Leaders We Deserve - Case Study Example

? Business Ethics Report Introduction Ethics principles in international businesses are by far much complex than those of local businesses. This is because, ethical practices varies with the region or country in which the business is operating. In the modern world of business, there is a high call for businesses to observe some degree of morality. As a result, many countries impose strict ethical policies to be followed by businesses operating in that country. These calls for them to formulate operating standards that determine and ensure ethical codes are observed. Common ethical issues faced by international businesses include personal working conditions, child labor, and corruption among others. These issues create dilemmas to management, hence the need for a business to develop its own strategies to deal with them. Ethical issues and dilemmas may arise in four levels. These include individual or professional level, organizational level, industrial level, and societal and international level. In individual or professional level, a person faces pressure from conflicting interests or in circumstances that call for decision-making. At this level, ethical dilemmas may originate from personal situations or pressure from work. An individual or personal dilemma may spread problems in the organization if not dealt with early enough (Weiss, 2008, p. 98). Organizational level involves the duty of the business to the shareholders and stakeholders. Business will find itself in a dilemma with these two parties if it carries out unethical practices. For example, the case of the American Airlines, where the company had to stop more than 900 flights in 2008 with the f correcting errors found in the wheels of these planes. This situation had put very many people at risk of death or harm (Weiss, 2008, p. 98). In industrial level, the company staff or workforce may be influenced to carry out some functions in the industry. Some of the business practices undertaken by businesses in an industry are unethical or illegal. Individual, professional, organizational, and industrial practices may conflict with those of societal and international levels. For instance, during the payment of cash to the government and offering tips to employees in a certain country may be unacceptable practices, but in certain countries such practices may be illegal and unethical, hence will be considered as bribery (Weiss, 2008, p. 99). Ethical behaviors According to David Smith, there are three types of ethical behaviors. These include universal base code, which refers to behaviors that are acceptable all over the world. These are codes of conduct that do not change with time and are affected by geographical and culture of people. Super imposed codes change with culture, region and time. Lastly, legal codes or laws, according to David laws are full of limitations as measures of ethics. The current legal framework supports capitalism which has always been considered wrong. At this point, I will share my sentiments with Smith that, an individual’s views on what is ethical or unethical depends on where he or she is located. For example, many countries in the world have zero tolerance on drug trafficking and abuse. A country like Dubai, a drug dealer is likely to be sentenced to hanging while in some countries; some hardcore drugs are still legal. A person may commit an act that to others is immoral and unethical, but the person could still get support some individual especially of the same culture. With this in mind, SIG came up with its own means and plan to help in making ethical decisions. The ethical framework Each company should have a measure of standard to warn against any deviation from ethical practices. An organization should keep in mind laws governing completion in different companies, corruption, policies on human rights and safety of both employees and customers especially in the communist countries. Smith during his lecture suggested that businesses longing to succeed should not consider political views. The response system on ethics acts as a basis for harassed employees to report the issue to the company officials, anywhere in the world (Smith, 2013, p. 1). Smith views competitive laws as being severe as they have zero tolerance on corruption, bribery, and fixing of prices among companies. He observes that these laws are even strict on companies with the biggest market share in a given industry. High fines are imposed on those individual companies that do not observe accepted code of ethics while operating in an international market (Smith, 2013, p. 1) Bribery is not tolerated in not tolerated in SIG, and most of the multinational companies. In fact, there is a policy on zero tolerance to any form of bribery. Bribery involves any form of gift, or warm reception in a certain place that is intended to motivate one in doing something or acting in a certain way. Human rights and responsible trading are highly supported by SIG, by carrying out regular audits on its company. This process ensures that any form of rights violation does not exist. Such violations include child labor, harassment, environmental concerns, and observation of minimum labor for their workers. David also argued that business risks vary from one region to another, more so for those countries operating in foreign market like SIG. He sees government legislation as a risk and mentions that whether the company is complying, or not a cost is incurred (Smith, 2013). Cause of Ethical problems According to David, Money is the root of almost all the ethical problems. As a result, human beings are more likely to be involved in unethical practices when money is on the table. He observes that many incidences on unethical practices are money- related. Companies have to choose what to embrace in the new market and what to ignore without compromising its core code of conduct and principles. Some of the key ethical issues that a business is likely to encounter in a foreign land include bribery, taxation and freedom of speech among employees and