The Most Important Reason for Business Ethics - Essay Example

Q1. Crane and Matten list 8 reasons why business ethics is important. List as many of these reason as you are able to, and explain in detail. Business ethics is important for a variety of reasons. These include: 1. Businesses have the potential to inflict harm This is the most important reason for business ethics. Malpractices by businesses can inflict harm on communities, individuals and the environment. Such harm may be through the use of banned substances in manufacturing. Business ethics helps understand about the causes of these malpractices and their consequences. It also teaches business owners what is wrong and right in business and what can be harmful to the health of their customers. This way, business ethics tries to improve human conditions by safeguarding people from potential harm. 2. Power and influence of businesses in society Today the influence and power of business is greater than ever. Most people are uncomfortable with this influence because they think businesses influence government policies to favor them at the expense of consumers. Business ethics helps address this situation and explain what exactly is happening. 3. Potential to provide major contribution to society Business is potentially able to provide immense contributions to the society through production of commodities, provision of employment, acting as a driver of economic growth and through payment of taxes. Business ethics explains whether this contribution is positive or not. 4. Increasing demands from stakeholders Nowadays, the demands on businesses to be ethical by stakeholders are becoming complex and challenging. As such, business ethics helps appreciate and understand such challenges clearly thus enabling businesses to meet these expectations easily and effectively. 5. Lack of business ethics education or training Since very few business people have been taught business ethics at school, business ethics helps improve their decision making by making it more ethical through provision of appropriate knowledge and tools which enables them to identify, diagnose, analyse and come up with the correct solutions to ethical challenges. 6. Continued occurrence of ethical infractions Ethical violations are frequent in business. Business ethics comes in and provides a way of dealing with these violations and ways in which they can be solved by regulators, managers and other interested parties. 7. Evaluating different ways of managing business ethics Business ethics gives us the ability to assess the problems and benefits pertaining to different ways of ethics management in organisations. 8. Interesting and rewarding Business ethic feeds us with knowledge that goes beyond the traditional understanding of business studies. It helps understand the questions raised by society and is interesting and rewarding because it provides us with skills and knowledge that help us address ethical issues in business. Q2. What is a conflict of interest? Outline potential conflicts of interest that might apply in firm-supplier relations. Conflict of interest normally occurs when an organization or a person’s obligation to act in the best interest of another is interfered with by competing interests that may in a way obstruct the fulfillment of that obligation in the best way possible. Conflict of interest may apply where: 1. Some of the directors in a firm may be the owners of the supplying firm and as such may influence the tendering process and supplier selection. They may select a certain supplier even if it does not have the best bid in order to help their company. 2. The suppliers may use information over a company that they gain through their association with the company as suppliers. Firms may also use information they gain about their suppliers thereby amounting to conflict of interest. 3. Those responsible for selecting suppliers may solicit for bribes from the bidders in order to award them the tender. 4. Owning equity in a company with which the employing company has business relationship such as being the customer or supplier can also amount to conflict of interest. 5. Conflict of interest between a firm and as supplier may also arise if the some employees of the firm are working simultaneously for the suppliers. Employees should not simultaneously work for suppliers and firms Q3. What is social accounting? Provide an example of an organization engaging in social accounting. Social accounting refers to the voluntary process that is concerned with assessment and communication of organizational activities and their impact on ethical, social and environmental issues that are relevant to stakeholders. Organizations engage in social accounting for both moral and practical reasons. These include internal and external pressure, identifying risks, improving stakeholder management and enhancing accountability and transparency. Challenges that social accounting faces include the perceived high costs, inadequate information systems, lack of standards, insufficient information, secrecy and sometimes unwillingness to disclose sensitive and confidential data. Social accounting is good because it leads to inclusivity, comparability, evolution, disclosure, management policies and systems, continuous improvement, completeness and external verification. Some schemes that make for good social accounting systems have been developed. These schemes tackle specific aspects of social accounting. These include: Area Scheme Auditing and certification Social accountability standards SA 8000 Reporting The Global Reporting Initiative (GRI) Reporting and assurance AA1000S Assurance Standard A good example of a company which has been engaging in social accounting is Traidcraft. It is a UK company which works with the New Economic Foundation and was one of the pioneers of social accounting. It published its first report in 1993 and many organizations have since adopted and adapted the methodology Traidcraft used. Q4. Describe the utilitarian normative theory of ethics and outline criticisms of this theory. The utilitarian normative theory of ethics is a normative ethics theory that puts the locus of right or wrong purely on the consequences (outcomes) of choosing one policy/action over the other. In this manner, the theory goes beyond the scope of an individual’s interests and takes care of the interests of other people. Utilitarianism faces several criticisms among them: 1. It does not give special moral weight to things such as contracts and promises. Its argument is that if breaking a contract or a promise would make the world happier, then the contract or promise should be broken. 2. It doesn't have room for a special moral obligation that people have to their friends and families. It only places weight on utility regardless of who gets it. For instance if one is faced with the choice of saving a spouse or a philanthropist from an accident, the theory would require one to save the philanthropist because he would do more good to the society. 3. It makes choices that are difficult to seem easy where it is not obvious what is right or wrong. For instance, supposing that one is faced with the choice of shooting one person to help six escape or doing nothing and having all seven get killed, utilitarianism holds that it is obvious that the right thing to do here is kill the person and save the others. 4. It regards the measure of all happiness as equal regardless of who enjoys it. For a utilitarian, making a person who bullies you happy is just as good as making your friend happy. Obviously, this may obviously not the case for many people because many people view happiness as being of n value unless that person has good morals. 5. It does not accord a special moral weight to justice. According to utilitarianism, the right thing is always the one that will produce more happiness even if it is not the just thing to do. Read More