The Importance of Ethics in Organisational Policies - Literature review Example

Management Ethics Table of Contents Table of Contents 2 Introduction 3 Part A 3 s of Ethics 4 Friedman’s thesis on international organisational ethics: 5 Freeman’s Stakeholder Theory 6 Carroll’s Corporate Social Responsibility Theory: 7 Sternberg’s model for Ethical Behaviour: 7 The Importance of Ethics in Organisational policies 8 Part B 9 Concept of E-commerce 9 Amazon.com, Inc. 9 Internet ethics requirements for Amazon.com,Inc.: 11 Ethical risk factors faced by the Amazon 13 Conclusion 14 Reference list 16 Introduction Organisational ethics increased its importance in the strategic development. Firms have to maintain suitable policies for maintaining ethical policies in operations in order to remain sustainable in the competitive industry segment. According to Carroll (2000), business ethics can be defined as the principles or policies of the firms, which provides increased values to the stakeholders of the firms. Operational activities and decision making are modified in terms of the ethical representation. Global firms are developing different type of code of ethics in order to control the operational policies according to sustainable requirements of society and other stakeholders. Ethical philosophy adopted by any organisations in order to conduct their operations with reputation, goodwill, efficiently and bottom line controls can be imposed (Carroll and Buchholtz, 2003). Globalised businesses are using ethical behaviour models and corporate social responsibility policy to increase the ethical nature of the organisation. Organisations are dealing ethical policies in terms of fetching higher values to their stakeholders like the customers, employees, social groups and various other employees. In the current study, detailed analysis of the Codes of Ethics, Codes of Conducts and Codes of Practice in terms of achieving sustainability and growth. In the second part, critical analysis of a case study of online business is described. Part A Carroll (2015) stated that business ethics are providing significant benefits to global firms like attracting existing and potential customers. Ethical business’s products will be more demanded by the customers and it will result in increasing sales and profits of the organisations. Ethical business policies are concentrating on increasing stakeholder support. Organisations are able to employ various policies for increasing beneficiary of the firms. Employees are oriented highly for increasing their loyalty and motivation. This policy will help the business in reducing employee turnover and retaining skilled and efficient employees. Therefore, firms will be able to increase efficiency and outcome. Dar (2013) argued that these policies are increasing attention among employees regarding achievement of organisational goals, it reduce recruitment costs of the international organisations. Firms are able to increase number of talented employee’s base. Organisational ethics also outlines proper care for investors or the financial stakeholders. Any ethical business will be aimed to develop their share price, paying proper dividend and meeting interest of financial stakeholders. However, if the organisations have unethical behaviour and lower corporate social responsibility strategies harm the firms by reducing brand values and stakeholders attraction. Gradually, the firms will be facing the challenge of reducing profitability. Bowie and Werhane (2005) cited that major international firms are managing different types of ethical policies like corporate social responsibility that denotes maintenance of the social responsibility, triple bottom line and ethical management and leadership strategies. Apart from this fair trading, environmental sustainability, corporate governance and imagery of social enterprise are promoted by the international firms. In addition, firms are maintaining proper mutual understanding among the stakeholders, cooperatives are developed and employee rights empowered. Carroll and Shabana (2010) opined that organisational ethics are developed based on various strategic traits like Codes of Ethics, Codes of Conducts, Codes of Practice, Corporate social responsibility and Triple bottom line strategic factors or models. Codes of Ethics Code of ethics can be defined as the written guidelines sets which are promoted by the organisational management. Such policies are controlling the behaviours of the workers and management. Therefore, organisations are able to conduct operations more ethically and according to the primary values and ethical standards. Such documents are helping the organisational management to meet customer demands and expectations. International firms are facing the challenges of increasing ambiguity about the customer expectation and perception. Changing political conditions are also affecting the decision making factors (Fennell and Malloy, 2007). Major international firms are facing the complexity in meeting various stakeholders. Major global businesses are developing strategies for gaining sustainable market condition and growth. Expertise resolution of firms is including different type of ethics. Customers and other stakeholders trust can demolished with negative and false representation. Gradually the goodwill also hampered by the firms. Using inferior materials and lower skilled employees in the global manufacturing firms will increase the threat or risk of health hazardous elements in the operational process (Douglas, 2015). Moral values and ethical operations are increased in order