Ethical Side of the Business World - Case Study Example

Ethics Name: Date: Ethics Introduction Ethics are a set of values, morals, behaviors, beliefs and practices that are considered to be right and widely accepted in a specific society. Ethical values may vary from one society to another depending on cultural backgrounds (Chung, John and Teruso 2008, 122). For this reason, marrying a cousin may be considered ethical in India while it is unethical West. Business ethics focuses on applying ethical principles in business. On this, it should be acknowledged that since an organization is not living creatures by itself; corporate ethics is normally developed and sustained by its people. As such employees, shareholders and other relevant stakeholders have a high influence in dictating corporate ethics. In the wake of increased competition, surplus production and need for sustainability, business ethics has become a critical factor influencing organizational success. In what is seen as a move towards ethical consumption, customers are increasingly associating themselves with ethical companies (Barnett, Philip and Terry 2005, 13). There are various ethics theories that are based on various schools of thought. The following paper gives a critical insight into an ethical dilemma faced by the president of Almond China as put forward in the case study ‘Should a German-Chinese joint venture follow the ethical rules of the parent company or the country of operation?’ by Katherine Xin and Wang Haijie. Ethical Dimension 1- Code of Ethics for Almond Chemical Situation Almond Chemical is a German company that has operations around the globe. It is renowned for its great products and chemical processing technology. The company is listed in New York and Frankfurt stock exchanges and as a result has to abide with international ethical practices outlined by the two stock markets (Xin and Haijie 2011, 130). The company has an internal code of ethics that is supposed to guide the company’s employees in their day to day work. The code of ethics is supposed to be upheld in all the company’s operations around the world. Some of the key issues in the code of ethics are health and safety standards. The company is supposed to provide a healthy working environment to its employees and should not pose any risk to the community or environment hence the emphasis on appropriate waste treatment (Xin and Haijie 2011, 130). The other key issue in the code of ethics is with regard to bribery and the use of corrupt means to do business. It is against the company’s practices to give any incentives or tokens to other entities so as to secure business deals. Currently the company is faced with a big ethics challenge in Almond China. It is finding it hard to make business operating within its code of ethics in a market where bribery, tokens and incentives are key factors influencing the probability of making good business. Task The task at hand is to uphold the company’s code of ethics as outlined in its German headquarters. The president of Almond China is tasked with the hard decision of affecting the company’s code of ethics. This is meant to ensure that the company standardizes its ethical practices around the world and that it abides with the ethical practices guidelines outlined by the New York Stock Exchange. Action In this ethical dimension, Liu Peijin, the president of Almond China is supposed to uphold the company’s code of ethics and desist from doing any business deals that require the use of bribes, tokens and incentives to secure sales. He is also supposed to ensure that the company upholds high health and safety standards in its Chinese operations as expected of it from its headquarters. Almond China’s action’s to uphold high business ethics can be explained using utilitarian, deontological and virtue ethics theory. According to deontological ethics, the morality of an action is examined by whether it is the right thing to do in a given situation. A normative ethics theory, virtue ethics emphasizes on doing the right thing because it is right as speculated by law (Manners 2008, 47). Relating this to the case study, Almond China should uphold the code of ethics outline by its parent company in Germany because it is the right thing to do as per the company’s rules and regulations. Owing to the fact that Almond Chemical is listed in the New York Stock Exchange, a stock market that has strict regulations with regard to the use of corrupt means in business, it is automatic that the company is expected to abide by ethics rules and regulations in its global operations (Xin and Haijie 2011, 130). From a community morals ethics point of view, observing high health and safety standards respects human life. Additionally, waste treatment, which is seen as an unnecessary operating cost by Almond China’s partners enhances environmental sustainability, which is the right thing to do. From a virtue ethics theory perspective, it is expected that individuals and organizations develop a set of virtues to guide their decision making actions (Abdullah and Benedict 2009, 91). On this point, it is important to note that there is a need for entities and individuals to develop their moral reasoning in such a manner that enables them to stick by a given set of