International Business Ethics and Morality - Essay Example

 Introduction Present essay is concerned with the ethical issues which have emerged in the business world due to activities performed by organizations for profit making. Increased number of competitors has forced organizations to perform activities for securing their profit margins and revenue generation. In this competition of profit making organizations also have to look after their market share and keep maximizing it. Organizations adopt various competitive strategies to overcome the force of high competition. Many organizations adopt several strategies which are not considered to be fair. It is so because organizations are required to perform their operations following a set of protocols which have been developed for maintaining the health of the society. To restrict organizations from being unethical towards their society governing bodies have been formed. Governance systems have been developed by these governing bodies to control the unethical practices in the corporate sector at domestic and international level. Business organizations operate within a social system and perform activities to improve the social environment through its products and services. It is a mutual understanding between the social system and the business organizations operating within it. It is also true that core purpose of business organizations, except the public sector and other non-profit making organizations, is profit generation. But when an organization operates within a social system it needs to understand the obligations which it has towards the betterment of the societal health. Revenue generation and profit making should not be the only purpose of the organizations but developing the society as a whole is also needed to be emphasized by them. Business ethics and morality According to Sir Adrian Cadbury, the beliefs and values associated with the company is more important over the structure and the system possessed by it. It is the value and purpose of the organization which gives it an identity in the social system. Ethical practices in the business world initially remained uncared but soon organizations realized its significance and now business ethics has become a separate domain of management studies at academic and professional level (Malachowski, 2001, p.9). Companies have specifically enhanced their activities responding to various social issues and try to resolve them (See Appendix 1). Ethical approaches in business world help organizations in decision making for critical issues of ethical nature. Following the concepts of business ethics organizations get support in understanding the rights and wrongs in the context of the society. Organizations have focused on ethical practices as one of their central activities as it is also helpful in creating their image in the society (Jones et al., 2005, p.16). It has become a mandatory part for organizations escaping from which could influence their image in the society. Figure 2- Importance of work ethics as per the employees of an organization (Source- Gabriel et al., n.d.) Morality is the values and beliefs through which one gains capabilities of identifying the correct and incorrect within the social system. Morality has its relationship with ethics as ethics helps in its rationalization. Morality has relationship with action and the feeling which is obtained as the outcome of the action. Morality helps people in developing their understanding regarding the good and the bad perception for any character or action. Moral attitudes and behaviour Moral attitudes of people has direct influence on their behaviour as it has been found that modification in the moral beliefs impacts the behaviour of individual or a group. Moral attitude supports the social phenomenon with a clear understanding of the right and the wrong parts of the outcomes which are possible from the phenomenon (McLean & Ellrod, 1992, p.288). Moral attitudes are studied as a part of ethics which helps in performing the application of various reasons for designing the principles which categorizes actions and characters into right and wrong. It also considers the situation when the decision of right and wrong has to be taken by an individual. Observation of morality and various forms of attitudes through the concepts of ethics results in development of ethical theories. Morality serve as the base ob which ethical theories are formed which are helpful in finding solutions to ethical issues and supports the decision making. Profit maximization has remained a major point of focus for present day organizations. Their actions for maximizing profit could have dual forms of impact on the social and business environment around them. Organizations which adopt unethical approaches for increasing their profit levels could influence the moral attitude of the social system and the business environment. Customers act as the mediator which spreads the impact of unethical approaches within the social system. The negative attitude of morality displayed by the business environment is because of the competitors and business partners who are significantly influenced by the unethical approaches. Profit maximization and ethics The need of profit maximization has begun with evolution of philosophy on private property firstly discussed by Adam Smith (1776). Any property when becomes private and has sole ownership it is obvious that its owners won’t be interested in lowering its value instead they make