Business ethics Flashcards
applied ethics
Case Study: Ford Pinto (1970)
“a business that makes nothing but money is a poor kind of business” - Henry Ford
-during crash tests, serious design flaw was discovered
-if your car is hit from behind by another car or vehicle at 20 mph or more the car is likely to explode
-changes would cost $11 per car, didn’t change as the law didn’t require them to do that
-weighed up the numbers: found that the incidents would cost $49.5 million whereas to change the gas tanks in all the vehicles would cost $137.5 million
-cheaper and more cost effective to not change the vehicle, so didn’t
Capitalism
-an economic and political system in which a country’s trade and industry are controlled by private owners for profit
consumerism
-the protection or promotion of the interests of consumers
oxymoron
-Good ethics is good business
-Dame Anita Roddick (body shop) promotes good business because it is the right thing to do – intrinsic reasons, ‘being good is good business
-Lord Alan Sugar (Business magnate) good ethics is good for business, as every business needs to hook in an audience to be successful – “Are you the cheap one, the one with good service, the ethical or bespoke one?”
Corporate Social Responsibility (CSR)
-a company’s commitment to carry out its business in an ethical way; looking at the environment, social aspects etc.
Corporate Social Responsibility (CSR): Milton Friedman
-theory on CSR
“there is one and only one social responsibility of business - to use its resources and engage in activities designed to increase its profits”
-businesses have a social responsibility to improve worker’s lives and help communities – socialism
-this made capitalism less effective and restricted rights of individuals to improve their lives
Corporate Social Responsibility (CSR): Strengths of Friedman’s view
-main focus should be to make profit, without profit, a business cannot survive (+)
-Friedman’s theory does promote social responsibility to society (+)
-increase of profits in a company benefits the economy which benefits the citizens of that economy (+)
Corporate Social Responsibility (CSR): issues with Friedman’s view
-also believed that social responsibility should not be forced by the government (-)
-however, companies can still be successful while pursuing several different methods of social responsibility at the same time (-)
-example, responsibility to stakeholders can still be achieved while helping to strengthen the community (-)
businesses
-have a duty and an obligation to consider the effects of their activities on society as a whole
shareholders
-an owner of shares in a company
-key priority of a business should be to make a profit for its shareholders
-these are people who have invested money into the success of a business
-more successful: more return on money
stakeholder
-a person with an interest or concern in something, especially a business
-a business must monitor and ensure it complies not only with the law but with accepted ethical standards as well
-wider needs of employees, consumers and the community should be considered
internal stakeholders
-groups within a business
-owners who are interested in how much profit the business makes
-managers who are concerned about their salary
-workers who want to earn high wages and keep their jobs
-suppliers who want the business to continue to buy their products
-lenders who want to be repaid on time and in full
external stakeholders
-groups outside a business
-customers who want the business to produce quality products at reasonable prices
-community which has a stake in the business as employers of local people
-local environment, example noisy night-time deliveries or smelly factories would be unpopular with local residents
relationship between business and consumer
-consumer wants to see social responsibility from the businesses it buys from
-consumer rights – quality, safety, price and good customer service
-example, good treatment of employees, putting back into the community, environmental concern
-consumers are crucial to change in business and how they are run
-example, nike and gap over child labour, nike now monitor its factories following a Panorama programme
employees vs employers
-balance of interests:
1. employers: want to plan for future, make profits and keep employees motivated
2. employees: want best working conditions, job security
-if employee is unhappy = high turnover, poor time keeping, absenteeism all result in less profit
-internet allows for rapid sharing of information plus attitudes of websites which discusses businesses
whistle-blowers
-a person who informs on a person or organisation regarded as engaging in an unlawful or immoral activity
-holds businesses accountable for their actions
-protected by law
-treated as witnesses to crimes or can choose to give information anonymously
-encourage whistle blowing as something that serves public interest
case study: Karen Silkwood
-died mysteriously in a car accident in 1974 amidst a campaign to challenge Kerr-McGee about the safety of a nuclear facility
-was a chemical technician at Kerr-McGee’s plutonium fuels production plant in Oklahoma
-member of the Oil, Chemical and Atomic Workers’ Union
-also an activist who was critical of plant safety
-1974, she testified to the Atomic Energy Commission that she had found serious violations of health and safety regulations (evidence of spills and leaks and missing plutonium that could make nuclear weapons)
-prior to her death, she was gathering evidence for the Union to support her claims that Kerr-McGee was negligent
globalisation
-companies becoming world wide
-integrating industries, economies, markets, cultures and policymaking around the world
-example, McDonalds
-speeds up:
-technologies changing, communications even faster
-transport is cheaper and faster
-removal of capital exchange controls, money can be moved easier
-consumer tastes have changed, try foreign foods
-businesses = freer to choose where they operate, taking trade to countries where labour is cheaper
-example, manufacturing has moved to Indonesia or phone lines to India
globalisation: justifications
-gives jobs/small incomes 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 (+)
globalisation: issues
-global companies taking trade from smaller businesses (-)
-keep poor communities poor and big companies rich (capitalism) (-)
-takes jobs away from countries with stricter human right acts, example, fair wages for cheaper alternatives (-)
-indigenous cultures affected (-)
-deforestation and pollution (-)
-child labour (-)
reality of sweat shops: case study: Rana Plaza
-2013, Bangladeshi factory collapsed
-factory supplied Primark and other companies like Walmart with low cost clothes
-over 1100 people died in the building called the Rana Plaza
-more than 2500 were injured
-day before the collapse the shops on the ground floor of the 80 storey complex shut due to cracks
-garment workers were ordered to return to work
-some were threatened with being docked a months wages
-after investigation, found that the upper factory floors had been built without permits and without reinforcements for the heavy machinery
Amnesty international
-campaigns for global human rights acts
-$30 million given in compensation
-health and safety on all buildings
-35 unsafe factories closed
‘A blueprint for better business?’ Cardinal Vincent Nichols
-wrote ‘A blueprint for better business?’ (2012)
-7 principles for good business:
1. human dignity; means to an end – Kant
2. common good
3. solidarity
4. subsidiarity
5. fraternity
6. reciprocity
7. sustainability
business ethics applied to Kantian ethics
-whistle-blowing: important of honesty and promise keeping
-globalisation: using countries with fewer human rights acts as a means of cheap labour (means to an end)
-cannot universalise exploiting every nation and every person – no goodwill/duty
-Kant promoted importance of equality and globalisation promotes inequality
-also opposed slavery, on the grounds that consent requires autonomy; no consent in Rana Plaza, had to go back to work
business ethics applied to Kantian ethics: William Temple
-‘Christianity and Social Order’
-develops Kant’s second formulation:
-act always for the good of persons
-the purpose of production is consumption, manipulating the market to create shortages to maximise profit is immoral
-to use buyers as a means for profit is wrong
business ethics applied to Utilitarianism
-might resist whistle-blowing, depending on how much harm was done in that particular case
-weigh up balance of good vs harm
-globalisation: western goods produced happiness for greatest number (Bentham rejected this view)
business ethics applied to Utilitarianism: Peter Singer
-modern utilitarian
-argues we should focus on minimising pain rather than maximising pleasure, must consider individuals/minorities as well