to attract the society. Ethical behaviour in the workplace culture will be resulting to increased efficiency among the employees. International trading success is based on the success on the various stakeholders like employees, managers, customers, suppliers, and even competitors. Thus, code of ethics are playing crucial role in obtaining effective compatibility. Code of ethics signifies that the firms must cover various attributes like Ethics, Values, Morals, Integrity, Character and Legal issues in their strategic factors (Fennell and Malloy, 2007). Eva (2009) argued that Codes of Conducts and Codes of Practice are strategic fits almost similar to the code of ethics. All the strategies are developed from the aspects of corporate social responsibility and ethical business practices. Many authors have developed various theories and models for the evaluation of organisational ethics as per the distinct international cultural, legal and operational policies (Flanigan, 2012). Friedman’s thesis on international organisational ethics: Milton Friedman provided an overriding concept of social responsibilities of international businesses. According to Eckenwiler and Cohn (2007), the sole social responsibility of business is using operational resources effectively and engages their workforce efficiently. Organisations are aiming to design their activities in order to boost the revenue generation. Moreover, Fennell and Malloy (2007) criticised that organisations are required to maintain proper policies according to the rule or expectations of different stakeholders. According to Milton Friedman, international firms are facing free competition and they are responsible to generate profits without hampering ethical operations by the mean of dishonesty or fraudulent activities. According to Milton Friedman, maintenance of trustworthy and honesty is important. Frauds and dishonesty are creating constraints in meeting the business goals and international sustainability. Stakeholders like the customers, investors and society will be considering the product quality and goodwill in much lower than the previous segments. In the competitive market, firms sometimes adopt fraudulent activities in terms of gaining more profit. Firms have to maintain honesty and ethical actions so that they are able to meet free market challenges. They have to adopt the fraud free and honest function. Firms will be able to develop their goodwill and sustainability with the help of these types of ethical policies (Flanigan, 2012). Freeman’s Stakeholder Theory According to Edward Freeman, there is certain relationship between the firms and internal and external environment. Stakeholders of the firms are mainly those who are getting the affects of operations of the firms. Global firms like Nike, Adidas, Tesco, Walmart and many other firms are having vast range of stakeholders. Organisational management have to negotiate the welfare and value provisions for the stakeholders (Mathew, 2015). Mainly, the customers, employees, stockholders, suppliers, social community and government are major stakeholders of the international firms. According to Edward Freeman, meeting stakeholder’s interest is one of the most important ethical strategies of international firms. Major stakeholders Ethical responsibility of international firms Customers Competitive pricing, moderate quality of products and service, timely delivery of orders, trustworthy promotional activities Suppliers Timely payment of credit purchase, renew the relation by increased reorder size, proper quality check, increasing loyalty measures Employees Setting up proper financial compensation, effective job or working hours, developing healthy workplace, suitable appraisal and motivation policies, skills and knowledge development programs, collection of feedbacks on any problem faced in the operational set up, increasing collective bargaining process for developing welfare of the employees (Freeman, 2009) Social community Developing infrastructure, school, colleges and other educational institutions, developing social and financial recognition, creating local employment opportunity for the area they are operating in Financial investors or shareholders Paying out proper rate dividend, creating proper roles of the investors in the organisational management selection, offering buy back in the time of liquidation (Lomborg, 2012) Carroll’s Corporate Social Responsibility Theory: Carroll’s corporate social responsibility (CSR) pyramid is one of the major CSR or ethical strategies adopted by the global firms. Audi, Mercedes, Mitsubishi and many other firms are using the pyramid for meeting the ethical issues in the international community (Carroll, 2000). Economic responsibility in Carroll’s CSR Pyramid is disseminating that the firms are maintaining effective strategies to meet the financial crisis related challenges. According to the theory, pricing of products and employees compensation are ethical responsibility of the organisation. Employee’s compensations are developed on the basis of the collective bargaining policy and market rate criteria. Similarly, pricing policy will be fixed as per the competitive or demand supply bargaining features (Carroll, 2015). Legal responsibility in Carroll’s CSR Pyramid refers to the ethical strategies that the international firms are maintaining for different legislative conditions. Firms will be more ethical if they are able to meet legislative guidelines and principles in the country. According to Carroll and Shabana (2010), Ethical Responsibility layer of the Carroll’s CSR Pyramid represents