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ASSESSED ASSIGNMENTS

This section contains a sample assignment for Unit 38, Understanding Business Ethics. The assignment covers Pass, Merit and Distinction criteria and requires evidence of substantial research by learners, particularly to meet the Distinction criterion. You will read learner answers at each level as well as tutor feedback to each of these. Read these answers yourself and try to identify both good and weak points before you read the tutor feedback. Then check if you were right. Use this information to identify the common pitfalls and errors that learners often make. In some cases this can mean having to rewrite and resubmit work, sometimes several times, to achieve specific grading criteria. You can avoid this by learning from the mistakes

SAMPLE ASSIGNM ENT


Unit title: Understandin g business ethics Unit 38, Assignment 38.1
ABOUT THIS ASSIGNMENT
This assignment requires you to apply the knowledge and skills from your course to a series of tasks. You will also need to undertake your own research to obtain the information required. The grading criteria covered by this assignment are shown in the box below.

Grading criteria
PI

Grading criteria

Evidenc e
Task 1

Describe the ethical issues a business needs to consider in its operational activities

P2 Explain business

the and

implications stakeholders

forthe Task 2 of a

business operating ethically Ml Assess how a selected business could Task 3 improve their operations ethically

D1 Evaluate the impact of a selected Task 4 business's ethical behaviour on stakeholders and the business

highlighted and by taking note of the good practice demonstrated in the good answers, Remember that this section is just as valuable whether you are studying Unit 38 yourself or not! This is because many of your assessments for a BTEC National qualification in Business will involve written assignments and you will often be expected to research information when you are preparing your answers. Doing this effectively, writing clearly and concisely, preparing the work in the correct format and answering the question(s) properly are all vital skills you need to

UNIT 38 / UNDERSTANDING BUSINESS ETHICS

demonstrate. Getting this right early in your course will save you valuable time, help to build your confidence and enable you to gain the best grades possible from the start.

YOUR ASS8GMMENT TASKS

but rather than talk generally about 'ethics' she wants to illustrate her points by referring to a particular business organisation. She has asked you to obtain the information she requires. Carry out the tasks below and provide the information in the formats requestec. Include a bibliography of all reference sources used during this assignment.

Scenario
You are working as an executive's assistant at a firm of management consultants, Your manager, Andrea Tate, is keen that all the senior consultants who visit clients to discuss potential projects stress the business benefits of operating ethically. Your firm can help them to identify and achieve these goals. Andrea wants to cover this issue at the next inhouse sales conference,

"ask 1 (Pass

criterion PI)
orovide the information required, you will -eed to investigate a business of your choice nd identify its activities from an ethical point of . iew. 2 Select a business and give the reasons why you chose this particular business. : Describe the

mission statement and corporate aims and objectives (or values and goals). : Describe the ethical issues the business needs to consider. ; Describe how the business is attempting to show its stakeholders that it is aware of the ethical concerns that apply to its operational activities.

which identifies the different stakeholders who are affected by the operations of your selected business. For each type of stakeholder in the table, explain the benefits and drawbacks of the way the business currently operates giving reasons and examples to support your opinions. Include any conflicts of interest between different stakeholders and give reasons for these differences below your table. Explain the implications for the business itself of operating ethically.

Note: You are advised to check with your tutor (who will play the part of Andrea) that your selected business will meet the criteria before you start this task.
Task 2 (Pass criterion P2]
Running a business ethically can have implications for stakeholders as well as for the business itself. Use the same business that you selected for Task 1 or an alternative business if you prefer. Prepare a table

Task 3(Merit criterion Mil

Businesses need to look into ways they may improve their operations ethically. To give further information to the

senior consultants at the next inhouse conference, Andrea would like you to develop the research carried out so far. She would like you to: Assess how your selected business could improve its operational activities to be more ethical and to have a positive impact on its operations.

Dl]
Assessments of business operations ethical or otherwise should always be evaluated to establish the impact on the business and its stakeholders before final decisions are taken. Therefore, to support your presentation in Task 3:

UNIT 38 / UNDERSTANDING BUSINESS ETHICS

Prepare a detailed report for Andrea to Prepare a evaluate the presentation of effect of each your of the changes assessment for and Andrea to use at suggestions the in-house you conference. recommended in Task 3 on each type of Task4 stakeholder (Distincti and on your on selected criterion business. Each of the conclusions you reach should be supported by appropriate evidence from your research.PASS LEVEL ANSWERS

Louise Cole - Assignment 38.1, Task 1 (P1)


The organisation I have chosen to investigate is The Guide Dogs for the Blind Association. I have chosen this business because I think it is very ethical as it carries out an excellent and valuable service to help blind and severely visually impaired people to become mobile again with the help of a

trained guide dog. It does wonderful work with dogs which I know because my aunt was a volunteer puppy walker for a long time. I have copied the vision of Guide Dogs and its mission from its website at http://www.guidedogs.org.uk/aboutus and this is shown here.

QOO
OUR VISION The Guide Dogs for the Blind Association (GDBA) wants a world in which all people who are blind and partially-sighted enjoy the same L rights, opportunities and responsibilities as everyone else. OUR MISSION Our mission is to provide guide dogs, mobility and other rehabilitation services that meet the needs of blind and partially-sighted people. In addition, we also campaigns for the rights of people who are blind and partiallysighted, educates the public about eye care . invests millions of pounds in eye disease research.

T
(From The Guide Dogs for the Blind Association website)

The main ethical issue that GDBA is involved with is equality for people who are blind and partially-sighted. I think that other ethical issues that GDBA needs to consider are as follows: Where to get the dogs from, how to train them and what to do with them if they fail their training or are ill. How to encourage applications from people who need a dog and how to train them to look after it - plus what to do if they haven't enough money

UNIT 38 / UNDERSTANDING BUSINESS ETHICS

to look after it or don't like animals or neglect it in some way. How to raise and spend money to do all this because Guide Dogs doesn't get any money from the government, only from appeals and other gifts. It also needs to have enough money in reserve so that it doesn't have problems if it runs short of money for any reason. It must also obey the law about what it does with its money.

4 The other things it does and how it


does them, such as its Travel Charter (below), the research project it did on street design and the campaigns it gets involved with. These must be right for the charity and not something that is disreputable. GDBA tells people about its aims and what it does on its website. It also has a quarterly magazine Forward, has packs for teachers doing Citizenship. It also has a book, Guide to Guide

Dogs which is all about guide dogs and


gives lots of information to anyone who wants to work for them or become a volunteer. The GDBA website includes a lot of information that relates to ethics even though it doesn't have an ethical policy, or at least there isn't one on the website. For example, they say that they campaign for the rights of the blind and partiallysighted community, especially on mobility and access issues. They also want more ethnic minority blind people to have dogs in the future. They breed over 1,000 guide dog puppies every year and only charge a new owner 50p to ensure no-one cannot have one because they have no money. Dogs who are unsuitable after training are found alternative careers (such as with the police) or found homes and when dogs retire they are placed with voluntary

adopters. So every dog is always looked after as well as possible all its life. GDBA wants their dogs to be welcomed on all forms of transport, without being charged, and has written a Travel Charter which it wants travel companies to sign up to. It wants staff who work for the travel companies to welcome the person and their dog and be helpful, such as by saying the name of the next destination on a bus, coach or train. This is also communicating ethical policies to other businesses. GDBA has many fundraising days and holds lots of events so that everyone knows what it does. All these activities help to raise money and also help to raise the profile of Guide Dogs. It also encourages businesses to support it by recycling ink cartridges or old mobile phones. It also collects stamps. It doesn't say whether it does any recycling itself in its offices. On its website it also says that supporting a Guide Dog campaign can be good for businesses who want to do this as part of their own Corporate Social Responsibility. Its campaigns have included campaigning for equal rights and it launched a fireworks petition before The Fireworks Act was passed, because fireworks can cause lots of stress to animals. GDBA also wants the government to spend more money in rehabilitating people who lose their sight. In 2007 it got involved with the 1 Million 4 Disability campaign, launched by the European Disability Forum.

Task 2 (P2) Guide Dogs


der Owners Stakehol

Stakeholders
Benefi ts There are no owners of

in

UNIT 38 / UNDERSTANDING BUSINESS ETHICS

Drawba cks Managers may not have enough


money to do everything they want

GDBA because it is a charity. But the managers are responsible for the way the business is run Employees Can work with dogs and be promoted from working in and/or working with visually handicapped people Dogs Looked after all their lives and well trained

May have to work at weekends or during the holidays as dogs need

the kennels to training dogs looking after all the time

May be given to someone who doesn't like animals. This is why every owner is regularly visited by a Dog Care and Welfare Advisor who can check everything is all right

Volunteers walkers

and

puppy Can work with dogs to help to Don't get paid for what they do. look after them and support May be upset when they have to the Association hand over a puppy they have brought up

Customers - these are the Will be more mobile because dog owners of the dog and also have companionship Suppliers Will be supplying a national organisation which is well known Competitors GDBA doesn't really have any competitors

Have to pay nominal 50p a week for its upkeep

May have to give discounts because all charities are careful with their money

Citizens - these include They may be able to get They may not like living near local people who live involved in events and kennels if the dogs are noisy and barking at night nearthe kennels as well as support GDBA the generai public

I think that the main conflicts could be between managers who want to save money and staff who want to spend money on the best facilities for the dogs and may want to train them for longer than managers would like. It must also be hard for staff if they don't like a new dog owner and trust him or her to look after the dog properly. Even though an advisor can visit, it may not be obvious if the dog is just being neglected a bit or not given much love or affection. Another

conflict could be between local people who complain about the noise if the dogs are barking at night, especially if the kennels are in a residential area. It is important that GDBA is ethical because it needs a good reputation to be able to attract funds from its supporters. People wouldn't give it money or leave it money in their will if they thought it wasn't ethical. ASSESSOR FEEDBACK FORM