customers (Smith, 2013, p. 4). Most cultures of the world appreciate gifts, discounts or commissions for providing an advantage to the business. Some public officials and leaders may demand large sums of money to influence a decision in favor of a company or to tolerate an illegal activity. A company will, therefore, design extensive code of conducts and monitor their implementation to survive some of these illegal deeds (Cadbury Schweppes, 2002, p. 1). Foreign market provides a business with a chance to access transfer pricing, where it pays low taxes. In such a situation, the company may decide to transfer most of its cost to the home office and retain profits in the local office. The foreign office will report high profits, which will attract low taxes at home the company will announce low profits as a result of the transferred costs. An ethical company should devise a legal way to balance the costs between home and foreign entities to avoid compromising their code of ethics (Cadbury Schweppes, 2002, p. 1). Freedom of speech among employees and customers is an ethical issue that companies have to consider in the foreign markets. Some foreign countries prohibit some manner of communication among individuals. A company that has to encourage free speech has to weigh and make a decision whether to participate on such an environment. These, among others, represent the ethical issues and dilemma that a business operating in a foreign market is likely to encounter (Cadbury Schweppes, 2002, p. 1). Relevant Ethical theories Deontological theory is a principle that asserts that actions should not be determined primarily by their consequences but should also be based on their intentions. This is a theory that establishes a good framework to avoid certain ethical situations in a business. Deontologists believe that actions can not only be calculated on the ground of results but by means. Although the results of an intervention are good, the motive behind it might be negative (Hull, 1979, p. 12). An individual or business should not only think on the consequences but also employ appropriate means. Immanuel Kant has been extremely vibrant in defending the deontologist theory. Kant argues that for an action to be moral, it must meet two conditions. These include, must be a law applying to all and must respect the fundamental human rights and his independent of mind (Kant, 1956, p. 37). This means that a person should not act or treat others in a way that he deems unfit and would not want them to treat him or her. In his approach, Kant (1956, p. 5) suggests that it will be wrong or in appropriate for one to set a principle that excludes other people or a certain group. For example, one cannot assert that it is wrong to use a certain drug where else he is taking it. This principle will go against the rule of universality as it only applies to a few individuals and exempts others. Kant states two types of actions: that of acting according to duty and from duty. Kant differentiates two kinds of imperatives, one based on hypothesis and categorical imperative. Imperatives are based on conditions (Hull, 1979, p. 12). Deontological theories prohibit any form of harm on individual human beings with an intention of benefiting others. According to deontologists, no individual should be used as a means to an end. Deontology views ethical principles as fixed and constant in a way that the duty to observe ethics is central to humans and businesses. According to Hull (1979, p. 13), deontology can be voluntary where one views it like a duty to follow what is fair or something that one has taken an oath to follow such as a company policy. The outcomes of a deed do not matter to deontologist, but the intention. Contrary to the deontological theory, teleological theory gives a different method of ethical decision-making process. Teleological theory focuses on final results rather than intentions or means. Teleological theory, therefore, is a theory that gives much attention to the examination of outcomes brought by an act or behavior and determines whether the results are good or evil based on the accumulative benefits of such undertaking. What is wrong in deontology may mean a different thing in teleological theory. Utilitarianism and egoism are the most common teleological theories of ethics. They are both concerned with the outcome of an action, though they portray some differences (Snoeyenbos, 2002, p. 45). In utilitarianism, the result of an action to individuals determines whether an act is morally acceptable, and the overall benefits of that act. In egoism, the result to an individual defines an action as ethical or unethical. Utilitarianism evaluates circumstances by their outcomes. Jeremy founded this theory on his knowledge and understanding of human natural behaviors. Human beings prefer continuous happiness, with no pain, and tend to substitute pain with pleasure. This also applies to businesses, where they want to continue making profits while reducing costs and avoiding losses. However, this is not likely to be achieved without an individual or a business being hurt (Snoeyenbos, 2002, p. 45). Utilitarianism theories are further divided into two based on the judgments on utility and disutility of an act. Act utilitarianism suggests that act is morally acceptable if it produces utmost utility or benefits many people. Act utilitarianism requires a business to carry out its activities and produce the most utility or benefits to a majority of people with less harm. This implies that the advantages of an undertaking must exceed its disadvantages. This type, however, is inappropriate to business people as it involves cost and benefit analysis (Thomson, 2002, p. 4). Rule utilitarianism suggests that some activities will produce benefits in one region but causes harm to another. For instance, the issue of bribing is illegal in most States. Failure to bribe in one area may bring maximum utility while bribing in another area may also bring the same utility. Utilitarianism argues that it will be ethical to break some rules or harm some