Role of Business Ethics
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Introduction to Business Ethics
Business ethics are concerned with the principles used by an organization to address the ethical issues that arise in the business environment. Current report will discuss about the background and development of the ethical approaches which is directed towards the involvement of Primark in the Rana Plaza tragedy (Fassin, Van Rossem and Buelens, 2011). Primark is an Irish company serving the varieties of clothes to the customers. The report will also discuss about impact of the disaster on firm's functioning and objectives and ethical implications for its stakeholder’s group
1.1 Explain the background and development of theoretical ethical approaches
The case study is related to the Rana Plaza building which gets collapsed near Dhaka, Bangladesh on 24th April 2013. By the view of the case study, three main ethical approaches can be developed in the mind of the public related to this tragedy and for which owner of Rana Plaza factory has to answer.
Deontological Ethical theory: This approach of ethical issues focuses on whether justification of the action taken by the company is morally justified or not. As per the case, this question can be asked to the owner about the manufacturing of building whether lawful material was used to construct the building or not (Elms and et. al., 2010). It is a very big thing that a building gets collapsed and takes the lives of many unknown people among which number of women was high. Another question can be raised regarding the unethical actions of the manufacturer in terms of the acquisition of land in morally justified manner. The owner should provide the evidence of purchasing of land in right and lawful manner and for this he has to submit the papers regarding the land upon which building has been constructed (Sparks and Pan, 2010). Moreover, justification has to be given that he has purchased good quality of raw materials with proper inspection and provide construction contract to the architects who was having proper degree affiliated by any known university. Deonotological ethical approach can be used to determine the ethical aspect of the tragedy.
Teleological Ethical theory: This theory puts emphasis on the consequences of the action that has been taken by the constructor to construct the building. The owner should think about the results of his action whether it would be good or bad to form the ethical decisions. As the case study indicates that the building has been collapsed and against this teleological ethical thinker will be questioned on the judgemental thinking of the owner (Pies, Beckmann and Hielscher, 2010). In short, it can be said that this theory is all about the determination of the judgemental thinking of the person before taking the ethical decisions. Teology is derived from the Greek word “Telos” which means end and this theory states that the decision maker should be rational in order to form the ethical decision. Furthermore, several ethical issues will be arising on the rationality of the contractor while giving the contract of the construction of the building. It can also create the conflicts between the deontological and teleological thinkers as former thinker emphasise on the actions while as second one emphasis on the results and consequences of the particular actions (Uysal, 2010). So, these are the ethical issues that can be developed in the mind of the public for which owner of Rana Plaza has to answer.
Virtue Ethics: This is the one of the normative theories of ethical approaches. The theory focuses on the character of the decision makers to evaluate and determine the ethical behaviour what is right and what is wrong. Managers and employees of the company should work on the behalf of the benefits of the company and not for their personal profits. For this, Primark has to justify the reasons of selecting the manufacturers and suppliers of Rana Plaza building for the supply of the goods and products (Trevino and Nelson, 2010).
1.2 Comparison and contrast of absolute Kantian ethics against relative situational ethics
Kantian ethics is the part of the Deontological ethical approach which emphasizes on the ethically right or wrong action of the person. While as relative situational ethics is similar to the Utilitarianism act of an individual whose action can be caused of the happiness of large amount of the public. In short, it can be said that relative situational ethics is based on the teleological ethical approach which emphasizes on the consequences of other’s actions. Both Kantian and relative situational ethics are the act oriented ethical approaches (Hoffman, Frederick and Schwartz, 2014). Although both the theories come under the normative ethical theories but still both the approaches have significant difference which can be understood by the following way:
Kantian Ethics can be considered as an example of the Deontological ethical approach which is directed towards the morally justified action of the individual. While relative situational ethics are an example of the Consequentalism ethical approach which mostly focuses on the results of the particular action taken by the person to make the ethical decision. Rationality of Kantian ethics depends on the morally judgemental action of the individual whereas rationality of relative situational ethics depends on determining the relevancy of principles and judgements with the individual and culture.