L e a r n e r N a m e : L o u is e C o le A s s i g n m e n t .R1T - s k1 s n d ( P 1 a n d P 2 ) 38 ea f a 2
L o u is e , I w a s v e r y in t e r e s t e d t o r e a d y o u r w o r k , e s p e c ia lly a ft e r o u r d is c u s s io n a b o u t t h e d iffe r e n c e s y o u w o u ld fa c e if y o u c h o s e a n o r g a n is a t io n in t h e v o lu n t a r y s e c t o r r a t h e r t h a n o n e in t h e p r iv a t e s e c t o r w h ic h h a s t h e m a in a im o f m a k in g a p r o fit . Y o u h a v e m a d e a g o o d s t a r t t o t h is t a s k a n d in c lu d e d m a n y r e le v a n t fa c t o r s w h ic h illu s t r a t e h o w G u id e D o g s fo r t h e B lin d A s s o c ia t io n o p e r a t e s a n d w o r k s t o r a is e a n d s p e n d m o n e y e t h ic a lly . H o w e v e r , t h e r e a r e o n e o r t w o g a p s t h a t y o u n e e d t o f ill in b e f o r e y o u a c h ie v e p a s s s t a n d a r d , T h e f ir s t lin k s t o t h e d is c u s s io n w e h a d , C h a r it ie s , ju s t lik e o t h e r b u s in e s s e s , h a v e t o m a k e s u r e t h a t t h e y c o m p ly w it h s e v e r a l la w s a n d r e g u la t io n s p a r t ic u la r ly in r e la t io n t o t h e ir f in a n c e s , T h e t r u s t e e s a r e r e s p o n s ib le f o r t h is a s p e c t o f t h e ir o p e r a t io n s a n d a r e k e y s t a k e h o ld e r s in t h e b u s in e s s , Y o u m a y r e m e m b e r t h a t I s u g g e s t e d t h a t y o u s h o u ld c h e c k if t h e w e b s it e c o n t a in e d a n a n n u a l r e p o r t a n d / o r a u d it o r 's r e p o r t a n d r e a d t h e s e c a r e f u lly , If y o u d o t h is , y o u w ill b e a b le t o w r it e a b o u t it s le g a l a n d r e g u la t o r y c o m p lia n c e in m o r e d e t a il t h a n ju s t s a y in g 'it m u s t o b e y t h e la w '! Y o u w ill a ls o b e a b le t o a d d t h e t r u s t e e s t o t h e s t a k e h o ld e r t a b le , r a t h e r t h a n s a y in g t h a t 'n o - o n e o w n s G u id e D o g s ', I t h in k it is u s e f u l t o s e p a r a t e 'm a n a g e r s ' fr o m 'e m p lo y e e s ' b e c a u s e t h e y w ill h a v e s lig h t ly d if f e r e n t in t e r e s t s a s y o u h a v e s a id . A g a in , if y o u r e a d t h e a n n u a l r e p o r t c a r e f u lly y o u w ill b e a b le t o g iv e s o m e e x a m p le s a n d r e a s o n s t o s u p p o r t y o u r c la im s a b o u t m a n a g e r s . In t h e e m p lo y e e s s e c t io n , y o u s h o u ld a l s o t r y t o l o o k a t w o r k i n g c o n d i-tai o e s m o r e c a r e f u l l y rn G D B A a s g o o d a t lo o k in g a ft e r t h e ir e m p lo y e e s a s t h e d o g s ?

UNIT 38 / UNDERSTANDING BUSINESS ETHICS

D o t h e y h a v e p o lic ie s in r e la t io n t o d iv e r s it y , f o r e x a m p le ? Y o u a ls o n e e d t o s e e if t h e y h a v e a n y p o lic ie s r e la t in g t o t h e ir s u p p l i e r s . It w o u l d b e u s e f u l i f y o u c o u l d m a k e s o m e c o m m e n t a b o u t t h e b u s i n e s s p r a c d io et s e y G a yB Ah e i r -t c h of p D t s u p p lie r s p r o m p t ly , f o r e x a m p le ? E s p e c ia lly s m a ll s u p p lie r s w h o w o u ld s t r u g g le t o w a it f o r p a y m e n t , T h e r e is a ls o G D B A o w n s t a n c e o n is s u e s s u c h a s t h e e n v ir o n m e n t a n d s u s t a in a b ilit y t h a t w o u ld b e r e le v a n t h e r e . Y o u m a y f in d it h e lp f u l t o c h e c k d o w n t h e lis t o f e t h ic a l is s u e s w e c o v e r e d in c la s s ( s e e y o u r s c h e m e d o c u m e n t fo r d e t a ils , t o o ) a n d m a t c h e a c h o n e a g a in s t in f o r m a t io n y o u h a v e o b t a in e d o n G u id e D o g s fo r t h e B lin d A s s o c ia t io n . H o w e v e r , d o r e m e m b e r t h a t t h is is o n e r e a s o n w h y w e b s it e s o n t h e ir o w n c a n o ft e n p r o v e in a d e q u a t e if y o u n e e d t o fin d o u t a b o u t a n o r g a n is a t io n 's p o lic ie s in d e p t h . Y o u t o ld m e w h e n w e d is c u s s e d y o u r c h o ic e o f G u id e D o g s t h a t y o u k n o w s o m e o n e w h o w o r k s t h e r e . I w o u ld r e c o m m e n d t h a t y o u s e e if y o u c a n t a l k t o h- om soer e h ie rt h a t p e r s o n c o u l d a r r a n g e i r f f o r y o u t o t a lk t o o n e o f t h e lo c a l m a n a g e r s . F a ilin g t h a t , y o u c o u ld e m a il t h e ir h e a d o ffic e o r t e le p h o n e t h e m . P r im a r y r e s e a r c h w o u ld a d d t o y o u r a c c o u n t s ig n ific a n t ly a n d w o u ld a ls o p r o v e in v a lu a b le f o r m o v in g o n t o a c h ie v in g M e r it a n d D is t in c t io n c r it e r ia la t e r , D o r e m e m b e r t o u s e y o u r n e w in f o r m a t io n t o b u ild u p o n t h e w o r k y o u h a v e a lr e a d y d o n e , w h ic h is fu n d a m e n t a lly s o u n d , H o p e f u lly y o u w ill f in d t h a t G u id e D o g s f o r t h e B lin d A s s o c ia t io n a r e o n ly t o o p le a s e d t o h e lp y o u if y o u c o n t a c t t h e m . A s y o u r ig h t ly p o in t o u t in y o u r a n s w e r t h e y a r e k e e n t o f o s t e r a p o s it iv e r e p u t a t io n b e c a u s e t h e y n e e d p u b lic s u p p o r t . R e m e m b e r , t o o , t h a t G D B A a ls o h a s t o c o p e w it h o t h e r c h a r it ie s ( a n d t e le t h o n s lik e C h ild r e n in N e e d o r R e d N o s e D a y ) w h ic h a ll w a n t p u b lic in n o v a t iv e im p o r t a n t s u p p o rt . T h e r e fo r e th a t a ll it n e e d s need to to com e up w it h i.e . ( b u t e t h ic a l) w a y s o f r a is in g aspect c h a r it ie s m o n e y . T h is is a n c o n s id e r ,

c o m p e t it io n f r o m o t h e r w o r t h y o r g a n is a t io n s w h ic h w a n t m o n e y a n d s u p p o r t fr o m t h e p u b lic . Y o u n e e d t o in v e s t ig a t e t h is in m o r e d e t a il t o in c lu d e in y o u r r e v is e d a n s w e r , b e c a u s e it is s i m p l y n o t c orror m c tt h i s p o i n t- ttoo svai e wt h a t G D B A -f e y h a s n o c o m p e t it io n ! F i n a l -l yo n e f u r t h e r w o r d o f a d v i c e . Y o u h a v e c h o s e n G D B A b e c a u s e y o u b e lie v e in it s a im s a n d w h a t it d o e s . T h is is g o o d b u t it a ls o m e a n s t h a t y o u a r e a p t t o t h in k w it h y o u r h e a r t

r a t h e r t h a n w it h y o u r h e a d ! T o a s s e s s it s e t h ic s y o u n e e d t o s t a n d b a c k a lit t le b it a n d t h in k a b o u t G D B A ra th er m o re d is p a s s io n a t e ly . O b t a in fa c t s a b o u t t h e w a y it o p e r a t e s a n d t h e n a s s e s s t h e s e . T o a c h ie v e M 1 a n d D 1 g r a d in g c r it e r ia y o u w ill n e e d t o t h in k a b o u t w h e t h e r it c o u ld m a k e im p r o v e m e n t s t o w h a t i t d o e s a n d h o w i t c o m m u n i c -a at n s i t s e t h i c a l s t a n c e ed y o u w ill o n ly b e a b le t o d o t h is e f f e c t iv e ly if y o u c a n t h in k r a t h e r m o r e o b je c t iv e ly t h a n y o u a r e d o in g a t t h e m o m e n t . I l o o k f o r w a r d t o r e a d i n g y Adam iBellw-o r k . ou r re v sed

Assignment 38.1, Task 1 (PI)

Introduction For this business ethics assignment I have chosen to investigate Ryanair, which is now Europe's largest low fares airline. The reason is because Ryanair is incredibly successful, yet is frequently the subject of critical customer feedback and bad media reports. It has even been called the unacceptable and irresponsible face of capitalism'. I wanted to investigate whether this is mainly because of the aggressive style of its management, in particular its CEO Michael O'Leary, or if it is because the company itself operates in an unethical manner. I thought this was very relevant too because the airline industry as a whole is now being criticised on environmental grounds - yet Ryanair is saying it will expand its operations to offer flights to the US for only 7. Again I wanted to find more about this whole issue. Ryanair mission statement
The Ryanair mission statement is as follows: 'To provide our customers with safe, good value, point-to-point air services. To effect and to offer a consistent and reliable product and fares appealing to leisure and business markets on a range of European routes. To

UNIT 38 / UNDERSTANDING BUSINESS ETHICS

achieve this we will develop our people and establish lasting relationships with our suppliers.'

Ryanair's goals
Ryanair's objective, in its online strategy document is as follows. 'To establish itself as Europe's leading low-fares scheduled passenger airline through continued improvements and expanded offerings of its low-fares service. It aims to offer low fares that generate increased passenger traffic while maintaining a continuous focus on costcontainment and operating efficiencies.' Ryanair's main goal has always been to cut its operating costs to a minimum so that it can sell tickets cheaply. It aims to get passengers from A to as cheaply as possible and many of its goals are focused on this, such as operating from cheap regional airports. It also wants to expand. In 2006 it carried a record 42.5 million passengers. It wants to increase this to 70 million by 2012. It has now announced plans to sell flight tickets to the US for only 7 and would like to takeover Aer Lingus, the Irish airline (in 2007 it owned 25%). It is also buying 117 more new aircraft, to increase its fleet of 107 Boeing 737-800s to 269 by 2012. It wants to increase its revenue and profits. Despite increases in fuel charges its expected net profit for 2007 is 257 million which will be an increase of 29% on 2006. Its revenues also increased by 33% because of a growth in passenger numbers, an increase in its average fares and other charges, such as for checked-in luggage.

How Ryanair operates Ryanair sells tickets direct on its website. It discourages passengers from checking in baggage by charging them. Passengers with overweight bags must pay a surcharge. This means more passengers bring hand luggage only and this means Ryanair can process passengers more quickly from fewer check-in desks and pay less in baggage handling charges. This also helps to reduce the turnround time between journeys as it is very important to keep this as short as possible. Ryanair uses cheap regional airports and prefers passengers to use online check-in and go straight to the departure gate. It sells travel insurance, hotel rooms and car rentals as well as scratch cards during the flight. All these bring it additional revenue and so do onboard purchases. It also introduced inflight gambling in 2007.
It gives nothing free on its flights - although it sometimes gives away free one way tickets as a promotion. It charges for anything bought onboard. It also tried to charge disabled passengers for the use of wheelchairs but was taken to a tribunal by the Disability Rights Commission who won the case.

