Analysis of British Airways Conducted with Regard to Ethical Concerns - Case Study Example

Business ethics Executive Summary Business ethics is concerned with how firms operate within the framework of existing laws to conduct its business. In this report, an analysis of British Airways was conducted with regard to ethical concerns. The paper specifically analysed two stakeholders to the British Airways. The paper analysed how different stakeholders (employees and executive) engaged, conspired, or colluded with other third parties to engage in unfair trade practices against competitors. British Airways’ junior staff had hatched a plan in which their staff posed as Virgin Atlantic staff at the height of their competition to undermine grossly Virgin’s reputation and financial wellbeing. The latter was a conspiracy to fix price but against which Virgin Atlantic blew an early whistle to stop prematurely. As one will notice, airline industry is full of stiff competition that takes all forms of unethical practices despite heavy fines that perpetrators are usually aware of (Fisman et al., 2005, p. 56). Introduction Ethical theories have majorly made general observations that the foundation of ethics is motivate by human desire to do good. It is a desire to good in the sense that the wish and the necessary action to accompany the wish are not usually mutually inclusive. Ethics therefore comes out as a concern on the way in which people apply moral principles to life. In other words, ethics is concerned with what s just, fair or acceptable by applying the fundamental that guide societal values. Business ethics is therefore guidelines that come out of concerns on how best a firm should relate with the society in a manner likely to promote the principles of justice and responsibility. Justice and responsibility come in the sense that business as a legal entity in its name or in the shareholders name, has a duty to make sure that its pursuit for profits is not motivated greed (Bob, 2006, p. 23). Business ethics therefore act to ensure that elements in business external environment are used in a manner likely to sustain their continued existence without any harm. Such a duty involves having to care for the environment and the community in which the business interacts with in the course of its daily activities. One should also note that business ethics also guide how a business firm will operate internally. In short, ethics in business is about applying all the values, principles, and regulations with the aim of being responsible to the welfare of the public (Hsieh, 2009, p.259). Business ethics is important majorly because it offers guidelines on how best business firms can relate with the society in which it conducts business sustainably. It also helps to make sure that those harmful practices that can be dangerous to consumers and to the environment are pre-avoided through law enforcement. For instance, dumping of harmful waste products in the environment of exposing customer to harmful environment or products are some of the advantages of business ethics. Business ethics assists in eliminating or minimizing the chances of consumers being exposed to substandard commodities that put them at the risk of being affected health-wise. Due to the fact that law cannot codify all ethical requirements, business organizations are usually left with the responsibility to imply anything that may constitute unethical behaviour and act accordingly (Hsieh, 2009, p. 253). Therefore, any business organization, together with its stakeholders has a joint responsibility to ensure that the organization operates within acceptable ethical conduct. Stakeholders are the people participating in the activity of a firm either directly or indirectly. According to stakeholders’ theory, any person that participates in the activities of a group does so with the aim of benefiting from such a process. If care is not taken, it could be possible that stakeholders and a business firm can engage in unethical behaviour. However, there have been cases where stakeholders are the ones making effort to ensure that a business firm operates ethically. In this study, the paper shall conduct an analysis of British Airways and the ethical concerns around the company. To be more specific, an analysis of two distinct stakeholders shall be conducted and evaluated against the prism of business ethics (Robert and Edmund, 2007, p. 18). British Airways Stakeholders Ethical Analysis Stakeholders in British Airways are majorly BA employee and BA shareholders. Actions of BA workers and that of shareholder could possibly take different ethical turns. In the ethical cases that involved BA, one may observe that both workers and management board were involved. Many organizations usually appoint shareholders to the management board because they have stake in the company and would out of their way to see that the organization succeeds. BA as an airline company is no exception. Stakeholders theory analysis in BA ethical case reveal that most of the interactions were between the Airline as the firm stakeholders as employees and suppliers of fuel through interference of BA executive (Hsieh, 2009, p. 257). Stakeholders Theory Model British Airways has had its share of ethical stress probably more than any other airline has ever had. In what observers had dubbed dirty tricks, the initial onset was a case against Virgin Atlantic back in the late 80s and the early 90s. During this time, many airlines were experiencing harsh times is the industry. One may also observe that prior to the emergence of British Airlines as a dominant force; the airline also had its many problems until the year 1987 when the management board approved its privatisation. The airline was able to grow under the leadership of Colin Marshall and Lord King. Improved management was what lifted the company to become one of the most sought after flights then. Given the vantage position the airline had, it was able to expand through absorption of other airlines that could not cope in the competitive market. Some of the airlines that the BA absorbed include Dan Air, UK Airlines, and British Caledonian. Such moves enabled the airline to become a global airline, having many hub airports across the world. While many airlines almost went bankrupt, only Virgin Atlantic that stood the test. By then, Virgin Atlantic was still a young company but BA was determined to drive it out of the market. The first case of ethical misconduct was therefore case between Virgin Atlantic and British Airways. Now Virgin Airlines was under the ownership of Richard Branson. The Airline has started operating its initial sole Boeing in 1984. It operated between New York and London. Nine years down the line the airline had expanded to eight flights and had also acquired new routes. To counter the increasing competition, junior level stakeholders hatched an unethical plan to compete against Virgin Atlantic. British Airlines staff in New York started making calls to Virgin Airlines passengers while at their hotel rooms. They usually