Ethics in Business - Assignment Example

Business ethics and sustainability Name Institution Question 1 Ethics in business had been an issue that has attracted widespread debate where various parties have had difficult moments in establishing what can be truly termed as ethical in business and unethical. Different models and theoretical approaches to this concept do not fully encompass and find a centralized definition of what is ethical and what is not ethical in business (Amat & Gowthorpe nd, p. 4). For instance, one company may take up a cost-benefit approach to its business activities. To them, the end would most certainly justify the means. It would not really matter that much how they got there provided they achieved their objectives. Other companies take a more utilitarian approach where they define the outcomes based on the effects upon every member who made a contribution to the same. In the first case, many companies will analyze their benefits after a process is completed. Here, they do not put much emphasis on the process that was used to arrive at the stipulated outcomes that they now have. If the benefit is high, they justify the means used to come to that end regardless of whether it was ethical or not. different companies operating in different demographical capacities have different definitions and approaches to ethics in business. In the above case study, it can be clearly be observed that there is a breach of ethics in business. The mining of Mica, the important commodity used to make polishes and paint is in great demand across the world with a kilogram of the commodity being sold as high as $ 1000. This sounds good showing that those who have involved themselves in the process of selling the commodity actually benefit a lot from the sale of the same. The returns (the benefits) are quite high in this case. Cosmetics companies across the globe purchase this raw material and use it to create their cosmetic products. These products are highly valued by all lovers of fashion and they are priced highly too. It seems that there is a lot of goodwill to go around following these benefits accrued. However, it is important to know the details of the process used to acquire this commodity and once the finished good is traced back to the origin, it loses its aura. Egotism vs. utilitarian ethical approaches From the case study, it has been shown that the mining of the Mica in India particularly is done without the care or need to take any precautions for protection of the miners. Most times, even children are involved in this process at the expense of education. The case details Salim, a 12-year-old boy who accompanies his father to the mines and assists him to mine using just a stick. They do so without much regard to the dangers involved that include caving in, snakebites, cuts, skin infections as well as respiratory diseases. In addition to this risk exposure, they get paid 8 cents for the one kilogram that will eventually retail at $ 1000 in international markets. It is quite clear that the people who get the big money only use the miners for their labor that is paid disgustingly low. They apply the egotism theory that puts more value into the benefits accrued from the process. The utilitarian approach that advocates for the good of all is ignored in this case. As a consumer of the beauty products, one may take a moment to reflect upon their contribution to this atrocity and breach of business ethics. Using a utilitarian approach, each person in the chain of business should be able to benefit from the whole process. As a consumer, I would take pride and more value to the product knowing that each person who contributed to the development of the product right from mining to sales has been duly compensated. As a consumer, I would embrace the utilitarian strand of ethics, as it would make me feel better knowing that am using a product that has benefited every person involved in its processing wholesomely. Question 2 Before world war I, many countries in the world were growing their economies at a snail-like speed. There was no much hurry and competition between various nations in the world was not that much pronounced. After the war, many nations gained a sense of self-interest and rivalry between various nations was taken a notch higher. This rivalries could be traced way back when powerful nations went out to seek colonies so that they can maintain their supremacy. The world wars were the last strokes that saw these nations formalize their rivalry and capitalism set in very prominently. Over the last half a century, there has been a massive evolution into wealth creation and wealth distribution among many countries, the West being the leader in this game. The business system and structure that is applied on a large scale across the countries in the West has increasingly been subjected to public criticism. This business system is observed to be avidly embrace the capitalism concept. In the west, large multinational corporations are present. These corporations enjoy the advantage that exists in their structural composition that gives them the capacity to keep on growing. The business system that is prevalent in the West allows businesses to fully thrive and exploit the resources that are at their disposal, sometimes with less or no control whatsoever. The result of this form of business is the creation of