Analysis of Business Ethics - Case Study Example

Case Study: Business Ethics Name Unit Institution Tutor Date Introduction “There is no such thing as Business Ethics. There is only one kind-You have to adhere to the highest standard.”- Marvin Bower the former managing partner of McKinsey & Company. Business ethics stems from applied or professional ethics; a branch of ethics that probes into the ethical issues arising in business environments. Ethics addresses concepts such as right and wrong, good and evil, justice and crime among others. The requirement for an individual to be ethical surpasses the obligation to obey the rules or laws laid out by legal authorities1. The fact that money is an insatiable commodity, presents an even taller order for business people to adhere to business ethics.2 Business ethics examine the rights that all business stakeholders ought to uphold and the wrongs that they should keep at bay such as price gouging.3 Partnerships characterize investments. The collaborations bring about business personalities whose exercise and adherence to business ethics impacts either negatively or positively on the businesses they invest. This paper presents a case study on the business ethics coming into play when a wealthy investor cum doctor (Victor Serna) offers to stake his €3 million in a franchise health care business (Day care centers for the elderly- Calidad de Vida) owned by Gloria Londono. The paper delves into the business ethical issues arising as a result of Victor taking a stand that Gloria will have to allow him to control the business. The overlying business ethics in this case regard deontology, utilitarianism, libertarianism, teleopathy among others such as adherence to virtues and corporate social responsibility. Elegant and calculating In this case study “An Angel Investor with An Agenda”, Victor presents himself as an intelligent and calculating investor. He has an aura of elegance that attracts people to him as attested by the style, fashion and the treatments he extended to Gloria when he makes his offer. Elegance is what causes attraction among people. Investors more than any other category of people, need to earn the trust that comes with elegance from potential business partners, “… His suits were Gucci, his watch Patek Philipe…he ordered us Serrano ham and Rioja”4. The presentation of oneself as elegant should not be an important factor in judging their ethicality. Some researchers assert that the vast majority of businessmen present themselves as elegant in order to camouflage malicious intentions while investing.5 Thus there is need for more scrutiny on investors’ ethical record. Victor presents himself as calculating, he starts to make the offer by stating the colossal amount of money that he plans to invest in Calidad de Vida “Before the food arrives...I am ready to invest in Calidad de Vida €3 million.”6 This arouses Gloria’s interest, “…Gloria’s heart leaped.” He explains what the amount of money he is offering has the potential to achieve and asserts that he has to be allowed control of the business. Caveat Emptor After stating his proposal to Gloria, Victor dismisses her efforts to respond. In the case study, “Gloria started to respond, but he cut her off.” Through his arrogant dismissal of Gloria, he violates a key business ethic- “caveat Emptor” a Latin phrase which means that the responsibility over a product (what it does, its benefits and/or how it harms the users) rests with the buyer7. In this case Gloria was the ‘buyer” of Victor’s offers. The fact that she was the proprietor of Calidad de Vida meant that she deserved listening to by any interested parties. Deontology Deontology comes from Greek word “Deon” meaning obligation or duty. German Philosopher and scientist, Emmanuel Kant proposed that morality obliges people to act in line with a particular set of principles or rules regardless of the outcomes they expect8. Deontology means judging the ethicality of actions based how they stick to rules. According to Kant, human beings possess the highest propensity to reason and act. As such, Kant believed that individual inclinations, emotions and expected consequences of an action, should not come to play in matters relating to moral action9. Gloria is in a dilemma over whether the acceptance of Victor’s money would further the course of her business. She needs the money but she fears Victor taking control of the business and jeopardizing it by meddling and being stubborn. Deontology dictates that her motivation to act must be based on ethics, and in this case business ethics. In case the board at Calidad de Vida accepted Victor’s money, would his say further the obligations of the business to the community? In line with deontology, the decision the board makes will seek to address this question. Currently business is good for Calidad de Vida. The company employs consistency in all the franchises. All are well equipped with staff, have therapy management soft ware and electronic patient records coupled with strict performance protocols to ensure uniformity. The conversation Gloria holds with the staff at one of the franchises attests to how well the business was doing, ‘…can you believe that it’s taken us only nine months to get to 35 clients?”10. 