Business Ethics

Question 1

what is corporate social responsibility?

Answer 1

a business has responsibility towards the community and environment

Question 2

who does the term ‘stakeholders’ include?

Answer 2

all people and groups associated with a business; e.g. employees, customers, local community, country as a whole and governments

Question 3

who does the term ‘share holders/stock holders’ include?

Answer 3

those who own the company and will make a profit if the company profits

Question 4

how would you know if a business is carrying out good corporate social responsibility? -where would you check?

Answer 4

the FTSE 100 index- an enhanced business review

Question 5

give 3 negative reasons why businesses take on corporate social responsibility?

Answer 5

they will be viewed negatively by customers if they don’t
if they didn’t treat workers well they could go and work elsewhere for a competitor
in hopes it will stop governments imposing stricter restrictions on them

Question 6

what responsibilities does a business have towards: employees?

Answer 6

to provide statutory pay including sick pay, holiday pay, maternity leave, to provide safe working conditions, to not discriminate based on race/gender/sexuality/age when employing, to have contracts of employment outlining hours of work

Question 7

what legal acts are in place to protect employees?

Answer 7

2010 Discrimination act
1998 Public interest disclosure act- mean employees can speak out publicly about unethical practise and keep their job

Question 8

what responsibilities does a business have towards: customers?

Answer 8

to advertise responsibly, to label responsibly, to charge fair prices, to supply customer demand

Question 9

what responsibilities does a business have towards: the local community?

Answer 9

to provide food banks, to provide jobs for local people

Question 10

what responsibilities does a business have towards: the country as a whole?

Answer 10

to take responsibility towards the environment, to dump waste responsibly, to provide jobs rather than move business abroad and take jobs from local people

Question 11

what legal act is in place to protect the county as a whole?

Answer 11

2011 Waste Disposal act

Question 12

what responsibilities does a business have towards: governments?

Answer 12

to obey government laws on: whistleblowing, pay, environmental laws etc.

Question 13

who are some main scholars to use for business ethics?

Answer 13

Adam Smith
Karl Marx
Milton Friedman
Robert Solomon
Anthony Weston
Ted Synder
Peter Singer
Sir David Attenborough
Lord Alan Sugar

Question 14

what does Adam Smith say about business ethics?

Answer 14

Adam smith wrote ‘An Enquiry into the Nature and Causes of the Wealth of all Nations’ (1776).
He argued that people are born with a moral sense, an innate conscience and a feeling of empathy and sympathy with others within the community.
In business the ideal is that business is unconstrained by governments.
He believed that free market capitalism was the best way to encourage entrepreneurial idea in business.
The benefits from the entrepreneurs would flow down into the community. If an entrepreneurial business owner of a factory did well, then this will enable him to employ more workers and they would have the stability of a good job.
The whole community gains from higher employment levels.
The good effects that come from the business owners is known as the trickle-down effect- this is guided by the “invisible hand”- it simply happens because business owners can make a profit within the free trade system and are innately good people.
As people have empathy for others in the community it means that business people would not be selfish.

Question 15

what does Karl Marx say about business ethics?

Answer 15

he gave a critique of capitalism in ‘Das Capital’. Marx did not like the idea that production in business was in control of individuals who controlled the labour forces by making profit from their work. He felt it undermined those who do not own the means of production- the working class whom he called the ‘Proletariat’. It put the capitalist class – the bourgeoisie- into a position where they could bargain for power over the working class. The working class are subservient to the capitalists because the only way they can try to escape their status is to work harder and earn more for the capitalists. In other words, workers are exploited by the capitalists.

Question 16

what does Milton Friedman say about business ethics?