The ethical aspects Ryanair must consider


Ryanair has a Code of Business Conduct and Ethics. This is for its staff and is available online. It covers the following issues: The working environment at Ryanair, including protection for staff against discrimination and harassment; privacy of personal information of staff; Internet usage by staff; substance abuse

UNIT 38 / UNDERSTANDING BUSINESS ETHICS

by staff. The business activities of Ryanair, including being honest and fair to customers, obtaining best value from suppliers but also being open and truthful; disclosing results of operations in good time, fairly, understandably and accurately to shareholders. Ryanair also confirms it aims 'to provide a reasonable return on investment to shareholders by pursuing sound growth and earnings objectives while exercising prudence in the use of assets and resources.' It will not seek competitive advantage through illegal or unethical business practices and no employee must accept gifts, hospitalities or other benefits that could influence them or be construed as a bribe. Financial reporting is the next area. All company books and records must be true and complete and there are rules relating to access to company assets and how transactions are recorded as well as administrative and accounting controls. Ryanair is a publicly owned company and the company is committed to full compliance with all requirements applicable to its public disclosures. Company property must not be used by staff for personal benefit and all employees must safeguard confidential information about the company Conflict of interest. This covers issues such as the type of other work an employee can do whilst

working for Ryanair, the type of investments they have and job applications by friends and relatives as well as insidertrading in shares and transactions that involve relatives. Laws and regulations. This covers compliance with employment laws and regulations that apply in all the countries in which Ryanair operates, health and safety laws and regulations and environmental laws and regulations. Disciplinary action (when necessary) and Reporting procedures if staff have a query or problem. However, there are other ethical issues Ryanair must consider because of the business it is in. Safety is a very important area. It doesn't matter how cheap the tickets are, if there was an accident because of poor maintenance or because the pilots weren't concentrating this would affect future business dramatically. Ryanair boasts on its website that in 30 years of operations it has not had a single incident involving major injury to passengers or flight crew It says this is because it has safety training procedures, has invested in safety-related equipment and has an internal confidential reporting system for safety issues. It also hires qualified maintenance personnel and provides proper training for them and maintains its aircraft in accordance with European industry standards. Ryanair stresses that its low cost

UNIT 38 / UNDERSTANDING BUSINESS ETHICS

operating strategy does not extend to the areas of maintenance, training or quality control. The environment. Ryanair argues that aviation accounts for less than 1.6% of greenhouse gas emissions. It claims it is Europe's greenest airline because it invests in the latest aircraft and engine technologies which significantly reduce fuel burn and CO2 emissions. Because it has modern planes and operates from remote airports fewer people on the ground are affected by noise and there is less rubbish on each plane because there are no 'free' goods offered. (This also reduces the cleaning needed!) Ryanair is against making air travellers pay an environmental tax because it claims road transport is worse. It also said the government's increase in UK departure tax from 5 to 10 was just another tax on tourists. Customer service. Customers want to be treated politely and considerately especially if they have a problem, such as wanting to change a ticket or if a flight is delayed or cancelled. Air travellers may also have a claim about missing or damaged baggage. They may also be concerned about disabled access onto a plane and facilities on board (including cleanliness). They want flights to be punctual and Ryanair claims it is good in this respect and at the top of the European league. It also has fewer lost bags and

cancellations other airlines.

than

many

Human rights which includes the recruitment of staff and issues such as diversity and the right to join a trade union. Corporate governance This means that Ryanair must be run properly and use resources carefully and shareholders must be treated fairly. For example, they must be able to stop directors trying to pay themselves too much money and they must also be able to see the accounts and other statements themselves each year (see Financial reporting above). Ryanair has stated it complies with the Combined Code which applies to companies listed on the Irish stock exchange as well as the London stock exchange. But in 2003 one investment fund said the company had failed to meet best practice as only one non-executive was independent and less than 20 days notice was given of the AGM which meant that shareholders didn't have enough time to read the report. As well, non-executive directors had been granted share options which aren't considered a suitable form a payment for their services. As well, its disclosure on environmental issues was not detailed enough. When I checked there was a full environmental statement where Ryanair claimed it was the greenest airline dated September 2006 so perhaps the situation has improved since then. I could find no other criticisms about its corporate governance online. Ryanair communicates all information about its ethics from its website. It says it doesn't produce

UNIT 38 / UNDERSTANDING BUSINESS ETHICS

information packs to anyone because these cost money. Therefore the only way to find out information about the firm is online, but their website is comprehensive and has all the information stakeholders could need, including financial reports. Michael O'Teary is very defensive of the business's strategy in relation to aspects such as the environment and safety and the airline gets a lot of coverage in the national press. It has also been the subject of television programmes, some of which have been very critical. Conflicts frequently occur at Ryanair between different groups of stakeholders. The senior management, mainly Mr O'Leary, is always fighting other groups, e.g. the Government and its tax, customers who want better service, staff who want more pay. He argues staff can leave and work elsewhere if they don't like it and that customers know what they are getting. This does not give them the right, though, to ignore people's basic rights, such as those of the disabled. The strength of opposition to Ryanair is shown in alternative websites, such as http://www.ryanaircampaign.org/ which includes dozens of negative press reports covering many different types of stakeholders. This obviously concerns Ryanair because it has tried to get the site closed down and challenged the domain name. Ryanair knows it must be seen to be ethical, especially in key areas. This is why, when there were reports about rushed descents by pilots (rather than going around again which is safer) they quickly issued a statement which said that they disapproved of that practice and

safety must be paramount. However, Ryanair also argues that they are in the business of providing the cheapest fares and that they must keep costs low to do this. In the investor's part of the website they stress their commitment to highly qualified pilots who are paid more than the average wage, new aircraft and safety as well as other ethical policies. This is because they know that investment, as well as passenger numbers, is crucial for their future expansion plans. Task 2 (P2)

Type of Stakehol der


Investor/ owner

Benefit

Reason/ example

Drawbacks

Reason/example

Make money out of their investment

Shares have generally increased in value and in 200? experts were saying they are a good buy

No dividends paid on ordinary shares

This is because Ryanair retains future earnings to pay for additional aircraft and for its expansion programme

Passenger

Save money on flights

Can fly very cheaply all around Europe, sometimes for nothing

Remote airports, Many websites contain no 'frills', hard to get money back if there is a problem High productivity targets to achieve. Cabin crew have to pay for their own training and it is deducted from . their first year's salary blogs and complaints about Ryanair customer service Some pilots and cabin crew have complained about fast turn-round times

Employee

Protection against
\

See ethical policy for staff. Ryanair claims its pilots are the best paid in Europe and have no overnight stays away

Supplier

Policy of treating suppliers fairly

See ethical policy

Costs - anything supplied will have to be good value

Ryanair keeps its costs as low as possible

Competitor

It can lose customers to its competitors

Ryanair often gets bad publicity which puts people off This is because it uses remote is less noise and also because it has newer planes and doesn't make as much rubbish.

It can be difficult to beat in some areas

Its safety and punctuality records are both very good and it is cheaperthan most competitors

Citizens

According to Ryanair, it is more 'friendly' to citizens than other airlines

Environ mentalists don't do unions. The Government and EU are probably wary too because of Ryanair's campaigns about tax and other issues.

Cheap flights mean more travellers and Ryanair plans to expand. Ryanair is anti-union - see www.ryan-be-fair. org set up by the International Transport Workers Federation

airports so there like Ryanair, nor

UNIT 38 / UNDERSTANDING BUSINESS ETHICS

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ASSESSOR FEEDBACK FORM

L e a r n e r N a m e : A d a m B e ll A s s i g n m e n t .R1T - s k1 s n d ( P I a n d P 2 ) 38 ea f a 2

A d a m , y o u h a v e o b v io u s ly t a k e n a lo t o f t in e a n d t r o u b le o v e r y o u r r e s e a r c h f o r t h is a m u s t b e c o n g r a t u la t e d . Y o u h a v e lo o k e d b e y o n d t h e h e a d lin e s , w h ic h is im p o r t a n t , t o is s u e s t h a t a r e r e le v a n t t o b u s in e s s e t h ic s a t R y a n a ir . I w a s in t e r e s t e d in y o u r r e a s o n fo r c h o o s in g R y a n a ir a n d I a m p le a s e d t h a t y o u h a v e com pany, Y o u r in f o r m a t io n w a s s e t o u t c le a r ly u n d e r a p p r o p r ia t e h e a d in g s , w h ic h m e a n t it w a c e r t a in ly m e t t h e c r it e r ia f o r P 1 .

b a la n c e b e t w e e n t h e n e g a t iv e p u b lic it y t h e b u s in e s s o f t e n r e c e iv e s a n d o t h e r p o s i

id e n t ifie d a n d a c c u r a t e ly d e s c r ib e d a w id e r a n g e o f e t h ic a l is s u e s t h a t a p p ly t o y o u r c

I n T a 2 ,k o u h a v e a p p l i e d y o u r f i n d i n g s t o d i f f e r e n t s t a k e h o l d e r s . I w a s s l i g h t l y d i s a p p o i n t e d sy ' g o v e r n m e n t ' u n d e r ' c i t i z e n s ' . Y o u w o u l d h a v e -df o n e xbaem t p lre t, ome ax n a g e r s hci o ul ilsdt h a v e r e t e pand t s h a v e b e e n a n it e m o n h is o w n !

t h e e x a m p le s t a k e h o ld e r lis t in t h e s c h e m e , w h ic h m e a n t t h a t y o u h a v e s o m e u n e x p e c t e d

b e e n d e a l t w i t h s e p a r a t e l y t o oor t p e r heam s lM y eOe 'sL e a r y , w i t h h i s c o m b a t i v e b u s i n e s s s t y l e , c o h pp o r

D e s p it e t h a t , I w a s p le a s e d t o s e e t h a t y o u h a v e in c lu d e d a w id e r a n g e o f e x a m p le s t o A g a in , t h is m ig h t h a v e b e e n e a s ie r if y o u h a d id e n t ifie d a b r o a d e r r a n g e o f s t a k e h o ld e r s . Y o u h a v e a p p r o p r ia t e ly id e n t ifie d t h e im p o r t a n c e t o R y a n a ir o f b e in g s e e n t o b e a n e t h ic a l o p e r a t io n s , s u c h a s s a f e t y , t h e e n v ir o n m e n t a n d h o w it t r e a t s it s s t a f f a n d c u s t c e r t a in ly t h e r e is a c o n s id e r a b le a m o u n t o f m a t e r ia l y o u c a n u s e f u lly e v a lu a t e t o a c h ie v e

h a v e a ls o id e n t ifie d s o m e r e le v a n t c o n f lic t s o f in t e r e s t a lt h o u g h t h e s e c o u ld h a v e b e e n

I lo o k fo r w a r d t o s e e in g h o w y o u a s s e s s t h e im p r o v e m e n t s R y a n a ir c o u ld m a k e t o a c h ie v e

UNIT 38 UNDERSTANDING BUSINESS wMwmmmm, ETHICS

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MERIT LEVEL ANSWERS

Aysha Bhamra Assignment 38.1, Task 3 (M1)


Slide one

Tops hop and its

ethics

Aysha Bhamra

Slide two

Topshop today
Topshop is very successful It sells fashion
23

clothes It could be more ethical in the way it operates

Ethical issues
Where Topshop clothes are made and distance they travel (carbon footprint) The cheap clothing business (use and throw away) Trading fairly and suppliers/workers (not

UNIT 38 / UNDERSTANDING BUSINESS ETHICS

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Slide three

paid living wage etc) Equality (eg size of clothes stocked) Business practices Tax

Slide four

Its competitors
These include
Next River Island Prirnark Matalan New Look French Connection H&M Zara

According to Labour behind the Label and


25

Clean up Fashion Next, Zara, New Look and

H&M are all more ethical than Topshop,

UNIT 38 / UNDERSTANDING BUSINESS ETHICS

What it could do

Slide five

Stock clothes over size 16 because at the moment they JJf discriminate against heavier w people,

The Kate Moss collection makes this worse as only thin people can wear her type of clothes. Some young girls will have to diet a lot to wear them. Also her lifestyle is not a good example to young girls.

