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INTRODUCTION

Businessethics,simplyput,areasetofprinciplesthatservesasaguideforthe
wayabusinessbehaves.Trustandintegrityaretwocommonwordsthatarestrongly
linkedtobusinessethics.Theyaredriversofethicalpracticesthatfosterthethinking
thatisabovetheconventionalpurposeofmaximizationofprofitinanorganization.
Therefore,fromashorttermperspective,ethicalpracticescancomeattheexpenseof
greaterprofitofbusinessbutitisbelievedthatitwillbebeneficialtothebusinesson
longterm.Unlikelaw,anybusinessorganizationisnotcompelledtofollowcertain
ethicsandhaveachoicetodenytoadheringtothem.Besidesthat,ethicsmay
sometimesbeconflictingwithmorals.Forexample,alawyersmoralsmaysuggest
thatmurderisdeplorableandmurderersdeservedtobepunished.However,according
toherethicsasaprofessionallawyer,sheneedstodefendherclientalbeitknowing
theclientisguilty.Thelawunderhumanrightsstatesthateverypersonisentitledtoa
fairtrial(Doebbler,2006).
Corporatemalfeasancehasbecometheonedefiningthemetorivalterrorism
inthelastdecadeandahalf.Someofthebignamesthatmadetheethicalviolations
headlinesroughlyadecadebackwereEnron(2001),WorldCom(2002),LaSenza
(2006)andLehmanBrothers(2008).Withaspectrumoflegalscandalsrangingfrom
insidertradingtochildlabormakingthenews,businessesareincreasinglyattentiveto
theirethicalbasis.Nevertheless,todate,therearestillalargenumberofcorporations
foundguiltyofethicalwrongdoing.Hence,thisessayaimstoanalyzecurrentbusiness
misconductcasesofvariousclassificationsfromyear2014to2015andapplying
relevantethicstheoriesrespectively.

CHILDLABOUR
Childlabourisanactthatismajorlyfrowneduponbythepublic.However,
onemustconsidertheextentchildlabourisjustified.Oneexampleofthisethical
conflictwaspresentedbyfoodgiant,Nestle.InSeptember2015,theFairLabor
Association(FLA),commissionedbyNestlediscoveredthatthefarmersintheirIvory
Coastcocoasupplychainwereusingchildlabour(TheGuardian,2015).TheFLA
found25workersbelowtheageof15workingin17ofthecocoafarmsthathas
engagementswithNestle.InWesternAfrica,ithasbeenanormforgenerationsfor
familyfarmerstousetheirchildrenaslabouroutofdesperationofbeingunableto
affordtohirewagedhelp(HRBDF,2015).Nestlehassincetakenactionstotackle
childlaborintheirsupplychainsuchasprovidingbetteraccesstoeducation,
improvingtheageverificationsystemsatfarmsandpromotingawarenessofNestles
codeofconduct.Tosome,thisgaveNestleanethicallymoralimage.Fromthe
perspectiveofconsequencebasedapproach,egoismtheory,acorporationsself
interestwouldbethemaximizationofprofit(Quelin&Duhamel,2003).Thisisin
linewithFriedmansstatementthatthesocialresponsibilityofcorporationsisto
obtainprofitsforitsstockholders(Ukoha,2013).Hence,itisdeducedthattheyarefor
childlaborasitcanlowerthecostofproductionandincreaseprofit.Thisislooked
uponasahighlyunethicalpractice.Childlabourcanbegooddependingonthe
contextinwhichitoccurs.Prohibitingchildrenfromworkinginfamilyfarmsmaynot
bepracticalinapovertystrickencountrylikeWestAfrica.Parentsmayresortto
sellingtheirchildrentotraffickerstoearnalivingworkinginanothercocoafarm.

