JANUARY 2, 2

Business Ethics final report

module teacher: John Ro

Nguyen Thi N
International business scho
Academic Year: 2
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Table of Contents

Introduction...........................................................................................................................................2

Case 1: Foxconn.....................................................................................................................................2

Case 2: Walt Disney...............................................................................................................................4

Conclusion.............................................................................................................................................6

References.............................................................................................................................................8

Appendix...............................................................................................................................................9

Case 1: Foxconn.................................................................................................................................9
Case 2: Walt Disney.........................................................................................................................11

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Introduction
The main challenge most organizations are facing in 20 th century is how to be
financially successful without doing no harm to the society. Some companies failed to align
their targets with their social responsibility in 2019. This paper will focus on the role of
business ethics by citing two cases, Foxconn usage of forced child labor, and Disney’s pay
gap due to their gender discrimination.

Case 1: Foxconn
Foxconn, a Taiwanese company, manufactures electronic devices for many major
names including Apple, Amazon, Nokia and Blackberry (Huang, 2019). Despite their success,
there have been controversies about their unethical behaviors, with usage of schoolchildren
as interns to produce Amazon’s Alexa devices in a China based factory as the latest event.

Students aged from 16 – 18 were hired to meet production targets. These interns
were required to work 10 hours/day, and 6 days/ week, though the China law says overtime
work is not permitted for the labor force of this age. According to ILO Convention No. 182
(1999), as cited in Kolk and van Tuldere (2002, p. 293), this is considered as one of the worst
form of child labor which is “all forms of slavery or practices similar to slavery, such as …
forced or compulsory labor … is likely to harm the health, safety or morals of children”. In
addition, teachers were paid by the factory to encourage students’ overtime work. Those
who refused would be dismissed, and their graduation and scholarship application be
affected. Schools will earn £55 for each student they offered. Foxconn had firstly hesitated
about hiring schoolchildren, but then concluded that the benefit was worth the risk. When
publically criticized, it justified itself by just providing students work experience. Foxconn
later confessed that the students were hired illegally, and improvement actions would take
place (Gethin, 2019).

There are several ethical issues which made Foxconn’s decision questionable.
According to ILO Conventions No. 138 and 182, as cited in Every Child Counts: New Global
Estimates on Child Labour (2002), children can work maximum 43 hours/ week. With
excessive 17 hours/ week, their health will be affected sooner or later. The students were
threatened with future consequences if they disagree with the rule. In an interview with the

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Guardian, the students stressed irrelevance of the assigned work to their studies (Gethin,
2019). Therefore, in this case, the question is whether Foxconn’s or the students’ interests
were being considered first.

Clearly, Foxconn had some ethical dilemmas. Firstly, Foxconn had to decide to
continue or discontinue usage of student interns. Secondly, it had to consider reduction of
the working hours or not. In other words, Foxconn had to choose between its production
targets or social corporate responsibility. Based on its response, I believe that Foxconn used
a defender strategy as a decision guideline. According to Miles and Snow (1978, 2003), as
cited in Yuan et al. (2018), defender strategy is when a firm is profit-oriented, and
concentrates more on efficiency improvement through cost management rather than
seeking new products or markets. Foxconn mainly focused on minimizing costs and
achieving their short-term goal. Thus, its business strategy influenced on their view towards
hiring student interns. Consequently, an unethical decision on forced child labor practice to
meet its production target was made.

There are 6 main stakeholders in this case with different interests. Foxconn, the
decision maker, is the main stakeholder. Their interests were obviously to increase profit by
minimizing operating costs, meet production targets, create good public image and avoid
scandals. Amazon, as Foxconn’s customer, shared the same goals as Foxconn. The student
interns wanted protection from labor exploitation, and freedom of choices. The schools,
responsible for educating the students, were to help them but also to wanted to make
money. End users and the government, the remaining stakeholders, were interested on
product availability and citizens’ health respectively.

There are at least 4 social norms in this case. Firstly, the students’ health should be
protected, and exploitation is unacceptable. Secondly, in any circumstances, they should not
be forced to work against their will. Thirdly, when a decision involving their well-being, their
best interests must be given the first priority. Lastly, the students should be treated fairly,
even when they decided not to work.