!
s

Slide six

What it could do also


Join the Ethical Trading Initiative (This applies to all Arcadia businesses, not just Topshop) and make sure suppliers/workers are treated properly.

27

_______________________________________________________

Stock more fair trade clothes (they only stock a few by People Tree at the moment)Slide seven

It should also
Not encourage young people to buy and throw away clothes Look at more recycling Look at what clothes are made of, eg are they organic cotton Not move clothes all around the world because of the carbon footprint Have an ethical audit

Slide eight

What the owner could do


He is Sir Philip Green and is worth billions, He saved 285 million in tax, according to the Money Programme, because he lives in Monaco part

UNIT 38 / UNDERSTANDING BUSINESS ETHICS

of the year He has big parties. He spent about 20 million and took over a Maldive island for his friends for his 55th birthday, flying them ail there, This is not good for the environment. He should move to England and pay tax here, where his customers are.

29

Taking action would mean pressure groups like Ciean up Fashion and Labour Behind the Label would give Arcadia a better ethical score Clothes would be available for a wider range of customers and that could increase sales The press would stop criticising Philip Green for living abroad and his taxes would help the British economy.

Slide ten

Slide nine

One report said Topshop is working on writing its Corporate social responsibility report but this is no good unless it takes action. It could stock more clothes made from organic cotton that are made nearer here to reduce its carbon footprint.

UNIT 38 / UNDERSTANDING BUSINESS ETHICS

ASSESSOR FEEDBACK FORM

Learn er N am e: A ysh a B h am ra A s s i g n m e 3 8 .r1e,a s 3 ( M 1 ) nt T f k


Y o u h a v e o b v io u s ly w o r k e d h a r d o n y o u r p r e s e n t a t io n A y s h a a n d I p a r t ic u la r ly lik e d t h e e n liv e n e d s o m e o f t h e s lid e s w it h a p p r o p r ia t e illu s t r a t io n s , W h e n y o u d i 1 a Tn adst ko s a c h i e v e P 1 a n d P 2 , y o u i d e n t i f i e d s o m e o f t h e m a i n e t h i c a l i s s u e s t h d 2 r e t a i l e r s n e e d t o l o o k a t a n d t h o s e t h a t c o n c e r n p r e s s u r e g r- o u c h a u cw h aesr eL a b o u r B e h i n d s ps ss h fa s h io n r e t a ile r s s o u r c e t h e ir c lo t h e s a n d h o w t h e w o r k e r s w h o m a k e t h e m a r e t r e a t e d a i s s u e s w h i c h a r e p a r t o f t h e E t h i-cw h iTcrha d ion ug uI n iftoi a t uvnea t e l y f a i l e d t o i d e n t i f y p r o p e r l y i n y o al y n r i p r e s e n t a t io n , Y o u r e a lly s h o u ld h a v e e x p la in e d w h a t t h e E T I is a n d h o w jo in in g it s h o u ld r i g o r o u s i n i t s e t h i c a l s t a n c e t o t h e l a b o u r i t u s e s , T n ost ib et chaeu m ea Tno p s h o p i twoi f l jn ont i n g -hi s s i benef l oi g e t c r it ic is e d a s m u c h ! b e c a u s e y o u i n t r o d u c e d - o tuhcehr a s n coetrhnes s s i z e s , h o w f a r t h e y t r a v e l a n d p o i n t s r e l a t i n g t o s co cl G ree n , It w o u ld h a v e b e e n b e t t e r t o id e n t if y a c t io n s t h a t o t h e r r e t a ile r s h a v e t a k e n ( e .g . N e x t , p r e s e n t a t io n w h e t h e r y o u a r e c o n c e r n e d w it h t h e e t h ic s o f ju s t T o p s h o p o r t h e w h o le g

U n f o r t u n a t e ly t h e E T I a n d la b o u r f o r c e / s u p p ly c h a in is s u e s w e r e r a t h e r lo s t in t h e m id d le

T o p s h o p h a s n o t , R e m e m b e r , t o o , t h a t T o p s h o p is p a r t o f t h e A r c a d ia g r o u p a n d y o u d

t o b e p a i d b y S i r P h i l i p G r e e n w o u l d b e o n t h e p r o f i t s o f -t a le hAo rucg h irae a lrl y uPph ,i ln po t j u s t T o p s ht ad G o i p e r s o n a l f e e lin g s a r e ! A ls o , w h e n y o u a r e c o m p a r in g T o p s h o p w it h it s d ir e c t c o m p e t it o in c lu d e P r im a r k a n d M a t a la n w h ic h s e ll c lo t h e s m o r e c h e a p ly t h a n T o p s h o p ,

G r e e n 's p r iv a t e lif e is n o t v e r y r e le v a n t t o t h e e t h ic a l b u s in e s s is s u e s y o u a r e a d d r e s

I s u g g e s t t h a t y o u c h a n g e y o u r p r e s e n t a t io n a lit t le b y id e n t if y in g t h e m a in o p e r a t io n a l i

s h o u l d i m -pnr o tv e h i l i p G r e e n h i m s e l f ! T h e n e x p l a i n a n d a s s e s s e a c h o n e , s t a r t i n g w i t h t h o s P s u c c e s s fu l' t h e n s t a t e it s la s t p r o fit fig u r e a n d h o w m a n y s h o p s t h e r e a r e .

m o s t im p o r t a n t fo r t h e b u s in e s s , A ls o , d o r e m e m b e r t o b e s p e c ific ! F o r e x a m p le , if y o u s

R e m e m b e r , t o o , t h a t y o u d o n o t n e e d t o g o in t o g r e a t d e t a il o n a s lid e b e c a u s e y o u s h o

In s t e a d , ju s t p u t t h e k e y in f o r m a t io n t h a t w ill r e m in d y o u w h a t t o s a y . A t t h e e n d , t r y t o s h o u ld h a v e n o p r o b le m s in s o o n a c h ie v in g M 1 .

w h ic h s u m m a r is e s y o u r k e y p o in t s , I a m s u r e t h a t w it h a lit t le w o r k t o o r g a n is e y o u

Adam Bell - Assignment 38.1, Task 3 (M1)


Slide one

How Ryanair could be more ethical

Slide two

Aim of this presentation


To assess the scope for ethical improvements at Ryanair, based on its current operational practices. To suggest changes Ryanair could make that would contribute to ethical

behaviour and have a

UNIT 38 / UNDERSTANDING BUSINESS ETHICS

positive impact on its


operations.

UNIT 38 - UNDERSTANDING BUSINESS ETHICS

Slide three

Recomme nded changes and


improvem ents
I Publicise an up-to-date environmental policy
Review extra charges and give better customer | care and setvice I

Improve conditions for staff Stop having

misleading adverts Have ethical policies for dealing with disabled pa; 2rs

: Meet best practice for corporate governance


Prepare a CSR report

UNIT 38 / UNDERSTANDING BUSINESS ETHICS

Slide four

Pu blic ise an uptodat e env iro nm ent al pol icy

The airline already claims it is 'green' because it replaces

planes every 2.5 years so uses new technology but many


people might not know this

The UK government has to reduce C02 emissions and


needs the help of all

UNIT 38 / UNDERSTANDING BUSINESS ETHICS

industry

Competitors have adopted this idea (eg Virgin) whereas

Ryanair has just argued that the contribution of airlines to


global warming is negligible Publicising a positive, up-todate poitcy would be good PR and cost very little

Review charge s and give better custom er care and service


including

Reduce excess charges for extras 'jumping' the queue, checking in baggage and everything bought on board. Most no frills operators to Europe do this but Ryanair charges

more man most. Reduce

prices of associated services eg hotels, car hire to give customers a better deal. Scrap premium phone line for customer contact and/or v allow contact by email. Reduce/scra p 14 admin

ww&m

Slide five

UNIT 38 / UNDERSTANDING BUSINESS ETHICS

fee for handling complaints. Train staff better and discipline any who are rude to customers.

Stop having misleading adverts


Slide six

Employ professional agency Stop being penny under such Don't put of flight pinching !^ Irish Airline Pilotsand Ryanair pays it In advance At Pay for training staff attendants. but to Improve conditions

let staff recharge their mobile pressure to meet targets Association (trade union). month then claims it bade each present phonesthey have year's salary that their out of at work first to leave or for staff resort to complaining online.

create adverts Don't advertise free or 0 tickets which leave off the tax so people don't realise there are extra costs

Slide eight

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11

UNIT 38 / UNDERSTANDING BUSINESS ETHICS

Have ethical policy for dealing with disabled passengers


Don't charge for wheelchair use. This is important because of the Disability Discrimination Act
Slide seven

Train staff to deal properly with sick or ill passengers.

Slide nine

HH

UNIT 38 / UNDERSTANDING BUSINESS ETHICS

M e e t b e s t p r a c t i c e f o r c o r p o

r a t e g o v e r n a n c e
C o m p l y
w i t h

t h e C

UNIT 38 / UNDERSTANDING BUSINESS ETHICS

o m b i n e d C o d e

D o m o r e t h a n t h e m i n i m u m -

a i m t o e q u a l b e s t p r a c t i c e . T h i s i s i m p o

UNIT 38 / UNDERSTANDING BUSINESS ETHICS

r t a n t n o w t h a t R y a n a i r i s a n e s t a b li s h e

d , p r o f i t a b l e b u s i n e s s .

Slide ten

UNIT 38 / UNDERSTANDING BUSINESS ETHICS

P r e p a r e a C S R r e p o r t
C o r p o r

a t e S o c i a l R e s p o n s i b il i t y s h o w s t h a t a b u s

UNIT 38 / UNDERSTANDING BUSINESS ETHICS

i n e s s i s t r y i n g t o d o m o r e t h a n t h e b a s i c

s a b o u t e t h i c a l i s s u e s . R y a n a i r d o e s n o t h

UNIT 38 / UNDERSTANDING BUSINESS ETHICS

a v e a C S R r e p o r t a n d p r e p a r i n g o n e w o u l

d h i g h li g h t i m p o r t a n t e t h i c a l i s s u e s a n d

UNIT 38 / UNDERSTANDING BUSINESS ETHICS

h e l p t o s h o w f t t a k e s i t s r e s p o n s i b il i t

i e s s e r i o u s l y .

