Category: Business Ethics

Business and Ethics Scenario

Abstract

Assessment Four of MBA-FP6028, will focus on the analysis of the Assessment Four Scenario. The focus of the analysis would be drawn to the safety and ethical issues regarding the scenario. This assessment looks at business considered that are presented by the situation, various approaches that could be made for the situation and favored choice of action to handle it. A professional correspondence will be created as well.

Introduction

Business ethics are considered to be the study of appropriate business policies and practices in regard to potential controversial subjects (Twin, 2019). To begin, the company needs to determine the ethical dilemma present and assure that the individual within the organization progresses for the better based off the current scenario. Airline’s industry is very fragile, and requires in-depth evaluation and planes need to be inspected thoroughly before departing from the airport, and after arriving to the airport to assure that everything operates in a coordinated manner. United airlines have gone the extra mile to assure safety and following the regulations and policies. This includes the pencil maintenance regular activities on all planes and that the engineering department are following procedure and within regulations and policies. The following scenario goes into the ethical actions and decisions surrounding the United Airlines’ organization.

Business situation presented by considerations

In any business condition, including the issues of the management of the airlines, there are ethical issues and safety pacts that are involved in a substantial role with the actions that address the affair the surround a company. The real predicament here is directed to the competitor within the airline industry whom is conducting their pencil maintenance procedure. The event goes to demonstrate that the problem has to do with irregular ticking of logs as well as poor repairs and standard representation of parts create a substantial influence on the event at hand. As the United Airlines crew, the employee of the competition has provided a crucial sum of data. The chief maintenance officer needs to determine what line of action to follow with this data. Employees hired that come from the competition often produce higher sales and more productivity (Vozza, 16). This is good for the company that hired this individual but business considerations are needed to be decided before following through with action based off the new employee.

To begin, the airline industry honors the FAA. The FAA is the Federal Aviation Administration, and they are the authority whom inspects regional flights and commercial flights with the only purpose of finding difficulties. Many airlines with the FAA have a cozy relationship as FAA work closely with the airlines and manufacturers (Lewis, 2019). Many airlines, including United Airlines has entrusted the safety role to the Federal Aviation Authority. Airlines have a fear that taking responsibility for what may happen to their airline following the guidelines and policies, and as a result the fault goes to the authority. It would be unethical for both competitors and the case study airline to completely transfer safety roles to the FAA. The purpose of brining this to light is because the FAA possesses less employees and they cannot handle the safety issues of so many airlines under investigation.

Next off, the safety of the passengers and the employees of the airline provide fascinating features that are worth noting. The biggest disaster that can destroy your customer experience is a lack of safety for the customers you serve (Martins, 2013). It is unfortunate that the competitor fails to properly maintain their airlines, endangering the employees and the passengers, which is a serious consideration when airlines are trying to execute a retention policy. Upon learning that the competitors possess a weak check system, probing more accidents to occur, the United Airlines chief maintenance officer must assure that the maintenance policies follow the AA guidelines and procedures at any given time. Physical security can be internal or external, man-made or acts of nature (Simpson, 2017). Physical security is crucial, and therefore the organization must guarantee that the employees and the passengers are safeguarded from bodily harm and other harm. The main point here looks into the issue that the concern for safety is disregarded or unnoticed, and this may ruin the company’s reputation or image, therefore it is essential for engineering tests and checks to take place before a flight departs or arrives. Considering the magnitude with which the informant has stirred up the data, the airlines has no other option but to always review their actions regarding the situation of doubt and insecurity.

Compare actions on two facets of activities under the dilemma

Reporting ethics under any circumstance can be viewed as profoundly. Although in the above case, there is the involvement of the competition, and therefore careful procedures have to be analyzed to fully understand the ethical circumstances of the situation. There exists the choice of conveying the unethical information to the authority, in this case being AA or FAA. On the flip side, the data collected on the safety lapses may get passed to the CEO of the competing organization, strictly providing them accurate data without making them think one is getting back on them for the firing meted against them. Nonetheless, the subject may get provided to them as an advice within the local newspapers or magazines, and look on the way forward for the topic at hand. It doesn’t make sense to provide an urgent problem in the advice section (Scutts, 2018). The advice should be given in a different section that would grasp their attention. Observing the issue above, a comparison is conducted on the report done to the FAA or the reality that we observe the report to the CEO.

