Baet 20300 Business Ethics : Assessment Answers

1.

• What are the reasons for why running a business ethically is profitable (or, at least guards against losses)?
• What are the reasons for why running a business ethically is not profitable?
• What are the reasons for why running  a business unethically is profitable?
• What are core values?
• Why is it a good idea to have core values?
• What is the difference between core values and ethical values?  What are ethical values?
• Why is running a business according to law – without thinking of ethics – not sufficient for running a business ethically?
• Why is running a business according to law – without thinking of ethics – not sufficient for running a business legally?
• Why is running a business according to law – without thinking of ethics – not sufficient for running a business profitably?
• What is the ethical significance of the Barclay/LIBOR case?  (Which of the first 3 questions, or questions like them, does it help to answer – and what is the answer to one of those questions on the basis of this case?)
• What is the ethical significance of the Malden Mills case?  (Which of the first 3 questions, or questions like them, does it help to answer – and what is the answer to one of those questions on the basis of this case?)
• What is the ethical significance of the Philip Morris case?  (Which of the first 3 questions, or questions like them, does it help to answer – and what is the answer to one of those questions on the basis of this case?)

2.

• What is the utiltitarian ethics?  In what sense is it about consequences?
• What are the problems with Utilitarian ethics?
• What is the Kantian ethics?  (Do not worry about the universal law formulation of Kantian ethics.  Focus on the each person as an end-in-itself formulation.)  In what sense is it about principles?
• What are the problems with Kantian ethics?
• What is the virtue ethics?  In what sense is it about personal character?
• What is the distinction between wants and interests?
• How does the distinction between wants and interests help establish rights – and what are rights?
• Are rights supported by Utilitarian, Kantian, or Virtue frameworks?
• What is the Utilitarian evaluation of child and slave labor?
• What is the Kantian evaluation of child and slave labor?
• What is the Virtue ethics evaluation of child and slave labor?

3.

What are the reasons for thinking that..

• Economic Model of Corporate Social Responsibility (ECMSR)  is ethically good according to Utilitarianism.
• EMCSR is ethically good according to Kantiainism
• EMCSR is not good according to Utilitarianism
• EMCSR is not good according to Kantianism
• Stakeholder Model of Corporate Socail Responsibility (SMCSR) is ethically good according to Utilitarians
• SMCSR is ethically good according to Kantians
• SMCSR is not ethically good according to Utilitarians
• SMCSR is not ethically good according to Kantians
• What are the Philanthropic, Minimum Morality, and Strategic Models of Social Responsibility?
• What are market failures (negative externalities, public goods, individual rationality failing) – and why is this important?
• What are the reasons for thinking that shareholders are not owners – and why is this important
• What is the problem with regulating business by law?  (The issues of first generation problem and lobbies)

1.