offered them first class seat or sometimes enticed them with the new concord seats. All these were geared towards making Virgin passengers cross over to BA. In other instances, BA went even to the extent of making suggestions that Virgin had difficulties, that the passengers has to transfer. To succeed in doing this, BA staff usually went the extra mile of posing as Virgin Airlines staff. Betts and Cassel observe that BA staff even went ahead obtain illegal access into Virgin Atlantic’s passenger loading information (Cited in Jones and Pollitt, 1995, p. 17). The consequences of the above scenario were that Virgin sued BA in a case that later saw BA pay fines to Virgin Atlantic up to £610,000. In the subsequent years, BA proceeded to lose its goodwill insignificant proportions as shares fell in the stock market (Harvey et al., 2004, p. 28). Another ethical case involving BA was a case in which the airline’s bosses were entangled in a case involving price fixing. In this case, the stakeholders that were under scrutiny were the airlines executives. The allegations levelled against them were that they were involved in price fixing of plane fuel surcharges. The matter had required the head of sales appear before a London court in September 2008. In this matter, the Office of Fair Trading was the party that had brought up the matter for determination after a tip from Virgin Atlantic (Hsieh, 2009, p. 268). Specific concerns in the alleged unethical practice were that part of the executive was being accused of having entered into a dishonest agreement with others. The aim of the agreement was to implement them in a manner that was highly likely to result, directly or indirectly, in fixed prices. BA had maintained that the matter was unfounded, making the process take a long legal path before its determination later in the year 2010. Ethical determination in the case relied on the evidence that consumers had not suffered in the alleged price fixing (Hsieh, 2009, p. 260). After this BA had published what it termed as British Airways Standing Instructions number 18. That was a business code of conduct in which it sought to come out clear on what ethical standards apply to employees. In that document, the airlines addressed matters to do with conflict of interest. BA maintains that a conflict of interest occurs in any instance when an individual’s interest interferes or seems to interfere with the airlines interests. The document also guides in misuse of opportunities and information, as well as stressing on confidentiality. BA also affirms its willingness to observe fair dealing and compliance with established laws, regulations, and rules. With the above regulations, along with periodic checks, BA is slowly emerging from having to deal costly with problems caused by stakeholders (British Airways, 2004, p. 2). Discussion One may notice that in the first case of unethical practice by BA against Virgin Atlantic, it emerged that the top management were not aware of the plan. The plan was planned by the middle level management in what one may note as the height of dirty competition practices. Given that BA employees took part in the actual calls and appearances in person as Virgin’s staff, the unethical practice is heavily attributed to employees. BA employees must have colluded with their bosses for something additional to engage in such unethical practices (Robert and Edmund, 2007, p. 36). Although the higher-level management was oblivious of this happening, the fact that their staffs were responsible directly implicated the company. BA was taken to be solely responsible for its own internal discipline and code of conduct with regard to fair practices. Quite a number of ethical theories guided the decision to fine BA. The motives for the action of the employees, the act itself and the consequences of the act, all pointed out that BA was the sole beneficiary in the whole dirty trick. Slapping on BA a fine of £600, 000 to Virgin Atlantic, and another £100,000 as libel fine to Richard Branson served to level playground for a while (British Airways, 2010, p. 9). In the second ethical concern, the executive of BA were halted prematurely before executing a price fixing agreement with suppliers of airlines fuel. The case proceeded before courts from 2008 to 2010 before it was defeated. Ignoring the legal proceedings, it was unethical for BA to contemplate fixing prices with suppliers with an aim of directly or indirectly disadvantaging other competitors. The ethical concern was a case of motives for the agreement. Entering into such an agreement was an unfair trade practice whose consequences would not have been for the general good as is enshrined in the principle of utilitarianism. Conclusion British Airlines has had quite a number of cases that pertains to unethical practices. Just like the Barclays Bank group, BA Company may face hard times and risk its image, something that may cost it more than it attempts to acquire through dubious means. The case should serve as a warning that unfair business practices are not the sure way of succeeding. Virgin Atlantic offers a good example of what it means to compete ethically buy offering customers what they want. Recommendations From the above scenario, the following would be necessary to be observes by both British Airways and other airlines. All airline companies should conduct periodic ethics trainings to their staff Employees should be empowered to refuse being forced to take part in any act that contravenes ethical regulations To discourage unethical practices, courts should fine perpetrator heavily All adverts should not be aimed at portraying others negatively but how to win customers by displaying what is on offer Advertisements should not be misleading Sales and market administrators should always forward their marketing strategy to the CEO for assessment on compliance with established guidelines Airlines should strive to uphold honesty and integrity Bibliography Bob H., 2006. Laid off and Left out, The new York Times, May 2006. British Airways., 2004. British Airways Standing Instructions. No. 18 - Code of Business Conduct and Ethics. British Airways., 2010. Corporate Responsibility Report 2009/2010. Retrieved from http://www.britishairways.com/cms/global/pdfs/environment/ba_corporate_responsibility _report_2009-2010.pdf Fisman, R., Geoffrey H., and Vinay B.N., 2005. Corporate social responsibility: Doing well by doing good? Working paper, The Wharton School, University of Pennsylvania. Harvey, C.R., Karl V.L., and Andrew H.R., 2004. The effect of capital structure when expected agency costs are extreme. Journal of Financial Economics 74, 3-30. Hsieh, N.: 2009. ‘Does Global Business Have a Responsibility to Promote Just Institutions?’ Business Ethics Quarterly 19, 251–273. Robert, D.H., and Edmund R.G., 2007. “Introduction to Social Responsibility” in David Keller (2002), man. Ed, Ethics and Values: Basic Readings in Theory and Practice. Pearson Custom Publishing. Vogel, D., 2005. The Market for Virtue. 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