Thisrelatestotheethicalrelativismtheorythatarguesthereareuniquesituations
whencircumstancesorculturalnormsdeterminewhetheranactionisrightorwrong
(Thompson,StricklandIII,&Gamble,2009).
EXPLOITATIONOFLABOUR
Unethicalbusinesspracticeshavecausedmanyforeignworkersworkinginthe
productionlinesandsweatshopsofgloballyestablishedcorporationstobeoppressed.
Onegoodexamplewouldbethecaseofthecomputergiant,Apple.ChinaLabor
Watch(CLW)reportedonFebruary2015,thatApplehadengagedcheaperproduction
ordersfromPegatron(CFO,2015).WorkersatPegatronwerepaidpeanutsand
workedmorethan60hoursperweekwithhalftheworkersworking90hours
overtimepermonth.Theyhadnochoicebuttoworkextrahoursasthebasewages
wereinsufficienttosupportminimumlivingstandards.Ithassincetakencorrective
actionsbytrainingmillionsofworkersin2014onemployeesrightsandApples
codeofconduct.Thedeontologicalstatementagainstexploitationwritethatitis
alwayswrongtousehumanbeingasmeanstoanendandinApplescase,as
instrumentsofprofit(Wood,2004).ItisaccusedthatAppleslowcostpursuithas
encouragedsupplierstocutcornersbyworkingtheworkerslongerhoursatalower
pay.However,avoluntaristmayarguethatexploitationisjustifiableifandonlyifone
freelyandknowinglychoosestoputhimorherselfintothesituation(Arneson,2001).
Although,exceptionscanbemadeiftheslavewasnotgivenachoiceoristooyoung
toknowanybetter.
FINANCIALFRAUD

Financialfraudisoneofthemostcommonbusinessethicalviolations.
ToshibainSeptember2015admittedtotheclaimthatithadoverstateditsearningsby
approximately$2billionovertheperiod7years(TheWallStreetJournal,2015).
HisaoTanaka,CEOoftheelectronicsconglomeratethenresignedfromthefirm.
InvestigatorsalsofoundthatToshibapracticesthecorporateculturewhereby
managementdecisionsarenottobechallenged.Fromautilitarianismperspective,a
personsactionsarerightifitresultsinthemostpossibleutilityforthemostamounts
ofpeople(Alexander,2002).Inotherwords,theethicalvalueofanactionis
determinedbytheconsequencesoftheactionandnottheactitself.Therefore,
Toshibasaccountingfraudisseentobeunethicalasitharmedstakeholders,investors
andthepublic.Nottomentionitsoppressiveculturethatforceditsemployeetosee
noevil,hearnoevilandspeaknoevil.Nevertheless,onthebasisofthesametheory,
Toshibatookgoodactionsofsettingaside8.4billiontopayforpotentialfinesand
reorganizedthefirmsmanagement(TheWallStreetJournal,2015).Thismaximizes
utilityinthesensethatithelpedstakeholdersregaintrustandgoodreputation.
Similarly,TescointheUKmadetheheadlinesofaccountingfraudin2014.
Thecompanyconfirmedthatithadoverstateditsprofitsbyasumof263million
poundsthroughdefermentofcostsandaccelerationinrecognitionofincome
(Fortune,2014).Thisresultedintheresignationofitschairman,SirRichard
BroadbentandaplungeinTescosstockprices.Thechairmanmayhavebenefited
monetarilyfromtheunethicalaccountingpracticesintheshortterm.However,inthe
longrun,hewasforcedtostepdownwhichdidnotservethecompanyanygoodat
all.Otherthantheutilitarianismapproachmentionedabove,accountingviolation
casescanbeviewedfromthedeontologicalethicsside.AccordingtoKant,themoral

dutyofanindividualbetterpredictstheproperethicsratherthantheconsequencesof
theact(Herman,1996).Meaning,amoralpersonwilltendtodowhatisrighteven
whenitisnotrequested.Broadbentwhochosenottoconductinanethicalmanner
lackedthedutytodowhatwasright.