There are other alternative solutions Foxconn could choose, and each has its own
pros and cons. Although as bad as it sounds, Foxconn can destroy all documents relating to
child labor violation, and deny everything. This would help Foxconn to meet its financial goal

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on cutting operation costs. However, the company would be exposed to reputation risks.
The students will continue to be exploited and all social norms are violated. Alternatively,
Foxconn stops using the student interns, without threatening their future. The students are
freed from forced labor, and all social norms are respected. It seems like a more an ethical
solution, but from Foxconn’s viewpoint, this will affect their production, and subsequent
challenge of hiring new workers. Or Foxconn could consider changing the number of
working hours, and withdrawing the threat on the students’ future. This would enable
Foxconn continued production, more profit from using the low-cost labor, without
reputation risks. The students’ interests are achieved, and all social norms are respected.

For Foxconn, the best option is fewer working hours, and no threat on the students’
future opportunity. This will satisfy everyone's goals and interests, and no social norms be
broken. Although children are vulnerable due to their ages, but no organizations should take
advantage of the children just to meet their own ambitions. As human, the children also
have basic human rights. According to Ethics of Rights, founded in Crane and Matten (2010,
p.108), "every person has a set of fundamental rights that they are entitled to simply by
existing that should be respected and protected in every single action". There should be no
conflict between the company's goals and community interests. Foxconn should have
considered its social corporate responsibility before making any decisions in the first place.

Case 2: Walt Disney

Walt Disney is a leading company in the entertainment industry. However, their
charismatic movies cannot cover their unethical behavior. They have recently been involved
in a gender discrimination lawsuit on their wage gap initiated by their 10 female employees.
Their promotion requests have been repeatedly rejected, although they are doing the same
amount of work as their male colleagues and have received excellent feedback on their
performance. Some of them are even doing other seniors’ jobs. They feel themselves being
treading water, while the men keep moving forward in their career thanks to their young
age and “potential”. There has been no official action from Disney yet, but they claimed to
be pursuing a fair payment policy (Levin, 2019).

The following ethical issues should be considered in this case. Firstly, a huge wage
gap exists across the gender despite the same amount of work. Secondly, the male staff to

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have been promoted are younger, and more junior with lower performance (Levin, 2019).
That the ladies are more productive is ironically one of the reasons for Disney’s refusal of
their promotion request, according to Sin, Stillman and Fabling (2017). The article stated
that in industries with lower competition of the product market, and more competition in
the recruitment market, companies tend to bargain with higher skilled and more productive
workers. Another ethical issue is the female employees’ responsiblities are not
commensurable with their salaries. Lastly, the promotion criteria vary depending on gender.

As the decision maker, Disney has to face with some ethical dilemmas. Firstly, should
payment to the female be raised? If yes, it would mean that there has been more favour
towards the men in the corporation. Secondly, should good female performers be
promoted? Similarly, this would mean that Disney will have put themselves into the list of
firms that have a “glass ceiling”. According to Morrisons et al. (1987), as cited in Oakley
(2000), “glass ceiling” is “a transparent barrier which prevents women from moving up the
corporate ladder past a certain point”. Lastly, should demotion be undertaken to the
privileged men? Though this could solve the gender discrimination, these men would feel
unhappy.

The main stakeholders include Disney, female and male staff. Like other
corporations, Disney tries to make decisions based on their main goals, higher productivity,
maintained professional workforce and good reputation. The females want to be fairly
rewarded for their good performance. The males wish to keep their current positions and
salaries.

There are at least 3 social norms in this case. Firstly, everyone should be given equal
opportunities regardless of their gender. It is unacceptable to ignore one entire group just
because of personal preference. Secondly, people should get what they deserve. All should
be recognised equally for their performance level. Poor performers are to be penalized, but
not promoted. Finally, a person’s position should fairly reflect his performance, role and
responsibility. Paying low wage to someone who has to do a senior job would mean labor
exploitation.

Several available solutions can be considered by Disney. Each has its own advantages
and disadvantages. Firstly, Disney could deny their gender wage gap, and affirm that they