35 clients were the break-even target for the new franchise that Calidad de Vida had set. This forces Gloria to contemplate on Victor’s offer while she seems to read ulterior motives from Victor, “…Victor wants to invest…but there are strings attached”11. Gloria discusses Victor’s proposal with Daniel the Chief Financial Officer (CFO), who proposes that it would be beneficial for the business to accept victor’s money. This he says would help Calidad de Vida “…pursue the aggressive growth strategy”12. Daniel advises that since, he and the entire business never knew what to in a volatile economic climate it would do them good to accept Victor’s money. They would use the money to support the franchisees that they recruited. From this perspective, the need to be economically stable overrode the fears that Victor might have ulterior motives. Deontology dictates that if the overall good to be achieved satisfies morality, then the one can go ahead and pursue the relevant course of action.13 In her own right Gloria pursues deontology. She feels that it is her obligation to inform the CFO before she embarks on any decisions with Victor. It is for this reason that she engages Daniel her CFO in a discussion. Utilitarian/Teleology ethics In teleological ethics, individuals derive moral obligation or duty from what is desirable and right out of an achievement14. It is also known as consequentialism ethics. Modern ethics from the 18th century have categorized teleological ethics as utilitarian ethics since in both cases, it is the achievements that matter and prove the morality/ethicality of an action. Deontology ethics contrasts utilitarian ethics. Utilitarian ethics stem from “utility” or the usefulness of engaging in an activity or venture. How right or wrong an action was when an individual or a corporate body was pursuing it is determined by its consequences15. Utilitarianism is an ethics theory that proposes that the proper course of action to be taken in any decision making process is the one that maximizes the overall good for the highest number of individuals.16 Utilitarianism is thus a form of consequentialism in that the outcomes of an action determine its moral worth. In this case, Gloria and Daniel depict utilitarianism. The two were well aware of the demographics “…an estimated 9 million people over 65 in Spain by 202017” Gloria knew that the increasing number of elderly people in Spain and elsewhere meant that Calidad de Vida needed money to expand and stabilize itself economically. Handling the huge number of the elderly Spain expected over the next decade was the end Calidad de Vida had to not only plan for, but achieve. Victor was there to provide the money the business needed. In managing to house the increased number of elderly people using Victor’s money, while questioning his motives, Gloria would have exemplified utilitarianism. Moreover, Calidad de Vida targeted at having fully owned centers in contrast with the franchises that Gloria currently run. While the franchises injected only 5% of their earnings to the proprietor, fully-owned centers would rake in more money. Driven by the desire to make more money, would have chosen to take Victor’s money right away and set up the centers. Yet she was not willing to hand over control to Victor “…Let’s talk about control,” Gloria said. “I don’t want to hand it to Señor Serna”18. Instead Gloria was willing to relinquish control to the franchisees as opposed to having an individual make all the critical decisions on behalf of the business. By allowing the franchisees more control, Gloria would be acting for the common interests of the highest number of people. This is a key aspect of utilitarianism. Teleopathy Teleopathy refers to the unbalanced pursuit of objectives. According to Shaw teleopathy in ethics is simply an emphasis for individuals and corporates to “walk the talk”19. Businesses ought o live up to the perception of the general public. As business people pursue their objectives they ought to adhere to business ethics 20.The values and ethics that businesses stand for should be evident to all absent contradictions. Calidad de Vida upheld high levels of teleopathy. Gloria and the staff at the center depict a warm and welcoming atmosphere that is synonymous with an elderly care center. “…Paola Silva, the always cheerful center director”21. The operational values borne on the business cards, further attests that the business ethics Calidad de Vida stood for were clear to all stakeholders. Libertarianism The philosophical term Libertarianism comes from the word liberty- which is the right to govern oneself based on free will. Libertarianism advocates for minimal influence and maximization of individual liberty will22. Libertarianism encompasses the right to govern oneself as well and is of the moral perspective that agents wholly own themselves and are entitled to moral powers regarding acquisition of property23. Victor acts on libertarianism when he proposes to invest in Calidad de Vida. He has a right to express his willingness to invest in Gloria’s business and has moral powers to acquire a part of the establishment. Gloria too is aware that Victor is morally right to express interest to invest in her business. Consumerism Another term relating to business ethics is consumerism. The term refers to the promotion of the consumer’s interests24. The customers of Calidad de Vida are old people each with unique old-age complications. This presents a wide array of challenges to the staff at the various franchises that the business runs. As such the adherence to consumerism is imperative to ensure that the clients get