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Business Ethics Essay Sample

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Business Ethics Essay Sample

Ethics is concerned with what is right or wrong, good or bad, fair or unfair, responsible or irresponsible, obligatory or permissible, praiseworthy or blameworthy. It is associated with guilt, shame, indignation, resentment, empathy, compassion, and care. It is interested in character as well as conduct. It addresses matters of public policy as well as more personal matters. (http://www.onlineethics.org/Education) In business ethics is applied and practiced in all levels however the level where the practice is approached is various, in today’s business environment ethics has become a core competitive advantage that big companies are promoting to overtake each other’s by presenting a quality ethical environment. “Business Ethics” can be defined as the critical, structured examination of how people & institutions should behave in the world of commerce. In particular, it involves examining appropriate constraints on the pursuit of self-interest, or (for firms) profits, when the actions of individuals or firms affects others.

(http://www.businessethics.ca/definitions/business-ethics.html) BENEFITS OF ETHICS FOR BUSINESS

One of the main benefits for a business of behaving ethically is that a better image is given to the world at large, and especially to consumers, resulting in greater profit. It also means that expensive and potentially embarrassing public relation disasters are avoided. As far as employees are concerned, if the business is seen to behave ethically, for example with regard to the environment, it will recruit more highly qualified employees, and this leads to better employee motivation as the employees are proud of their jobs.

Being ethical can increase costs for the business, e.g. they have to pay reasonable wages to all employees. If a business is truly putting its ethics into practice it will have to pass on the same standards down the supply chain and this will mean no longer doing business with suppliers who are not prepared to meet the same standards. Ethics theories

There are two main types of theories that linking ethics and morality Some ethical theories are teleological – what is right or wrong depends on the end or outcome of an action – for utilitarian, pleasure, happiness or ‘the greatest good’; for Aristotle, ‘Eudaimonia’. Other theories are deontological – doing what is right means doing your duty or following the rules – for Kant, the categorical imperative; in Natural Law, the secondary precepts. It is easy to think of teleological theories as relativist and deontological theories as absolutist, but it is not that simple. Apart from Kantian Ethics (thoroughly absolutist and deontological) and Situation Ethics (clearly relativist and teleological).

Absolutist ethical theories
Kantian ethics

Kant believed that morality, in all spheres of human life, including business, should be grounded in reason. His Categorical Imperative held that people should act only according to maxims that they would be willing to see become universal norms and that people should never be treated as a means to an end. Kant’s theory implies the necessity of trust, adherence to rules, and keeping promises (e.g. contracts).Kant argued that the highest good was the good will – the importance of acting from duty, so, for example, if a merchant is honest in order to gain a good reputation, then these acts of honesty are not genuinely moral. Kant’s ethics are ethics of duty rather than consequence: a business behaving morally in order to impress consumers is not truly moral according to Kant. Kant’s ethical theory applies well to both employees and consumers as it does not permit people to be treated as means to an end – even if that end is profit. Kantian ethics would also see a business as a moral community – employers and employees, stakeholders and shareholders, standing in a moral relationship with each other which would influence the way they treat each other. This seems to require that the work that employees are given is meaningful, and that businesses should be organised more democratically. Natural Law

Natural Law is often described as deontological because, in practice, it leads to a set of rules that people have a duty to follow. These rules are absolutist, because they know of no exception. For example, using contraception to prevent conception is absolutely wrong, regardless of consequences such as the spread of AIDS, unwanted pregnancies etc. However, Aquinas’ Natural Law Theory says we should try to fulfil our God-given purpose. This is teleological, as it is interested in our design or ‘end’. The primary precepts – worshipping God, living in an ordered society, reproducing etc. – are teleological: they are the ends to which all our actions should aim. The primary precepts are also absolutist – Aquinas believed we were all made by God with a shared human purpose. Moral relativism