ENVIRONMENTANDHEALTHVIOLATIONS
InSeptember2015,Volkswagenrevealedthatithadinstalledsoftwarethat
distortsthereadingofthehazardousgasemissioninmillionsofcars(Fortune,2015).
ThecarsmanagedtopasstheEnvironmentalProtectionAgencyemissiontestwitha
moreenvironmentallyfriendlyreadingthanwhattheyreallyare.Asaresult,thefirm
hadtopaycustomercompensation,potentialfinesandsufferareputationalhit.Under
theutilitarianismtheory,oneshouldthinkabouthowtheiractionswouldaffectall
partiesinvolvedandweighouttheprosandconsoftheaction.InVolkswagenscase,
itsfoolishacttoattempttotricktheemissiontesterhascausedquitealargeexpense
tothecompanyandalsomarredtheenvironmentalconditions.Therefore,thecons
outweighedtheprosleadingtotheconclusionofanunethicaldoing.Kantianism
suggeststhatbusinessesshoulddowhatisrightbecauseitisarightthingtodoand
alsohelpothermakerationaldecisions(Herman,1996).Volkswagenfailedtoprovide
consumerswithaccurateinformationabouttheirproductinorderforthemtomakea
rationalpurchasingdecision.Hence,thisactishighlyunethicalinrelevanceto
Kantianism.
In2014,Yum!,theownerofKFC,TacoBellandPizzaHutwasfoundselling
taintedmeatinKFCChinasuppliedbyShanghaiHusi(Forbes,2014).Itwasreported

thatthefreshmeatwasmixedwithexpiredmeatintheproduction.Yum!instantlycut
anycontractswiththesupplier,althoughtheactiondidnotwinbackthesameamount
ofloyalcustomerslost.AccordingtotheprinciplesofKantianismtorespectpeople,
actrationallyanddowhatisright,ShanghaiHusihasviolatedeveryaspectofthis
theory.Itactedirrationallytoharmconsumershealthintheaimsofincreasingits
profits.Thisisalsoinlinewiththeegoismtheorymentionedearlierintheessay.
ShanghaiHusialsoviolatedconsumersrightstotheactualnutritionalfactsofthe
foodtheyconsume.Ontheotherhand,Yum!reactedinanethicalandresponsible
mannerthatistoimmediatelycuttieswiththesupplier.UndertheVirtueethics
concept,anindividualshouldactbasedonhisorherinnatecharacterratherthan
relyingonexternallaws(Arneson,2001).Theconclusionunderthisconceptissimilar
tothatoftheKantianismtheory.ShanghaiHusiclearlydidnotshowsignsofmoral
conscienceintheirdoings.WhereasYum!shouldbeapplaudedfortheirprompt
actiontotackletheproblemasitistherightthingtodo.

WORKPLACEDISCRIMINATION
In2015,BMWManufacturingCo.agreedtopay$1.6millionandrehirea
totalof70blackemployeesintheSouthCarolinafacilityintheattemptsofsettlinga
racialdiscriminationlawsuit(ibtimes,2015).Itwasclaimedthatthecompanys
criminalbackgroundcheckproceduresunequallyaffectedblacks.BMWsguidelines
statethataslongasapersondoesnotpossessacriminalrecordwithinthepastseven
yearscouldbehired.Nevertheless,in2013,theystarteddismissinganyonewitha
criminalrecordfromanyyearatall.Consequently,80workerswerelaidoff,of
whom70ofthemwereblacks.BMWclearlydidnotmeetthetraitsofthevirtue

theoryduetothefactthattheydidnotactethicallywhendecidingtofireitsmajority
blackworkerswithnovalidreasons.Thefirmasalsonothonestasitbreachedits
codeofconductofnotallowingtheemploymentofworkerifandonlyiftheyhavea
criminalrecordwithinthepastsevenyears.Undertheutilitarianismtheory,BMW
failedtoacknowledgetheconsequencesoftheiractionstowardstheinnocent
employeeswhowerelaidoff.Hence,basedonthistheory,BMWdidnotactinan
ethicalmanner.
Otherthanthat,thetechfirmgiant,Microsoft,wasaccusedofdiscrimination
basedongenderbyaformeremployee,KateMoussouris.Sheclaimedthatshewas
passedformorethanonepromotionwhereashermalecounterparts,whowereless
qualified,gotthepromotion(CNNmoney,2015).Shealsomadeaninternalcomplaint
aboutsexualharrassmentbyasuperior.Althoughmeritswerefoundinthecase,the
firmmerelyreaassignedhimwithoutfurtheractions.Sheclaimedthatheretaliatedby
cuttingherbonusanddiminishingherresponsibilities.Asacompanythathasa78
percentmaleworkforceand88percentofmenholdingtopexecutivepositions,it
failedtopresentitscommitmenttoadiversedworkforce.Morever,theCEOof
Microsoft,Nadella,madeastatementinaninterviewthatwomenshouldnotaskfor
raises;infacttheyshouldrelyongoodkarmatobringtheraisestothem.Froman
individualisticviewthatholdsthattheresponsibilityofabusinessistoseek
maximumprofitwithoutfraudulentacts(Herman,1996).Basedonthisview,
Nadellascontroversialstatementisethicalasheisonlystatinghisopinionandthe
factthatthecompanydoesnotgiveoutraisestowomenwillpotentiallyincreaseits
profits.Ontheotherhand,theutilitarianismthoerysuggeststhatinbothKate