• Ethics is very important to the business activities as ethics and morale act as the primary factors in the decision making process. It has been proved in the past that the unethical practices in the business lead to employee dissatisfaction and de-motivation. In addition to that, the business ethics also plays a great factor in keeping the brand image undamaged. The business gets hampered if the ethical behavior becomes public. The confidence of the investors gets lost, therefore it would be very difficult for the company to gain the confidence and trust in the market.
• One should follow ethics and public policy for understanding the viewpoints of both the customers and employees. However, following business ethics may lead the business to a under profited business as well. It is quite evident that the employees and their families depend on the activities of any business, but sometimes, the public policies of a business can encounter a conflict of interest and it may lead to bankruptcy as well. Therefore sometimes, the businesses have to adopt unethical practices for saving it from bankruptcy.
• Ethical behaviors within the business practices are mostly profitable. This idea is mostly applied on the decision making procedure. It has been proven in the past that the ethical practices are socially profitable the employees and their families are entirely dependent on the business. Business ethics make the businesses morally sound which considers the larger perspective than the small interests of the management personnel. Therefore ethical practices may not gain much return on investment in the initial stage, but it enhances gaining trust in the market.
• The core values of a company indicate to the values that are considered to be the primary elements that outline the foundation of the business on which the employees conduct their functions and perform. There may be several values in the universe, but some of them are considered to be the primary ones, therefore these values are considered to be the constant core values in a business. Even if there are considerable changes in the politics, governmental policies, society and technology, these values will be constant for the business practices. These values underlie the performance of the company, how the employees interact with each other and the making of strategies by the management.
• The core values are very important to the business, as it helps the organization in the decision making procedure. These values tend to stand behind the product and service quality of any organization. They also informs about the values and morals of the company to the potential clients and investors. The customers can identify to a specific business with these core values. Therefore, in this competitive market, having a fixed and specified core values can help the companies to gain a competitive advantage in the market. These values also play a crucial role in the company retention policy and the recruitment policies, as the potential employees can also identify the company with these values.
• The ethical values are the established set of principles that governs the behavior of the employees. The ethical values help the company to maintain a good reputation in the market. The basic difference between the ethical values and the core values  is that the core values cover a broader sense of the business practices and cover all the possible values that are related to the business activities, however the ethical values only enhances the ethical practices of the organization and tend to govern the behavior of the management and employees.
• While practicing the business activities, it is very important to consider that something being legal does not make that action ethical always. Apparently it may be considered as the obvious fact, however, in reality it is not. In most cases, it can be seen that lying is legal in situation, but it can definitely be considered as unethical. The law is mostly made with a moral purpose; however there are several loop holes which can eventually make them unethical yet legal.
• Legally the business should consider both the legal and ethical practices. The law mostly has a specific moral purpose for making others’ lives safer and better along with protecting their significant rights. However, there may be some practices which can be considered as unethical yet legal, such as lying under a certain consequence. Also, there may not be any moral rational for any newly formed law, but behaving according to the law may not be ethical under that circumstances. Therefore there are high chances that the business would lose the confidence and trust of the employees and potential customers as well.
• If a business is being run without any ethical concern, it may gain more profit as the management would only consider the lawful actions and about the own profits of the business. However, not thinking of ethics may not be able to gain the trust of the investors and customers, as they may not trust a business which does not consider ethical practices in the business. Therefore it would not be sufficient for the business running profitably without ethical practices.
• The Barclay/LIBOR case may be considered as unlawful, yet it was ethical because it was done for keeping the company alive. The Barclays were cheating the Libor system and asked the employees to lie, so that they could borrow at lower rates of interest than it was, as the Libor system has made different interest rates for the companies, individual investors and the banks. The company had made more profits for the company through this unethical practice; however, this was not according to the moral and rational practices of any business. This can also be considered as a conflict of interest situation where the bank did not think about the customers’ interest for fulfilling their own interest. However the practice cannot be considered as ethical and moral due to the malpractice.
• In the Malden Mills case, the CEO of the company decided to run the business ethically, even after the fire made around 3000 employees out of work. the management decided to pay the salary to the employees and went entirely against of the common practices of business and achieved the appreciation in a crucial phase. However, the company went bankrupt after a certain point of time as they were running the business without any profit. This case can be considered as ethical without thinking of basic profits, but this had led the business to bankruptcy.  
• Phillip Morris, a global tobacco company had sued Uruguay due to their anti-smoking legislation in the country as they thought that it devalues the cigarette trademarks. However, the anti-smoking legislation was for the benefit of the general population and was an ethical practice by the government. However, this law was harmful for the business practice of Phillip Morris and the case was filed. However, international organizations such as PAHO and WHO supported the Uruguay government due to their ethical practice towards their country. Therefore the law was considered more ethical as it concerned broader context, however the business interest of the company was not.

2.

