Nadella,madeastatementinaninterviewthatwomenshouldnotaskfor
raises;infacttheyshouldrelyongoodkarmatobringtheraisestothem.Froman
individualisticviewthatholdsthattheresponsibilityofabusinessistoseek
maximumprofitwithoutfraudulentacts(Herman,1996).Basedonthisview,
Nadellascontroversialstatementisethicalasheisonlystatinghisopinionandthe
factthatthecompanydoesnotgiveoutraisestowomenwillpotentiallyincreaseits
profits.Ontheotherhand,theutilitarianismthoerysuggeststhatinbothKate
MoussourisandNadellascases,itishighlyunethicalandunfairthatafirmonly
thinksabouttheirowninterestanddisregardthehappinessandinterestofallwomen
employees.
CORRUPTION
In2014,itisrevealedthatWalmarthaspaidatotalof$439millioninfines
andlegalfesstosettleanallegationofbriberyandcorruptioninitsinternational
dealings(TheNewYorkTimes,2014).Lawyerswerehiredtodefendfor30of
Walmartsexecutiveswhowereinvolvedintheforeigncorruptioncase.Walmartwas
saidtohavepaidbribesinMexicoinordertoobtainpermitstoopenupnewstores
andthatthewholeactwascoveredupinternally.Walmartwasfoundtohave
initiativestofosterthecultureofsilencethatmayhaveallowedtheMexicanscandal
todelayseveralyearsbeforecorporateleadershipwasinformed.Thismalignculture
thenallowedtheevidenceofwrongdoingtobeignoredandtheboardkeptinthedark.
TheKantianismisatheoryofhavinggoodwillandbeingrational.Walmartfailed
thecategoricalimperativeindecidingwhatispermissibleornotastheyusedtheir
employeessilencetotheirownadvantage.Walmartsactofcorruptionisnot
justifiablethroughtheUtilitarianlens.Thisisbecausethefirmdidnotweighthecost
ofbenefitsofitsactionsfornotonlythefirmbutitsstakeholdersaswell.
Fifa,theworldgoverningbodyoffootballhasbeenthroughmultipleprobes
throughouttheyearsundercorruptionandracketeeringsuspicions.InMay2015,Fifa
officialswerefinallyarrestedoncorruptioncharges.Authoritiesarrested14officials
whom9ofthemareformerorcurrentFifaexecutives(theguardian,2015).AUS
attorneycommentedthattheycorruptedthesoccerbusinessataworldwidescaleto
servetheirowninterests.Theybribedtoobtainbroadcastingrightsforgamesand
hostingrightsfortheWorldCup.Examplesofeventsthatreekedcorruptionsarethe
2010WorldCupawardedtoSouthAfricaandthe2011Fifapresidentialelections.In
briberyandcorruptioncases,bothWalmartandFifadonotpassasethicalintheir
doingsevenundertheindividualismtheory.Althoughthetheorystatesthatitis
justifiableforbusinessestodowhatevertheycantoincreaseprofits,itshouldbe
withinthelawaswell.Fifafailedtoimplementthefourvirtuesfromthevirtuetheory
suchasthecourage,honesty,temperanceandfairnessforfaircompetitionduringthe
WorldCup.
CONCLUSION
Inconclusion,individualandorganizationsconsistenlyfacecountless
decisions.Ethicaldecisionmakingiscrucialtoanorganizationsimageandsuccess.
Bothpersonalandorganizationalvaluescanaffectthechoicesinthedecisionmaking
process.Thesechoicescomewithsignificantconsequencesthatcanbegoodorbad.
However,theethicalpositionofanactcanbeviewedandjustifiedthroughvarious
ethicstheoriessuchasUtilitarianism,Kantalism,Individualism,Virtuetonameafew.
Individualsmaydifferintheirethicalreasoningacrossdifferentethicalissues,
becauseeachdifferingcontentsevokevariousethicalreasoningcriterias.Therefore,
firmsandinvidualsoughttobecriticalinmakingtherightchoices.
REFERENCES
Alexander, C. (2002). Ethics in Accounting? University of Tennessee
Honors Thesis Project .
Arneson, R. (2001). Encyclopedia of Ethics (Vol. 2nd ddn). Routledge,
London.
CFO. (2015, February 12). Apple Accused of Exploiting Overseas
Workers. Retrieved February 21, 2016, from CFO.
CNNmoney. (2015, September 6). Microsoft sued for gender
discrimination. Retrieved February 24, 2016, from
http://money.cnn.com/2015/09/16/technology/microsoft-lawsuitsex-discrimination/
Doebbler, C. (2006). Introduction to International Human Rights
Law. CD Publishing.
Forbes. (2014, October 6). KFC, Yum! Dragged Down By Chinese
Food Safety Scandal. Retrieved February 23, 2016, from
http://www.forbes.com/sites/briansolomon/2014/10/07/kfc-yumdragged-down-by-chinese-food-safety-scandal/#37b519751944
Fortune. (2014, October 23). Tesco chairman resigns after $420
million accounting scandal. Retrieved February 22, 2016, from
http://fortune.com/2014/10/23/tesco-chairman-resigns-after420-million-accounting-scandal/
Assignment 1
Business Cases and Application of
Ethical Theories
MGT 305
Ms. Chithra Latha Ramalingam
Hoo Jo Ee
B1302003
Bachelor of Economics