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don’t undertake any gender discrimination. According to Oakley (2000, p. 325), “This
behavior could be seen as an attempt to band together to preserve the upper ranks as a
predominantly male domain by sending the message to females who attempt to infiltrate
their domain that they are less than welcome and will have to fight to gain entry”. Such
approach might lead to other female victims of gender discrimination to join and prolong
the lawsuit. Disney’s public image and reputation will deteriorate, and business be adversely
affected. All social norms are violated. Secondly, Disney could choose to promote the
deserved women and keep the male positions. With this option, the lawsuit would be
managed, further scandals avoided. The hard working female staff can get what they
deserve. Nonetheless, gender inequality still exists, as the undeserved males are still
favourably positioned. Lastly, the female staff are fairly promoted, and their male collegues
demoted. Although the males may be unhappy, fair recorgnition of performance and
compliance with social norms are ensured.
The problem would be managed with no lawsuits against Disney, if they choose the
last solution, promotion and demotion the females and males respectively. Despite the male
disappointment, the gender discrimination and preference over the men are eliminated. As
such, Disney won’t violate the 2 nd principle of Theory of Justice. As stated in Crane and
Matten (2010, p. 294), “Social and economic inequalities are to be arranged so that they are
attached to the offices and positions open to all under conditions of fair equality of
opportunities”. In other words, inequalities may exist among the staff provided that one
person is preferred over another based on his qualifications and the job could be done by
anyone. Any criteria for a position that involves sex or race undoubtedly indicates an act of
discrimination (Crane and Matten, 2010, p. 295). As a large firm in the entertainment
industry, Disney’s leading actions will have a great influence and contribute to the campaign
of gender equality in the workplace.

Conclusion
This paper has analyzed two cases that involve the unethical behaviors. Running a
business is challenging. Shareholders and any stakeholder can be affected by a decision
making. There would not be any ideal decision for all cases. But to the aim of meeting their
goals, company management should make sound decisions so as to ensure compliance with

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social norms. This assignment has helped me to better understand business ethics and how
it can be applied in reality.

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References
1. Crane, A. and Matten, D. (2010). Evaluating Business Ethics. In: Business Ethics. 3rd
ed. Oxford: Oxford University Press, pp.91-133. 108
2. Crane, A. and Matten, D. (2010). Employees and Business Ethics. Business Ethics. 3rd ed.
Oxford: Oxford University Press, pp.287–337.
3. Every Child Counts: New Global Estimates on Child Labour. (2002). Ilo.org. [online] Available
at: https://www.ilo.org/ipec/Informationresources/WCMS_IPEC_PUB_742/lang--en/
index.htm [Accessed 16 Nov. 2019].
4. Gethin, C. (2019). Schoolchildren in China work overnight to produce Amazon Alexa devices.
[online] the Guardian. Available at:
https://www.theguardian.com/global-development/2019/aug/08/schoolchildren-in-china-
work-overnight-to-produce-amazon-alexa-devices [Accessed 12 Oct. 2019].
5. Huang, K. (2019). Hon Hai/Foxconn Technology Group. [online] Foxconn.com. Available at:
https://www.foxconn.com/en/index.html [Accessed 16 Nov. 2019].
6. Kolk, A. and van Tuldere, R. (2002). Child Labor and Multinational Conduct: A Comparison of
International Business and Stakeholder Codes. Journal of Business Ethics, 36(3), pp.291–301.
7. Levin, S. (2019). “Underpaid and undervalued”: 10 women claim systemic discrimination at
Disney. [online] the Guardian. Available at:
https://www.theguardian.com/world/2019/sep/18/disney-lawsuit-gender-pay-gap-abc
[Accessed 12 Oct. 2019].
8. Oakley, J.G. (2000). Gender-based Barriers to Senior Management Positions: Understanding
the Scarcity of Female CEOs. Journal of Business Ethics, 27(4), pp.321–334.
9. Sin, I., Stillman, S. and Fabling, R. (2017). What Drives the Gender Wage Gap? Examining the
Roles of Sorting, Productivity Differences, and Discrimination. SSRN Electronic Journal.
[online] Available at: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3032137
[Accessed 13 Oct. 2019].
10. Lu, L.Y., Tian, G. and Yu, Y. (2018). Business Strategy and Corporate Social Responsibility.
Journal of Business Ethics. pp.1-19.

Appendix
Case 1: Foxconn

Summary

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Foxconn (Amazon’s supplier), has been using schoolchildren aged 16 - 18 as an attempt to

meet production targets. Chinese law allows children aged 16 and above to be employed
but it's illegal to work overtime which is happening as students are asked to work 10
hours/day, 6 days/week. They are encouraged by the teachers to work additional shifts. If
the students refused, they were told that their future will be affected. With each student
provided, the school will earn £55. At first, Foxconn was wondering about hiring student
interns but decided that the benefits are greater than the risks. They defended that it was a
practical work experience for the students. Later, Foxconn admitted that the students were
employed illegally, and they will change it instantly.

Ethical issues
 Are the students’ health being affected?
 Are the students being forced to work?
 Does the internship really benefit students' future?
 Whose interests are being put first?

