Applied Ethics: Business Ethics Flashcards
1
Q
What did Henry Ford say about business?
A
‘A business that makes nothing but money is a poor kind of business.’
2
Q
Why might it be questioned if Ford the car brand is really that ethical?
A
Because of the Ford Pinto Case in 1970
3
Q
When did the Ford Pinto Case occur?
A
1970
4
Q
What was the Ford Pinto Case in 1970?
A
- before the Pinto model was released to the public, a serious design flaw was discovered. The gas tank was designed so that when it was involved in a rear end collision at an impact speed of 20 MpH or greater, the tank would cause a fire and explode.
- suggested changes would have cost around $11 per car. A confidential company memo directed that the safety features should not be adopted until required by law.
- Ford Motor Company knew about the problems
- in this case, they weighed up the cost of death compared to the cost of changing the cars. They found that it would be cheaper not to change the cars and would allow the deaths to take place.
- you could say that if it was going to cost $11 per car to change it, why wouldn’t you just add this to the cost of the car?
5
Q
Give a solution which could have been taken to the Ford Pinto Case in 1970
A
If it was going to cost $11 per car to change it, you could just add this to the cost of the car.
6
Q
Who was the founder of the Body Shop?
A
Dame Anita Roddick
7
Q
What is Body Shop famous for?
A
Its anti-animal testing
8
Q
What did Anita Roddick say about business?
A
‘Being good is good business.’
9
Q
Does Anita Roddick promote intrinsic or extrinsic reasons?
A
Intrinsic reasons. She acts ethically because it is the right thing to do, not simply for image.
10
Q
What is the difference between intrinsic and extrinsic reasons for being ethical?
A
Intrinsic reasoning involves being ethical because it is the right thing to do, whereas extrinsic reasons is where you are ethical in order to look good to the outside world.
11
Q
What did Lord Alan Sugar argue about being ethical?
A
He argued that being ethical is just a hook to get people to come to you.
12
Q
Give an example of extrinsic reasoning
A
When supermarkets advertise all of their charity events and the money they have donated, is that because they are doing it for intrinsic reasons as they want to raise money, or are they doing it because it makes them look good? Are they doing it as their ‘hook’, as Lord Alan Sugar would say.
13
Q
What is Corporate Social Responsibility (CSR)?
A
The responsibility you have to a society as a company / group.
14
Q
What did Milton Friedman say about Corporate Social Responsibility (CSR)?
A
‘There is one and only one social responsibility of business - to use its resources and engage in activities designed to increase its profits, so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.’
15
Q
Summarise what Milton Friedman says about Corporate Social Responsibility (CSR)
A
As long as you don’t deceive anyone and you’re not fraudulent, you should do whatever you can do in order to make more profits. At the end of the day, this is what businesses are about, they want to make profit, otherwise it’s not a business. He is saying that people should be able to make money.
16
Q
Does Milton Friedman think we have Corporate Social Responsibility (CSR)?
A
Friedman argues that businesses are about making profits, otherwise it is not a business, so this is what is important.
17
Q
Strengths of Milton Friedman’s view
A
- the main focus of a business should be to make profit. Without profit, a business cannot survive.
- in a way, Friedman’s theory does promote social responsibility to society. This is because, if there is money in society, then society will prosper.
- the increase of profits in a company benefits the economy, which benefits the citizens of that economy. This is because there is more money in the system.
18
Q
Weaknesses of Milton Friedman’s view
A
- Friedman also believed that social responsibility should not be forced by the government (it currently is now).
- however, companies can still be successful while pursuing several different methods of social responsibility at the same time.
- e.g., responsibility to stakeholders can still be achieved while helping to strengthen the community. You can still be very profitable, but also very ethical at the same time.
19
Q
What is a shareholder?
A
Someone who has shares (money) in a business. The value of this money will go up and down; this is the stock market.
20
Q
What happens to shares if a business is successful?
A
The money you have put in will increase.
21
Q
What is a stakeholder?
A
Anyone who has something at stake and at risk of losing. The wider needs of the employees, consumers and the community should be considered.
22
Q
What types of stakeholders are there?
A
Internal and external stakeholders.
23
Q
What are internal stakeholders?
A
Groups within a business
24
Q
What are external stakeholders?