Situation Ethics
This must not be confused with cultural relativism. Cultural relativism is a very weak moral theory that says things are right and wrong relative to our culture. The theory is easily refuted. Situation Ethics says that what is right and wrong is relative to the situation. In other words, if you asked “Is it wrong to abort a foetus?” I would ask “Under what circumstances?” Clearly the outcome of my actions is of central importance here. Rules may be useful, but you may need to ignore the rules in order to do the right (loving) thing – the thing that is in the best interests of the people affected. Theories that can be either Absolutist or relativist Utilitarianism- Virtue

Utilitarianism considers the majority affected by a certain action – general welfare is important, and this is often seen as good business policy: the general good of the organisation is more important than that of individuals. So, for example, an employee, though qualified for a certain position, will have to give way to another so that the interest of the business as a whole can be preserved. A farmer may have to give up some of his land for a dam project, because it will provide irrigation for lots of farmers and generate electricity for the whole community. However, the best business transactions are the ones in which the best result is achieved, when Business and consumer, employer and employee, shareholders and stakeholders are considered and benefited. This means that when making business decisions all alternatives need considering – no one can just act on intuition if they wish to maximise utility. Economically Utilitarianism would seem to be a good ethical approach to business; however, in many cases it is not simple and clear cut. For example, closing a polluting factory may be good for the environment, but not for the local community who may need the jobs. Whatever the business does it is going to upset one group of people or another. Utilitarianism does not always help here.

Virtue Ethics
Virtue Ethics from Aristotle shows that business cannot be separated from society – everyone is part of the larger community, the ‘polis’, the corporation, the neighbourhood, the city, the country or the world and our virtues are defined by that larger community. Business is part of that community. Virtue ethics focuses on the character and motivation of the agent and on the agent’s ability to pursue eudemonia. Virtue is also learnt through observation of others’ behaviour – as far as business is concerned an individual cannot be ethical in a vacuum, but always as part of the ethical community. This applies to the employers as well as the employees who must show the virtues of character such as honesty, prudence, fairness and courage.

The virtues of co-operation seem to triumph over competition, but does this mean that the virtuous person in business will be the good corporate citizen rather than the high-flier, wheeler-dealer or the entrepreneurial innovator? Virtue Ethics is interested in the most general traits that make a harmonious society possible, so the traits that make for good business must be the same as those of a good society; the virtues of a successful businessman and those of a good citizen must also be the same. In business, as in society, trustworthiness and co-operation are essential; even the most devious business dealings presuppose an atmosphere of trust, and competition is only possible (as in sport) within a context of general co-operation. Business is an essential part of society, not separate from it, and, as in society, living together is central, making a profit is just a means.

The previous theories have approached Ethics differently to introduce ethics in three words Actions with Morale Motivation that always interact with people, society and environment. This has led the government to produce acts to protect the ethical approach in the Business framework such as employment acts; equality acts; environmental protection acts; advertising and promotion acts and more; Also ethics have implied businesses with different organisation such as Human Rights, the Office of Fair Trade and media which created pressure points when the operate locally and internationally , thus businesses have been pushed to act ethically in every operation not only that but it became a competitive advantage to create and attract new stakeholder to the business such as producing a statement of a social responsibility and list of duties toward society, environment and employments. CSR cooperate social responsibility

CSR definition as “the obligations of business to pursue those policies, to make those decisions or to follow those lines of action which are desirable in terms of the objectives and values of our society.” (Bowen, 1953).

This is code of responsibility which states the purpose of the CSR in business as the obligation in which raise the awareness towards objectives and values of our societies to ensure decisions are made to maintain the relation between communities and business policies.

A CSR statement:
´Our biggest challenge this century is to take an idea that seems abstract³sustainable development³and turn it into a reality for all the world’s peoples. Kofi Annan, former UN Secretary General One of humankind’s greatest challenges this century will be to ensure sustainable, just and balanced development. The needs of current and future generations cannot be met unless there is respect for natural systems and international standards protecting core social and environmental values. In this context, it is increasingly recognized that the role of the business sector is critical. As a part of society, it is in business· interest to contribute to addressing common problems. Strategically speaking, business can only flourish when the communities and ecosystems in which they operate are healthy.