Answer 16

Friedman, an economist, wrote an article in ‘The New York Times Magazine’. In it he claimed that the social responsibility of a business was to increase its profits. He claimed that “greed is good” and that a free market enterprise was best and a capitalist society because it encouraged and allowed entrepreneurs to set up businesses. In ‘Capitalism and Freedom’ Friedman argues that the only obligation of business is to maximise profits to help its shareholders (whose main priority is to make profit) whilst engaging in open and free competition between businesses without deception and fraud. Business people are obligated to follow wishes of shareholders whilst obeying laws and ethical customs of societies. Corporate social responsibility. Friedman claims that the “rules of the game” must be followed and argues these do constrain profit maximisation. He claimed that corporations should have no skills in the areas of supporting charities , health or educational projects in the communities in which they are based.

Question 17

what does Robert Solomon say about business ethics?

Answer 17

Solomon wrote a book titled ‘A Better way to Think about Business- How personal integrity leads to corporate success’. He argued that profit motive (the idea that business should set out purely to make profit as its sole gaol) is an oversimplified view of what the profit motive is and why it is important. The pursuit of profit is one of the main gaols in business but not the only one. He wrote “we adopt a too narrow vision of what business is, e.g the pursuit of profits and then derive unethical or immoral conclusions form this.” Profit, he claimed, should be seen as a way of encouraging and rewarding hard work- building a better business and serving society better. Solomon takes his views from Aristotle. Aristotle claimed that we should always act virtuously e.g with honesty, patience and fairness and that helps our communities. Based on this thinking Solomon sees a link between profit and social responsibility. A business should set out to make a profit but by supplying quality goods to its customers, providing jobs and fitting into a community. Good business should take the community into account and if it does it helps it make a profit and therefore increases productivity. He wrote that “businesses should always involve large cooperative and mutually trusting groups. ….networks of suppliers, service people, customers and investors.” Corporations should put the virtues into practice such as fairness and honesty. Virtue and profit must thrive together.

Question 18

what does Anthony Weston say about business ethics?

Answer 18

He supports the view of Solomon
– that social responsibility and profit are important.
He gives the example of the pharmaceutical company Johnson and Johnson- which lists its responsibilities to groups of people in order. Firstly it has a responsibility to doctors, nurses and patients , mothers and fathers and all others who use its products. Then it lists its employees, the communities in which people live and work, and finally its stock holders (those that have a share in the business and will make profit it it makes a profit) The stake holders come above the stock holders.
In 1981, 7 people were poisoned by cyanide laced Tylenol capsules in Chicago. Johnson and Johnson took 22 million bottles of the shelf in response to this offered to exchange any already purchased bottles and took losses of over £100 million. They reintroduced the drug in tamper resistant packaging and quickly reclaimed 80% of the market share in Weston wrote “proving that doing the right thing by stakeholders also benefits stockholders too. ”

Question 19

what does Ted Synder say about business ethics?

Answer 19

Synder believes that a business should set out to make profit foremost but social responsibility towards employees and stakeholders is important to some degree, although it is secondary to their purpose of profit making. In the UK, large numbers of call centres have been moved to developing countries such as India because costs of offices and staffing are lower. Synder’s research into emerging markets suggests that moving to LEDC’s benefits markets and businesses more than if they had stayed based in the MEDC’s.

Question 20

what does Michael Sandel say about business ethics?

Answer 20

Companies have a duty to their stakeholders- their employees and their customers. They should not necessarily follow government laws if they operate in different countries and are trans national companies as the laws may not be ethical. Instead they should follow ethical principles to guide them in their attitudes. Milton Friedman famously claimed that businesses should; aim to maximise their profits and not be too concerned about their stakeholders. Sandel claims this is too narrow a view of the purpose of a company. It should be concerned about the common good. They might be guided by Human rights for example and all companies whether western or eastern could try and extend the human rights to apply to business areas.

Question 21

what does Peter Singer say about business ethics?

Answer 21

preferences not to feel pain. This extends to animlas as well as humans. We have to make true preferences based on reason and consequences as opposed to manifest preferences. The preferences of future generations should be considered.

Question 22

what does David Attenborough say about business ethics?

Answer 22

We need to consider the environment very seriously indeed. Climate change is happening fast as carbon emissions rise from factory pollution, air travel etc. and destroying the earth and the animals in it- e.g. coral is dying and animals are dying out such as Polar bears as the ice caps melt. We need to educate people about this.