a cliché of individuals and organizations who are deemed to be super wealthy on one end and another cliché of people who wallow in poverty on a daily basis. Nation such as the USA can pride itself in the fact that they have a thriving economy and home to the majority of the world’s richest people. However, on the other extreme, the nation also has the largest number of poor people. Though the definitions of poor and rich is relative to a given context, country and other factors, the disparity between the rich and the poor people in the USA is huge. Right to property vs. just distribution of wealth This difference in wealth distribution is what has raised a huge debacle and criticism on a global scale. People argue that it would only be fair that wealth be distributed equally amongst various individuals who contributed towards the creation of the same. However, according to the statues of the UN rights and liberties, this approach is skewed. In the Western nations for example, the wealth that people get is directly related to the input one made. Though other factors might result into wealth creations that are not legal such as stealing and robberies, it is the constitutional right of the person to keep what he or she earns. It is also within the freewill of that individual to do as he or she pleases with his or her wealth. Thus stated, it is then shown here that an individual has the liberty to be rich and acquire wealth. Moreover, he also has the right to retain this wealth or do as he or she pleases. Just distribution of wealth is not justified constitutionally. Constitutions of many nations, particularly those in the West allow for creation of environment for wealth creation but do not give provision for the distributions of the same. What happens in most instances is that taxes from the people are used as resources to develop areas that are seen to be less developed but efforts that individual put in their work to create wealth are recognized and they are given the capacity to retain this wealth despite much criticism (Mounira 2009, p. 13). If people did not have this right, the motivation to work harder and excel would be absent. People need to know that governments protect their right to exist, own and retain their property without the threat of someone claiming ownership over the same. Just distribution of wealth cannot be said to be fully justified despite widespread global criticism. Question 3 A right based perspective to ethical behavior serves to categorically place various ethical issues in the society in their appropriateness. In other words, it gives a framework within which individuals can operate without being accused of conducting some form of atrocity to the community in which it serves. The right based approach limits the various personnel who are involved in business activities to ensuring that they operate within the boundaries of professionalism and what is termed as ‘right’ (Romila, Lee & Dilip 2013, p. 13). There are numerous right based ethics in the world and the factor of determining what is good from what is bad in a business setup lies solely upon the minds of those who engage in such activities. However, there are well recognized fundamental ethical approaches that every person is inclined and indeed expected to adhere to. Every individual in the society has their own definition of what is right or wrong. Collectively, each person is expected to act in such a manner that does not infringe on the rights of other members of the society at any given time. Sometimes, the right based approach extends to cover even the environment. Here, people are expected to behave in such a manner that ensures that the goodwill of the environment is maintained. There are various right based ethics and their application is designed to ensure that the coexistence between individuals in the society and between individuals and society. Right based ethics are legal and they uphold moral or human rights and by extension, the rights of the environment. The first right based ethics under mention here is the right of individuals to freely voice their opinions. In any society, an individual has the fundamental right to express him/herself without any infringement from the law whatsoever. However, under the right based ethics, this individual has the mandate to choose what he or she expresses using various mediums carefully so as not to instigate chaos from words. The individual knows what is rightful to say and what would bring harm to others and using this concept, he or she expresses opinions without necessarily inflaming other society members. The right to own property is also another right entitled o individuals. People have the right to own property wherever they so wish and wherever they may be able to afford. However, the process of owning these pieces of property should not in any way conflict with the rights of other individuals and the society. For example, manufacturing companies need to find ways to treat their waste so that it would not bring harm to the environment and the people who depend on the well-being of this environment t survive. The right to join groups or political movements is also inherent here. However, following the right based ethical perspective, this right is subjected to maintenance of peace. The rights based ethics prohibits the usage of such fronts to bring about destruction to