Both actions taken by the prior Chief maintenance office provide consequences if executed incorrectly. For example, the report that is created to the FAA, the group that is affected is the competition and even United Airlines when the competitors discover which they shall, that it’s us whom distributed their names to the authorities. Furthermore, the reality is that the reports are generated on a daily basis and this is damaging to the organization, in which the image of the organization will be affected, not just regionally but nationwide as well as around the world. Even the American market will see it is problematic to trust the carrier conducts maintenance on its spare parts since we have chosen to hire somebody who oversaw the rot in the prior organization and wouldn’t say anything about it. Safety is not the absence of harm but it’s the presence and development of capability, awareness, active communication and caring (Godd, 2015). So it’s crucial to note that an organization’s fright of expenditure should be part when it involves safety. It is for the same motive that the organization’s employees should be brave enough to report any undoing to recover the expenses and other repercussions that may provide the organization with a lot of losses. Therefore, this is the differences of identified pointed to the very existence of the safety management approaches by the organization.

Best course of actions and the ups and downs

The best course of action when observing the airline management indicates the fact that the workers must report the unethical fetes to the competitor organization’s CEO. Amid all the choices available, this seems as the appropriate course of action, and therefore, the organization attains the benefits by utilizing it. The airline industry is interconnected and no one should be on bad terms with their competition. So when going about this course of action, this is to bring to the attention of their management. The advantage that United Airlines possesses with this action is that the market choices and the market share maybe depreciate with the information that United would spill out against their competitor. The disadvantage to this action is the robbed worker. The worker will function in the bad blood of the competitor since he is the one that attained this data and it was confidential but shared amongst competition. People believe the ends justify the means are more likely to offset a good dead with bad ones or vice versa (Ghose, 2013). Every action has to have its balance. There is good that can come out of it or there is bad that can come out of it.

Communicating ethical decisions and which ones

The last stage in this entire commotion represents the delivering the unethical services to any concerned player. A couple of the matters that worth communicating involve the financial and legal repercussions of the entire fiasco. Stakeholders should be aware of how to take care of the effects of the moral corruption on the entire situation if everything were to come to a standstill and assure that the matter such as the profits that are affected due to poor ethics must be known by everyone. If any legal actions were to surface from the situation, then they must recognize and get ready to face the consequences that are coming. The organization being affected include the employees, shareholders, management, and the board. Everyone in the organization should be aware of the control of safety in the organization and therefore never be kept in the dark. When an employee doesn’t get the wide view, not only does the point of their work escape them but it can be frustrating (Fried, 2015). So no one within the organization should be kept in the dark and should be aware of everything that is going on.

The individuals whom are disturbed by the management of ethics in the maintenance section should plan actions to do with the same at any particular time. Successful businesses are built on relationships (Towers, 2017). Ethics play a crucial role in generating trust between employees, customers, and United Airlines shareholders. instant that the trust is destroyed, there are things like corporate social responsibility that break down significantly. This is why it is important for an organization to do everything possible to diminish the effect of the adverse policy effects expanding out by for instance, establishing confidentiality clauses.

Reference

1. Fried, J. (2015). The danger of keeping your team in the dark. Inc. Retrieved from https://www.inc.com/magazine/201506/jason-fried/lighting-the-way.html
2. Ghose. T. (2013). Why good deeds can cause moral backsliding. Live Science. Retrieved from https://www.livescience.com/27729-morality-changes-ethical-behavior.html
3. Godd, M. (2015). Cost vs. Safety: This is the time for safety leadership. JMJ Retrieved from https://www.jmj.com/blog/cost-vs-safety-this-is-the-time-for-safety-leadership/#
4. Martins, F. (2013). Is safety a part of customer service? Business 2 Community. Retrieved from https://www.business2community.com/customer-experience/safety-part-customer-service-0722603
5. Lewis, R. (2019). The FAA’s relationship with airlines and manufacturers is under scrutiny, again. National Public Radio. Retrieved from https://www.npr.org/2019/03/14/703535271/the-faas-relationship-with-airlines-and-manufacturers-is-under-scrutiny-again
6. Simpson, D. (2017). The importance of physical security. AGIO. Retrieved from https://agio.com/newsroom/importance-physical-security/
7. Scutts, J. (2018). The evolution of the advice column. Medium. Retrieved from https://medium.com/s/story/the-evolution-of-the-advice-column-4676167c4317
8. Towers, P. (2017). Workplace trust: Why trust is important in the workplace. Task Pigeon. Retrieved from https://blog.taskpigeon.co/workplace-trust-trust-important-workplace/
9. Twin, A. (2019). Business ethics. Investopedia. Retrieved from https://www.investopedia.com/terms/b/business-ethics.asp
10. Vozza, S. (2016). Why your competition’s staff will be your best employees. Fast Company. Retrieved from https://www.fastcompany.com/3059542/why-your-competitions-staff-will-be-your-best-employees

