Applied Ethics: Business Ethics Flashcards
What did Henry Ford say about business?
‘A business that makes nothing but money is a poor kind of business.’
Why might it be questioned if Ford the car brand is really that ethical?
Because of the Ford Pinto Case in 1970
When did the Ford Pinto Case occur?
1970
What was the Ford Pinto Case in 1970?
- 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?
Give a solution which could have been taken to the Ford Pinto Case in 1970
If it was going to cost $11 per car to change it, you could just add this to the cost of the car.
Who was the founder of the Body Shop?
Dame Anita Roddick
What is Body Shop famous for?
Its anti-animal testing
What did Anita Roddick say about business?
‘Being good is good business.’
Does Anita Roddick promote intrinsic or extrinsic reasons?
Intrinsic reasons. She acts ethically because it is the right thing to do, not simply for image.
What is the difference between intrinsic and extrinsic reasons for being ethical?
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.
What did Lord Alan Sugar argue about being ethical?
He argued that being ethical is just a hook to get people to come to you.
Give an example of extrinsic reasoning
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.
What is Corporate Social Responsibility (CSR)?
The responsibility you have to a society as a company / group.
What did Milton Friedman say about Corporate Social Responsibility (CSR)?
‘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.’
Summarise what Milton Friedman says about Corporate Social Responsibility (CSR)
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.
Does Milton Friedman think we have Corporate Social Responsibility (CSR)?
Friedman argues that businesses are about making profits, otherwise it is not a business, so this is what is important.
Strengths of Milton Friedman’s view
- 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.
Weaknesses of Milton Friedman’s view
- 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.
What is a shareholder?
Someone who has shares (money) in a business. The value of this money will go up and down; this is the stock market.
What happens to shares if a business is successful?
The money you have put in will increase.
What is a stakeholder?
Anyone who has something at stake and at risk of losing. The wider needs of the employees, consumers and the community should be considered.
What types of stakeholders are there?
Internal and external stakeholders.
What are internal stakeholders?
Groups within a business
What are external stakeholders?
Groups outside a business
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)
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
What were Nike and Gap criticised over?
Child labour
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?
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.
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.
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.
Give a person who whistle blowing costed them their life
Karen Silkwood
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
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.
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.