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Slide eleven

ASSESSOR FEEDBACK FORM

L e a r n e r N a m e : A d a m B e l l3 A s 1 i,agsnkm e n t r e f 8.s 3 T (M 1 )

I f o u n d y o u r p r e s e n t a t io n v e r y in t e r e s t in g A d a m , a s it b u ilt u p o n t h e w o r k y o u d id f o r P 1 a n d P 2 . I lik e d y o u r In t r o d u c t io n b e c a u s e t h is c le a r ly s a id w h a t y o u w e r e a im in g t o a c h ie v e in y o u r p r e s e n t a t io n . a r e a s w h e r e y o u f e e l t h e r e is s c o p e f o r im p r o v e m e n t w it h s o m e g e n e r a l r e a s o n s t o s u p p o r t y o u r a r g u m e f f e c t iv e t h a n t r y in g t o in c lu d e t o o m u c h . im p o r t a n t w h e n y o u a r e e v a lu a t in g y o u r id e a s f o r t h e D is t in c t io n c r it e r io n D 1 . Y o u r s u m m a r y , t o o , w a s s u c c in c t a n d t o t h e p o in t . A ls o , it is w o r t h r e m e m b e r in g t h a t y o u d o n 't n e e d t o g o in t o t o o m u c h d e t a il o n a s lid e , b e c a u s e y o u c a n a d w h e n y o u t a lk . T h e s lid e s h o u ld r e a lly b e ju s t a s u m m a r y o f t h e m a in p o in t s .

I w a s p le a s e d t h a t y o u m e n t io n e d t h a t m o s t , n o fr ills , o p e r a t o r s , lik e R y a n a ir , c h a r g e f o r b a g g a g e n o w . T h

I w a s a lit t le d is a p p o in t e d t h a t y o u o n ly u s e d o n e illu s t r a t io n a t t h e s t a r t o f t h e p r e s e n t a t io n , a s t h is w o u ld h

T h a t s a id , y o u s p o k e c le a r ly a n d a t t h e r ig h t p a c e a n d m a d e e y e c o n t a c t w it h t h e a u d ie n c e w h e n y o u w e good! I w a s a lit t le c o n c e r n e d t h a t w h e n y o u w e r e a s k e d a b o u t y o u r r e s e a r c h y o u s e e m t o h a v e r e lie d h e a v ily o n t h a lw a y s r is k y u n le s s y o u c h e c k t h e o r ig in a l s o u r c e s , a s I a m s u r e y o u a r e a w a r e , b e c a u s e a n y o n e c a n c o n t r ib u y o u c a n c r o s s - c h e c k a n y is s u e s r e la t in g t o m is le a d in g a d v e r t is e m e n t s t o t h e A S A w e b s it e .

t h o u g h t a b o u t q u e s t io n s t h a t y o u m ig h t b e a s k e d in a d v a n c e a n d a n s w e r e d t h e s e c o n fid e n t ly . Y o u a ls o m

Y o u h a v e c e r t a in ly a c h ie v e d M 1 w it h t h is p r e s e n t a t io n a n d I w ill b e in t e r e s t e d t o r e a d y o u r r e p o r t t o a c h ie v e t b i b l i o g r a- w h y c h s h o u l d g o b e y o n d W i k i p e d i a o r t h e R y a n a i r w e b s i t e ! p hi

w h e n y o u m u s t e v a l u a t e t h e s e s u g g e s t e d c h a n g e s . R e m e m b e r , t o o , t h a t y o u w i l -l aasl s ao n e e d t o i n c l u d e a l i s t o f

Marek Janicki - Assignment 38.1, Task 4 (D1) REPORT ON ETHICAL IMPROVEMENTS THAT BARCLAYS BANK COULD MAKE Introduction
The Fraser Ethical Reputation Index ranks companies with high public profiles according to the public's perception of their ethics. The higher the rating the least ethical the company. According to a report in the Independent newspaper in 2006, Barclays is number five in that list. This means people think it isn't ethical. Only McDonald's, Nike, Shell and Adidas came out worse, which is one reason I have picked Barclays out of all the other high street banks, although many ethical issues that relate to Barclays also relate to them, too. Despite this, in May 2007 Barclays was given a Platinum rank and came second in the Business in the Community index published in the Sunday Times. This index is based on a self-assessment survey which has to be signed by the company's chief executive. Barclays chief executive is John Varley who says he wants the business to be leaders in corporate responsibility. But the business was highlighted in a Whistleblower programme by the BBC and the staff weren't acting ethically then. That is another reason why I picked Barclays. In this report I list the issues that Barclays should tackle and say how these would affect different stakeholders and the business.

Ethical issues
Ethical issues that businesses like Barclays need to consider are as follows:

Corporate governance, so that shareholders and investors are treated fairly and the

company is run properly.

Corporate social responsibility, which means doing more than the minimum in
different ethical areas relating to stakeholders, such as looking after employees and customers and being honest and open with suppliers and shareholders.

Environment, which includes things like climate change and global warming and looks
at things like being carbon neutral.

Sustainability, which means operating without using up scarce resources that


will make things difficult for the next generation. An example is using renewable energy, such as electricity from wind farms. DISTINCTION LEVEL ANSWERS

Marek Janscks - Assignment 38.1, Task 4 (D1) REPORT ON ETHICAL IMPROVEMENTS THAT BARCLAYS BANK COULD MAKE Introduction
The Fraser Ethical Reputation Index ranks companies with high public profiles according to the public's perception of their ethics. The higher the rating the least ethical the company. According to a report in the Independent newspaper in 2006, Barclays is number five in that list. This means people think it isn't ethical. Only McDonald's, Nike, Shell and Adidas came out worse, which is one reason I have picked Barclays out of all the other high street banks, although many ethical issues that relate to Barclays also relate to them, too.

Despite this, in May 2007 Barclays was given a Platinum rank and came second in the Business in the Community index published in the Sunday Times. This index is based on a self-assessment survey which has to be signed by the company's chief executive. Barclays chief executive is John Varley who says he wants the business to be leaders in corporate responsibility. But the business was highlighted in a Whistleblower programme by the BBC and the staff weren't acting ethically then. That is another reason why I picked Barclays. In this report I list the issues that Barclays should tackle and say how these would affect different stakeholders and the business.

Ethical issues
Ethical issues that businesses like Barclays need to consider are as follows:

Corporate governance, so that shareholders and investors are treated fairly and
the company is run properly.

Corporate social responsibility, which means doing more than the minimum in
different ethical areas relating to stakeholders, such as looking after employees and customers and being honest and open with suppliers and shareholders.

Environment, which includes things like climate change and global warming and
looks at things like being carbon neutral.

Sustai liability, which means operating without using up scarce resources that
will make things difficult for the next generation. An example is using renewable energy, such as electricity from wind farms.

DISTINCTION LEVEL ANSWERS

Marek Janicki - Assignment 38.1, Task 4 (D1) REPORT ON ETHICAL IMPROVEMENTS THAT BARCLAYS BANK COULD MAKE Introduction
The Fraser Ethical Reputation Index ranks companies with high public profiles according to the public's perception of their ethics. The higher the rating the least ethical the company. According to a report in the Independent newspaper in 2006, Barclays is number five in that list. This means people think it isn't ethical. Only McDonald's, Nike, Shell and Adidas came out worse, which is one reason I have picked Barclays out of all the other high street banks, although many ethical issues that relate to Barclays also relate to them, too. Despite this, in May 2007 Barclays was given a Platinum rank and came second in the Business in the Community index published in the Sunday Times. This index is based on a self-assessment survey which has to be signed by the company's chief executive. Barclays chief executive is John Varley who says he wants the business to be leaders in corporate responsibility. But the business was highlighted in a

Whistleblower programme by the BBC and the staff weren't acting ethically then.
That is another reason why I picked Barclays. In this report I list the issues that Barclays should tackle and say how these would affect different stakeholders and the business.

Ethical issues
Ethical issues that businesses like Barclays need to consider are as follows:

Corporate governance, so that shareholders and investors are treated fairly and
the company is run properly.

Corporate social responsibility, which means doing more than the minimum in
different ethical areas relating to stakeholders, such as looking after employees and customers and being honest and open with suppliers and shareholders.

Environment, which includes things like climate change and global warming and
looks at things like being carbon neutral.

Sustainability, which means operating without using up scarce resources that


will make things difficult for the next generation. An example is using renewable energy, such as electricity from wind farms.

UNIT 38 / UNDERSTANDING BUSINESS ETHICS

Corruption, which means everyone being honest in every way. Trading fairly, which means not misleading customers or suppliers. Legal and ethical compliance, which means obeying all the laws
and regulations that apply to that type of business and its operations.

Business practices, which refers to how the business operates from


recording its transactions to training its staff.

Working conditions, which refers to the conditions in which the staff


work and what they are expected to do, how long they work each week, the hours they work and how much they are paid.

Individual ethical responsibilities, which means how individual


staff at all levels treat the people they deal with. For example, if they have a difficult problem will they try to help or not? And will they sell a product that will earn them more commission even if this would not help the customer? This includes people working in call centres as well as people working for the business itself.

Banks and ethical issues


Banks are often accused of acting unethically. In March 2007 the Office of Fair Trading announced it was studying retail bank pricing because people cannot work out what it costs them to have a personal current account. Many people think these are free but really this is not the case. Plus banks use current accounts to try to sell other products. The OFT has received many complaints about unauthorised overdraft charges and other fees which are more expensive than necessary and is investigating this. In addition it thinks the banks are not competitive, which is important, because if they were the prices of different products would be more obvious and more competitive. On the BBC website it says that the true cost of bouncing a cheque may be less than 2 but banks charge people 25. This is not the first time there have been problems with banks. Many banks are repaying large sums that they have charged customers who are overdrawn and/or cannot pay a direct debit. These are far more than are necessary than the amount necessary to cover the cost of sorting out the problem. Banks are trying to settle this dispute before it goes to court because then there would be a judgement they would all have to follow. One man got back 35,988 from Natwest which said it only settled the case to save large legal costs! To help people, the Consumer Action Group website has standard letters people can download to claim their money back. Or people can use the government's Money Claim Online service. charges are. Robert Peston's report on the BBC website said using a debit card abroad from NatWest could cost a family from 20 to 1 20 for one trip

Banks are always trying to get money without their customers knowing. in bank charges. And sending money abroad is expensive. My friend did that They charge for people withdrawing money from cash machines abroad and it cost 20 just for his bank to complete a form. They also keep money and for buying things abroad. But they don't make it clear what those
in the banking system for days when it is being transferred. My uncle, who to be transferred immediately whereas in the UK banks keep hold of it to lives in Canada, says they don't have that problem because the money has

UNIT 38 UNDERSTANDING BUSINESS ETHICS

make money on it. It makes it worst, too, that banks make record profits. Barclays is up by 35% and a lot of that will be by charging people penalty charges or getting them to borrow money they don't need or can't afford. Banks are often trying to tempt people to take out credit cards and spend money or doing balance transfers, which just encourages people to stay in debt, or to take out huge mortgages and loans. This is unethical. Citizens Advice has said that they now see twice as many people to help them with debt as they did eight years ago. The BBC website says the average amount people owe is 13,153 but most are on very low incomes and don't understand the financial decisions they make. My cousin, who works in Germany, says they are not allowed to do that in Germany so they shouldn't be able to do it here. Often this is deliberate mis-selling as was shown in the Whistleblower programme shown by the BBC in 2007 when BBC reporters worked undercover for Barclays for 9 months and found customers being misled, lied to and charged for financial products they didn't know they had. It was the same at the call centre and in the branch. All employees were focused on making targets to earn a bonus, often by changing the customer's current account from a free one to a chargeable one and hoping they wouldn't notice. I think this type of thing probably goes on all the time by all the banks.