that firms have to maintain proper quality and pricing set for the products or service. Employees and customers are not given false promise or fake concepts. Firms like Tesco, Nike and Ford are adopting ethical promotional policies for meeting their customers with trust (Carroll and Buchholtz, 2003). Philanthropic responsibility in Carroll’s CSR Pyramid determines that international firms are developing strategies for the welfare of the employees or other stakeholders, learning and development programs for employees, lifestyle development and social infrastructural up gradation (Carroll and Shabana, 2010). Sternberg’s model for Ethical Behaviour: Sternberg developed his model as per eight different stages. First stage helps leaders or mangers to identify the issues as per herm traits and respond to the issues strategically. Second task outlines that the management have to classify the events according to the ethical dimensions (Mathew, 2015). Third stage is deciding ethical dimension according to its significance. Fourth stage refers to disseminate various personal responsibilities among the employees according to the ethical solution. Fifth stage represents some ethical rules that will be helpful in addressing the problems. Sixth stage shows that the ethical rules are developing feasible and concrete solutions of the various problems faced by the organisations (Krug and Kavanagh, 2014). Seventh stage outlines how potential consequences are mitigated through the ethical manner. Eighth stage identifies the ethical solution for each of the environmental policies. The Importance of Ethics in Organisational policies International businesses like the Tesco, Nike, Adidas, Ford, Microsoft and many other companies are enjoying certain advantages of the organisational ethical policies. Leadership development McGee (2008) stated that leaders are the key people for executing strategies for the international organisations. Ethical leadership traits will be helping the firms to manage their employees more efficiently. Leaders can ensure more self-esteem and loyalty among the employees in the distinct national base. International firms like Nike, ASDA and many other firms are developing unique code of ethics for their multinational leaders. Such ethical practises are outlining the factors of the authority among the leaders in terms of controlling the behaviour of the employees in the firm. However, unethical traits of the leaders will get viral among the employees of international firms (Mathew, 2015). Worker Ethics Menzel (2007) opined that employees are required to maintain ethical behaviour so that they can ensure truthfulness and honesty in their operational process. Employee ethics will help the firms to achieve the goals in a trustworthy manner. Honest employees will be concentrating on the quality standards for the beneficiary of the firm. Therefore, firms are able to increase the quality of products and service. Henceforth, firms are able to increase their image of goodwill among employees. Code of ethics of many international firms like Tesco, Walmart, Adidas and Puma are controlling the behaviour of the multinational leaders and employees. These firms are promoting ethical managerial culture. Leaders of such firms are describing the ethical trait requisites to their employees. Such organisations are using the appraisal of the employees who are meeting the unique code of ethics (Plotkin, 2012). Part B Concept of E-commerce E-commerce is one of the most emerging trends of the global business. Mainly, such process helps any company to maintain influential presence in the internet media and reach the clients globally. Electronically managed business helps international firms to share informational and trade with multinational firms. E-commerce has features like multi location sales, advertising products and services effectively and virtual payments can be made electronically. Physical presence is not mandatory in such type of trading set up (Moustafa, 2015). This medium is getting high vulnerability due to huge reach of the internet-advertising medium. Website reaches larger number international people at least possible cost. In addition, online medium can be redesigned or upgraded quite easily and instantly as per the changing consumer’s demands. There are several E-commerce sites in the globalised market like Amazon, E-bay, Alibaba and many more offering the customers with different type of products (Wang, 2010). Amazon.com, Inc. Amazon.com, Inc. is one of the major E-commerce firms having different types of products and services. They are having the facility of online ordering, pre order booking and developing various catalogues. American based electronic commerce company is meeting the international customers. The organisation is holding the leading position among the internet-based retailers of the United States and global segment (Amazon.in, 2015). They are offering the following products like The Book Depository, Appstore, Game Studios, comiXology, Instant Video UK, Instant Video, Audible, Kindle, Instant Video German, Lab126, Studios, MyHabit.com, Twitch.tv, Woot, Shopbop and Askville (Amazon.in, 2015). Main features of Amazon E-commerce portals are providing online shopping, Content Distribution and Web hosting. They are having the following segments like A9.com, a2z, Alexa Internet, Digital Photography Review, Audible.com, Amazon Web Services, Internet Movie Database, comiXology, Goodreads, Junglee.com, Zappos and Twitch (Amazon.in, 2015). Wang (2010) stated that online ethics are bringing certain benefits for the organisation. Online