Question 23

what does Alan Sugar say about business ethics?

Answer 23

When a business is set up you have to ask yourself what your selling point is- your unique feature? How are you going to be different in the workplace to 30,000 other business entrepreneurs? “ Are you the cheap one? The one with the good service? The ethical one….What’s your hook?” so as long as you make profit that’s what matters. If you choose to be ethical then it’s to make profit.
Make notes on the Dialogue article.

Question 24

what is globalisation?

Answer 24

around the world economies, industries, markets, cultures and policy-making is integrated

Question 25

what is globalisation’s impact on stakeholders-
what are some arguments for globalisation encouraging the pursuit of good ethics as the foundation of good business?

Answer 25

It is good for the economy in a capitalist society. It creates more jobs for poorer people in LEDC’s and therefore brings more happiness.

It creates jobs across the world and allows workers in LEDC’s to have a fair wage and be informed which is ethical

There are human rights that protect people who work for global businesses in each country that should be followed. Companies have to be made accountable. In this way Human rights should be kept e.g. rights for workers to a fair wage and good working conditions. Children should not be used as labour. Virtues are kept such as promises keeping through work contracts and being honest with workers. It is the duty of employers to keep these laws. This leads to good ethics.

Question 26

what are some arguments against globalisation encouraging the pursuit of good ethics as the foundation of good business?

Answer 26

Many businesses do exploit workers for profit. It leaves an unhappy minority Lack of international laws allow this and global companies do not check local companies that work on their behalf.

It might create jobs in LEDC’s but businesses can be misleading with employees in globalised businesses- they don’t always fully inform them of the conditions and contracts of employment fall way under standard . Can get away with poor advertising and poor product making – can sell products for cheaper if they are made in LEDC’s

Many businesses do not approach business through a sense of duty and keeping universal laws. Virtues and human rights are not important to them in the pursuit of profit.

Poor environmental ethics Many global businesses do not care about the environment and do not check that their businesses abroad in LEDC’s are working to any environmental regulations. They can get away with a lot as there are no local laws .

Question 27

what is whistleblowing?

Answer 27

an employee disclosing ethical wrongdoing to the employer or to the public

Question 28

application of utilitarianism to business ethics

Answer 28

Bentham- act utilitarian
Mill- weak rule utilitarian
The principle of Bentham’s Hedonistic utilitarianism and that of Mill’s is ‘The greatest happiness for the greatest number of people.’ It is for Bentham, and to some extent for Mill, a relative and teleological approach that looks at the consequences of each act. For Bentham each situation/act is looked at and the 7 factors of the Hedonic Calculus are used to weigh up whether the action will result in more Hedons or Dolors. It is based on quantity of happiness. Mill sadistic guards- brings more pleasure than pain, so allowed.
Bentham –relative approach so flexible
Mill-rules should be in place to protect minority rights but if the situation demands it they can be broken so some flexibility.
Bentham- in our human nature to be happy
Mill-happiness is a fact-naturalists. Empirical evidence supports this view.
Mill recognises that humans have the potential to be virtuous fulfil their human nature as reasoned and intellectual beings. Quality of happiness is more important than quantity of Happiness.,

Question 29

application of Kantian ethics to business ethics

Answer 29

Kant (1724-1804)
Deontological
Duty for duties sake
Laws are made using reason not emotion
Categorical imperatives- you OUGHT to keep promises/tell truth
Hypothetical imperatives- tell the truth IF it suits you
3 principles of catagorical imperatives: laws must be universalised, whether to universalise law if it: leads to ordered society, contradicts law of nature/will, never uses people as a means ot an end, to be a law making member of kingdom of ends
Contradiction in law of nature- cannot carry out a law/maxim if it contradicts the nature of what it is
Contradiction in law of will- cannot have a law/maxim that contradicts what you want for yourself
Greengrocer example
Freedom and the Summum Bonum- free to acts morally, choose out of duty, God punishes immoral rewards moral, Summum Bonum is the Highest Good- being virtuous rewarded by God