The Role of Ethical Decision-Making in Contemporary Businesses - Coursework Example

CONTEMPORARY BUSINESS ISSUES 3 by Student’s Name       Code+ Course Name Professor’s Name University Name City Date Using appropriate case examples, discuss the role of ethical decision-making in contemporary businesses Introduction In the contemporary businesses and management environment, managers are faced with the constant need for making ethical decisions given the ethical challenges they encounter. A good number of companies have made unethical decisions in the past. It is, therefore, important for the contemporary businesses to engage more in ethical decision-making so that they can enhance the use an approach based on behavioural ethics (Oumlil & Balloun, 2009). In other words, most companies want to present themselves as pure as possible in the eyes of the customers. The senior management teams within organisations are charged with the responsibility of ensuring that people are well-behaved and that their processes are ethically-made to suit the contemporary business environment (Oumlil & Balloun, 2009). There is an assumption that the ethical decision-making process is affected by a host of individual, contextual, and situational factors, including opportunity, the cultural environment, and personal experiences. Sometimes it becomes difficult to differentiate what is considered to be morally unacceptable and acceptable. For many managers and companies, a conflict arises between making ethical decisions and difficulties of the contemporary economic environment. It would be a lot easier to make ethical decisions in case a company aims at making substantive profits from a business rather than pursuing an approach that maximises profits (Bateman, Valentine & Rittenburg, 2013). Ethical Decision-Making in the Contemporary Businesses ASDA has ventured into new regions, in so doing the management has engaged in ethical practices such as organising a free and fair recruitment process. The company has also ensured that it operates within the confines of the employment rules. For instance, the company has made it clear that its raw materials are not produced by underage workers or workers with poor working conditions. In addition, the company has also massively engaged in CSR as a way of giving back to the society in a special way. This shows how important it is for companies to engage in ethical decision-making from time to time to gain popularity among its customers (Oumlil & Balloun, 2009). Ethics is about a person’s or business’ moral judgments concerning right or wrong. Decisions that are taken within an organisation can be made by groups or individuals, but whoever makes these decisions are influenced by the organisation’s culture (Lawrence & Weber, 2008, p. 19). Making the decision to behave ethically is considered moral-based; employees have to decide what they believe is the right decision. This can be in the form of rejecting the path that results in the biggest short-term benefit (Thiel et al., 2012, p. 49). The essay analyses the factors that compel managers to engage in a number of decisions so that they ensure all their activities and decisions are ethical. The paper also explores the wider role of ethical decision-making in organisations and how they benefit from it. Lastly, the paper uses recent examples of companies that have seen the need for ethical decision-making within their ranks in the contemporary business environment. Opposing Theories in Ethical Decision-Making The two opposing theories that are relevant to this study are moral universalism and moral relativism. Moral universalism, also referred to as moral objectivism, holds that there exists universal ethics which make certain behaviours be simply right or wrong irrespective of the underlying circumstances. On the contrary, moral relativism holds that there is no existence of a recognized universal rule which defines what is right and/or wrong. Instead, moral relativists argue that the aspect of morality is solely determined by standards of an individual's authorities and such authorities can be the government, organization’s management, or even religion (Melé & Sánchez-Runde, 2013). Ethics and Management An ethically oriented manager tends to take a keen interest in the long-term impacts of the organisation’s activities to the society. This could be in the form of environmental impacts of the products and services, or other activities. The manager must also ensure that the products and services are safe, they are honest in advertising, the workers have excellent working conditions, and there is transparency among the stakeholders (Oumlil & Balloun, 2009). In the contemporary business environment, balancing these activities tends to be costly and overwhelming such that managers may be compelled to resort to using shortcuts (Belizzi & Hasty, 2003, p. 337). Managers are expected to have good returns in the market and that means they are more profit-oriented than being ethical in the process (Ferrell & Fraedrich, 2016, p. 13). Businesses are governed by certain moral principles, but the managers tend to overlook the importance ethical decision-making for the long-term benefit of the business. While there are those who play an important role in ensuring that all activities a company engages in observe ethical principles, there are those who do not buy into the same idea. However, the contemporary business environment highlights the strong link between ethical decision-making and organisational performance (Belizzi & Hasty, 2003, p. 337). However, with the pressures they encounter as a result of new businesses that want to claim their stake in the global market, organisations may engage in unethical behaviours such as employing underage children for cheap labour and maximum profits (Belizzi & Hasty, 2003, p. 337). Features of Ethical Decision-Making A key feature of ethical