• Utilitarianism states that ant action is good or morally sound when it brings good for a great number of people. This theory is a part of the normative ethics which is concerned with the term, ‘utility’ which can be defined as the pleasure as the outcome of the action other than the suffering of an individual involved in the action. It is also a part of the consequentialism which is concerned whether any action is right or wrong on the basis of the interest and pleasure of the individuals involved.
• According to Utilitarianism, only the consequences of any activity are important entities in the entire world, however, considering it to be the only significant thing would be wrong. The primary weakness of the theory is that it requires violating the standards of justice. It seems that the theory requires penalizing the innocent within certain circumstances.
• The Kantian ethics refers to the theory which has been developed on the basis of a view that good will is the sole good thing and any action can be considered to be good if the primary principle or the maxim behind is associated with moral law. This theory is all about the maxim or the principles as it believes that the maxim is only ethical when it is practices against the good will. If an individual is in a contradictory world, his or her actions can be considered unethical if it is not associated to the good will.
• The Kantian ethics has some serious issues with its statement, such as the mentioned duty in the maxim are considered to be absolute as it cannot help the individual resolving the conflicts that arises while performing thee duty. In addition to that, this theory tends to omit the moral emotions such as sympathy, compassion and remorse as the ethical and suitable purposes for any action. Also, this theory ignores the potential consequences of any action which makes it purposefully blind to the determination of the moral worth.
• Virtue ethics, a major approach for normative ethics, which emphasizes on the moral character or virtue, in the place of emphasizing on the consequences of any action or the rules or moral duties. The virtue ethics indicates to the fact that helping any person would be considered to be benevolent or charitable. Therefore, it can be said that it is about the moral character or virtue, which is considered to be a disposition of an individual. This theory talks only about the moral character of a man which enhances the decision making process.
• The basic distinction between the wants and interests is that interests can be changed under a certain circumstances; however wants tend to be the same under any circumstances. There might be situations where the interests can be altered, however the wants remains the same as it is associated to the basic needs of an individual. An interest is something which is related to the direct objective of the human needs or it may also be related to the direct objective of the human need, on the other hand, human need is something which is the fundamental requirements for living the human life.
• The interest is something that is associated with the direct objective if human needs or it is related to the associated to the directive objective of the human need as a consistent means of ending. Therefore if good health is considered to be someone’s need, medicine is the way that enhances the way of regaining someone’s health. Furthermore, it is the basic right of an individual that he or she gets appropriate amount of medicine. Therefore the basic distinction between the want and interest helps to establish the fundamental rights.
• Rights are the social, legal and ethical set of principles that are the basic normative rules regarding what are the things allowed for people in accordance to the social convention, legal system and ethical theories. All the Utilitarian, Kantian, or Virtue frameworks support the basic and fundamental rights of an individual as a part of right ethics and normative ethics.
• Utilitarianism theory considers that an action of any person is right only when it tends to maximize the utility by creating more usefulness to all the parties. Therefore in case of child labor, it can be said that it may create temporary utility to the family of the child as they get the money for their family, however it does not really concern the best outcome in the long run. In most of the cases, the companies provide lower wage to the child labor, therefore it would be considered morally wrong as it does not increase the utility for both the parties, rather it only provides chances to the company to exploit the child labors.
• As the Kantianism theory revolves around the rational decision making procedure, autonomy and honesty, it states that an individual should not lie or decisive another individual for getting something done according to their own interests. The concept of categorical imperative of this theory helps determining whether an act is permissible or not. Therefore this theory classifies child labor practice to be an unethical one as the children are only utilized for making considerable profit for the businesses as they provide labor in a lower wage rate and cannot be able to protect them.
• Virtue ethics is something which includes assessing the character of an individual on the basis of different virtues. Therefore this theory also considers a person’s character is flourishing and reaching the best of its potential only when the character of an individual involves some of the virtues such as justice, honesty, courage etc. This theory does not justify the child labor practices as the companies promoting child labor generally fails to showcase their virtues such as justice and fair practice. Promoting child labor as it involves lower wage cannot be justified by this theory.

3.