ethics of the firms are having the features like the potential education and training, recruitment or HRM policies, financial reporting, whistle blowing for the unethical or inappropriate actions, B2C commerce, word of mouth promotions and new product development. In addition, Amazon.com, Inc can collect the customer complaints and feedback in terms of gaining the insight on limitations of E-commerce features. Firms will be able to meet the search engine optimisation or SEO related policies. Online businesses are creating provisions for providing admiration to the cultures, languages and life styles. Amazon.com, Inc is developing different strategies for their digital organisational process or environment. The firm is maintaining different types of ethical strategies to meet growth and sustainability in intensely competitive globalised market (Yeh, Wu and Che, 2010). E-Business policies of Amazon.com, Inc: Amazon.com, Inc. is having different type of products and services for the international market segment. The firm is developing different generic models in order to develop ethical programme for launching production, delivery of the products and review the success of the products (Amazon.in, 2015). They are targeting youths and low aged clients through the online business segments. However, E-commerce portals are facing the challenge of selling controversial products and services. Management of the stakeholders is complex in the digital base. In addition, internet marketing ethics are negating internet gambling, adult websites banners and abusive online actions (Yeh, Wu and Che, 2010). Online purchasing policy is developing proper consideration for inexperienced customer. Amazon.com, Inc. is adopting role playing strategies for their potential customers in the online segment. The firm has emphasised on the web content analysis in order to make their website more lucrative and user friendly. On the other hand, internet or social media marketing campaign are developing various segments. Privacy issues are maintained very well by the management of the company. They are also concerned for saving their intellectual property and developing precaution for the piracy issues. Amazon is selling different types of software, music portals, pictures and IP defence mechanisms (Young, 2013). Spy ware and online trust are used to increase safety among the customers and other transactions. Internet ethics requirements for Amazon.com,Inc.: Recognition Internet must provide proper values for the users and stakeholders of the business. World Wide Web segment considers that the customer’s values are broader concepts. As a result of it, Amazon.com, Inc. must design their content and services ethically, as per the expectation of customers. Being the leading E-commerce firm, they recognised that the online environment is the primary component of global economic environment (McGee, 2008). Understanding the National and Local cultures Major advantage of the E-commerce portals is that it does not face any barrier of geographical locations. Firms like Amazon are facing the cross cultural factors among different national and local regions. Thus, the firm need to select various policies for their business operations. Amazon.com, Inc. must be segmenting various products and services as per the allocation of the various cultural groups, ethnic groups and social occasional policies (Moustafa, 2015). E-Mail and chatting ethics Internet is used for personal or groups communication which is observed in case of the social media or mail chatting. These segments are providing most emerging trend of the marketing and selling products and services. Amazon.com, Inc. has to maintain ethical promotional policies like promoting their products ranges in the small banner advertisement and pop ups which can be stopped. In addition, such promotional policy will not hamper the customers with false features and pricing policies (Lomborg, 2012). Disseminating brand image Amazon.com, Inc. is using the cross sell technique to sell various branded products and services. Thus, ethical responsibility of the firm is to share the name and features of the brands (Fennell and Malloy, 2007). Avoid awful languages Amazon.com, Inc. should be using easy and well known languages in their marketing plans. They have to ensure more information sharing through e-mail, chatting, blogging and social media marketing. The firm need to admire that communication policy among the international customers must be feasible enough so that they can obtain sustainability and growth (Eckenwiler and Cohn, 2007). Safeguarding the personal information Amazon.com, Inc. must be protecting the personal details of the online users like the residential address, contact numbers, personal interests related information, passwords of the banking and other financial information. Moreover, the E-commerce vendors must be developing different ethical policies for increasing customers or stakeholders welfare (Eckenwiler and Cohn, 2007). Online payment and catalogue search Amazon.com, Inc. used to collect information regarding the features and price of the various products and service. People are able to purchase various products and get the delivery of those products in their home or provided address. Amazon.com, Inc. must use proper policy for collecting payment from the customers and deliver the products in the promised time (Eckenwiler and Cohn, 2007). Ethical dimensions are one of the major challenges that E-commerce system is facing. Internet access is getting complex as many firms are using false promotions and fake