decision-making is an organisation’s ability to review constantly its ethical codes of conduct and practice. The implication is that the management team will be wired towards ensuring that it can solve all the arising ethical dilemmas and operate in a strictly ethical way. Thus, managers have a responsibility of checking the company’s values when setting up ethical codes and they have also to show that they are consistent with the government regulations (Khalid, 2013). The current competition has resulted in increased involvement in ethical decision-making among organisations. This means that organisations have to be aggressive and ruthless at times, in order to become successful in the contemporary business where engagement in ethical activities give an organisation a good moral standing in the society. In spite of the need to fight competition, managers have ensured that they practice within ethical lines in all its activities (Lawrence & Weber, 2008, p. 20). One example of ethical decision-making can be drawn from Wal-Mart’s management, which made a decision to engage in ethical processes in all its activities. The management had realised that as a business, it had a responsibility to society. They decided to do this by helping solve the broader societal issues. This was done in the full knowledge that ethical decision-making in the contemporary business is highly regarded as a way of positioning an organisation on the better path of responsibility. Companies in the contemporary business want to be seen as corporate citizens, thus, the scramble for corporate social responsibility (CSR) practices (Winston, 2012). Ethical decision-making touches on transparency and openness as adopted by some of the world’s key firms such as Tata Steel, which has engaged in transparent operations in its finances and key decisions. Tata Steel has involved stakeholders more in the decision-making process and took their suggestions into account. When the stakeholders are more involved, they feel they are part of the system and will be motivated to work even harder to earn the trust of the management, particularly the employees (Maheshwari & Ganesh, 2004). Ethical decision-making is important in any given management. In the contemporary business, ethics stands out prominently given the numerous dilemmas that have faced firms before and have led to the eventual collapse of those businesses (Ferrell & Fraedrich, 2016, p. 37). Since any given business operates and exists in a society and is part of the societal subsystem, its operations have to contribute to the welfare of the society at large. For a business to survive in the ever-changing business environment, it must earn the society’s social sanction. A business without social sanction is one that cannot earn customers (Tenbrunsel & Smith‐Crowe, 2008, p. 545). Any business’s survival needs two things. On one hand, it has to be in line with the need profit maximisation and, on the other hand, it has to meet the stakeholder needs. Ethical considerations are significant in the modern business practices. The social element dimensions of business ethics cannot be left out because numerous issues arise from the interaction of business to the wider society. In other words, a business should remain ethical for its benefits. A company that engages in decisions and unethical actions may give away results in the short-term. For businesses to survive in the long-term, they need to conduct their activities ethically and show that they are responsible by engaging in community-based activities such as educational sponsorships among other programmes (Thiel et al., 2012, p. 49). Corporate Social Responsibility as an Ethical Decision Other than being seen to be socially responsible, organisations engage in the excellent care of their employees by creating the best working atmosphere. To illustrate this, Google Plc. employs extreme care of its workers. The company has hugely invested in its employees in terms of their satisfaction and subsequent retention by providing them with massage chairs, pianos, yoga classes, ping pong tables, lava lamps, and assorted video games among other incentives. To this end, Google Plc is described as the company with the best employee working environment, given its keen observation and provision of employee needs. Based on these strategies, every talented employee wants to work for Google and the current employees do not wish to leave (Steiber, 2014, p. 57). Ethical decision-making and CSR can earn a company considerable benefits. For instance, it can attract customers to buy the organisation’s products, thus, boosting profits and sales. It also makes employees lengthen their stay with a firm, thus, reducing turnover. This results in increased productivity with a pool of the best talents. Ethical decision-making attracts investors to an organisation, therefore, keeping the share prices of the company high. This means that the business cannot be taken over by other investors (Lawrence & Weber, 2008, p. 22). Impacts of Unethical Behaviour Unethical behaviour means that a company’s reputation is damaged, thus, it will become less appealing to investors and other stakeholders. Ultimately, the company’s profits will also diminish (Lawrence & Weber, 2008, p. 22). For instance, when Nike was faced with unethical labour practices in its sweatshops and lack of consideration for the employees, it lost a lot in terms of revenue and profits. Its brand name was also damaged, and it took years to repair and recover its image. This has influenced the way contemporary businesses operate. Most businesses have ensured that their activities are within the confines of responsibility (DeTienne & Lewis, 2005, p. 359). For instance, Richard Branson’s Virgin Group is one of the companies engaged in widespread climate change sensitisation programmes. Branson himself has made this the company’s vision. Being an