Improvements Barclays could make


Banks have a lot of money, so they can afford to produce lots of literature which says how ethical they are whether they are or not. Barclays has a 64 page CSR report and it has lots of policies and principles, e.g. on animal experimentation, bribery and corruption, defence sector, equality and diversity charter, environmental policy statement, environmental and social impact assessment and human rights. It also could use this information to get a high score in the self-assessment survey in the Business in the Community index.

Despite all this I still think people won't trust it after the Whistleblower programme. Also many people don't like dealing with call centres and this again was shown in the TV programme because call centre staff are just

UNIT 38 UNDERSTANDING BUSINESS ETHICS

in it for the money and don't care about the people they speak to. In the programme they enjoyed misleading them. Barclays may not be any worse than other banks but I think it puts profits ahead of its customers. Its profits for 2006 were 35% higher than the year before and were a record 7.14bn. And it made this money even though it had to write-off more than 2 billion from Barclaycard customers. It now says it is more careful about the customers it takes on and refuses 60% of applications. Like free banking and illegal charges the banks have also been criticised by the OFT for making late payment charges and these are now illegal.

Evaluation of action Barclays should take and effect on stakeholders


Get rid of its call centres and employ more staff in branches to help customers. This would be good for the staff who are stakeholders and also for the customers who are stakeholders. Get rid of targets for staff based on selling financial products and get rid of bonuses for selling, too. This, again, would benefit both the staff and the customers, both of whom are stakeholders. Never persuade people to have a credit card or an overdraft or mortgage that they cannot afford. This would be good for customers and also for organisations like Citizens Advice which would have less work to do because not as many people would have problems. Explain exactly what all the charges are with all current accounts and make these as low as possible. This would benefit customers but may reduce the profits which the shareholders might not like but Barclays makes enough profit so that they would not be too badly affected. Stop charging for transactions made overseas. Nationwide doesn't do this so Barclays could afford not to. Again customers would benefit when they go abroad. Transfer money more quickly. Customers would benefit, both private customers and businesses.

Conclusion
I think all banks should do this but Barclays could set a lead, especially as it says it wants to be a leader when it comes to ethics. It has enough profits so that it wouldn't matter if it made a few million less. In fact, if it took the lead on ethical banking it could get twice as many customers who would leave the other banks and the shareholders would like this.

Marek Janicki 10 May 2007

UNIT 38 / UNDERSTANDING BUSINESS ETHICS

ASSESSOR FEEDBACK FORM

L e a r n e r N a m e : M a r e k J a n ic k i A s s i g n m e 3 8 .r1e,a s 4 ( D 1 ) nt T f k

M a r e k , I r e a d y o u r r e p o r t w it h in t e r e s t , e s p e c ia lly a ft e r t h e g o o d w o r k y o u d id f o r P 1 a n d P 2 , w h e n e t h ic a l is s u e s B a r c la y s n e e d s t o c o n s id e r a n d t h e n e x p la in e d t h e im p lic a t io n s fo r b a n k s a n d t h e ir Y o u r In t r o d u c t io n w a s g o o d w it h u s e fu l in fo r m a t io n o n t h e F r a s e r E t h ic a l R e p u t a t io n In d e x , Y o u a l r e p o r t . It w a s a l i t t l e d i s a p p o i n t i n g t h a t y o u d i d n ' t i n v e s t i g a t e t h i s i n m o r e d e t a i l i n r e l a t i o n t o B a r a s t h is w o u ld h a v e b e e n v e r y in t e r e s t in g ,

i n y o u r p r e s e n t a ,t yoonu f foor c M s1e d o n t h e k e y i s s u e s t h a t y o u h a d r e s e a r c h e d r e l a t i n g t o B a r c l a y s B a n k i u

a p p a r e n t l y c o n t r a d i c t o r y f i n d i n g s o f B a r c l a y s r a n k i n g i n t h e B u s h ni setsl e bi no wheer C o m m u n i t y i n d e x a n d W i s l t

U n f o r t u n a t e ly y o u t h e n lis t e d a ll t h e d if f e r e n t e t h ic a l is s u e s t h a t m ig h t a p p ly t o a n y b u s in e s s w h ic p r e s e n t a t io n a s a p p r o p r ia t e fo r e t h ic a l im p r o v e m e n t

h e r e . In s t e a d y o u s h o u ld h a v e fo c u s e d o n t h e o p e r a t io n s o f y o u r c h o s e n o r g a n is a t io n t h a t y o u id e

O n e w a y t o d o t h is w o u ld h a v e b e e n t o c o n s t r u c t t h e m a in p a r t o f t h e r e p o r t u n d e r a p p r o p r ia t e e t

UNIT 38 UNDERSTANDING BUSINESS ETHICS

h e a d in g s , t h e n g o in t o m o r e d e t a il a b o u t e a c h o n e a n d it s e f f e c t o n s t a k e h o ld e r s ( b o t h p o s it iv e a n a n d t h e n s e le c t t h o s e a r e a s w h ic h y o u t h in k a r e t h e m o s t im p o r t a n t a n d r e le v a n t t o t h e b a n k . Y o u r n e x t s e c t io n f o c u s e d o n d e s c r ib in g in d e t a il m a n y c u r r e n t e t h ic a l is s u e s r e la t in g t o b a n k in g . t o s e v e r a l b a n k s , n o t j u s t B W r h il s tyl e ,b Oo rwl y rta m m e r e l a t e d j u- sbt u tto i tB ias r d laa ny g e r o u s t o a c a s lp no e h e g c s u s e ju s t o n e s o u r c e a s a k e y fo c u s fo r a c o n c lu s io n w it h o u t a n y o t h e r c o lla b o r a t iv e e v id e n c e . Y o u v e r y r e le v a n t p o in t s b u t y o u n e e d e d t o id e n t ify t h o s e w h ic h d ir e c t ly r e la t e t o B a r c la y s o p e r a t io n s e x a m p le s b o t h r e la t e d t o N a t W e s t ! a lle g a t io n s ( s u c h a s y o u r u n c le 's o r s is t e r 's o p in io n s , f o r e x a m p le ) , Y o u s h o u ld a ls o a v o id s w e e p in w h i c h a r e u n s u b s t a n t i a t e d , s u cah r a,e . '.Ao'l r1 e h i n k o tyhei s sg o e s o n a l l t h e t i m e ' w h i c h l e s s e n s t h e s l tm pl e A p a r t f r o m o n e o r t w o o t h e r s onudr e p s nsad ne dn ttaS se t hdea y Tyi m ue s p p e a r t o h a v e u s e d t h e I cee uch hun o a B B C w e b s it e a lm o s t e x c lu s iv e ly fo r t h is r e p o r t , G o o d r e s e a r c h m e a n s c h e c k in g o u t s e v e r a l d iffe r e y o u r r e fe r e n c e s o u r c e s c le a r ly a t t h e e n d o f y o u r r e p o r t . Y o u d o h a v e s o m e g o o d id e a s , h o w e v e r , fo r h o w B a r c la y s c o u ld b e s e e n b y it s c u s t o m e r s t o

A n o t h e r p o in t t o n o t e , M a r e k , is t h a t y o u n e e d t o m a k e s u r e y o u r e s e a r c h a n d p r o v id e fa c t s , r a t h e

im p a c t o f t h e fa c t s y o u h a v e d is c o v e r e d . I w o u ld a ls o r e c o m m e n d u s in g a w id e r a n g e o f s o u r c e s w

c o m p a r in g t h e m a n d I w o u ld c e r t a in ly h a v e e x p e c t e d m o r e r e f e r e n c e t o t h e B a r c la y s w e b s it e , Y o u

b a n k , H o w e v e r , y o u h a v e n o t e v a lu a t e d t h e s c o p e f o r y o u r s u g g e s t e d im p r o v e m e n t s , w h ic h is w

T h is m e a n s t h in k in g a b o u t t h e f e a s ib ilit y o f e a c h id e a in r e la t io n t o B a r c la y s o p e r a t io n s a

o b je c t iv e s . F o r e x a m p le , it is w e ll k n o w n t h a t c u s t o m e r s a r e o ft e n a p a t h e t ic a b o u t c h a n g in g t h e c o m p a r e t h e a l l e g a t i o n W h i sa td ee b ilp rw he er a m m e w i t h t h e s m l n to g o

b e o n e r e a s o n w h y t h e b a n k s fe e l t h e r e is n o p e r c e n t a g e in c h a n g in g t h e ir b e h a v io u r , Y o u m a y a l

Marek Janicki 10 May 2007

UNIT 38 / UNDERSTANDING BUSINESS ETHICS

s t a t e m e n t s i n B a r c l a y ' s e t h i c a l p o l i c i e s , w h 1c,a n ydo tuo i n v e s yt isgea t h e fi a cTt o r s w h i c h e n a b l e d i h anal ed n a sk B a r c la y s t o b e r a n k e d s o h ig h ly in t h e B u s in e s s in t h e C o m m u n it y in d e x , Y o u b r ie fly m e n t io n e d t h a s e c t io n ! T o a c h i e v e D 1 y o u n e e d t o e v a l u a t e t h e e f eeaccth o tf y yp oe ut r k e h o le setri .o n s a or n b y i d e n t i f y i n g f of s a sugg d St t a ll t h e s t a k e h o ld e r g r o u p s a n d t h e n id e n t ify b e n e fit s t o s u p p o r t y o u r id e a s a s w e ll a s d is a d v a n t a g e

w a s c o m m it t e d t o e t h ic a l le a d e r s h ip b u t f a ile d t o in v e s t ig a t e o r r e f e r t o t h is a t a ll w h e n y o u r e a c h e

g r o u p s . T o d o t h is y o u n e e d t o lo o k a t B a r c la y s o p e r a t io n s in m o r e d e t a il. F o r e x a m p le , d o it s p r o fit p r o v id in g o n lin e s e r v ic e s e t c ) ? W h a t a r e t h e b e n e f it s o f it s c u r r e n t o p e r a t io n s t o c u s t o m e r s w h o c a m a n a g e t h e i r o w n m o n e y , r a t h e r t h -aann d vt e rayt o tnh ei s i ns st o cei ej o y o f t h e g o v e r n m e n t , n o t i n d i v i d u a l e h i h tb b a n k s , Y o u m a y n o t a g r e e w it h t h is , b u t t h in k in g a b o u t t h in g s d if f e r e n t ly is a ll p a r t o f t h e e v a lu a t io Y o u w ill n e e d t o r e w o r k y o u r id e a s , lo o k in g s p e c if ic a lly a t B a r c la y s a n d e v a lu a t in g t h e s e t o a c h ie v e c o r r e c t l y b e f o r e y o u c a r r y o n . I f y o u d o t h is , I a m c o n f i d e n t t h a t y o u w i l l b e a b l e t o m a k e t h e n e c e s y o u r r e p o r t t o a c h ie v e D 1 .