Culture & Ethics in Business Industry

Introduction & Approaches for Ethical Dilemma

Introduction

An ethical dilemma is defined as an examination of the moral standards of an individual where the person’s values conflict with each other. For example, a salesman’s moral values are compromised by the responsibilities of work because of the need to offer a poor-quality product to a customer who is not aware of the fact. The conflicting ethical values for salesperson are loyalty to the company and truthfulness to the customer.

Approaches for Ethical Dilemma

In the Consequential Approach, Utilitarianism is followed for decision making. The utilitarian approach says that “ethical decisions should maximize benefits to society and minimize harm.” For example, the company’s decision is always based on maximizing profit ethically for a larger number of stakeholders.

The Deontological Approach is about duty, obligation and principle. In a deontological approach, a person cannot compromise on moral principles regardless of the consequences faced. The deontologist often follows the golden rule, “Treat others the way you want to get treated” (Trevino & Nelson, 2019). For example, the owner demands to change financial statements to attract investors; the auditor decides to act even if it results in losing the job.

The Virtue Ethics Approach is about personal honesty and strong moral principles. The virtuous person has ideal character traits, which are integrity, self-control and truthfulness. A person who is virtuous shows kindness in many situations of life because of that person’s character and natural internal tendencies. For example, a doctor would never break a code of ethics for self-gain (Trevino & Nelson, 2019).

Ethical Dilemma: A Story

The Story

Olivia, a new car sales agent, still doesn’t have a sale for the month of December. This is bothering her because she is a candidate for the Rookie of the Month. One of the requirements of this award is to have a sale for each month. She is also looking forward for the award as she can put it in her resume. The winner will also receive a cash bonus.

One week before the deadline, Olivia finally closed a deal. The buyer availed a limited year-ender promo for one a car. Three days later, Olivia found out that the buyer missed to sign one of the required documents. It was only Olivia who noticed the incident. The company will have an audit for the Rookie of the Year candidates and if they find out, she will be out of contention. Upon calling the buyer, Olivia found out that he is on a vacation and will be back way past the deadline. Olivia, having been pressured that she might lose the award, has signed one of the documents without the buyer’s consent. She was so nervous because it is obvious that one of the documents is forged. Her good friend, Joanne, is the one assigned to double check the documents to make sure it is complete and not forged. She told Joanne that she signed one of the documents without consent and has pleaded not tell anyone. Joanne, a close friend of Olivia, has promised not to tell anyone about what Olivia did. A month after, Joanne’s boss asked her if Olivia’s documents are complete and if signatures are authentic.

Situation

This is an ethical dilemma because if Joanne tells the truth to her boss, her friend Olivia will lose her job and the award. Also, Joanne has promised that she would not tell anyone that Olivia signed one of the documents without the buyer’s consent. Meanwhile, if she chooses to lie to her boss, she will be disrespectful to her job, the company, and to her superior. Therefore, there is a conflict with her loyalty to her friend and loyalty to her company and boss.

Course of Action

Joanne chose not to tell her boss because she is more loyal to her friend. She perceived the situation in a regular employee’s perspective, more than the perspective her boss. She knows that as an employee, it feels unfortunate and embarrassing to lose a job. Joanne, doesn’t want her friend Olivia to lose her job. Also, Joanne doesn’t want to break her promise that will result to losing Olivia’s trust.