significant efforts for increasing the value of the property they possess. The demarcation of private and public started during the industrial revolution which categorized people into groups with specific titles and grades. The group of capitalists dominated the society who possessed resources for production while people who supported the production process through their efforts formed the class of workers. From that period capitalists had single motto which was maximization of their property through business activities. Since then profit making became the core purpose of business organizations. By default organizations are run to generate profit for its long term survival and also to satisfy their shareholders. Ignorance of shareholders interest towards the organizational profit could result into extinction of the organization. So organizations cannot afford to loose their shareholders and are bound to maximize their profit for their satisfaction. But in protecting their shareholders interest organizations might ignore their role towards the social system. This ignorance could also result into their unsatisfactory performance towards their investors. Contributions made by the organizations to the social system in a positive way support them in satisfying their investors securing their long term survival. With the change in time and business environment organizations also gained knowledge on their role towards the society in which they are operating. Understating their contribution to the social system organizations get benefited and are considered as responsible citizen of the society. According to Dr. Friedman (1970), every business has its core purpose as maximization of profit for the interest of the organization as well as the investors who are related with the business. The economist concluded that it is up to the investors’ interest that for which company they are going to take the risk of investment (Gupta, 2008). Profit maximization influencing moral attitudes and behaviour The activities performed for the purpose of profit maximization could influence the moral attitude and behaviour of people living within the social system. Products and services which meet the expectations of customers’ influence their moral attitude towards the serving organization in a constructive manner. The positive impacts of quality service and goods at reasonable price are reflected from the behaviour of the customers. This is also a form of profit which is intangible in nature. On the other hand failing to meet the customers’ expectation provokes the moral attitude of customers in negative ways. This could influence the business operation of organizations as customers might have changed behaviour towards the organizations services. One of the leading organizations of the semiconductor industry, Intel has been criticized by both the business as well as social environment because of its unethical business practices for profit maximization. The competitors and partners have shown negative response to the unethical practices adopted by Intel for achieving the competitive advantage. The unfair business practices adopted by Intel have influenced the moral attitude of its business partners, competitors, and investors who are the parts of the business environment. Similarly their unethical approaches have also influenced the customers who possessed a positive perception for the organization. For the purpose of profit maximization the company has violated the antitrust law enforced by the U.S. antirust laws. Intel has performed such unethical act to reduce the level of threat which it is observing from another firm AMD which is also a potential player in the semiconductor industry (Cooper, March, 2008). Responsible factors for unfair business practices Organizations adopting unethical approaches are not doing so willing but there are certain factors which are responsible for such a stiff situation. Present day organizations are required to face a highly dynamic business environment which is accompanied with high competitive forces. In order to face such a tough situation organizations need to secure their resources to meet their targets set for production and sales. Along with securing essential resources, capturing the maximum portion of market is also a major concern for present day organizations. Organizations in their efforts for achieving the sustainable development might face a tough competition from their rivals. If their rivals discover something relevant to their industry but is still unknown by the industry people they automatically achieve a competitive edge over their competitors. Below given figure represents the outcomes of a survey which analyzed industry people response on the situation when their rivals attain something valuable which is not present with them. Figure 1- High competitive forces influencing organizational decisions (Source- Malachowski, 2001, p.185) Maintaining the balance between the lawful and unlawful activities within the business operation becomes tough for organizations when they feel extreme threat of losing their market position. During such conditions organizations becomes helpless and adopt unethical trade practices to solve the issues. The same situation has been faced by Intel in recent years which has forced it to violet the protocols of ethics and adopt unfair trade practices. Offering bribe to computer manufacturers for buying their products has negatively influenced the computer manufactures who are the customers of