virtues when presented with situations that require them to make decisions amidst dilemmas and uncertainty (Abdullah and Benedict 2009, 91). From the case study, it can be identified that Wang Zhibao, the sales vice president, Dolf Schulman, Almond Chemical’s vice president of business development and the Chinese partners did not value the virtues upheld by Almond Chemicals. This is illustrated by their allowance for bribery and other corrupt means of securing business deals as practiced in China (Xin and Haijie 2011, 131). In such as situation, Liu Peijin’s decision should be guided by the company’s virtues and any action undertaken should be seen to uphold them. From utilitarian ethics theory perspective, an action is deemed ethical if it leads to the happiness of the majority of people (Jones, Will and Gregory 2007, 138). On this point, it is worth point that Almond Chemical is a global company. From the case study, it was pointed out that Almond China accounts for just 3 % of the company’s business (Xin and Haijie 2011, 131). It was also noted from the case study that Almond has to abide by ethical standards set by the New York Stock exchange. Any breaches to the code of ethics are due to affect the company’s position in the market in addition to attracting legal action. Furthermore, news about the company’s unethical practices in China are due to impact negatively on the corporate image thus hurting its business owing to the increased trend of ethical consumption as pointed out earlier (Barnett, Philip and Terry 2005, 13). For this reason, a decision to uphold high health & safety standards and ethical business practices is one that leads to the happiness of the majority of people; thus should be upheld over others. Result From the above discussion, Liu Peijin’s decision would ensure that Almond China upholds Almond Chemical’s code of ethics and is able to sustain its business around the world. However, it is due to have a negative effect of Almond China’s business since the sales team will not be able to secure deals in a market that has a high regard for tokens, incentives and bribery. Ethical Dimension 2- Almond China’s Business Success Situation The other ethical dimension to the ethical dilemma faced by Liu Peijin is with regard to the success of Almond China. From the case study, it can be identified that the Chinese market operates differently from the European and Western markets. According to Chen Dong, the chairman of the Almond Chemical’s joint venture with a Chinese company, the use of tokens of appreciation and incentives while doing business is a widely accepted practice in China; hence Almond Chemicals should use it if they want to succeed in the market. Chen pointed out their competitors were using it; hence their continued success. On the other hand, the joint venture was barely able to meet 60% of its target; illustrating the negative effects of failing to bend its moral practices to suit the Chinese market (Xin and Haijie 2011, 130). On this ethical dimension, the success of Almond China was heavily dependent on the way it handled business ethics for the specific market. Task Liu Peijin was tasked with a hard decision of propagating Almond Chemical’s code of ethics and at the same time ensure that Almond China was a successful venture. From the case study, it can be acknowledged that there is a thin line between ethical and unethical business practices as proposed by Chen Dong with respect to the company’s code of ethics. Liu Peijin was not able to identify where the line between bribery and tokens of appreciation for good business lay. As such, it is important to analyze possible actions with respect to carious ethical theories. Action Liu Peijin should provide an allowance for the use of incentives and tokens to enhance the chances of Almond China’s success. However he should emphasize that bribery is not to used so as to secure business deals and that the tokens are just meant to establish and sustain good business relationships with their business partners. With respect to health and safety; Liu Peijin should not give any allowance for lesser standards. Providing a healthy working environment and environmental sustainability should be key values; hence never compromised. The situation can be analyzed using libertarianism, utilitarianism and virtue ethics. According to libertarianism ethics theory; an action is deemed ethical if it upholds liberty and freedom of choice (Hinman 2007, 227). From the case study, it can be acknowledged that the Chinese market upholds the need for token exchanges in either cash or kind between business acquaintances so as to enhance their relationship. According to Chen, the reason as to why the Almond China is not meeting its targets is because it has failed to acknowledge the need for this practice in the Chinese market; terming it unethical as per the western and European standards (Xin and Haijie 2011, 130). However, there is allowance for the kind and value of token that a business should give to its partners. Schulman points out that the company can offer trips, vocations and tickets to its business connections as tokens of appreciation and not necessarily cash. This is a liberalist stand since it does not outline the specific reward/ token that the