Relative situational ethics is the combination of the will, reasons and desires of the individual as they have to think about the morality of results of the particular action (Shaw, 2013). On the other hand, Kantian ethics is the combination of wills and reasons of the individual and it does not include the desire as it is considered as an outside force to influence the individual's decisions (Bangladesh factory collapsed tool passes 1,000, 2013). Situational ethics works on the basic notion in terms of maximizing the happiness of the public with the action where as another ethic works on the state of affairs that are related to rewarding the right action of the individual.
Moreover, maximization of good results is considered as a right ethical decision while selection of morally right action of the individual is reflected as right way to form ethical decisions. Main feature of the relative situational ethic is to create maximum utility for the community members and society, in contrary essential feature of the Kantian ethics is to possess positive attitude towards the rules and regulations of the laws and society to create better value for them (Ferrell and Fraedrich, 2010). Additionally, morality of the individual gets evaluated on the basis of the consequences under the relative situational ethics while in Kantian ethics it prioritizes the evaluation of morality on the basis of action taken by an individual. Lastly, it can be said that Kantian addressed with the fact whether objective behind certain actions are right or wrong in spite of focusing on the result of the action. On the other hand, relative situation ethics address with the intention of the people to provide good or bad result.
1.3 Types of ethical issues that affect Primark's operations, past and present
From the Rana Plaza Disaster, operations of the Primark will get affected significantly as the company was getting supplied with manufacturers working in the unit. As per the indicative of tragedy, the building gets collapsed on 24th April 2013 with unknown number of workers and employees. So, because of this many ethical issues have arisen among the public which can affect the functioning of the firm (Jennings, 2014). Various types of ethical issues are there which can create crucial impact on the business operations even can make the company's image down. Description of these issues and its impact on the company are given as follows:
Health and safety: The first issue faced by the Rana Plaza is in the regard of health and safety of the employees working in the building. As stated earlier that large amount of members gets died in the disaster and this tragedy affects Primark's operations very badly. Moreover, rate of customer turnover will get increased as unavailability of right product at the right time to the right place. Inventory management will become difficult task for the enterprise as shortage of the supplies will be there in its warehouse (Ma, 2010). Furthermore, market share of the company gets reduced and sales of the products will also get reduced.
Compliances and governance issues: Another ethical issue faced by the Rana Plaza is related with the compliances and governance issues. These issues states whether the building was operating in the lawful manner or not and proper inspection has been done before acquiring the land or not. Violation of government rules and regulations can take place because of corruption and giving priority to the personal interest instead of the public interest (Mingers and Walsham, 2010). This affects the business operation of the company in terms of reducing the customer loyalty and trust on the quality of the products offering by it. Moreover, position, sales and profitability of the company get reduced.
Decision making issues: This issue is related with the morality of decision making of the contractor and managers who deals with the suppliers of Rana Plaza. It affects Primark operations in terms of reducing the quality of the products and misrepresentation of the products to the customers (Albrecht and et. al., 2010). This will create bad image of the firm in the market and customer base of the enterprise will also reduce.
So in this way, these ethical issues have affected Primark's operations in terms of the sales and quality of the products. While at present, it should focus on the relationship building activities to maintain healthy relations with the customers (Redfern and Crawford, 2010). Furthermore, it should invest large amount of money in promotional tools so that customers can get aware about the products and services.
2.1 Primark's business objectives have been affected by ethical issues arising from the Rana Plaza disaster
Above section of the report has described about the ethical issues from the Rana Plaza and because of these issues, business objectives of Primark get affected very significantly. At present, business objectives of Primark is to provide better quality of goods and services to the customers at affordable prices so that they can get satisfied with the functioning of the business. Another object of the firm is to create better value for the customers and gain maximum customers satisfaction (Fassin, Van Rossem and Buelens, 2011). Primark is emphasizing on the practices which are ensuring the public that the organization is operating in ethically responsible manner and is also trying to maintain the transparency in its business operations in order to increase the trust and loyalty of its stakeholders. Additionally, it is focusing on the recruitment of the highly talented personnel so that they can produce good quality of services for the consumers and can build the healthy public relations. Furthermore, the company is emphasizing on the goals of maintaining an ethical presence of it in the market and also participating in the number of social activities to ensure its stakeholders that it is working towards their welfare.