products features. Thus, time-efficient tool will be helping the busy clients in obtaining all the features of various products (Eckenwiler and Cohn, 2007). Apart from this, Amazon is using the “Netiquette” for their online commercial portals. They are using the codes of ethics, corporate cultures, legal and regulatory frameworks and proper personal responsibility for the customers and other stakeholders (Eckenwiler and Cohn, 2007). Ethical risk factors faced by the Amazon Theft of Customer and Corporate Information Computer hackers are creating high threat for the Amazon portals. Hackers are accessing confidential data of the online customers easily. Hackers are stealing different personal data of customers which was submitted on the time of ordering. Mainly, hackers can use the information like identity, residential address, birth date, bank or other financial details, credit card numbers, passwords, email address and contact number (Moustafa, 2015). Cash cannot be used in the online segment therefore the clients are using credit cards to make the payment for the price of products. Amazon.com, Inc. is facing highest challenge of protecting the card numbers, expiration dates and security codes from the hackers and vulnerability. The firm is adopting the strategies of updated security software that will help them to encrypt individual information and protect them from potential frauds (Moustafa, 2015). Weak Service Amazon is recently facing the challenges of the lower efficient logistics support. They are delivering damaged products to the end customers. Counterfeit goods are also sent by the lower developed distribution centers. Inefficient logistics are reducing the timely delivery of order to the customers (Wang, 2010). Amazon.com, Inc. sometime refuses to take returns of the sold products. In the developing countries like India, African countries, South East Asian countries, Amazon.com, Inc. is unable to protect goods in consignment. E-commerce portal of Amazon does not have any segment for reporting complaints or giving feedbacks. Weak services also reduce the efficiency of recognizing orders, collection of payments and delivering the products on time. Amazon portal does not allow customers to compare the products (Plotkin, 2012). Frauds and fake issues Amazon.com, Inc. is adopting e-mail and social media promotions to reach huge number of potential customers. Such policies are facing the threats of increased numbers of the spam and scam issues. Mainly, the advertisements are offering fake or disguised features of the products. The firm many a time offers different type of gadgets, which they might not have in their stores. Personal information of the clients is shared commercially by the employees. Purchase frauds are representing the false promise, fake features, artificial and manipulated information and creating artificial scarcity to increase the price. Amazon.com, Inc. is facing the challenge of meeting financial crisis in the international E-commerce environment. Employees forces or influence the customer’s selection for buying products. Thus, Amazon has to maintain effective strategies for frauds and fake issues (Plotkin, 2012). Intellectual Property Theft Amazon.com, Inc. is one of the leading E-commerce firms in the world having various products, brands and service. They are facing the challenge of meeting cross organizational challenges. Internet allows the competitors to access the portal of Amazon. Competitors can copy the features, products and service offered by the firm. They also imitate the graphical and hyperlink approach of the Amazon. In addition, they are offering almost same type products and service related feature (Menzel, 2007). Thus, Amazon.com, Inc. will be facing the challenge of reducing profits. The firms can safeguard their intellectual properties with the strategies long-term contract with the designers and trade marking their brands. Conclusion From the study, various dimensions of the business ethics are obtained. Ethics is one of the key traits of the organisation growth and sustainability and maintaining proper operational policies. In the study, main concentration was aligned in terms of virtual commerce segment. The study is divided into two segments. First part is describing the various strategies, theories and models like codes of ethics, Friedman’s thesis on international organisational ethics, Freeman’s stakeholder theory, Carroll’s corporate social responsibility theory and Sternberg’s model for ethical behaviour on behalf of the international aspects. Significance of ethics is outlined on behalf of various international organisations. On the other hand, second part is outlining various concept of E-commerce along with the requirement of the ethical responsibility. Amazon.com, Inc.selected to gain a deeper insight on the virtual ethics and its risk facing attributes. From the second segment, it is observed that the key ethical responsibilities are recognising the requirement of the customers and developing the features. International ethics also includes proper values for the distinct national and local cultures. Firms like Amazon have developed ethical policies for the social media promotions, brand image development, linguistic issues and protection of individual information and developing feasible online payment and catalogue search portals. However, it is observed that the Amazon.com, Inc. is facing various ethical risks. Such threats are reducing the profitability and sustainability of firms. Reference list Amazon.in, 2015. 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