Notesale: Turn your study into money

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Business Ethics
What is Business Ethics?
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Examines how people and institutions should behave in the
business world (commerce) eg
...

Companies decide on code of conducts which may include
responsibilities towards the environment and developing
globalisation of fair trade throughout the world
...
Avoid conflicts of interest: don’t except
bribes, don’t sell/buy information
...

Eg, employ child labour, ignore workers rights
Businesses cannot claim to be ethical if it ignores unethical practices:
-­‐ child labour
-­‐ production of sweat shops
-­‐ violation of workers rights
-­‐ ignoring health and safety
Businesses have to be concerned with all behaviour of supply chain:
Suppliers, contractors, distributors, sales agents
Employers and Employees
Whistleblowing: When an employee informs the authorities about
unethical practices within the business
...
Animal furs
-­‐ businesses acting irresponsibly
-­‐ business practises they find unacceptable
Positives:
-­‐ supporting businesses with strong ethical record eg Fairtrade
Does ethical behaviour help business?
Advantages
Higher demand from consumer
support (revenues)
Improved brand and business
awareness/recognition
Better employee
motivation/recruitment

Disadvantages
Higher costs – sourcing from
Fairtrade suppliers rather than
lower price
Higher overheads (indirect costs
of operating a business) eg
training of ethical policy
Danger of building up false
expectations (people think
business is ethical in every aspect)

New sources of finance eg
...
of accidents (180 deaths, 180 serious injuries, 2100
vehicles lost) the cost to pay in law suits equated to $49
...

It therefore, would be economically cheaper to NOT recall all cars
and pay out when people started dying
...

They withheld over £1
...

PRIMARK
Primark’s use of child labour was ‘outed
...
Child protection groups disapproved of
this action calling it irresponsible and likely to cause additional
hardship to children and other workers
...

A new ethical code has been appointed – Ethical Trade
Director – to train and check up on new existing suppliers
...
This includes:
-­‐ Internal stakeholders (managers, employees, shareholders)
-­‐ External stakeholders (local community, customers, suppliers)
Eg
...
Either way,
they have a stake in its future
...


Milton Friedman (1912-2006)
Believes companies have a duty only to their shareholders (to
increase profit)
Business and the environment
Environmental damage is a natural consequence of the growth of
business
...

Growth leads to energy demands and to build more power stations
...

1850 Sheffield (centre of the worlds steel manufacturing industry) –
the sun was never seen as pollution hovered in the atmosphere
Devastation of the environment in the West during Industrial
Revolution is being repeated on a larger scale in emerging economies
– eg China (fasting growing economies increases pollution massively)
FACT: in 2010 more than 200mill Chinese people did not have
access to clean water due to pollution

Some scholars say its possible that the damage caused by industrial
growth may not be long-lasting
...

1 billion people in developing countries will bear the brunt of
environmental damage as they tend to burn fuels such as leaded
petrol or live near rubbish dumps
...

KEY FEATURE: growth of huge corporations that dominate markets
...
Possible to get a McDonalds in South Korea
HOWEVER: It has brought ethical problems for business:
- Injustice towards poorer countries
- Trade is not fair due to trade barriers
- Wages in less developed countries are much lower
- safety standards not upheld
APPLIED:
IMMANUEL KANT (1724-1804)
Duty is all important & must be done through good will
...
Not so they would return but
through his duty – he should be honest
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This would be treating workers as ends to a means
...
Spying is selfcontradictory as if we all did, there would be no new ideas to steal
...

Positives
The example of the shopkeeper
shows the importance of placing
people before profit
Clear cut approach

Negatives
Doesn’t resolve clashing duties
eg
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Each shareholders happiness is worth no
more or less than the happiness of each employee as theres more
employees than shareholders
...

Alternatively, there may be more customers than employees so Util
could potentially justify anything a customer are kept happy with
cheap goods:
Meaning Util would allow bibery, slavery, espionage etc if majority
are happy
...
Lying was wrong because
it didn’t work
...

Preference Utilitariansim may disagree as being lied to would go
against the preferences of all shareholders
...

Based on self-interest: Adam Smith (1723-1790) said society
functions well when individuals decide what is most useful in a
situation and wishes of others must be considered or else the business
will fail
...


NATURAL LAW
Applying Natural Law – look at basic theory which aims to assist
everyone in fulfilling their purpose
...

-­‐ Preservation of life – absolutist stance on Sanctity of Life: would
not work invest in businesses that benefited from experiements
on embryos & avoid businesses producing pornography,
gambling etc
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Salaries
paid to different countries all with
different living standards working
in the same business
...
A farmer who has crops, trades for clothes
...

Exchanging goods for money helps society function as a single
person can’t be an expert in all aspects of life
...

True wealth: ‘the stock of things that are useful in the
community
...

Eg
...
BUT if I come
to the market with only money I bring nothing of true value
...

HOWEVER: Today’s business seems to have a ‘mission satement’
(summary of their telos)
...

Aristotle: Business is the polis where we create friendships and
values are formed, where we seek eudaimonia
...


Becoming virtuous involves following virtuous people eg
...

Positives
Shows that business is part of
society and not something
completely separate

Negatives
Virtues eg co-operation flourish at
the expense of others –
competitive spirit
Danger of MacIntyre’s
‘bureaucratic manager’
dominating – business is not
really concerned with ethics but
with efficiency, profit and
controlling resources

RELIGIOUS ETHICS
Christian Ethics gives a variety of views on business ethics
...

PROTESTANTS: see wealth as a good thing, we should work
to generate wealth to support our families
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CATHOLICS: idea of common good that condemns selfish
pursuit that ignores justice
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Agape is the only
rule
...
’
Agape doesn’t mean doing everything to make a profit, it does
mean treating all stakeholders fairly
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Do
not steal

Negatives
Many people consider religion to
have very little to say of
relevance in the world of
business

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