company is supposed to give but gives it the leeway to make a choice. It can also be argued that cultural diversity has a significant influence on corporate ethics (McGee 2010, 70). As a result of this, the Chinese business culture regards token exchanges with business partners as ethical business practices while this is considered unethical in Europe and in Western countries. As such, the virtue ethics theory can be used to analyze Almond Chemical’s position. It is unable to give in to the requests of its partners since it holds different virtues from them. However, it is imperative that global organizations customize their business practices to the national cultures so as to guarantee their success as outlined by Hofestede (Smith and Evelyn 2005, 211). From a deontological theory point of view, issuing tokens to business partners is the right thing to do in the Chinese market (Manners 2008, 47). On this point, it is worth noting that business networking as upheld by the famous Guanxi strategy is a key factor that influences business success in China (Lee and Philip 2005, 29). For this reason, Liu Peijin should provide a framework of rewarding business partners without plunging the company’s business to dependency on corrupt deals. Result The result of Liu Peijin decision would be that he would create a loophole that can be used by the Chinese partners to do unethical business practices. On the other hand, he would have given the Almond China a chance to succeed in the competitive market. However, high health and safety standards will continue to be upheld in the company’s operations. Decision Liu Peijin should make a decision that ensures that the ethical and business concerns in the two ethical dimensions explained above are taken into consideration. First, high standards of health and safety will be maintained in all the company’s operations in China. This is basic ethics and this value is at the heart of Almonds future growth and global business sustainability. However, Liu Peijin will need to reconsider his ethics perspective on the Chinese market. He should acknowledge that ethics is not universal and that culture has a high influence on ethical values upheld in a country. As a result of this, Liu Peijin should develop a framework with his Almond China team that will assess how the company will build networks in the Chinese market without the use of bribery. A policy that outlines the tokens that should be used to recognize/ seal business deals should be developed to guide the activities of the sales team. This decision will ensure that high ethical standards are upheld in Almond Chemical’s global operations without compromising business success. Conclusion In conclusion, it can be acknowledged from this paper that Liu Peijin, the president of Almond China is faced with an ethical dilemma that is based on the need to uphold Almond Chemical’s code of ethics and at the same time ensure Almond China’s success. On one side, Liu’s decision is limited to the need to ensure that Almond China acts within the provisions of Almond Chemical’s and New York Stock exchange code of ethics. On the other side, Almond China is faced with a different market from the European that widely accepts the use of tokens and incentives to secure business deals; a practice that is regard to be unethical by Liu. However, the need to consider cultural diversity in international business operations in line with maintaining ethical business practices requires that Liu Peijin makes a decision that makes an allowance for Chinese business culture without plunging the company into unethical business practices. Bibliography Abdullah, Haslinda, and Benedict Valentine. "Fundamental and ethics theories of corporate governance." Middle Eastern Finance and Economics 4, no. 4 (2009): 88-96. Barnett, Clive, Philip Cafaro, and Terry Newholm. "Philosophy and ethical consumption." (2005): 11-24. Chung, Kun Young, John W. Eichenseher, and Teruso Taniguchi. "Ethical perceptions of business students: Differences between East Asia and the USA and among “Confucian” cultures." Journal of Business Ethics 79, no. 1-2 (2008): 121-132. Hinman, Lawrence. Ethics: A pluralistic approach to moral theory. Cengage Learning, 2012. Jones, Thomas M., Will Felps, and Gregory A. Bigley. "Ethical theory and stakeholder-related decisions: The role of stakeholder culture." Academy of Management Review 32, no. 1 (2007): 137-155. Lee, Don Y., and Philip L. Dawes. "Guanxi, trust, and long-term orientation in Chinese business markets." Journal of international marketing 13, no. 2 (2005): 28-56. Manners, Ian AN. "The normative ethics of the European Union." International affairs 84, no. 1 (2008): 45-60. McGee, Robert W. "Analyzing insider trading from the perspectives of utilitarian ethics and rights theory." Journal of Business Ethics 91, no. 1 (2010): 65-82. Smith, Aileen, and Evelyn C. Hume. "Linking culture and ethics: A comparison of accountants’ ethical belief systems in the individualism/collectivism and power distance contexts." Journal of Business Ethics 62, no. 3 (2005): 209-220. Xin, K., & Haijie, W. “Should A German-Chinese Joint Venture Follow The Ethical Rules Of The Parent Company Or The Country Of Operation?”. Harvard Business Review 1271, (2011); 129-131 Read More