If the situation happened again, the group has concluded that one should do what Joanne did. The group will not tell the boss what Olivia did because of the friendship that is built. Relationships are important and the group do not want a friend to lose a job and the trust in the relationship. The group believes that the conversation about with Olivia is done privately and thus, should be just between the two of them.

Ethics in the Business Industry

Introduction

Ethics is the moral belief that affects a human’s behaviour. Ethical behaviour would, therefore, be the application of these moral principles. It occurs when an individual act in a manner that displays honesty, fairness, accountability, and other ethical characteristics that are morally acceptable to that individual. It is choosing to be honest, truthful, respectful and fair in your actions. (Stone, 2005) In short, it knows the difference between right and wrong.

Ethical behaviour is essential in the workplace for many reasons. Ethical conduct is what drives a business; it is what the company built its reputation. To run a successful business, one must consider the effects of unethical behaviour and put measures in place to mitigate any of these behaviours that may occur. One such example is a Code of Ethics. It can be beneficial in control and minimizing unacceptable behaviour in the workplace. (Lattal, Clark, & Daniels, 2007)

Ethics also protects society from unscrupulous activities where the law does not apply. For example, it is not illegal to use false information to advertise your business to get customers or sell a product, but it is unethical. Therefore, a company that wants to uphold its reputation would refrain from that activity. Thus, ethics prevent organizations from harming society and the environment.

From the lower-level workers to the senior managers of a business, ethics is a central element that is very important to the success of a business. Any company that is known for its practice in moral values and has a reputation for good corporate governance is usually respected by its customers, suppliers, and society (Jennings, 2002).

Ethical Qualities

When dealing with people, honesty is one of the most critical moral characteristics to display. Ways in which this can be applied is by being truthful and being sincere in all your actions. A trustworthy person is given a lot of respect. People will feel confident knowing that you will always act in their best interest and make decisions that will benefit them in the long run. When someone is honest, it means that the person will always tell the truth. For example, if something goes wrong, an honest person will not allow someone else to take the blame for them, they will accept the responsibility for their action. It also shows that you are a person of integrity that one can always be dependable to do the right thing.

A person who practices fairness is usually able to solve situations in an objective and amicable manner. All situations are handled in the same way as any other, and no unique treatments are extended to any one person. Fairness, therefore, means dealing with others in a consistent, impartial, and objective manner. When you are fair and just, you find that people are more comfortable working around you. They are usually more cooperative and are often more motivated to do well at their jobs (Reamer, 2013).

An accountable person usually take responsibility for their actions. It means owning up to one’s mistakes and not allowing someone else to take the blame for something that you are responsible. An accountable person recognizes the difference between right and wrong and strive to practice these principles. Assigned task is completed on time and duties are performed with the goals of the organization in mind. When one is reliable and dependable, it helps to build a relationship with co-workers. It is because people feel like they can always depend on you to do the right thing. Being present for your shift, performing specific duties, and working together for a common goal are some of the priorities of an accountable person (Siems et al.,2010).

Analysis

Many ethical qualities can be considered when creating ethical creditability. However, in addition to those mentioned above are two moral values that must also be considered, these are integrity and openness. These will be explored along with the other behaviours that are paramount for the realization of these principles.

Integrity is a strong moral principle. It demonstrates in someone honest, reliable and trustworthy. Someone who believed in moral values set personal standards and can be expected to deliver on their promises. Doing the right thing is essential not just for the individual but for the people around them (Reamer,2013).

When dealing with people, one must be openminded. People should be able to approach you with the confidence that you will give much thought to their feelings. An open person is mindful of how they approach the views and ideas of others. Respect and consideration are given to others’ opinions.

These are qualities that we learn from our cultural background and how we were socialized. These qualities enable us capable of demonstrating our ability to act in a manner that is socially accepted the values in our daily lives. In addition to these three principles (Siems, et al., 2010).

Conclusion

The application of Moral principles that include honesty, fairness, and accountability illustrates three important ethical qualities that are deemed highly relevant to the workspace. These beliefs are centred around one’s ethical values based on how an individual was trained. To maintain these values, one must continue to seek new way to uphold ethical principles, and in so doing, seek professional growth were the advantages are to build strong customer loyalty, improve company reputation and to reduce turnover for employees.