environment or even loss of life to others. The right to life is also a fundamental right based ethics. Every individual in the world has a right to live. However, individuals should not misuse this right to engage themselves in activities that would in one way or the other endanger other people or lead to property destruction. For example, even though ethically individuals have the right to life based ethics, this right can be forfeited through a process of the court if these individuals are seen as not acting in the interests of the community as well as themselves. In other words, if one steals or kills, the court may order one to be killed and this makes them forfeit the right based ethics that is the right to life. Question 4 Ethical decision making in business is a very vital and key concept. In some industries such as the financial sector and insurance, ethical decision-making forms the backbone of their business (Aktan, Masood & Yilmaz 2009, p. 32). In other words, these sectors rely heavily on the trust that people have in them. People need to be able to trust them enough to give them their funds to manage. The case study under discussion here shows how CBA officials evidently and knowingly discarded their ethics and almost led to the loss of hundreds of millions of dollars in savings. In this story, the cost- benefit approach is used in this case disregarding the consequences of the behaviors of some of the highest officials in this bank. Nguyen, the man behind the breach of ethics in this bank is accused of embezzling funds that belong to the aged people and investing them in risky investment portfolios. With the impending loss, a group of employees decided to come forward and blow the whistle on the case. Nguyen was not fired but as a sign of goodwill so that the reputation of the bank can be maintained, he was given time to resign citing ill health. The cover-up and rationalization of this breach of ethics can be observed as flowing through the top echelons of the bank. The bank is mainly concerned with the attainment of its targets. There is little reference and factor to how this target is achieved. Nguyen is shown as having been one of the top performers in the bank as he had been able to hit targets and sometimes even triple these target scales. After he is promoted, he embarks on a journey of investing cash in high-risk investment platforms. This money is designed as savings by the elderly members of the society and it is not to be invested in high-risk ventures. The investments made by Nguyen hits a snag with the financial crisis and the investments he made experience a free fall. At the risk of losing $ 300 million, various bank employees blow the whistle on the case instigating a series of events that leaves the ethical approaches to business in this case being questioned. When the investors realize that they would somehow lose their savings, they flock to the bank to understand what is going on. Ethically, the bank seniors would have related to these clients about the plight of their investment. However, it did not happen like so. Taking a good example of the Blanches, who were the clients of this bank and had saved with the bank, they receive letters informing them that the bank would pay them $ 6777 that grows considerably in three months to $ 95000 pointing to the fact that there must have been a breach of ethics in this bank. The rationalization of the end justifying the means that most senior officials in this bank have is a direct breach of their ethical codes. In the first place, they should not have invested the client’s money without the duly authorization of the client. The officials who later get fired and some banned for forging the signatures of the clients point to the protective ring that these senior employees of the bank had. That is how they managed to channel funds of the clients to other forms of investment other than the clients had stipulated. This leads to a high-level breach of ethics and any form of rationalization would not earn back the trust of the client. When the customer relations manager at the bank sends a letter to the Blanches and then realizes that they have the very original letters, he changes his statement arguing that he had stated as so in a bid to ‘lessen’ the workload. However, it can be observed clearly that the action of placing savings of these elderly people into ‘high risk ventures’ was a deliberate move. The statistics show that the trend of the investment group read ‘high risk’ irrespective of the demographics of the client. This shows that the bank utilized the client’s money without any form of proper authorization by the same. References Aktan, B, Masood, O and Yilmaz, S 2009, “Financial shenanigans and the failure of ethics in banking: a review and synthesis of an unprecedented fraud”, Banks and Bank Systems journal, vol. 4, no. 1, pp. 30-33. Amat, O and Gowthorpe, C nd, “Creative Accounting: Nature , Incidence and Ethical Issues “, Retrieved from http://econ.upf.edu/docs/papers/downloads/749.pdf Mounira, A 2009, “Ethical Investment and the Social Responsibilities of banks”, International Business Research, Vol.2, no.2, pp.123-130. Romila, P, Lee, C and Dilip, G 2013, “Financial transaction and fiduciary obligation: Ethics, economics or commingled commitment? ” International Journal of Banking and Finance, vol.9, no. 4, pp.1-27. Read More