13 3

f r o m h ig h s t r e e t b a n k in g o r f r o m w h o le s a le b a n k in g ? H o w d o e s it s p e n d it s m o n e y ( e .g . in t a x , e m p

m o n e y p r o p e r ly ? F o r e x a m p le , o n e a r g u m e n t c o u ld b e t h a t t h e r e s h o u ld b e g r e a t e r p r o t e c t io n fo r p

s t a r t w o u ld b e t o w r it e a b r ie f e v a lu a t io n o f o n e o r t w o o f y o u r id e a s a n d c h e c k w it h m e t h a t y o u a r

Adam Bell - Assignment 38.1 Task 4 (D1) REPORT ON HOW RYANAIR COULD IMPROVE ITS OPERATIONS ETHICALLY Introduction
This report evaluates the effect of the improvements that Ryanair could make to improve its operations ethically. It does this by identifying the effect upon specific groups of stakeholders as well as on the business itself. All the claims that are made are supported by researched evidence, and a list of sources is attached to this report.

Stakeholders and Ryanair


Stakeholders in Ryanair include the shareholders, the managers, employees, passengers, suppliers, competitors, citizens, the government and environmental pressure groups. Each of them will be affected in different ways if Ryanair makes changes to the way in which it operates.

Areas identified for improvement


Scope for improvement has been identified in each of the following areas. Publicise an up-to-date environmental policy Although Ryanair claims it is Europe's greenest airline1, it has not responded positively to new concerns that the aviation industry should help to reduce pollution. The Department of Transport forecasts that passenger numbers will more than double by 20302, which means that its CO2 emissions will double also. It is no use business and industry and private people doing their best if all the gains are wiped out by the airlines. Several things could happen as a result. Passengers may start to be more aware of their 'carbon footprint' and limit their overseas travel or travel more by train or car. Also, Ryanair, and other airlines, are likely to find themselves in the spotlight more by pressure groups such as Greenpeace and Friends of the Earth because of the amount of fuel they use and the fact that their passengers are usually taking 'unnecessary' journeys. This may make people feel guilty so that they buy fewer flight tickets.

UNIT 38 / UNDERSTANDING BUSINESS ETHICS

If they don't, the government could tax air travel more to stop people flying as often - and this will probably affect budget travellers more than business travellers or the very rich, who can afford to pay tax more easily. On a cheap Ryanair flight the tax can be far more than the ticket. This is why Michael O'Leary denounced the doubling of UK departure tax as 'regressive, unfair and penal' and criticised the chancellor, Gordon Brown3. Or passengers could choose to fly with the more environmentally friendly airlines. Michael O'Leary argued that airlines aren't the biggest contributor to global warming4 but he is out of step with the way people think. Virgin Atlantic announced it would try to save up to two tonnes of fuel per flight by towing aircraft to runways so that engines don't run for as long. And Richard Branson pledged 1.6 bn of Virgin Group profits towards renewable energy initiatives. He also said that up to 25% of the world's aviation carbon dioxide emissions could be cut if airlines, airports and governments worked together5. This is a more positive response than Michael O'Leary who denied airplanes responsibility because he said aviation accounts for just 2% of CO2 emissions and took out a huge advert in the Guardian to say how greedy Gordon Brown was6. In its environmental statement online Ryanair says it replaces its planes every 2.5 years and claims it is excellent at other environmental aspects, such as reducing fuel burn and CO2 emissions but people don't know this, instead they read the headlines Mr O'Leary makes, whereas Richard Branson is more positive and tells people he is taking these concerns seriously and doing something about it. Ryanair should do the same and make it quite clear it will take an ethical stance on the environment in the future. Effect on stakeholders of improvements in this area Passengers: may be more loyal to Ryanair and won't feel as guilty if they make a trip. Shareholders: could claim they invest in ethical funds. Managers: cost of environmental policy should not affect profits yet will give good publicity. Competitors: like Virgin Atlantic, would not get the better of Ryanair so easily. Pressure groups: will not pursue Ryanair as much.

Government: may not tax travel more which would be more damaging to future ticket sales. Review extra charges and give better customer care and service All airlines depend upon passengers for their business. They need to be customer focused and treat people fairly and honestly, otherwise they will lose business to their competitors. Ryanair needs more passengers if it is to meet its expansion targets and be Europe's leading, low fares airline7. It also has a Code of Business Conduct and Ethics and a Passenger Charter8 but it is still often arrogant and highhanded in the way it treats them. This might have been all right in its early days but now Ryanair has more competitors things are different. There are pages and pages of problems online at comparison travel sites like Ciao9 and airlinequality.com10 that people have had, far more than for competitors such as easyjet or Zoom. Ryanair was one of the first to pass all its costs on to its customers to make a profit. In 2007 it made record profits and these increased by 30% in one quarter and a main reason was because it had introduced charges for passengers who wanted to check in baggage11. So it now appears more greedy when it keeps finding more and more ways of getting money out of passengers. According to a report in Which magazine12, most no-frills European airlines charge passengers to check-in baggage and for excess baggage, but Ryanair charges more than anyone else because easyjet allows one free hold bag and flybe charges less and so does bmibaby. Virgin Atlantic doesn't charge at all and Richard Branson has announced his intention to fly passengers across the Atlantic as cheap as Ryanair. If Ryanair charges for bags they will not be competitive and the Which report said that most passengers would opt for an airline that doesn't charge for luggage if they had a choice. Passengers also have to pay if they want to queue jump to get a good seat with their partner and for anything they buy onboard as well as extra if they pay for travel insurance by credit or debit card - but they also have to do this with easyjet. But when all this is added to the government taxes and other airport charges it can become expensive to fly with Ryanair, even if the ticket itself is cheap or sold as 'free'. A business reviewer in the Times said that this could eventually damage the Ryanair brand.13 A Times investigation also found that both Ryanair and easyjet

UNIT 38 / UNDERSTANDING BUSINESS ETHICS

have a huge mark up on their Scratchcards and give only 1% to good causes; they also make large profits by advertising cheap car hire and other services but sell these at inflated prices. This is not good publicity for either business14. If, on top of that, the staff are rude or if people are left to find their own way home if a flight is cancelled or if they cannot make a claim in time if their luggage is lost because they are on holiday then they will change their airline. There are many reports online at airlinequality.com and skyscrapercity.com and Ryanair is the only airline to have a campaign against it online which its lawyers have tried to close down at www. ryanaircampaign.org. Because of EU regulations Ryanair now has to provide accommodation or meal vouchers if flights are delayed or cancelled but it has introduced an administration fee of 14 per ticket for handling refunds and, according to Wikipedia, Norwegian consumer authorities have fined Ryanair 43,000 for doing this15. Customers can only contact Ryanair by premium phone line, too and complain they are kept waiting for ages to make a simple mistake or have to keep ringing back. The more profits Ryanair makes the less customers will tolerate this sort of thing. Competitors are increasing - approximately 60 new low-cost airlines were formed in 2004 according to Wikipedia and more have appeared since then. The more choice passengers have the more they will choose to go with an airline that treats them well in addition to being cheap. Even if Ryanair sticks to all its extra charges to pay for its cheap tickets there is no need to make life difficult for people to contact them or to make a valid complaint. Also, there is no excuse for staff to behave badly or be rude and this does not save the airline money at all! Effect on stakeholders of improvements in this area Passengers will get a better quality service and experience and be more tempted to use Ryanair again. Managers may save money advertising if passengers are more loyal and there will be less damaging press coverage. Shareholders may gain if passenger numbers increase, even if the costs of customer service rise a little bit. Staff will find they have fewer complaints to deal with and fewer annoyed customers to cope with. Competitors may find that they lose business to Ryanair.

Improve conditions for staff Ryanair refuses to tolerate the idea of trade unions and does not recognise the Irish Airline Pilots' Association. In July 2006 an Irish High Court judge found that Ryannair had bullied pilots to force them to agree to new contracts and some Ryanair managers had given false evidence in court 16. According to the Ryan Be Fair website17, working conditions aren't good, for example office staff cannot recharge their mobile phones at work and flight attendants have to pay for all their own training costs. Ryanair will pay for this upfront but then the worker has to pay them back out of their first year's wages. Employees at Ryanair have to work very hard to meet targets18 - such as the 25 minute turn-round times and if they are not treated well either then this is not ethical. Michael O'Leary argues that if anyone doesn't like working at Ryanair they are free to leave - apparently one poster just says 'If you don't like the company then get out19', but that ignores the fact that good, motivated and committed staff are not easy to find and recruitment can be costly if staff turnover is high. Effect on stakeholders of improvements in this area Passengers are more likely to find that staff are well trained, courteous and eager to help them. Staff will be more motivated and keen to work for the company. Managers will gain if people are keener to work for them and turnover is less. Shareholders will gain if recruitment costs fall and the reputation of the business improves because this will help profits. Suppliers may gain if they regularly deal with staff. Competitors will find it harder to poach staff and will find the competition tougher. Stop having misleading advertising Ryanair produces all its own adverts and doesn't have an agency20 and some Irish newspapers say Michael O'Leary writes most of them himself, particularly those that attack people he doesn't like. Ryanair has been in trouble for misleading advertisements relating to prices several times. For example it advertised seats at 0 or for free when customers still have to pay tax and airport charges. There are several examples on the Advertising Standards