In developing nations:
Definition A country that is poor, and has a mainly agricultural economy but has a desire to advance both socially and economically. Another term is “Third World”. Some examples of developing countries include Honduras, Guatemala, Egypt and Benin. (http://www.investorguide.com/definition/developing-country.html) Those nations has been suffering from corruption, unfair human acts, abuse and all sort of unethical behavior that has stopped them from development despite the fact that they may have more resources and treasures than any developed country such as Diamond in Sierra-Leon and Monuments in Egypt, those countries had corrupted regimes that opened the doors for unfair business practices and bad working conditions but those nations are customers for any companies which likes to go global but the argue would can they act ethically globally as well as they do locally?! That creates the challenge for any business to not to fail in entrapment that ethics and morality may create. We have seen many unethical businesses that are still running and exist so that agencies has researched top 10 unethical businesses which include Rayanair, total oil, Marlboro and Freeport-Mcmoran whom have been highlighted for different ethical behaviors, two related examples of business in developing nations are: Example 1 Freeport-Mcmoran

The cooper and gold company has been accused on infringing upon the land of West Papuans and oppressing their rights. In 1998, a lawsuit was brought against the company accusing Freeport of human rights abuses in West Papua. These abuses included; house arrest, death threats, psychological harassment and surveillance monitoring by the security forces who were employed by Freeport. The lawsuits failed because the district court ruled the alleged abuses were not a violation of the ‘law of nations’. The unethical companies mining procedures still continue today, unopposed by laws and officials. Example 2 Total

The unethical French oil and gas corporation, Total has a large oil pipeline in Myanmar, built by slave labour. The Burma UK Campaign has criticised the company for playing a crucial role in funding the Burmese military junta. The junta receive between $200 million to $450 million a year from the oil whilst the people of Burma receive nothing but aggravation. The profit made from the pipeline has been spent on funding the juntas military with 10 MIG jets being purchased from Russia. Security forces employed to protect the pipeline have been known to commit horrific human rights abuses. The world’s most unethical companies have been compiled by Swiss research company Covalence in their 2010 annual review of multinational corporations (http://www.actionforourplanet.com/#/top-10-unethical-companies/4545796858) In the other side there are many companies which has a strong ethical approaches globally as well as nationally such as Prime Mark, Cadbury, Marriott International and Vodafone Group I will be analyzing the ethical performance in a developing country and my example will be based on Egypt. Vodafone Egypt has shown an exemplary track-record in CSR initiatives aimed at benefiting local communities in Egypt.

As detailed on its Face-book page, “Vodafone’s investments in Egypt are an evident reflection of its commitment to civic involvement for a stronger market foothold”. Indeed, CSR has been integral to the company’s corporate development and competitive advantage, with an estimated expenditure to support social investment estimated at approximately $23 million (LE 140 million). It contributes to various social initiatives in the domain of health, education, and emergency relief, and won the award for ‘Best CSR Contribution’ at the 2009 Telecoms World Awards Middle East, for its community development and Tele-Medicine Project at Siwa Oasis, implemented in cooperation with the UNDP and MCIT Trust Fund. In addition Vodafone Egypt Foundation, a separate legal entity, actively participates in emergency relief and works closely with marginalized communities in Egypt.

It was registered in 2003 as a corporate donor in The Egyptian Ministry of Social Solidarity, and receives 0.02% of Vodafone’s earnings pre-taxation, relying additionally on contributions from the Vodafone Foundation in London. Vodafone Group LTD, the majority shareholder of Vodafone Egypt emphasizes that “it does not consider sustainability as a philanthropic gesture or add-on. It is part of our core business [and] mirrors the way we manage our business”. Whilst its CSR initiatives undoubtedly show it has engaged actively in promoting and contributing to societal needs at a variety of levels, it has also strongly partaken in creating ‘shared value’, not with the community, but with the government. In itself, it is important to remember that a corporation is not a moral gatekeeper; its primary role is to maximize its profits, and develop a value-chain which generates economic value top-down through its core business activities and strategic mission. It would be unfair to berate without context the fact that Vodafone, like many international companies, actively work in partnerships with governments. In reality, it is often such partnerships which can lead to important reforms, and intensify positive industry clusters. The CSR operation for Vodafone Egypt covers the following areas Education, Disaster Relief, Health and Safety, Orphans and Environment