• Economic Model of Corporate Social Responsibility (ECMSR) states that the first and foremost responsibility of any company would be its economic responsibility as it should be primarily concerned with the profit. If the company does not make adequate amount of money, it would go bankrupt and could not even think about performing the other social responsibilities. The Utilitarian ethics includes increasing the net amount of happiness for the involved people who are being affected by the actions of any company. This ethics supports the ECMSR model as this model involves maximizing the profit or pleasure for all the involved stakeholders. Maximizing the profits would make everyone happy which indicate that the theory supports the model.
• Kantian ethics states that the wrongness or rightness of any action does not really depend on its consequences, rather it mostly depends on whether an individual has fulfilled their duties or not. As a business or a running company, the first ever social responsibility is to gain profit as this is the primary source of income for the employees. Kant also indicates to the categorical imperative which is the fundamental base for morality. Therefore it can also be said that the moral duty of any company is to think being profitable before being a socially responsible corporate citizen. Therefore the Kantian ethics supports the Economic Model of Corporate Social Responsibility (ECMSR) model.
• Economic Model of Corporate Social Responsibility (ECMSR) is good according to Utilitarianism as the theory involves increasing the net amount of happiness for all the stakeholders in any business. It also takes into account the benefits and costs of any action and how it can affect all the entities who are involved in the business activities. The model has been supported by the Utilitarianism theory as it only helps the organization to increase the profit or happiness of the involved stakeholders with more profit. Therefore, it can be said that the model is entirely supported by the Utilitarianism theory and considered to be ethical, only when the model is increasing the happiness of all the involved parties. If the model enhances harming a party for increasing the profit for the business, it is not supported by the Utilitarianism theory.
• Kantian ethics indicates that the wrongness or rightness of any action does not really depend on its consequences, rather it is mostly dependent on whether an individual has fulfilled their duties or not. As a business or a running company, the first ever social responsibility is to gain profit as this is the primary source of income for the employees. Kant also indicates to the categorical imperative which is the fundamental base for morality. Therefore it can also be said that the moral duty of any company is to think being profitable before being a socially responsible corporate citizen. The primary duty of any organization is gaining profit, therefore if the company does what is supposed to, it would be supported by Kantianism.
• The Stakeholder Model of Corporate Social Responsibility (SMCSR) theory entails to a theory of business ethics that tend to address the values and morals for managing the organization. This theory also involves the models regarding the stakeholder of any business stating that the business has a fiduciary duty of putting the requirements of the stakeholders at the first, as the business would want to increase values for the individual stakeholders. As the Utilitarian theory also involves maximizing the net happiness or pleasure for the parties, the ethical theory supports the Stakeholder Model of Corporate Social Responsibility (SMCSR).
• Kantianism involves the fact that the acting faculty should be supported by the law conception, as whatever an individual does, it may turn into something unintentional, as it is beyond the control of the individual. Therefore it can be said the morality of any action is not dependent on the outcome of any action, rather it is dependent on the will which stays behind the action. The Stakeholder Model of Corporate Social Responsibility (SMCSR) model states that the business has the basic responsibility of fulfilling the requirements for the involved stakeholders. Therefore this theory also indicates that being a responsible corporate social citizen would also entail that business has a good will behind fulfilling the needs of the stakeholders as well. Therefore this theory supports the SMCSR model.
• Utilitarians do not think that the SMCSR model is not ethical as this model helps increasing the entire happiness of all the involved parties. The SMCSR model states that the business should take care of its involved stakeholders as its primary responsibility. However, it is only applicable when the business involves benefits for all the involved stakeholders, from customer to suppliers and employees. If any of the party does not get their basic requirement, the theory would not support it as well.
• If the business takes its actions based on the goodwill behind it, the Kantians would support the SMCSR model. This model includes all the stakeholders as a responsibility to the business therefore the business should act in a way that it would fulfill all the needs for the stakeholders. Therefore there is no reason behind thinking that the model is not supported by Kantianism, rather the theory supports the model.
• The philanthropic framework of the corporate social responsibility indicates to the mission of the company and guides the actions of a company so that the CSR policy o the company can serve the community. The business should also be morally responsible to the society so that the minimum morality is fulfilled. The Strategic Models of Social Responsibility also proposes the wide approach of CSR policy and analyzing the distinct levels of CSR integration.
• Market failure is the situation which indicates to the fact that that the allocation of the services and products are not efficient. It also indicates to the continuous negative externalities and the rationality failing at the individual level, thus it can be said that the market failure exists also due to the reason that the self regulatory organizations exist. As the analysis of the policies play a great role, it is very much possible that these ideas are important as it may lead the company to an inefficient resource allocation as well.
• The stakeholders are the ones who are involved with the business activities; however they are not the owners. The employees, suppliers, customers, all come under the stakeholder terminology, but it is important to consider that the stakeholders are not the owners. They may have a great part to play in the business activity, but they are not the ones who regulate the entire business.
• Running a business by law can indicate to the first generation problem, while the entrepreneurs face as they have to do most of the things on their own. Other than that the lobby issue can also become a hindrance in the business activity, as running the business strictly by law can be a major issue for the owners. There are several major lobbies in the business world, which can create issues for the business. As the first timers have to struggle with their new experience in the business world, the lobby issue can be very difficult for the businesses as well.

References

Arnold, D.G., Goodpaster, K.E. and Weaver, G.R., 2015. Past trends and future directions in business ethics and corporate responsibility scholarship.

Cohen, A.I., 2014. Philosophy, ethics, and public policy: An introduction. Routledge.

Hoffman, W.M., Frederick, R.E. and Schwartz, M.S. eds., 2014. Business ethics: Readings and cases in corporate morality. John Wiley & Sons.

May, L. ed., 2017. Applied ethics: A multicultural approach. Routledge.

Sekaran, U. and Bougie, R., 2016. Research methods for business: A skill building approach. John Wiley & Sons.

Trevino, L.K. and Nelson, K.A., 2016. Managing business ethics: Straight talk about how to do it right. John Wiley & Sons.