UNIT 38 / UNDERSTANDING BUSINESS ETHICS

Authority website of Ryanair adverts where complaints about misleading information have been upheld21. Ryanair has argued that some complaints are from competitors and that rarely do passengers actually complain. All they want are cheap seats. When Michael O'Leary is now saying they will fly to USA for 7 he is ignoring all the extra costs, such as tax, which still misleads the public. Effect on stakeholders of improvements in this area Passengers and citizens will be able to trust the claims that Ryanair makes. Shareholders and managers should benefit from increased business and less bad publicity. Competitors will have fewer opportunities to criticise Ryanair or report it to the ASA. Have an ethical policy for dealing with disabled passengers People are less tolerant of discrimination now and expect businesses to take account of the reasonable needs of their employees and customers. These include airlines even though it seems they don't come under the Disability Discrimination Act yet according to the Disability Rights Commission22. Newspaper headlines relating to issues such as disabled customers being charged for wheelchairs or limiting the number of disabled passengers on a flight seem petty and make a business seem out of step with modern thinking. This is especially true when a business is successful, like Ryanair. In addition the business has received negative publicity for staff being offhand or rude to people who are ill or injured, as well as disabled23. The airline is still being unfair to disabled passengers and as a result an MP, eager to help them. Staff will be more motivated and keen to work for the company. Managers will gain if people are keener to work for them and turnover is less. Shareholders will gain if recruitment costs fall and the reputation of the business improves because this will help profits. Suppliers may gain if they regularly deal with staff. Competitors will find it harder to poach staff and will find the competition tougher. Stop having misleading advertising Ryanair produces all its own adverts and doesn't have an agency20 and some Irish newspapers say Michael O'Leary

writes most of them himself, particularly those that attack people he doesn't like. Ryanair has been in trouble for misleading advertisements relating to prices several times. For example it advertised seats at 0 or for free when customers still have to pay tax and airport charges. There are several examples on the Advertising Standards Authority website of Ryanair adverts where complaints about misleading information have been upheld21. Ryanair has argued that some complaints are from competitors and that rarely do passengers actually complain. All they want are cheap seats. When Michael O'Leary is now saying they will fly to USA for 7 he is ignoring all the extra costs, such as tax, which still misleads the public. Effect on stakeholders of improvements in this area Passengers and citizens will be able to trust the claims that Ryanair makes. Shareholders and managers should benefit from increased business and less bad publicity. Competitors will have fewer opportunities to criticise Ryanair or report it to the ASA. Have an ethical policy for dealing with disabled passengers People are less tolerant of discrimination now and expect businesses to take account of the reasonable needs of their employees and customers. These include airlines even though it seems they don't come under the Disability Discrimination Act yet according to the Disability Rights Commission22. Newspaper headlines relating to issues such as disabled customers being charged for wheelchairs or limiting the number of disabled passengers on a flight seem petty and make a business seem out of step with modern thinking. This is especially true when a business is successful, like Ryanair. In addition the business has received negative publicity for staff being offhand or rude to people who are ill or injured, as well as disabled23. The airline is still being unfair to disabled passengers and as a result an MP, Sharon Hodgson, brought an early day motion in Parliament which said 'That this House is outraged that Ryanair does not allow disabled customers the opportunity to state their requirements when booking flights electronically but instead chooses to insist that disabled customers must

UNIT 38 / UNDERSTANDING BUSINESS ETHICS

contact the company directly on an 0871 telephone number which costs 10 pence per minute; believes that this shows a lamentable attitude towards accommodating disabled passengers; and urges Ryanair to incorporate disabled customers into their normal online service forthwith'24. With Ryanair profits high this type of behaviour just gives the business a very bad name. Effect on stakeholders of improvements in this area Passengers would know that if they were disabled they would have no problems and would be treated fairly. Staff would find it easier as they would be trained what to do to work ethically. Shareholders and managers would gain because the reputation of the business would be better and more disabled people would buy tickets. Suppliers could benefit, such as people who run hotels which specialise in disabled access as they could link to Ryanair and sell hotel rooms. Meet best practice for corporate governance This is important because Ryanair depends upon shareholder loyalty and needs investors being attracted by share gains so that they continue to invest in the business. Ryanair says it has complied with the Combined Code since 200425 but a report online by West Midlands Pensions said it failed to meet best practice in 200326. If many shareholders lost confidence in the business and sold their shares simultaneously the price would fall and Ryanair would not be able to meet its expansion targets without borrowing large sums of money. Also Mr O'Leary is at present trying to convince shareholders that buying Aer Lingus would be a good thing27. Shareholders will not support him if there is any suspicion that the company was not being run properly or if they thought they were being misled. They may be suspicious, for example, that no-one can stand up to Mr O'Leary. If they really approve of his management style then they may be worried that Ryanair is a one-man business and there is no-one who can follow him. Whatever their beliefs, Ryanair should meet best practice of the Combined Code at all times now it is a well-established profitable company. Effect on stakeholders of improvements in this area

Shareholders would have confidence in the business and that the money was being used ef-.ciendy and in accordance with the law. The government (both Irish and UK) would know that Ryanair was a reputable business. Managers and staff would know that their jobs were safe and secure. Suppliers would know that they could supply goods in confidence and know that they would get paid. Corporate Social Responsibility Most large businesses have a CSR report these days which explains how they are trying to do more than the minimum they need to do to comply with the law. There are many benefits to CSR28 . Ryanair does not but if it had one this would help to show that it was taking its ethical responsibilities seriously. Effect on stakeholders of improvements in this area Shareholders and managers would be committed to identifying and making relevant improvements that would benefit the business. Passengers and citizens would think more highly of the organisation. Staff would be proud to work for the business. Competitors would be under more pressure. Benefit to the organisation of operating more ethically Ryanair is a very successful airline which wants to continue expanding, but it is operating in a very competitive market. People know their rights these days and expect businesses they support to value them. If Ryanair wants to expand it has to be aware that now that it is an established, profitable company there is less excuse for acting as it did when it was a fledgling business desperate to make a profit. Now this sort of behaviour often just makes it look greedy and Michael O'Leary sometimes seems unprofessional. By adopting more ethical policies and publicising these, it could attract more passengers which, overall, would help it to increase its profits. It would also be less vulnerable to unexpected problems or downturns in the travel business. I believe there is scope for improvements in all the areas I have identified without significantly increasing costs. Adam Bell 10 May 2007

Reference sources
Ryanair: Europe's Greenest Airline - Ryanair website (document dated September

UNIT 38 / UNDERSTANDING BUSINESS ETHICS

2006) also Environmental Issues and Ryanair at www.ryanair.com/site/news/releases/2004/dec/ gen-en-201204-3.html Guardian newspaper: Rise of low-cost flights comes at high price (5 January 2007) Guardian newspaper: Ryanair profits soar but O'Leary hits at Browns tax (6 February 2007) Mail on Sunday. Jets do not cause wars and plague (17 January 2007) reproduced on www.thisismoney.co.uk/consumer/caring/article.html BBC News: Virgin Atlantic move to save fuel (3 December 2 I it news.bbc.co.uk/1 /hi/business/6203636.stm Ryanair advert in Guardian in March 2007, reproduced or Indymedia Ireland at www.indymedia.ie/article/81705 Ryanair website - Mission statement and strategy document at www.ryanair.com Ryanair website - Code of Business Conduct and Ethics and Ryanair's Passenger Service and Lowest Fares Charter Ryanair reviews at travel.ciao..uk/reviews/ryanair Ryanair passenger problems about Rvanair product and Ryanair service standards at www.airlinequality.com/forum/ryan.htm The Times-. Check-in charges help Ryanair fly higher (6 February 2007) Which magazine consumer news: Fees weigh you down (May 2007) The Times'. O'Leary shows that less is more in air travel by James Harding, business editor (6 February 2007) Times Online: How budget airlines boost profits with costly extras (7 April 2007) at www.timesonline.co.uk/tol/news/uk/article 1624065 .ece Wikipedia at http://en.wikipedia.org/wiki/Ryanair Ibid Ryan Be Fair at www.ryan-be-fair.org Management Issues - Ryanair staff bite back (11 January 2005) at www.management-issues.com/2006/5/25/blog/ryanair-staff-bite-back.asp Ibid Wikipedia at http:en.wikipedia.org/wiki/Ryanair ASA Adjudication Ryanair Ltd at www.asa.org.uk/asa/adjudications/Public/ TF_ADJ_4l929.htm Disability Rights Commission: Ryanair's policy on disabled customers - an update (21 October 2005) at http://www.drc-gb.org/newsroom/news_releases/2005/ ryanairs_policy_on_disabled.aspx Wikipedia at en.wikipedia.org/wiki/Rvanair EDM1357 Ryanairs Treatment ofDisabled Customers (25 April 2007) at http://edmi.parliament.uk/EDMi/EDMDetails.aspx?EDMID=33134&SESSION=885 Ryanair website at www.nanair.com/site/about/invest/docs/2006/060901annualreport.pdf Corporate Governance Proxy \ oting Activity September - November 2003 at www.westmidspensions.org.uk/pdfs/corpgovactivityseptember03november03.pdfIrish Times Ryanair Investors question 1.48 billion offer (6 October 2006) at http://www.ireland.com/newspaper/finance/2006/1006/115859l432871.html Corporate social responsibility at www.businesslink.gov.uk/bdotg/action/ layer? topicId= 1075408468

UNIT 38 UNDERSTANDING BUSINESS ETHICS ' m * m mmwM wmsts

ASSESSOR FEEDBACK FORM

L e a r n e r N a m e : A d a m B e ll A s s ig n m e n t r e 3 8 . 1 ,a s 4 ( D 1 ) f T k

I r e a lly e n jo y e d r e a d in g y o u r r e p o r t , A d a m , a n d f o u n d it v e r y in f o r m a t iv e a s it b u ilt u p o n t h e w o r k y o and M 1. I p a r t ic u la r ly lik e d y o u r In t r o d u c t io n , w h ic h c le a r ly a n d c o n c is e ly s u m m a r is e d w h a t y o u w e r e w r it in g y o u r r e p o r t e a s y t o r e a d , I w a s a ls o im p r e s s e d t h a t y o u f o c u s e d o n s p e c if ic a r e a s o n w h ic h y o u f e e l t r y in g t o in c lu d e t o o m u c h . I w a s a ls o im p r e s s e d w it h y o u r r e s e a r c h . Y o u h a v e o b v io u s ly u s e d a w id e r a n g e o f s o u r c e s a n d id e t h e s e a t t h e e n d a s r e q u e s t e d . I w a s p a r t ic u la r ly p le a s e d t o f in d t h a t y o u h a d c r o s s - c h e c k e d s o m e o a ccu ra te , Y o u h a v e e v a lu a t e d y o u r id e a s b y lo o k in g a t d iffe r e n t s t a k e h o ld e r g r o u p s a n d a ls o a t t h e a c t io n s o f c b u s in e s s m o d e l o f k e e p in g c o s t s t o a m in im u m a n d it s e x p a n s io n a im s ,


14 2

f a c t t h a t y o u d e a lt w it h e a c h it e m in y o u r s e c o n d s e c t io n s e p a r a t e ly , in b u lle t p o in t s w it h c le a r h e a d in

f o r im p r o v e m e n t a n d g a v e e v id e n c e t o s u p p o r t y o u r a r g u m e n t s in e a c h c a s e , T h is is a lw a y s f a r m o r e

t h e W ik ip e d ia w e b s it e . A s y o u k n o w , b e c a u s e a n y o n e c a n c o n t r ib u t e t o t h is s it e it m a y n o t a lw

m a n y c a s e s , Y o u r c o n c lu s io n s w e r e v e r y a p p r o p r ia t e a n d w e ll- c o n s id e r e d , p a r t ic u la r ly in t h e lig h t o f R Y o u h a v e c e r t a in ly a c h ie v e d D 1 w it h y o u r r e p o r t , W e ll d o n e !

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