people if at all it will result to maximum utility. This is against the deontological theories that prohibit any intent to harm an individual even though it is to the benefit of the majority (Takala, 1995, p. 1) A salient example of Utilitarianism in real life situation occurs in Europe industrial areas. Europe has many industries emitting harmful gases to the atmosphere. Pollution of the atmosphere has adverse effects on the climate and the environment, but utilitarianism will argue that the industries provide more benefits than harm to the community. These benefits involve employment, goods and financial benefits (Hull, 1979, p. 2). Golden rule, on the other hand, calls for people and businesses to treat others in the way they would like to be treated by them. This implies that an individual or business should be fair to people so as for them to be fair to the individual or business. This requires an individual to have empathy when dealing with people or other businesses. An individual should have other people’s welfare in mind before undertaking an activity or action. This theory gives general standards or values rooted in religion and culture that can be used to guide human beings on making ethical decisions (Velasquez, 2001, p. 2). For example, based on a real life experience, a student is given money by the parent to pay for school tuition fees, but on the way he drops the money unknowingly and a person behind him collects the amount and puts it in his or her pocket. After some distance, the student realizes that he has lost money and goes back looking for the money and meets the person who collected it. Based on the golden rule, there is the question: If his child or relative falls in the same situation, how would he want others to behave? How to overcome International business dilemmas: David mentions that for a company to survive in the foreign market the manager and employees should not be moved. The company should uphold its values and should not accept bribes (Smith, 2013, p. 4). Walk out of business if necessary. According to David there was one time that SIG had to walk away from the business in Hungary due to unethical practices by other companies. SIG was driven by its policy of always wanting to win in a fair way. He warns that a company needs to compromise any of its standards (Smith, 2013, p. 4). All businesses and individuals are susceptible to dilemmas in their normal life, and, therefore, the various ethical theories and ethics cut across the corporate and personal world. Businesses and multinational companies are the most affected entities due to their nature of their activities, differences in the legal framework, political situations, and cultural differences between different countries. Cultural differences for instance affect businesses in a higher magnitude than other factors. This is because what one country perceive to be wrong may be acceptable in another country (Cadbury Schweppes, 2002, p. 1). Workers should be encouraged to report mistreatment or discrimination. Every worker should strive to improve the standards of the company and that of other team members. Individuals not conforming to the laid down policies should be dealt with accordingly and dismissed if need be. These ethical concerns are pronounced in businesses operating in international markets. The relationship between businesses and their competitors may result to immoral practices such as price wars, holding, and bribery and unfair competition. Price wars may be allowed in a certain country, whereas in another, this may be discouraged. This is because it favors businesses that have economic advantages (Cadbury Schweppes, 2002, p. 1). Conclusion It is evident and understandable that ethics are crucial to businesses operating across borders. In fact, ethical issues in a business cannot be neglected. The management of multinational companies faces various ethical problems and dilemmas, which they have to make ethical decisions based on the available, ethical principles and laid frameworks. No particular ethical principle discussed above can perfectly be used to make ethical judgments especially if the company operates in a volatile international economy. This gives international companies the option to combine these ethical principles towards making a more presentable and fair judgments. Most companies have the objective of appealing to many people by being the most outstanding and ethical organization. This will remain a challenge to organizations because each ethical issue demands a new style of approach and new environment introduces a unique ethical problem. However, ethical concerns should not be ignored; instead, they should be part of business culture. The managers and decision makers should come up with appropriate ethical principles to deal with these problems. If it is practically impossible for an organization to deal with an ethical problem, the company should consider walking out of that market rather than compromising its integrity. References Cadbury Schweppes , 2002. Ethical business practices. Cudburry Schwepes Hinks, P., 2012. Leaders we deserve. [Online] Available at: http://leaderswedeserve.wordpress.com/2012/01/31/apples-new-leader-faces-ethical-dilemmas-at-foxconn/ [Accessed 6th May 2013]. Hull, R. T., 1979. The Varieties of Ethical Theories. Buffalo Psychiatric Center., pp. 2-4. Kant, I., 1956. A Critique of Practical Reason. New York: Liberal Arts. Smith, D., 2013. Four ethics in practice. New York. Cengage Learning. Snoeyenbos, M. &. H. J., 2002. “Utilitarianism and Business Ethics,”. Blackwell:. Takala, T. &. U. O., 1995. . Retailers’ Professional and Professo-Ethical Dilemmas:. Journal of business ethics, 14(3), pp. 893-907. Thomson, 2002. Thomson learning. [Online] Available at: http://www.swlearning.com/pdfs/chapter/032406196X_2.PDF [Accessed 6th may 2013]. Velasquez, M. G., 2001. Business Ethics Concepts&Cases, Business Ethics. s.l.:Anderson University DBA. Weiss, J. W., 2008. Business Ethics: A Stakeholders and Issues Management Approach with Cases. 5 ed. s.l.:Cengage Learning. Read More