Task The task at hand is to uphold the company’s code of ethics as outlined in its German headquarters. The president of Almond China is tasked with the hard decision of affecting the company’s code of ethics. This is meant to ensure that the company standardizes its ethical practices around the world and that it abides with the ethical practices guidelines outlined by the New York Stock Exchange. Action In this ethical dimension, Liu Peijin, the president of Almond China is supposed to uphold the company’s code of ethics and desist from doing any business deals that require the use of bribes, tokens and incentives to secure sales.

He is also supposed to ensure that the company upholds high health and safety standards in its Chinese operations as expected of it from its headquarters. Almond China’s action’s to uphold high business ethics can be explained using utilitarian, deontological and virtue ethics theory. According to deontological ethics, the morality of an action is examined by whether it is the right thing to do in a given situation. A normative ethics theory, virtue ethics emphasizes on doing the right thing because it is right as speculated by law (Manners 2008, 47).

Relating this to the case study, Almond China should uphold the code of ethics outline by its parent company in Germany because it is the right thing to do as per the company’s rules and regulations. Owing to the fact that Almond Chemical is listed in the New York Stock Exchange, a stock market that has strict regulations with regard to the use of corrupt means in business, it is automatic that the company is expected to abide by ethics rules and regulations in its global operations (Xin and Haijie 2011, 130).

From a community morals ethics point of view, observing high health and safety standards respects human life. Additionally, waste treatment, which is seen as an unnecessary operating cost by Almond China’s partners enhances environmental sustainability, which is the right thing to do. From a virtue ethics theory perspective, it is expected that individuals and organizations develop a set of virtues to guide their decision making actions (Abdullah and Benedict 2009, 91). On this point, it is important to note that there is a need for entities and individuals to develop their moral reasoning in such a manner that enables them to stick by a given set of virtues when presented with situations that require them to make decisions amidst dilemmas and uncertainty (Abdullah and Benedict 2009, 91).

From the case study, it can be identified that Wang Zhibao, the sales vice president, Dolf Schulman, Almond Chemical’s vice president of business development and the Chinese partners did not value the virtues upheld by Almond Chemicals. This is illustrated by their allowance for bribery and other corrupt means of securing business deals as practiced in China (Xin and Haijie 2011, 131). In such as situation, Liu Peijin’s decision should be guided by the company’s virtues and any action undertaken should be seen to uphold them.

From utilitarian ethics theory perspective, an action is deemed ethical if it leads to the happiness of the majority of people (Jones, Will and Gregory 2007, 138). On this point, it is worth point that Almond Chemical is a global company. From the case study, it was pointed out that Almond China accounts for just 3 % of the company’s business (Xin and Haijie 2011, 131). It was also noted from the case study that Almond has to abide by ethical standards set by the New York Stock exchange. Any breaches to the code of ethics are due to affect the company’s position in the market in addition to attracting legal action.

Furthermore, news about the company’s unethical practices in China are due to impact negatively on the corporate image thus hurting its business owing to the increased trend of ethical consumption as pointed out earlier (Barnett, Philip and Terry 2005, 13). For this reason, a decision to uphold high health & safety standards and ethical business practices is one that leads to the happiness of the majority of people; thus should be upheld over others.

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