Dilemmas and goals of decision maker

Name of the decision maker: Foxconn
Dilemmas
 To continue or discontinue the usage of student interns?
 To change the working hours or not?
 To choose between production targets or social corporate responsibility?
Goals
 Increase profit
 Increase productivity
 Maintain good reputation
 Avoid scandals

Interests of stakeholders
Stakeholder Interests
Amazon Increase profit, avoid scandal
Foxconn Meet production targets with lowest costs possible,

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avoid scandal
Student interns To be protected from labor exploitation, have freedom
of choices
School Gain more profits, help students, maintain good
reputation
Customers Products availability with reasonable prices
Government Health of citizens

Social norms involved

 Students' health should be protected
 Students should not be forced to work by any circumstances
 The students' best interest must be the priority
 Every student should be treated fairly

Options available for action

1. Secure all records about child labor violation
2. Stop all students from working but ensure their opportunities still available
3. Change working hours and promise there will be no impact on students' future

Impact of each alternative

1. Good for financial goals but high risks of scandals and public image. Students will
continue to be exploited, all social norms are violated
2. Bad for financial goals, disrupted production line but no scandals will occur. Students'
interests are achieved, all social norms are respected
3. Positive for financial goals although there might be a slight delay, no risk of scandals.
Students are protected and respected. All social norms are respected

Recommended alternative
The best option for Foxconn is to change the working hours and ensure to the
students that their future opportunities won't be affected. This option will satisfy everyone's
goals and interest and no social norms will be broken. Although children are vulnerable due
to their ages, but no organizations should take advantage of the children just to meet their

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own ambitions. Children are human and thus, they also have basic human rights. According
to Ethics of Rights, "every person has a set of fundamental rights that they are entitled to
simply by existing that should be respected and protected in every single action". There
should be no conflict between the company's goals and community interests. Foxconn
should have considered social corporate responsibility before making any decisions in the
first place.

Case 2: Walt Disney

Summary
Walt Disney Company were accused by a group of 10 female employees about gender
discrimination towards their salaries. Their requests for promotion were denied by the
company although they have the same amount of works with their male colleagues. Even in
some cases, they are doing tasks of someone in higher positions with a fractional price.
Meanwhile, the male employees in Disney were promoted constantly due to their
"potential" and younger ages, not their actual performances. Disney didn't comment on the
case but previously stated that there are no such things as wage gap among male and
female employees.

Ethical issues
 Female employees received lower salaries compare to male colleagues with similar
work amounts.
 Younger, less experiences, worse performance male employees constantly got
promoted.
 Female employees' duties are not commensurable with their salaries.
 Is there a difference in promotion criteria between female and male staffs?

Dilemmas and goals of decision maker

Name of the decision maker: Disney
Dilemmas
 To raise the salaries for female employees or not?
 To promote deserved female staffs or not?
 Should male employees who did not deserve a promotion be demoted?

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Goals
 Increase productivity
 Keep professional staffs
 Maintain good public image
 Avoid scandals

Interests of stakeholders
Stakeholders Interests
Disney Higher productivity, maintained professional workforce and
good reputation
Female employees Get the promotion that they deserved
Male employees Keep their positions and salaries

Social norms involved

 Everyone should be treated equally regardless of their gender.
 People should get what they deserved.
 Employees' position should be commensurate with their performances.

Options available for actions

1. Deny everything about gender wage gap.
2. Promote deserved female employees and keep the current positions of male
employees.
3. Promote for deserved female employees but demote undeserved male employees.

Impact of each alternative

1. Bad for public image, high risks of scandals. Unsatisfied employees, all social norms are
violated.
2. Better for public image, low risk of scandals. Although female employees' interests are
achieved but the actual gender discrimination problems are not solved. Social norms 1
and 3 are violated.
3. Everyone's interests are achieved. Even though the male employees won’t be happy,
but all social norms are respected.

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Recommended alternative
The situation will be controlled and there will be no lawsuit against Disney if they
choose to promote deserved female employees and demote undeserved male employees.
Even though there might be some male employees who are not happy, the main problem
behind wage gap is solved. Disney won’t violate the 2nd principle of Theory of Justice. As
stated in Crane and Matten (2010, p. 294), “Social and economic inequalities are to be
arranged so that they are attached to the offices and positions open to all under conditions
of fair equality of opportunities”. In other words, inequalities may exist among the staff
provided that one person is preferred over another based on his qualifications and the job
could be done by anyone. Any criteria for a position that involves sex or race undoubtedly
indicates an act of discrimination (Crane and Matten, 2010, p. 295). Since Disney is an
extremely large company in entertainment industry, their leading actions will have a great
influence and contribute to the campaign of gender equality in workplace.

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