ethical decision-making activity, the company has seen a rise in its profits and showcased Branson as a global leader who loves to solve global issues in the current business environment (Dearlove, 2007, p. 163). Importance of Ethical Decision-Making in Modern-Day Business In the contemporary business environment which is highly competitive, organisational leaders tend to keep themselves in the know of the technological advancements, competitor’s services and products, globalisation effects, and threats and opportunities within their specific industry (Irwin, 2015). Leaders have to observe their company’s mission, culture, values, vision, goals, and strategy constantly. Amidst all the complications, it is not easy to get space on the organisational plate for an extra priority. Nevertheless, to succeed in the contemporary business environment, organisations have to solve how they can make ethics their main priority (King & Powell, 2007). Every business wants to grow into large multinationals; however, it is not easy given the stiff competition, legal compliance issues in foreign nations and the observant customers who want to see their desired company among the most responsible in the world (Irwin, 2015). Scandals have hit a number of organisations in terms of their business operations. The most recent scandals include those that happened at WorldCom, AIG, Enron, and Tyco. What happened in these organisations raised concerns about the rise of irresponsible and unethical behaviour in organisations. Organisations have been involved in corruption scandals and other unethical practices that have not gone down well with the companies’ ethical principles (Bateman, Valentine & Rittenburg, 2013). Given the contemporary economic environment, organisations are hard-pressed to follow the communication practices with a view of ensuring that customers get the actual message when marketing. However, there are certain companies that may try to use unethical means such as using unfair pricing methods, producing products of low quality, deceptive packaging, and misleading the customers through advertising. Since customers are increasingly becoming knowledgeable in ethical principles and implications, it has compelled quite a large number of companies to ensure that they make ethical decisions that take into account the quality of the products produced and consumed by the customers (Kearney, & Gebert, 2009). The Growing Ethical Concerns among Consumers The ever-growing ethical consumer behaviour has become a huge concept that is describable as a process of decision-making processes that affect the ethical concerns of the consumer. By presenting their ethical concerns, consumers are capable of communicating their perceptions or attitudes towards the marketing practices of a company. A company that has shown it is socially responsible and observes ethical decision-making principles often shows that they can care about its suppliers, employees, the environment, and customers. In other words, they look at the wider perspective of the society in totality (Kearney, & Gebert, 2009). While there are those companies that have keenly observed the ethical decision-making processes, others prefer not to engage in such practices, and instead, they engage in unethical practices such as using child labour as part of the process of production. In addition, others encourage the working in sweatshops given the unfavourable working conditions. Ethical decision making has become one of the key strategies used by many organisations to increase their profits by engaging in ethical marketing practices devoid of traces of unfairness. Customers have shown that they are often happy to be part of a company that observes the importance of the society in all aspects (Bateman, Valentine & Rittenburg, 2013). People who work in organisations where there are values they uphold and systems of operations that observe the need for ethical decision-making at all times. Ethical decision-making involves self-regulation, processing of knowledge, and setting of such goals. The idea is always about making things better in the society for all to enjoy. Companies have resorted to using the most appropriate methods of marketing and production in a bid to increase the inflow of cash and from the customers. In the contemporary business, buyers have changed consumerism by themselves. By behaving responsibly, companies have the moral authority to showcase themselves as the most preferable producers. These companies condemn the violent behaviour or violence emanating from unethical practices by the senior management team and employees (Bateman, Valentine & Rittenburg, 2013). The modern-day business person cannot successfully operate without understanding the regulatory and legal environment within which they function. When a multinational company gets into a new international business as a way of enlarging its competitive advantage and market share, it means that ethical decision making should be involved given the difference in the business environments (Shapiro & Stefkovich, 2016, p. 31). For instance, McDonald’s made its entry into the Indian market and has engaged in cultural activities or even included Indian dishes in its menus to incorporate the Indian culture. McDonald’s has shown its sensitivity to the fragile Indian eating culture as a way of ensuring that it maintains a good relationship with the local customers (Taneja, Girdhar & Gupta, 2012). In addition, similar strategies have been employed by the Kentucky Fried Chicken (KFC) in China. The Chinese people may not have welcomed the idea at first, but the company was forced to engage in radical ethical decision making to ensure that it is fully involved in CSR or other community initiatives (Taneja, Girdhar & Gupta, 2012). In addition, companies have also engrained incorporation of diversity as part of their strategies to present a global