Ethics and Business - Essay Example

? Ethics & Business Introduction This paper is an attempt to look at the relation between ethics and business. It would try to answer the question that why businesses should care about ethics when profits and ethics have appeared to be having an inverse relationship. Furthermore, it would also explore the claim that in the long run, ethics and ethical behavior benefits businesses. The same would be done with the help of theory, examples, and shedding some light on a particular case of Merck and its ethical behavior. Discussion According to its simplest definition, business ethics refers to the practice of differentiating what is right and what is wrong. Everyday, businesses find themselves faced with decisions, which make a strong impact on the lives of the stakeholders of the company. Important here to note is that stakeholders just not only include the “employees, customers, investors, debtors, shareholders, suppliers, distributors and competitors” (Wicks, Freeman, Werhane, & Martin, pp. 85-86, 2009) of the company but they also go on to include the entire society or community with which they are working. There are various reasons why companies should care about ethics and ethical behavior at their organizations. First, gone are the days when business had great bargaining power and customers were only concerned with their products and services. Globalization and revolution in information technology have changed everything and customers are now more aware than ever. Furthermore, with increased competition, businesses now have no choice but to fulfill the needs of customers regarding the information that they want (Beauchamp, Bowie & Arnold, pp. 41-48, 2008). Thanks to the vigilant media, journalists, governmental agencies and other watchdogs, that any potential news about any irresponsibility, ignorance environmental protection, injustice to stakeholders and other forms of unethical conduct, sooner or later, reaches straight to the customers in flashes. In addition, when it does, customers have shown that they have the power to stage boycotts, protests and blacklist the company in the eyes of all customers. Therefore, it is in the best interests of the company and its stakeholders to ensure ethical conduct at all times (Henn, pp. 320-324, 2009). Second, when a company actually ensures ethical behavior with the insiders and outsiders, it acts as a vital source to motivate the employees. When employees know that they are indirectly working for a company, which is better than other companies or the organization, is not harming other unlike others or it is working for a cause as well, employees listen to their inside voice which tells them to work harder to be a part of it (Henn, pp. 320-324, 2009). Companies, which have championed corporate social responsibility and ethical behavior, have had lesser employee turnover as compared to others. Furthermore, ethical companies are not only able to retain talent, but they also attract more talented and skilled people than others that allow them to have a greater pool of candidates (Wicks, Freeman, Werhane, & Martin, pp. 85-86, 2009). Third, marketing remains an important aspect of the business. Marketing ensures that company generates enough value for the customers to satisfy their needs and earn appropriate revenues. However, an important aspect of marketing is promotion of the product, in the absence of which the business has no reason to survive because if the customer does not know about the product in the way in which the company desires then there is little no point in running the business (George, pp. 254-256, 2006). With the passage of time and especially over the past few decades, promotion is becoming an expensive and troublesome activity for various businesses. It is becoming impossible to reach the desired customers with traditional means of promotion. Customers have greater control over their telephones, emails, TV sets and others. Furthermore, customers are also smart to understand all the tricks of the trade (Ferrell, Fraedrich & Fraedrich, pp. 85-89, 2009). Therefore, the point here is that companies are searching unorthodox and modern ways of promoting themselves. One of the ways is to champion ethical conduct with all the stakeholders of the company. Quite understandably, the general perception and feeling of the customers about the corporate is that it is governed by no sense of morality and unethical conduct. However, when an organization proves to its observers and its critics that it is different, through its public relations, causes, charities, funds, activities, word of mouth advertising, services and others, then this receives much attention and discussion in the public and consumer circles. Eventually, it needs up generating goodwill and many potential customers for the company (Wicks, Freeman, Werhane, & Martin, pp. 85-86, 2009). Important here to note is that many people claim that there is an inverse relationship between ethics and business profits and revenues. They believe the same because ethical conduct, at times, requires businesses to make certain decisions which appear to be costly or which appear to be forcing the company to leave certain profits earning opportunities. Considering this argument, the inverse relationship between ethics and profits appears acceptable; however, there is no point that it could be true in the long run as well (George, pp. 254-256, 2006). History has shown that companies, which have remained true to their ethics and values, have not only survived through all thick and thins but they also continue to make great profits. Names include of companies like “Johnson & Johnson, Colgate, Microsoft, Marriott