A
Groups outside a business
25
Internal stakeholders examples
- owners: interested in how much profit the business makes
- managers: concerned about their salary
- workers: want to earn high wages and keep their jobs
- suppliers: want the business to continue to buy their products
- leaders: want to be repaid on time and in full (leaders are who give you the money to start a business)
26
External stakeholders examples
- customers: want the business to produce quality products at reasonable prices
- community: has a stake in the business as employers of local people
- local environment: for example, noisy night-time deliveries or a smelly factory would be unpopular with local residents
27
What were Nike and Gap criticised over?
Child labour
28
What happened with Nike and Gap?
Nike and Gap were criticised over child labour and faced very bad reactions from the public, which came following the Panorama programme, revealing the poor sweat shop conditions. They reacted and changed their policies, with Nike now monitoring its factories following the Panorama programme. The question is, however, would Nike have actually done this if they never got caught? Did they do it for intrinsic or extrinsic reasons?
29
How did Nike react when they were called out for child labour?
They changed their policies and began monitoring its factories, following the Panorama programme from which they were exposed for carrying out child labour.
30
What is a whistle blower?
A whistle blower is someone who risks their livelihood to tell the truth about companies and make businesses accountable for their actions. Whistle blowers are protected by the law. They know what the company is doing is unethical and so, whistle blow on that company.
31
Why is there lots of protection around whistle blowers?
Because it is very hard to become employed if you are a known whistle blower. You risk your livelihood and it can sometimes cost you your life, too, such as in the case of Karen Silkwood.
32
Give a person who whistle blowing costed them their life
Karen Silkwood
33
What happened with the whistle blowing case of Karen Silkwood?
- she died mysteriously in a car accident in 1974 amidst a campaign to challenge Kerr-McGee about the safety of a nuclear facility
- she was an activist who was critical of fuels production plant safety
- in the summer of 1974, Silkwood testified to the Atomic Energy Commission that she had found serious violations of health and safety regulations - including evidence of spills, leaks, faulty fuel rods and enough missing plutonium to make multiple nuclear weapons.
- during the week prior to her death, Silkwood was reportedly gathering evidence for the Union to support her claim that Kerr-McGee was failing in maintaining plant safety
- Silkwood was killed in the car accident, but the case continued after her death and they did find Kerr-McGee guilty
34
What is globalisation?
This is where companies become worldwide. This involves integrating industries, economies, markets, cultures and policy-making around the world. Globalisation is where a company becomes global, such as McDonald's.
35
Where do businesses often move their production of products to?
Countries where there is cheap labour. They go to places where there is a lack of health and safety, no minimum wage required, no break requirements etc.
36
Is the process of globalisation speeding up or slowing down?
Globalisation is speeding up
37
Give some reasons as to why globalisation is speeding up
- technology is changing - communications are even faster now (e.g., Skype)
- transport is cheaper and faster
- removal of capital exchange controls - money can be moved earlier
- consumer tastes have changed - willing to try foreign foods
- UK gets year round food/produce, because of globalisation
38
Strengths of globalisation
- gives jobs / small income to poor communities
- trains local people to have new skills
- consumers are happy with cheaper clothing (consumerism)
- consumers can buy the products they enjoy all year round
39
Weaknesses of globalisation
- global companies taking trade from smaller businesses, e.g., Caribbean bananas could not compete with Del Monte, which is a massive company.
- keeps poor communities poor and big companies rich (capitalism). This is because, the money is leaving the country rather than being put back into their country.
- takes jobs away from countries with stricter human rights acts, e.g., fair wages for cheaper alternatives.
- indigenous cultures affected.
- deforestation and pollution
- child labour
40
What happened on 24/04/13?
The Rana Plaza building in Bangladesh collapsed
41
When did the Rana Plaza building in Bangladesh collapse?
24/04/13
42
How many people died in the Rana Plaza building collapse?
1100 people died
43
How many people were injured in the Rana Plaza building collapse?
Over 2500
44
The Rana Plaza building collapse
- 24/04/13
- 1100 people died
- more than 2500 people were injured
- the day before the collapse, the shops on the ground floor of the 80 storey complex shut due to cracks in the building
- the garment workers were ordered to return to work and were threatened with being docked a month's wages if they didn't
- after investigations, it was found that the upper factory floors had been built without permits and without reinforcements for the heavy machinery
- $30 million was given in compensation
- health and safety was then implemented on all buildings and 35 unsafe factories closed.