MoussourisandNadellascases,itishighlyunethicalandunfairthatafirmonly
thinksabouttheirowninterestanddisregardthehappinessandinterestofallwomen
employees.
CORRUPTION
In2014,itisrevealedthatWalmarthaspaidatotalof$439millioninfines
andlegalfesstosettleanallegationofbriberyandcorruptioninitsinternational
dealings(TheNewYorkTimes,2014).Lawyerswerehiredtodefendfor30of
Walmartsexecutiveswhowereinvolvedintheforeigncorruptioncase.Walmartwas
saidtohavepaidbribesinMexicoinordertoobtainpermitstoopenupnewstores
andthatthewholeactwascoveredupinternally.Walmartwasfoundtohave
initiativestofosterthecultureofsilencethatmayhaveallowedtheMexicanscandal
todelayseveralyearsbeforecorporateleadershipwasinformed.Thismalignculture
thenallowedtheevidenceofwrongdoingtobeignoredandtheboardkeptinthedark.
TheKantianismisatheoryofhavinggoodwillandbeingrational.Walmartfailed
thecategoricalimperativeindecidingwhatispermissibleornotastheyusedtheir
employeessilencetotheirownadvantage.Walmartsactofcorruptionisnot
justifiablethroughtheUtilitarianlens.Thisisbecausethefirmdidnotweighthecost
ofbenefitsofitsactionsfornotonlythefirmbutitsstakeholdersaswell.
Fifa,theworldgoverningbodyoffootballhasbeenthroughmultipleprobes
throughouttheyearsundercorruptionandracketeeringsuspicions.InMay2015,Fifa
officialswerefinallyarrestedoncorruptioncharges.Authoritiesarrested14officials
whom9ofthemareformerorcurrentFifaexecutives(theguardian,2015).AUS
attorneycommentedthattheycorruptedthesoccerbusinessataworldwidescaleto

servetheirowninterests.Theybribedtoobtainbroadcastingrightsforgamesand
hostingrightsfortheWorldCup.Examplesofeventsthatreekedcorruptionsarethe
2010WorldCupawardedtoSouthAfricaandthe2011Fifapresidentialelections.In
briberyandcorruptioncases,bothWalmartandFifadonotpassasethicalintheir
doingsevenundertheindividualismtheory.Althoughthetheorystatesthatitis
justifiableforbusinessestodowhatevertheycantoincreaseprofits,itshouldbe
withinthelawaswell.Fifafailedtoimplementthefourvirtuesfromthevirtuetheory
suchasthecourage,honesty,temperanceandfairnessforfaircompetitionduringthe
WorldCup.
CONCLUSION
Inconclusion,individualandorganizationsconsistenlyfacecountless
decisions.Ethicaldecisionmakingiscrucialtoanorganizationsimageandsuccess.
Bothpersonalandorganizationalvaluescanaffectthechoicesinthedecisionmaking
process.Thesechoicescomewithsignificantconsequencesthatcanbegoodorbad.
However,theethicalpositionofanactcanbeviewedandjustifiedthroughvarious
ethicstheoriessuchasUtilitarianism,Kantalism,Individualism,Virtuetonameafew.
Individualsmaydifferintheirethicalreasoningacrossdifferentethicalissues,
becauseeachdifferingcontentsevokevariousethicalreasoningcriterias.Therefore,
firmsandinvidualsoughttobecriticalinmakingtherightchoices.

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Assignment 1
Business Cases and Application of
Ethical Theories
MGT 305
Ms. Chithra Latha Ramalingam

Hoo Jo Ee
B1302003
Bachelor of Economics