the company. High level of competition among the microprocessor manufacturer has resulted into such an adverse business condition for Intel. Another significant example can be the controversy which is associated with the beverage company Coke. Coke has seen one of its worst business conditions when it was sued for adopting unethical trade practices for gaining more profit and curbing their costs. The company outsourced its production to local and domestic level communities which is considered to be unethical. This particular cat of the company influenced its business at global level which also resulted into closure of its several regional operations. A global community formed against the companies manufacturing the colas and they boycott the products of these two companies until they adopt ethical approaches (Anonymous, n.d.). Another potential sign of protest is the website which promoted the ban of Coke and developed a website in its favour. The website has been named as which criticises the company’s unethical trade practices for the purpose of profit maximization (ATTAC Norge, 2009). Impact on business environment The business environment also has its moral attitude towards the organizational activities and its impact over the market condition. The behaviour of organizations changes when any of its competitors found acting unethically. The business environment also has the investors and stakeholders who have equal interest in the profit level of the organizations which they are associated with. It becomes an essential issue for organizations to come up to the expectation of their investors and stakeholders (Gupta, 2008). The stakeholder theory proposed by Crane and Mattern (2007) can describe the stakeholders as an individual or group which are either harmed or benefited by the organization and the behaviour of the company towards the acceptance or violation of the investors’ rights (img018, 2010, p.2). Performing unethical approaches to satisfy the investors could have opposite reaction making investors unsatisfied due to their unethical behaviour. Other crucial members of the business environment are the suppliers who are also influenced by the unethical trade practices which results into poor relationship between the supplier and manufacturer. Impact on social environment The social environment mainly involves the customers who avail the services and products offered by the organizations. Organizations which have a reputed image in the market are more likely to get hurt due to the ethical issues raised against them. Influencing the morality of customers could be more harmful for organizations since they spread their views and protest in masses. Excessive protest directly influences the sales figures of the organization and reduces the revenue level. In case of Coke the unethical trade affairs has led the organization to face a severe fall in their sales at some of their business locations spread across the world. Adopting unfair means for profit maximization has influenced its customer base across the globe as a result of which the company has taken several initiatives to assure the quality of their products and also enforced the uniformity of its quality across the globe. In the context of social impacts the company faced multiple challenges due to its unethical approaches such as its declining market share in the U.S., an investigation on antitrust in European region, workforce challenges faced in Colombian region and the environmental damage caused in Indian region (Levy & Matthews, 2004). Ethical initiatives to resolve the issues In order to gain stability in terms of ethical activities and morality several initiatives have taken place at domestic and international level. Fair trade system is also one of such initiatives which aims to support the producers which are based in developed economies and faces scarcity of resources. The fair trade system provides empowerment to the producers and expands their business network at national and international level. Adopting fair trade system supports the society also by removing the poverty from the economy. Presently the system has already influenced the lives of 7.5 million people in appositive way. The system has already involved 630 producers which belong to 5 different nations. The system has grown rapidly in terms of brands it possesses which have increased from 150 in 2003 to more than 4500 by now. The fair trade system encourages fair trade business models which have proved to be effective for organizations such as Divine Chocolate Ltd. The fair trade system supported the production process of the organization and also guided in activities related to educating and advocating their work activities (Week9, n.d.). Ethics has always remained a point of confusion in designating right or wrong to work activities which are carried out within the organizations. Present day organizations have made it mandatory because of its essential contribution in bringing stability in the business on global level and creating values for their customers. Conclusion The ethical issues which are raised due to the unfair means adopted by organizations are obvious in present day business environment. Profit maximization has encouraged organizations to violate the ethical code of conduct which have gained significant attention in recent years. Ethical approaches have remained less effective in terms of maximization of profit while unethical approaches have significantly supported organizations in a short