In this way, it can be said that the company has turned its objectives from profit to the public oriented and ensuring the community that it is operating in the socially responsible manner.
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2.2 Ethical implication for Primark's stakeholder
Stakeholders are concerned with the parties who are interested in the functioning of the business. Here, the stakeholders of Primark are shareholders, customers, communities, government and employees.
Shareholders: These are the parties who invest their money in the business and expect the high rate of return on its investment. Shareholders are interested in the growth and profitability of the firm (Elms and et. al., 2010). Manager of Primark can ensure the shareholders that their money has been utilizing in the growth of the business and its action will not harm the reputation of the firm.
Customers: The people who consume goods and services of the company and interested in the quality of products, pricing policies and positioning of the company are its customers. Ethical implication for the consumers can be with regard to convey right information about the products and charging reasonable prices from them.
Communities: It is the surrounding within which company operates and these parties are interested in the morality of the company's decisions (Sparks and Pan, 2010). Ethical implications for the communities can be in terms of minimizing the pollution, creating healthy work environment and providing them better employment opportunities.
Employees: Primark can place ethical implications for its employees by the way of protecting them from unethical practices, removing the exploitation by the employers and providing them fair remuneration against their services.
Government: The governing authorities who formulates the rules and regulations for the company within which it has to operate (Pies, Beckmann and Hielscher, 2010). Ethical implication for the government can be in terms of payment of taxes on time and following the rules and regulations formulated by it.
Some possible conflicts can be arising in between the interest of the stakeholders. The conflicts can be in terms of the profitability like shareholders wants to make the company more profitable while communities and customers wants that Primark should focus on societies welfare instead of earning profits. Moreover, shareholders want that high prices should be charged from the customers to maximize the profit whereas customers want to pay minimum prices for the goods and services (Uysal, 2010). In this way, interest of the different stake-holder's group can create conflicts which should be addressed by the managers of Primark in an effective manner.
3.1 Assessment of a position of the company when acting as a moral agent
Moral agent is the entity who is capable of making the moral decisions with reference to right or wrong notions. A company is having significant contribution in promoting the business ethics and make the community and society satisfied with its working. For this the company follows the legal rules and regulations framed by the government and eliminate the corporate crimes from within the organization (Kish-Gephart, Harriso and Treviño, 2010). Set of values get decided by the company and communicate these values to the stakeholders so that every member of firm will follow the same guidelines and ethics to serve better value to the society. Corporate social responsibility activities get conducted by the Primark to make satisfying the communities with its business operations. Moreover, the enterprise maintains the transparency in the business systems so that any members of the organization can get prevented from the unethical act and unfair trade practices.
he company formulate its employment policies in line with the employment laws which eliminate the employee discrimination and exploitation from the workplace and provide better value to the workers working for the organization (Tseng and et. al., 2010). Furthermore, the firm contributes in maintain and promoting the sustainability of the business environment within which it operates with the purpose of minimizing the negative impact and maximizing the positive impact caused by its operations. In this way, the enterprise plays significant role in promoting the business ethics.
3.2 Analysis of development of mechanism for achieving employee involvement and empowerment
Employee empowerment is concerned with delegation of authority and responsibility to make the decisions so that they can participate in decision making and problem solving of the organization (Crane and Matten, 2010). While as employee involvement is concerned with involving the personnels in business activities and sharing the work with others. Various mechanism are there through employee involvement and empowerment can be achieved by the Primark.