International, Whole Foods International, Ford Motor Company, Standard Chartered, IKEA, General Electric, and others. On the other hand, there are several examples of companies such as Diamond Shamrock, Enron, WorldCom, Tyco International, Mahindra Satyam, Ryanair, Lucent Technologies” (Shaw, pp. 168-169, 2010) and others, which due to their unethical conduct either have ceased to exit or are facing great problems. Case of Merck In order to understand the importance and role of ethics in business, the case of Merck presents a great opportunity. This case shows that how a company believed it as its responsibility to take care of people who had nothing to return to the company and were thousands of miles away from the organizational headquarters. Even today, many people living in the coastal area of Africa, sub Saharan Africa and South America suffer from a dangerous disease of Onchocerciasi (Ferrell, Fraedrich & Fraedrich, pp. 85-89, 2009) also known as river blindness. The disease is caused by the bite of a black fly, which leaves a dangerous parasite in the body. The fly lives in the rivers therefore, only the people living near the rivers and seas of Africa and South America are at the risk of this disease. The disease eventually not only leaves the person deprived of the sense of sight but also the parasite, which grows inside the body develops, the feeling of itching in the body (Ferrell, Fraedrich & Fraedrich, pp. 85-89, 2009). People at their large stage of the disease literally feel worm like insects crawling under their skin, which could be up to two feet, damaging their tissues. This disease is not only the second biggest cause of blindness in humans but the affected people find themselves in so much of pain that majority of them use to commit suicide even before their death (Beauchamp, Bowie & Arnold, pp. 41-48, 2008). During the mid of 20th century, when this disease was killing thousands of people in Africa, creating disastrous social and economic impact, scientists, working under the umbrella of Merck, were working to find a cure for this disease along with various other projects. Finally, in the year 1975, Merck discovered ivermectin that was claimed to be the cure of river blindness in humans. The tests conducted on animals appeared to be successful and five years later, in the year 1980, the company successfully conducted the first human trials in Senegal, which showed that drug was ready to be sold (George, pp. 254-256, 2006). However, the company faced significant expenses in the discovery, development, and improvement of this drug, which was named as mectizan. Since this was the only drug available in the market for the cure of this disease, Merck hoped that it would be able to earn billions of dollars by selling it; however, the problem was that neither the people differing from the disease nor their government had the buying power to purchase this disease in bulk quantities. The company went to the United States government asking for buying this drug from Merck and then distributing it to the affected people in Africa. For some reasons, the United States government declined the proposal after which the company turned to the United Nations, which at first declined the proposal to buy the drug but was ready to assist the company in other ways. Since the project was no longer economically viable, it was rational and logical to stop the production of the drug and concentrate the energies on other projects. However, on October 21, 1987, the company’s president Raymond V. Gilmartin amazed the world by announcing that the company will distribute and donate the drug for free, “as much MECTIZAN as necessary, for as long as necessary, to treat river blindness and to help bring the disease under control as a public health problem” (Beauchamp, Bowie & Arnold, pp. 41-48, 2008). Since that day, the company has donated more than 500 million drugs to the affected people and the ones, which were at potential risk living in more than 35 different countries of the world. Important here to note is that this task required the company to set up a distribution chain, all by itself, to reach the end consumers because selling it to others may cause the black marketing of the drug. With the help of WHO and others organizations, the company treats 25 million every year (Shaw, pp. 168-169, 2010). Despite the fact that Merck has face some charges in the recent past for its irresponsible behavior but this move of the company and continued commitment to this cause has allowed Merck to earn so much of the goodwill that customers surveys have repeatedly shown that customers all around the world trust the company more than other pharmaceutical company. It has worked with governments, entered new markets, received praise from customers and critics, motivated employees, attracted superior talent and have redefined the concept of business ethics and responsibility. During the year 2010, the company earned revenues of more than 46 billion US dollars and is one of the top-five pharmaceutical companies in the world (Shaw, pp. 168-169, 2010). Works Cited Beauchamp, Tom L., Bowie, Norman E., & Arnold, Denis G. Ethical Theory and Business. Prentice Hall, 2008. Ferrell, O. C., Fraedrich, John, & Ferrell, Linda. Business Ethics: Ethical Decision Making and Cases. Cengage Learning, 2009. George, Richard T. De. Business ethics. Pearson/Prentice Hall, 2006 Henn, Stephen K. Business Ethics: A Case Study Approach. John Wiley and Sons, 2009 Shaw, William H. Business Ethics: A Textbook with Cases. Cengage Learning, 2010. Wicks, Andrew C., Freeman, R. Edward., Werhane, Patricia H., & Martin, Kirsten E. Business Ethics: A Managerial Approach. Prentice Hall, 2009. Read More