run. Ethics has become a crucial part of the management system within the organizations which also serve as a way through which organizations can contribute to their society for its overall development (See Appendix 2 & 3). In the context of profit maximization organizations have become unethical which is evident from several industries such as FMCG, retail, IT, and entertainment, and many more. Initiatives which are being taken up at domestic and international level have helped the organizations in understanding the importance of governance system which also offers value to their investors. Establishment of measuring standard for ethical and unethical approaches has it maximum impact on the social system as all these activities are centrally concerned with the development of the social health across the globe. Performing business activities being within the boundaries of ethical frameworks can help organizations as well as the social system. Component- 2 Reflection on learning components The learning component has supported the better understanding of the concepts of ethics and its role in present day business environment in the international market. Development of social system has emerged as a major concern for business organizations through which they can attain the sustainable development. The learning component tutorials have also focused on the basic ideas of ethics and described the process of developing ethical theories resolving issues of ethical decision making. It has been understood from the tutorials that better ethical approaches support the organization in making effective decisions on various ethical issues. Organizations existing within the social system have certain responsibilities regarding their contribution to the development of the social system. Value creation is also an important aspect of business which can be achieved with the help of ethical approaches adopted to perform the business operations. These ideas have been effectively discussed during the tutorials making the sessions more valuable in terms of knowledge gain. Attaining ethical standards has become common in most of the organizations which signifies the importance of ethics in business world at present and in near future. Reference ATTAC Norge. December, 2009. Campaign to Stop Killer Coke- Norwegian campuses remove Coca-Cola. [Online] Available at: http://www.killercoke.org/norwayremove.htm [Accessed on March 26, 2010]. Anonymous. No date. The South Asian- Stop the Colas. [Online] Available at: http://www.thesouthasian.org/coke_and_pepsi.html [Accessed on March 26, 2010]. Cooper, R. March, 2008. GCP- The Online Magazine for Global Competition Policy- AMD v. Intel: An Assault on Price Competition. [Online] Available at: http://www.gordonmoore.org/pressroom/legal/docs/Cooper_GCP_Mar08.pdf [Accessed on March 26, 2010]. Gabriel, G. No date. NORTHERN VIRGINIA COMMUNITY COLLEGE- OFFICE OF INSTITUTIONAL RESEARCH- EMPLOYEE CHARACTERISTICS AND SKILLS VALUED BY NORTHERN VIRGINIA EMPLOYERS. [Online] Available at: http://www.nvcc.edu/oir/reports/empchar.htm [Accessed on March 29, 2010]. Gupta, S. 2008. Proceedings of the Academy of Business Economics - The Purpose of Business: Profit Maximization versus Corporate Citizens. [Online] Available at: http://www.usi.edu/business/mbea/2008/P01Gupta.pdf [Accessed on March 26, 2010]. Img018. 2010. Stakeholder theory. [Image]. Available at: provided by the client. [Accessed on March 26, 2010]. Jones, C., Parker, M. & Bos, R. 2005. For business ethics. Routledge. Levy, A. & Matthews, S. 2004. "Coke's World of Woes". [Online] Available at: http://www.killercoke.org/cokewoe.htm [Accessed on March 26, 2010]. Malachowski, A. 2001. Business Ethics: Methodological issues. Taylor & Francis. McLean, G. & Ellrod, F. 1992. Philosophical foundations for moral education and character development: act and agent. 2nd ed. CRVP. Week9. No date. Fair Trade Business Models. [PPT] Available at: provided by the client. [Accessed on March 26, 2010]. Appendices Appendix 1 Characteristics and Skills Rated "Very Important" or "Important" by Area Employers Characteristics and Skills Very Important Important Combined* Rated as "Very Important" or "Important" By More Than 90% of the Respondents Work ethics 72% 23% 95% Communication abilities 73% 21% 94% Ability to learn on the job 63% 32% 95% Motivation or initiative 59% 34% 93% Working with others 59% 33% 92% Rated as "Very Important" or "Important" By 61% to 90% of the Respondents Ability to solve job problems 48% 39% 87% Interpersonal skills 43% 40% 83% Reading/comprehension skills 41% 39% 80% Overall preparation for employment 37% 42% 79% Rated as "Very Important" or "Important" By 50% to 60% of the Respondents Computer skills 29% 30% 59% Special technical job skills 30% 29% 59% Analytical aptitude 21% 38% 59% Familiarity with job equipment 28% 30% 58% Mathematical skills 20% 32% 52% Rated as "Very Important" or "Important" By Less Than 50% of the Respondents Work experience 16% 29% 45% Leadership abilities 16% 29% 45% GPA or academic credentials 6% 19% 25% *Total percentage of respondents who rated characteristic "very important" or "important". (Source- Gabriel et al., n.d.) Appendix 2 Importance of Work Ethics Rating Responses # % Very Important 1,097 72.1 Important 350 23.0 Somewhat Important 64 4.2 A Little Important 7 0.5 Not At All Important 1 0.1 Not Applicable 1 0.1 Total 1,520 100.0% (Source- Gabriel et al., n.d.) Appendix 3 Importance of Work Ethics (Source- Gabriel et al., n.d.) Read More