Job enlargement is process of expanding the scope of the existing job and increase the number of tasks related with the particular job. Through this employee can gain the variety of skills and use these abilities in forming the decisions (De George, 2011). However, it increases the work burden and frustration of worker due increase in responsibilities and accountabilities. It motivates the individual to get involved in key decision making of firm and encourage him to provide solutions for the specific problems.
Quality circle is another technique to increase the employee involvement and empowerment. An individual as part of quality circle will interact with other members and will provide in crucial contribution in decision making and problem solving process (Carroll and Buchholtz, 2014). This will increase the analytical ability and strengthen the decision making power of the worker however probability of increase in conflicts and grievances can also be increased at the workplace.
4.1 Ethical issues affecting the Coca cola company
The coca cola firm is the leading brand in the world but has faced various key ethical issues which affect its business operations to a large extent. As the the firm is competing at the global levels so it should consider all the business laws and regulations followed by the different host countries to make its stakeholder satisfied with its functioning. Another ethical issue faced by the enterprise in in terms of maintaining the environmental sustainability (Dunfee and Nagayas, 2013). Various issues arises due to its unethical operations and contribution in the environmental pollution. So it should take care about the way in which it is operating and try to minimize the negative impact and maximize positive impact on the society caused by its operations. Furthermore, many questions get arise on the freshness of the ingredients used in the product as by using the products some children get sick (Sparks and Pan, 2010). By this issue company's image in the market get down and profitability and growth of its business get decreased.
In the year 1999 in Belgium few children get ill after consuming the product of coca cola and after several days media spread this information in the whole country because of which selling of the products get stopped and its market share get down very rapidly (De George, 2011). Even investors and suppliers of the neighbouring countries like Netherlands, Luxembourg etc. also recalled all the products of the Coca cola. It had loose the trust and faith of its stakeholders which affects its profitability and sales revenue in the market.
4.2 ways to improve the ethics of their operations
There can be various ways through which it can improve its ethics and minimize the ethical issues. It should adopt the efficient technologies to produce the products so that negative impact on the society can get minimized and positive effect on the environment can get maximized. Corporate Social responsibilities should be followed by it so that it can build healthy relationship with the stakeholders and can contribute in the economic development (Tseng and et. al., 2010). It should operate its business within regulatory framework like discrimination act, 2012, health & safety act, 2012, equality act, 2010 and minimum wages act etc. so that better values can be created for the employees within the organization. Good relations can be framed between company and its stakeholders.
Quality audit should be conducted by the Coca cola and then report should be published for the public so that interested parties can get ensured that the company is following all the quality standards which will results in increase the trust of the stakeholders and profitability of the business. In this way, it can improve its ethics and build healthy relations with public (Crane and Matten 2010).
4.3 Design of suitable ethical code
- The organisation can follow health and safety regulations while manufacturing the soft drinks so that better work environment can be created for the employees within it.
- Green marketing campaign can be adopted by the Coca cola to promote the environmental sustainability and by this it can create vary good image in the mind of the community members.
- Quality standards should be installed and quality audit should be organised within the organisation and the report should be published in the public media so that interested parties can get assured that the firm is producing healthy and quality products (Dunfee and Nagayasu, 2013).
- Management team of the Coca cola should take visits of company's different stores so that they can ensured that its suppliers are working in the ethical manner and no unethical practices are taken place with the customers.
- It should publish fair and true picture of its financial statements so that investors can make the informed decisions regarding the investment in its shares.
- It can use the optimum promotional mix to promote its product so that right information can be reached at the right audience and it should not influence the customers to purchase the product by conveying wrong information (Crane and Matten, 2010).
From the above report, it can be concluded that the organization should follow the business ethics in order to gain the maximum customer satisfaction. Current report has discussed about the background and development of ethical approaches by taking an example of Rana Plaza Disaster. Significant impact of this tragedy on Primark's operations and objectives has also been discussed in the report. Furthermore, ethical implication for the stakeholders of the company to ensure its ethical functioning has been elucidated. Impact of the ethical issues on the Coca cola company along with ways to improve the ethics and suitable ethical codes has also been described in the report.
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