Business growth and success are foundational motivations for executive; however, correspondingly, parallel importance should be placed on the moral and ethical guidelines that drive these returns when dealing with all stakeholders.

References

1. Lattal, A., Clark, R., & Daniels, A. (2007). A Good Day’s Work: Sustaining Ethical Behavior and Business Success. McGraw Hill Professional.
2. Reamer, F. (2013). Social Work Values and Ethics. New York: Columbia University Press.
3. Siems, F., Bruton, J., & Moosmayer, D. (2010). Integrating core marketing ethical values into relationship marketing. Journal of Relationship Marketing : Innovations & Enhancements for Customer Service, Relations & Satisfaction, 9(2), 68–82. https://doi.org/10.1080/15332661003768716
4. Stone, P. (2005). Ethics and Palliative Care: A Case-based Manual. Radcliffe Publishing.
5. Trevino, L. K., & Nelson, K. A. (2014). Managing Business Ethics: Straight Talk about How to Do It Right. United States of America: John Wiley & Sons Limited.
6. Jennings, M. (2002). Business Ethics: case studies and selected readings. Mason, Ohio: Thomson/South-Western

Moral Principles and Business Ethics

Ethics

Ethics is defined as the moral principles that govern a person’s behaviour or the conducting of an activity. In simpler words ethics is a system of moral principles. Ethics define the right way of living life for us by establishing rules, principles and values.

Business ethics

Ethics is an important part of our life. Basically it is what discriminates us from animals. It works by providing us a code of conduct which we can follow and become more acceptable and respectable in our society. Just as ethics is applied in every other field of our lives there are certain ethics which should be implemented in our business too. Business ethics is a form of applied ethics that oversees ethical problems that can arise in a business environment.

Businesses throughout the world are focusing and trying to use more ethical ways of doing business so that they can satisfy their customers and also increase their profits. Similarly the business we chose which goes by the name Islamabad Diagnostic Centre or ‘IDC’ is one of the best and most trusted diagnostic centres not only in twin cities but throughout the country. Just as any other business, Islamabad Diagnostic Centre works hard to make sure that everything it does is well in between the ethical boundaries of our society and makes the society accept and trust this dignified organization even more.

Policies

In the field of keeping the environment clean and hazard free, Islamabad diagnostic centre has many different policies which were told to us by the Director Operations in our recent interview with him. Some notable policies were as following

• The waste was classified into different categories. All of these were dumped in separate bins and then were treated by the certified waste authorities through different methods. So as different waste objects need to be treated differently at different temperatures and by using different methods, this step made sure that no waste was left untreated.
• Secondly, all the waste that was produced by the Islamabad diagnostic centre was kept away from the main building and was completely covered so that its smell and the germs do not spread until it was taken away by the waste authorities.
• Thirdly, Islamabad Diagnostic Centre has an agreement with a waste management company which is certified by the Government of Pakistan, to pick up and treat their waste. This company makes sure that the waste is disposed of properly by using different techniques such incineration etc.

Management

It is true that employees are the building block of an organization. But they are also the face of the organization. What they do is what represents the company in the eyes of the public. So employees should be well trained and well aware of the organizations ethical codes and they should make sure that they implement these codes while performing their duties. At IDC, management is considered really crucial. IDC values its employees very much but also expects good result and behaviour from them. While interviewing the director operations told us multiple benefits some of which are as following:

• Firstly, all the employees of IDC can use the medical services free of cost. This includes blood test, X-Ray and any other medical service that they need.
• Secondly, employees are granted interest free loans to meet their expenses or if they ever met a crisis and needed money above their pay check and affordability on an urgent basis.
• Thirdly, employees are also provided with donations if they or any of their family members gets involved in a bad accident or god forbid if any of their family members dies. Furthermore, the director told us that for the sake of employee welfare, IDC also pays the transportation cost of dead bodies of their employees loved one’s and as well as pays other burial expenses. But this all is done off the record to show their employees that IDC stands with them in their moments of sorrow.

These are the benefits that IDC provides but in return as mentioned earlier, it requires some things to be followed by employees. The most important thing is the rules and principles set by the organization should be completely followed and this includes the ethical code of conduct. The director said that any employee who is found violating these policies and codes will be referred to the discipline committee which has the authority to impose strict punishments including firing the employee from the job.