outlook. In the modern-day business environment, issues around race and ethnicity have to be taken into account when employing people (Shapiro & Stefkovich, 2016, p. 31). In other words, employment goes beyond race or religious background, but only focus on the talents and the quality of the work done. The world is so diverse and has different people and cultures, which are treated with the respect they deserve irrespective of their background. An ethical way to respond to diversity by organisations has always been through recruitment of diverse workforce (Shapiro & Stefkovich, 2016, p. 31). Furthermore, organisations create equal opportunities in all the training programmes and it shows fulfilment when every employee can enjoy his work and that their contributions are valued throughout. In other words, the decision to value the contribution of every employee is one of the key components instilled in most organisations to enhance success in the competitive world. Ethical decision-making processes ought to be pegged on protection of customer and employee rights, ensuring that all the business operations remain just and fair for all workers. The decisions are also meant to protect the workers’ common good and ensure that the individual beliefs and values of the employees are protected as well (Shapiro & Stefkovich, 2016, p. 31). Ethical Decision-Making in the Global Aspect When a company expands into a new market, it is bound to meet new challenges regarding governance and compliance issues. For instance, businesses are supposed to fully abide by the environmental laws, monetary statutes, and safety regulations. Much as a company may want to grow and do it very fast, it does not mean that the company must break the laws. Ethical decision making is important in terms of enhancing compliance with the laid down procedures (Shapiro & Stefkovich, 2016, p. 31). As companies expand into new territories, they meet new pressures on their businesses. For that reason, they have to hatch plans that help them overcome the pressure that will always arise. In the global business environment, through the economic and cultural diversity, global managers are pressed to great challenges as it degenerates to a wide variety of ethical problems (DesJardins & McCall, 2014). It is important to note that a solution and respect for the organisational principles is key for its operations. Both ethics and profit are two of the necessary parts when assessing the results of organisational activity, while the profit is a reflection of organisational results when looked at from a quantitative perspective, ethical aspects are the reflection of the quality of the achieved results (Shapiro & Stefkovich, 2016, p. 31). Therefore, global managers are tasked with the formulation and organisation of policies, as well as, standards by collectively including the ethical and legal principles for a company to work at its very best (DesJardins & McCall, 2014). It is important that an organisation engages in ethical decision making because failure to do so means that a number of things could go wrong. For instance, when an organisation engages in unfair advertising, it means that a lot of money will be used to clear things up when it becomes a huge scandal. No company wants to be entangled in a scandal of any kind because of the widespread repercussions of being on the wrong side of news. In addition, failure to observe ethical decisions will also mean that there could be drop in revenues (Shapiro & Stefkovich, 2016, p. 31). Ethical decision-making helps a company achieve greater heights in the competitive contemporary business environment. It also calls for the management to ensure that it is sensitive to the outcries of the raised by the customers and involvement of all the stakeholders of a company (Oumlil & Balloun, 2009). For instance, Enron’s directors had seen a problem in the offing, but decided not to solve it in time. A company that wants to grow ensures that all the energy is directed towards ensuring that the working conditions of the employees are excellent, and that the stakeholders can access the most important information regarding the performance of the company among its competitors and whether or not the company is making profits. Transparency in an organisation, particularly on financial issues is crucial for stakeholders and shareholders (Bhave, Kramer, & Glomb, 2010). In addition, contemporary ethical decision-making affects the entire working system that cultivates cooperation and accountability among the present co-workers. In the past two decades, many companies have resorted to the use of smaller teams within organisations so that they can be efficient in the delivery of services. This gives the workers more room to work within the shortest time possible and also observe the company’s spirit of ethical decision making (Bhave, Kramer, & Glomb, 2010). Conclusion In conclusion, ethical decision-making has become an important element in the contemporary business environment. With the increasing complexities of the business activities brought about by increased competition for market shares and venturing into new markets, a lot of activities are involved. Managers may be stretched to the limit and may engage in unethical activities to achieve maximum revenues. However, with the global changes on how ethics is valued in the current businesses, ethical considerations has epitomised the current management of businesses through corporate social responsibility. Companies have seen the need for them to behave responsibly in the market so that it attracts customers and build a brand name. References Bateman, C.R., Valentine, S. and Rittenburg, T., 2013. Ethical decision making in a peer-to-peer file sharing situation: The role of moral absolutes and social consensus. Journal of business ethics, 115(2), pp. 229-240. 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