satisfied with the services they receive. The business’s staff extended the treatment it offered to clients to their families as well. By accommodating the families of the old people into their plans the business showed high degree of consumerism. The family members would help the staff at the centers to better understand their clients. Value Value is another core component in business ethics. Gloria comes out as having true value for the elderly care center business, “…six elderly clients seated around a table in Calidad de Vida’s signature green chairs. …this scene was what she had envisioned five years ago when she quit her job …”25. After the meeting with Diana and Daniel, Gloria pulled out a card that bore the operational values of Calidad de Vida. Honesty-speak clearly but with respect Enthusiasm-those who don’t believe don’t Belong Transparency- information is available to everyone A search for the common good- put yourself in the client’s shoes26. Gloria wondered if she could she uphold those values if she took Victor Serna’s money. We can deduce that Gloria upheld the operational values at heart and this affirms that she upholds business ethics as well. She feared that by allowing Victor to have the say in critical decisions, she would be staking the business ethics. Corporate social responsibility Corporate social responsibility is another business ethics that Gloria and the board at Calidad de Vida ought to consider before deciding on whether to accept Victor’s offer to not to. Gloria feels that it is its obligation to extend the very best of services to its clients absent excuse. Allhoff posits that a business’s social responsibilities ought to extend to not only the “stockholders but to other stakeholders as well”27. How well a business serves and integrates with the community in which it thrives is usually a benchmark of its adherence to business ethics. Calidad de Vida serves the elderly in the society and as such the business ought to integrate very well with the society. The business can assist in setting up other facilities like gymnasiums for the elderly, extend the range of services they render or reduce the fees they charge at the centers. The money Victor offers can fund these projects and thus fulfill Calidad de Vida’s corporate social responsibility. The dilemma however persists since there are the operational values that define the business ethics the business stands for. Gloria fears that allowing Victor control over her business would violate these business ethics. Virtues Diana and Gloria depict Victor as a “stubborn meddler”. “Serna may have a reputation for meddling…It seems to be his terms or nothing”28. These attributes form part of Victor’s virtues and are an integral part of his business ethics29. In refusing to change his stand, Gloria might judge him as being unfair, unjust or even outright wrong. Victor appears to possess a huge ego; Shaw advises that there is a very thin line between a healthy ego and egocentrism. He adds that whereas a healthy ego is essential particularly to business people, egocentrism cause dislike from people30. These judgment criteria encompass not only business ethics but all ethics in general. Gloria on the other hand appears a respectful lady. Her reference to Victor as “Senor” attests to this. Again, when Victor asks her not to comment on his proposal she obliges in spite of feeling that she had to make something clear. According to Glac, the portrayal of virtues or vices by a person can form the basis of judging ones as ethicality31. Whenever ethical issues come up integrity is paramount. Integrity means the “wholeness” and cohesion of an individual’s morals. Integrity encompasses honesty, responsibility and accountability. Gloria comes out as an integral business woman, the manner in which she tends the business attests to this. Conclusion Business ethics are the codes of conduct that govern inhabitants of business world. These involve the “rights” that business people should uphold and the “wrongs” that they ought to shun. This case study depicted the different facets of business ethics after Victor Serna offers to stake 3 million in a health care business Gloria Londono owns. Victor states that he needs to have a say in all critical decisions after investing in Calidad de Vida. Gloria is currently planning to expand Calidad de Vida and cater for increased demand for their services. Moreover, she wants to stabilize the business economically and make more profits. On the other hand the business adheres to strict operational values and business ethics. Victor poses the threat of violating these very ethics by gaining control over the business. In light of these, conflicting ethical issues come up. One of this is deontology (a category of ethics that obliges people to act in line with a particular set of principles or rules regardless of the outcomes they expect). Utilitarianism (a category of ethics that argues that, how right or wrong an action was when an individual or a corporate body was pursuing it is determined by its consequences) also surfaces. Consumerism and caveat emptor come up, both touching on businesses acting for the good of the buyers or clients. The virtues of the parties involved as well as Calidad de Vida’s corporate responsibility and how each of these relates to business ethics has also been highlighted Bibliography Allhoff, Fritz and Anand Vaidya. 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