Vodafone Egypt is proud to be considered a leader of CSR in Egypt.
“We aim to connect and develop the community and accelerate Egypt’s advancement. Vodafone Egypt is one of the first corporate companies in Egypt to establish a department dedicated to Corporate Social Responsibility activities. This reflects the commitment to Corporate Responsibility at the most senior level, and how it is embedded into our business here. The department was established in 2004 and has since been engaged in philanthropic and community support projects”. Vodafone Egypt CSR Statement

Vodafone Egypt’s Corporate Responsibility program covers a wide range of activities: * Environmental issues (recycling, waste management, and network deployment) * Education development
* Community support programs
* Health support programs
* Employment engagement programs to encourage a community spirit among our people In collusion the Ethical Performance for this company in a developing nation has been rewarded and granted as one of the best performance in the Middle-East, Vodafone Egypt is going in the right path to create a sustainability position and healthy work environment with applying all the ethical principles internally and externally the company understood the environment they practice their business so that Vodafone Egypt with the cooperation of Vodafone UK has provided five daily rules for employment to improve the social code and to increase the ethical approach awareness in-line with an ethics training course which is essential to all employees to attend and fully understand.

Last year two more successful social approaches were presented by Vodafone Egypt, The Vodafone Literacy Initiative and 25 Duties toward Egypt to work together with the nation in development and evolution. As part of our dedication to national duty and social responsibility, Vodafone Egypt Foundation launched the literacy Initiative and aims to eradicate illiteracy in Egypt within five years. This initiative was launched in association with the United Nations Educational, Scientific and Cultural Organization (UNESCO) and the Life Makers Association, as well as several civil society organization and relevant entities, in coordination with the Ministry of Education.

(http://www.vodafone.com.eg/vodafoneportalWeb/en/P7600152331301924626303) see Appendix 1

Individuals ethical approaches plays huge part in which how the business performance ethically in which affect the relation between individuals employed by the business and the business’s context of morality and ethics that should fit perfectly together otherwise the business will face conflict and infection in behaviors individuals should respect the following; * Equality

* Health and safety
* Diversity
* Disciplinary actions
* Respect values and culture
* Environmental approaches
If the employees failed to fulfill their positions with respect to the previous list of business’s morals and ethics they will face a course of disciplinary actions which may lead them to lose their jobs. I believe that for the business to operate ethically in developing nations it has to transfer all the experienced and tried approaches to those nations and not to break them at any level however educating those individuals by providing the essential ethical training is an important step to ensure that policies are followed through the business practices and respected, also monitoring those individuals and receive feedback from them will help to indicate any conflict that may occur as a cause of the clash of cultures. It is not an easy route to take as challenges will always arise but if the business has a strong ethical approach success should be the reward and the fail will only occur if the business CEO and directors has failed to create a firmly monitoring system that will be followed through all operations such as Recruitment and Selection; Producing and Transporting, Marketing and Advertising;

Appendix 1
As part of our dedication to national duty and social responsibility, Vodafone Egypt Foundation launched the literacy Initiative and aims to eradicate illiteracy in Egypt within five years. This initiative was launched in association with the United Nations Educational, Scientific and Cultural Organization (UNESCO) and the Life Makers Association, as well as several civil society organization and relevant entities, in coordination with the Ministry of Education. The Vodafone Egypt Foundation has announced the names of the organizations contributing to this literacy initiative. These include 20 organizations shortlisted from among 400 civil society organizations.

These organizations will operate under the umbrella of :
* Vodafone Egypt Foundation
* The Life Makers Association
* The Youth Association for Population and Development
* The Coptic Evangelical Organization

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