- but would anything have happened if this factory hadn't collapsed?
45
What did Edward Abbey say about business?
'Growth for the sake of growth is the ideology of the cancer cell.' This gives negative connotations about businesses that grow
46
Business ethics
This discusses the moral justification of economic systems and practices, the responsibilities of businesses and the rights of workers
47
Capitalism
This is the idea that companies are privately owned (not owned by the government) and exist to make profit, e.g., Tesco's exists to make money. Whereas the NHS is owned by the government and does not make a profit.
48
Corporate responsibility
Businesses have a responsibility to consider the interests of their customers and investors
49
Ethical investment
Investment should only be made in businesses that trade ethically, like Fair Trade
50
Profit
Money made after sales and after taking away the costs involved
51
Profit motive
The whole point of a business is to make profits; without profit, the investors, workers and owners will not gain anything.
52
Transnational corporation (TNC)
A business that is registered and operates in more than one country - e.g., Coca Cola.
53
Consumers
People who buy from businesses
54
What is business ethics about?
It is about going beyond what is legally required by law and instead, doing what is morally right.
55
Give some ways in which a business can be more ethical
- treating their employees well
- treating suppliers well
- only using materials that are ethically sourced
- paying their fair share of taxes
56
Business ethics approach: treating employees well
- giving employees a safe space to work + paying them a fair wage (this does not mean just paying them the minimum wage)
- companies can provide other financial incentives, such as bonuses or a share scheme where employees receive shares in the company they work for.
57
Give an example of a business who treats their employees well
Google
58
How does Google treat their employees well?
They give employees...
- free food
- free medical and dental care
- gyms
- money towards student loan payments
- flexible working hours
- excellent communal spaces where employees can relax and socialise
59
Business ethics approach: treating suppliers well
- this can be done by paying fair prices and making payments on time to the suppliers
- fair trade prices have been established to ensure suppliers are paid a fair price for the materials they produce and sell
- a popular industry that has fair trade products is the coffee industry. If a product has the fair trade logo on the packaging, this indicates that, among other things, the business has paid the grower fairly for the coffee they have produced.
- the fair trade logo has become a symbol that a business is acting ethically towards suppliers.
60
Business ethics approach: only using materials that are ethically sourced
- this means that the materials have not been sourced through the exploitation of workers and that environmental and social impacts have also been considered
61
Give an example of a business who treat their suppliers well and source goods that are ethically produced and grown
Lush
62
How does Lush treat their suppliers well and only use ethically sourced materials?
- Lush has an ethical buying policy that outlines exactly how they treat their suppliers, covering things such as making sure their suppliers have good workers' rights, safe working conditions (including no child labour), that the products they buy are never tested on animals and that the materials have been produced in an environmentally sustainable way.
- by having these policies, Lush is taking a stance against suppliers that act unethically, in turn, increasing their ethical credentials
- Lush has built a business around treating their suppliers well, but mainly around the ethical sourcing of the materials that go into their products.
63
Business ethics approach: paying your fair share of taxes
- ensuring taxes are fully paid is vital if the business is to be seen as ethical
- this is because many global brands use legal loopholes in the tax law to avoid paying tax legally. It is not illegal but is looked upon unfavourably by consumers and governments. It can give a business a bad press coverage.
- one example of this is Starbucks, as they paid 0% corporation tax in the UK in 2011, which resulted in a public boycott of the brand.
- if the correct tax is not paid, it can instantly impact a business' reputation
64
What does Milton Friedman think the reason for business is?
To make money
65
What does Robert C. Solomon think the reason for business is?
It is more than just to make money, but it also has environmental and ethical responsibility.
66
Usury
The practice of lending money at unreasonably high rates of interest
67
What did the Industrial Revolution lead to, in terms of businesses and ethics?
The Industrial Revolution led to the employment of millions in unhygienic conditions, with dangerous machinery, long hours, no holidays, pollution and very low wages. Workers were without rights.
68
When was the Equal Pay Act introduced?
In 1970
69
Why might Aristotle be a supporter of corporate social responsibility?
Because, in his ethical writings, he always insisted on the communal aspects of the ethics. He placed a large focus on the polis.
