Business ethics

Henry ford quote

'A business that makes nothing but money is a poor kind of business'

What's the ford pinto Case 1970

During crash tests which proceeded sales of the pinto to the public, a serious design flaw was discovered. The gas tank was so designed that when it was involved in a rear end collision at an impact speed of 20mph or greater the tank was likely to rupture causing a fire and explosion. Following crash tests, the conclusion was the rear end structure was not satisfactory. Suggested changes would have cost about $11 per car. A confidential company memo directed that the safety features not be adopted until required by law. Ford motor company knew about the problems.

Summary of the ford pinto case

Design ways rushed. The normal time to produce an automobile in 43 months - ford took 25 for the pinto. Before production, for engineers discovered flaws in the car design. In nearly all rear-end crash tests which proceeded collisions the pintos fuel system would rupture extremely easily. Because assembly-line tooling was already in place when engineers found this defect, top ford officials decided to manufacture the car anyway, even through ford owned the patent on a much safer gas tank

What is the sentence 'good ethics'

Oxymoron

Dame Anita roddick (body shop)

'Being good is good business' promotes good business because it is the right thing to do - intrinsic reasons

Lord Alan sugar (business magnate)

'Are you the cheap one, the one with good service,the ethical or bespoke one? What's your hook?' Good ethics is good for a business, as every business needs to hook in an audience to be successful - extrinsic reasons

Corporate Social Responsibility (CSR)

A business's concern for the welfare of society.

Milton Friedman quote on corporate social responsibility

'There i 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 to say engages in open and free competition without deception or fraud'

What was Friedman reacting to with his theory

The idea that businesses have a social responsibility to improve workers lives and help communities. For Friedman this is socialism

What's does fried argue

Made capitalism (private ownership, business completely freely make profit) less effective and restricted rights of individuals to so improve their lives

Strengths of Milton Friedmans 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

-the increases of profits in a company benefits the economy which benefits the citizens of that economy

Issues with Friedman's view

-Friedman also believed that social responsibility should not be forces by the government

-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

What do businesses have

Duty and an obligation to consider the effects of their activities on society as a whole

What is the key priority of a business

To be to make a profit for its shareholders

What are shareholders

These are people who have invested money into the success of a business. More successful: more return on your money

What are stakeholders

People who have something at stake

What must a business do

Monitor and ensure it complies not only with the ;aw but with accepted ethical standards as well.

What should a business consider

The wider needs of employees, consumers and community should considered

Are businesses hypocritical window dressing to cover the creed of businesses by acting ethical

We dont know?

What are 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 shines to continue to buy their products

Lenders who want to be repaid on time and in full

What are external stakeholders

Groups outside a business

Customers who want the business to produce quality products at the reasonable prices

The community which 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 originally did relationships between business and consumers

Simply meant not conning the consumer to buy something he/she didn't need(i.e. PPI)

What do consumers now want to see from businesses

Social responsibility

What are consumer rights

Quality, safety, price and good customer service

What is examples of social responsibility

-good treatment of employees

-putting back into the community

-environmental concern (think recyclable packaging etc.)

-not using sweat shop[s etc.

are consumers crucial to change in business

Yes an example of this is Nike and Gap over child labour. Nike now monitor its factories following the panorama programme

Would Nike have done this without been caught out by panorama?

No

Does this show just extrinsic motivation not because they knew what they was doing was wrong?

Yes it does show extrinsic motivation

What are employers balance of interest

Want to plan for future, make profits and keep employees motivated

What are employees balance of interest

Want best working conditions, job security

What happens if an employee is unhappy

High turnover, poor time keeping, absenteeism all result in less profit

What are whistle blowers

Someone who risks their livelihood to tell the truth about companies and make businesses accountable of their actions

What are whistle blowers protected by

The law

What are whistle blowers treated as

Witnesses to crimes or can choose to give information anonymously

Why are whistle blowers treated as witnesses to crimes

This is to encourage whistle blowing as something that serves public interest

What is the Karen silkwood case

She was a chemical technician at the Kerr-McGee's plutonium fuels production plant in crescent Oklahoma. SGE was a member of the oil chemical and atomic workers union. In the summer of 1974, silkwood testified to the atomic energy commissions 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. She died mysteriously

What is globalisation

Companies becoming world wide, integrating industries, economies, markets, cultures and policy making around the world

Why is the process of globalisation speeding up

Technologies changing - communications even faster (i.e. Skype communications)

Transport cheaper and faster

Removal of capital exchange controls - money can be moved easier

Consumer tastes have changed - willing to try foreign foods

Uk gets year round/produce because of globalisation

Why are businesses free to choose where they operate from

Businesses are taking trade to countries not influenced by unions/ equal rights = labour is cheaper

E.g. manufacturing has moved to Indonesia or phone lines to India

Justifications for globalisation

Gives jobs/ small incomes to poor communities

Trains local people to have new skills

Consumers are happy with cheaper clothing (consumerism)

Consumers can buy thr products they enjoy all year round

Issues with globalisation

Global companies taking trade from smaller businesses e.g. Caribbean banana could not compete with del monte

Keep poor communities poor and big companies rich (capitalism)

Takes jobs away from countries which are stricter human rights acts e.g. fair wages for cheaper alternatives

Indigenous cultures affected

Deforestation and pollution

Child labour

The reality of sweat shops

24th April poorly made Bangladeshi factory collapsed. The factory supplied primark etc with low cost clothes. Over 1100 died in rana plaza. More than 2500 injured. The day before the collapse the shops on the ground floor of the 80 storey complex shut due to cracks in the building. The workers were ordered to work and threatened with loosing money if they didnt go. After investigation they found the upper factory floors had been built without permits and without reinforcements for the heavy machinery.

What happened because of the sweat shop in Bangladesh

Amnesty internationals 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' by cardinal Vincent Nichols 2012's seven principles for good business (using natural law and Catholic teachings

1.human dignity 'each person can never be merely an instrument valued just for their usefulness'

2.the common good 'the set of social conditions which allow people more easily to develop, individually and communally'

3.solidarity we are all dependent on each other, means we must be in touch with communities and strive for the same common good

4.subsidiarity is not only good business reactive but is good for the people concerned - efficiency

5.fraternity fellowship towards those of different cultures building relationships

6. Reciprocity giving to everyone what is due and being willing to do more than strict justice requires

7.sustainability duties to future generations, care for resources and the environment

What does Kantian ethics think about whistle blowing

Whistle blowing=importance of honesty and promise keeping but what about the promises made by the employer to the company?

What does Kantian ethics think about globalization

It's using countries with fewer human rights acts as a means of cheap labor (means to an ends). Can't universalise exploiting every nation and every person - no goodwill/duty

What did Kant promote the importance of

Equality (globalisation often promotes inequality

What was Kant opposed to

Slavery, on the grounds that consent requires autonomy (can be linked to the rana plaza case)

How does William temple in 'Christianity and social order' develop Kants second formulation

-act always for the good of the persons

-the purpose of production is consumption. Manipulating the market to create shortages to minimise shortages

-to use buyers as a means for profit is wrong

What does utilitarianism think about whistle blowing

Might resist it depending on how much harm was done in that particular case e.g.if you whistle blew and a company shut down and everyone was then left without a job was the severity of what was done worth it

What does utilitarianism do

Weigh up the balance of good vs harm

What does utilitarianism believe about globalization

Western goods produced at lowest possible price=greatest happiness for greatest number (however Bentham did reject this view)

What does peter singer say about pleasure and pain

We should focus on minimising pain rather than maximising pleasure. We must consider the individual's/ minorities as well as pain is universal but pleasure is not