Toward a Model for International Business Ethics - Case Study Example

Eight Steps to Ethical Decision Making in Business Abstract In past, Multinational Companies have always been involved in strong controversial issues due to the concerns of ethics and the way they took decisions in case of ethical dilemma. In essence, it is imperative for employer, managers, employees, subordinates and every worker to maintain the ethical culture of their organization so as to evade any controversy regarding ethics especially, because this specific matter most often ruptures the public image of the company and people generally do not feel positive for that particular organization. This paper aims to study the ethical dilemma confronted by Nestle and how they responded to it. Eight step process of dealing with ethical dilemma has been applied to the case of Nestle and the type of ethical approach followed by them has also been discussed. Introduction Many Authors and Ethical Practitioners have suggested ways and steps of dealing with ethical dilemma. One of them is Treviño and Nelson (2010), who in their book “Managing Business Ethics”, provided a step by step guide to follow in coping with ethical dilemmas. They have proposed 8 steps procedure that proves to be beneficial in taking the right decision while facing an ethical dilemma. Asgary and Mitschow (2002) also observed that very little attention is given to the global ethical perspective in businesses due to numerous concerns. They have identified several business ethics issues and how they can be resolved in future implications. This paper aims to study the ethical dilemma faced by Nestle and the way they responded to it. In 1977, Nestle got involved in endangering consumers’ health by promoting its infant formula products. Number of agencies called to boycott using Nestlé’s products and this remonstration continued till 1980s. Nestlé’s Ethical Dilemmas Unethical marketing practices Marketing practices adopted by Nestle to promote its products were considered to be reasonably unethical. Irrespective of offering hygienic products, Nestle promoted its infant’s product that contained harmful ingredients. Nestle agreed to lay down these practices when they were warned by World Health Organization and UNICEF in 1980s. Genetically Modified Foods Nestle was accused for using genetically modified ingredients in infant’s products and for using the products that were dumped in Europe in Asian Countries where the GM Laws were less stringent or absent. Practice of providing unsafe products to uninformed consumers was convincingly unethical. Overcharged Prices Nestle introduced its mineral water bottle namely “Pure Water” in India and Pakistan at very premium prices in 1998 and 2001 respectively. Prices were too high to be afforded by the underdeveloped countries citizens. According to utilitarianism approach, the actions are evaluated in the basis of consequences, by assessing its good effects or bad effects. Nestlé’s actions produced worst for the largest number of South East Asian people as water is the basic necessity and Nestle was charging too high prices for this to the people who cannot afford it. Eight Steps to Ethical Decision Making in Business-Trevino and Nelson (2010) Step 1: Gather the Facts The first step that must be analyzed carefully while facing an ethical dilemma is to gather all the relevant facts that can be helpful in resolving an ethical issue. In certain cases, an individual is already aware of the facts but in other cases it is required to gather the necessary facts. In case of Nestle, this step is already acknowledged by the company as they knew what they are going to do. Step 2: Define the Ethical Issues If an individual is not deliberately performing any unethical action than it is required to define the parameters of ethical issue or what actually the ethical problem is. Case of Nestle seems to be a deliberate effort of promoting such products therefore this step is also not applicable it them. Step 3: Identify the Affected Parties (stakeholders) Nestle should have identified the consumers that would be affected by consuming such unhygienic products. Irrespective of recognizing this, Nestle continued to market and promote its products. Step 4: Identify the Consequences If Nestle would have analyzed the whole situation, it could easily identify the adverse consequences of this decision in declining market share, hampered public image and badly affected infants and consumers. Had these consequences be taken under consideration before, the situation would be rather positive and beneficial for the company and for the customers as well. Step 5: Identify the Obligations Nestle didn’t purposely identified and resolve this issue until WHO and UNICEF obliged them to do so. Step 6: Consider your own character and integrity The trust and confidence that people used to have in Nestlé’s got immensely deluded. To upgrade company’s integrity and trust back, Nestle need to include the Corporate Code of Ethics to get back the previous position. Step 7: Think creatively about potential actions If Nestle would have followed the previous six steps, it would be in a position to think creatively about how this issue should be resolved. Being such a gigantic MNC, it definitely would have reached a perfect solution that would have created a Win-Win situation for company as well as its stakeholders. Step 8: Check your gut This step is the essence of the entire eight step model. Gut feeling never lies. Whether it’s a corporation or an individual, every entity must follow and act according to its conscience while dealing with ethical dilemma. Surely, the person will end up in taking the right decision. Consequentialist Approach Consequentialist approach focuses on considering the consequences before taking a decision in confronting ethical dilemma. Utalitarianism theory is one example of Consequentialist approach, which states that those decisions must be undertaken that provide the maximum benefit to the maximum number of people and minimizing the harm. As per the above mentioned situation of Nestle, this approach was not undergone by the company. Deontological Approach This approach is more inclined towards divine laws, based on codified sets of Quran, Torah or Bible. It tells to do the right thing irrespective of all other concerns. Corporate Code of Ethics is also a set of principles to follow in order to maintain ethical culture. Neither this approach was taken by the company. Virtue Ethics Approach Its states that integrity of moral actor should be observed rather than the moral act itself. To certain extent, this approach was applied by Nestle as they considered their own self only irrespective of the community. Ethical dilemmas are a part of both personal and professional life of an individual. In the course of Business Ethics, we have studied different approaches of ethics and the ways of dealing with ethical dilemma both in our personal and professional life. This course has proven to be very helpful for me as it has taught us several ethical perspectives regarding individuals and organization. In future, it will assist all the students to behave ethically when confronting with any ethical dilemma. The approaches and the eight steps that we have studied cannot be learnt properly unless we apply them in our daily lives. Understanding of these concepts must be developed properly in order to get them applicable to our routine ethical dilemmas. References Asgary, Nader and Mitschow, Mark C. (2002). Toward a Model for International Business Ethics. Journal of Business Ethics(36)3, 239-246. Crane, Andrew. & Matten, Dirk. (2007). Business ethics: managing corporate citizenship and sustainability in the age of globalization (2nd ed.). New York: Oxford University Press Ethical Dilemma in Business. (n.d.). Retrieved from http://www.succezz.com/Articles/business-ethics-dilemma4.html Ethical Dilemma in Today’s Business. (n.d.). Retrieved from http://blog.nationmultimedia.com/print.php?id=962 Ferrell, O. C., Fraedrich, John. & Ferrell, Linda. (2010) Business Ethics: Ethical Decision Making and Cases (8th ed.). Mason: Cengage Learning Shaw, William H. (2010). Business Ethics: A Textbook with Cases (7th ed.). Boston: Cengage Learning Trevino, Linda K. & Nelson, Katherine A. (2010). Managing Business Ethics (5th ed.).United States of America: John Wiley and Sons Williams, Dean. (2001). The Ethics Dilemma. 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