70
Costa CSR
- worked with Stop The Traffik to shape a human rights programme within the business
- Costa Coffee is the first UK coffee shop that has sourced 100% of its coffee in line with the Rainforest Alliance Standard.
- they only support palm oil products that are RSPO certified
- they have made a global commitment to use only cage-free eggs in products by 2025.
71
What is 'greenwashing'?
Greenwashing is when a company seeks good public relations by making trivial and low-cost, eco-friendly changes to products, services and processes that are merely for show. Greenwashing is essentially acting ethical to look good.
72
What does 'greenwashing' do?
It gives a false impression and misleads the public about the ethics behind a company.
73
Give an example of 'greenwashing'
The fast fashion brand H&M has a 'Conscious' collection, which claims to use 'organic' cotton and recycled polyester to make the public believe that they have a strong interest in sustainability. However, it was found that the 'Conscious' line had a higher share of damaging synthetic materials than its main line (72% compared to 61%).
74
What is whistle-blowing?
This occurs when a member of an organisation reports misconduct by a superior or co-worker.
75
What was the Geoffery Wigand whistle-blowing case?
He reported that the B&W cigarette company ignored research into less addictive cigarettes, even genetically engineering a tobacco plant named Y-1 which was twice as high in nicotine as regular tobacco. He revealed that the company had known for 30 years that their tobacco products cause cancer and other diseases. Because of his actions, Wigand received threats against his family, loss of income and a divorce.
76
Does Geoffery Wigand emerge as a hero or a villain?
He can be seen as a hero, because he considers the health of the public as being more important than his job. He also caused further investigation into the company into the effect on animals and the environment.
77
Milton Friedman quote
'The social responsibility of business is to increase its profits.'
78
Why would whistle-blowers be considered ethical people?
They might be seen as ethical because they don't put their own comfort and security over doing the right thing.
79
Why would whistle-blowers not be considered ethical people?
They could be seen as behaving unethically by breaking the contract of trust and confidentiality between themselves and their employer.
80
What idea is the slogan 'good ethics is good business' based around?
It is based around the idea that 'doing the right thing' is a route to business success.
81
What challenges the ability of companies to 'do the right thing'?
Globalisation
82
What does Kantian Ethics believe about whistle-blowing?
It is the right thing to do (universal law + person as ends needs to be considered). If someone is acting unethically, you have a duty to expose them.
83
What does Utilitarianism believe about whistle-blowing?
It depends on how many people will be impacted. Whistle-blowing may be supported by utilitarianism if it will benefit a significant number of people, but if it will cause soaring unemployment, then it may not be supported.
84
What happened with P&O Ferries?
P&O Ferries sacked 800 staff in order to replace them with workers on much cheaper wages.
85
P&0 Ferries: good ethics is good business
P&O Ferries sacked 800 staff to replace them with workers on much cheaper wages, which is a very unethical thing to do, as it shows no care for employees and an interest purely in money. Had the company not been called out for such an action, perhaps the statement 'good ethics is good business' would not be true, as they would generate more profit. However, many people are refusing to use the brand and it has now become well-known as an unethical company, which could mean they generate less money, therefore supporting the view that 'good ethics is good business', for acting unethically has caused them to lose business.
86
Kantian Ethics and globalisation
- If the company is acting just for its own good by employing staff in poorer countries where they can be taken advantage of, for example, then in Kantian terms, it is treating people as a means to an end, not as an end in themselves = Kant thinks it isn't right.
- A Kantian might also argue that no one could universalise exploiting every nation and every person, so it cannot be right to do this.
- Exploitation is not dutiful.
87
Utilitarianism and globalisation
- It depends on how utilitarianism is to be understood.
- If we argue that utilitarianism is to be understood in terms of 'the greatest good for the greatest number', then someone might construct a case that the suffering of a few workers in a far-off place is acceptable, given that there is a greater good created for the majority of stakeholders. But, this crude view of the principle of utility was rejected even by Bentham.
- Other utilitarian thinkers, such as Peter Singer, might say that we are not intrinsically more valuable than someone else and exploitation of workers and the environment cannot be right, because you cannot privilege your pleasure in profit and cheap goods over the suffering someone feels.
88
Who is at fault for having bad ethics?
Is bad ethics the fault of the business or is it also consumers and shareholders who demand constant updates, new models, lower prices and faster delivery?