Reporting

Every organization has a particular structure and is being run according a particular process. There is a particular chain of command in every organization through which reporting is done in a hierarchy, from lower level to higher level. But according to the director operations of IDC they follow ‘FLAT ORGANIZATIONAL STRUCTURE”. A flat organization refers to an organization structure with few or no levels of management between management and staff level employees. This elevates the employee’s level of responsibility in the organization, improves the coordination and speed of communication between employees and encourages and easier decision making process among employees etc. This all helps IDC to carry out smooth operations within their organization and make their employees more loyal and make them follow their ethical codes and other principles more strictly as they have a greater sense of responsibility and this allows IDC to satisfy their customers, the society, do good for the environment and make healthy profits.

References

1. https://smallbusiness.chron.com/flat-vs-hierarchical-organizational-structure-724.html
2. https://managementhelp.org/businessethics/index.htm
3. https://idc.net.pk/

Business Ethics: How Politics is Affecting the Business World?

Technology and innovation nows day become a major role of our life, it’s taught the competitor sector with the biggest companies in the world creating and innovating every year by giving the quality and the innovation on every product they produce. But when politics come affect this interesting field, it becomes more complicated to determine who controls the market .in this assignment, I will discuss one the major economic crisis between the 2 Global economic power and why is it related directly to The second biggest Smartphone producer in the world? and why this decision is unethical? For me to go deep in the subject I have to give a background about the company and what the company major fields and why is it important to know that to understand the hole crisis because it’s not just related to the smartphones but it is related also to China and USA.

Huawei Technologie is a company that was founded in 1987, it is the leader in global provider of information and communication technology. Huawei have approximatively 194000 employees and operate in 170 countries and regions in the world with more than 3 billion people around the world. Huawei offers to their customer’s value by providing them with open, flexible and secure ICT (information and communications technology), Stable secure and stable network operations by making it as secure as possible and it has been their priorities since 2018, Promoting industry development and providing people with strong growth platform. Huawei is also known as the second-biggest smartphone producer in the world and one of the companies that are going to implement the 5g in the next few years, however with the cold war between that was started by the US and involved China and Huawei, it is an important challenge to make it happened.

STAKEHOLDER MAP: Stakeholders’ impact and are impacted by the company in different ways, each one of them plays a major role in the development and the innovation of Huawei.Based on the sic principles that Huawei relies on to priorities stakeholders that are: Principles of responsibility, influence, Proximity, Dependency, Representation, and policy & strategic intent and by doing that Huawei make sure to understand the requirements of each one of the stakeholders.as in the issue each stakeholders have an effect and been affected by it because since the materials that made to create the product are based on multiple stakeholders but also the customers are related to the product since they buy the product.

• Customers: They are the ones ho buy the products and influence the numbers of the company, in this case, costumes play a major role because not only they are impacted by the issue but they are going to impact the company in a negative way. the most important thing to a customers is the product quality and safety since the issue impact directly the product in a negative way then the product quality will decrease because the product will not be the same and that will influence the customers Purchase but there is an expectation from the customers towards the company that Product quality will not decrease. Huawei in this situation communicate with the customers through customer surveys and satisfaction surveys to know more about what the customers think about the issue and what are their concerns and obviously, Huawei reassure their customers that the quality will not decrease but it’s the opposite actually, it’s still going to increase and be innovative as usual and the prof of that is they launch The Huawei Mate 30 without Google Apps after the US and Google Ban them from using Android fully and Google Apps, they were able to sell one million after the launch by just pre-orders in china, obviously the smartphone will be available in Europe very soon but the question is will it do good numbers?
• Suppliers: The suppliers are related directly to this issue. Because of the influence of the US, most suppliers that use to do business with Huawei are cutting the ties off with them because of this situation but the main one is Google. Since Android-powered every Huawei smartphone, it is one of the main suppliers for Huawei. After Putting Huawei in the blacklist of the US, Google was forced to drop the license from Huawei but even tough, Android is open-source which means it can be used as the funding to build a system for the smartphones which what Huawei did because they anticipated this situation way before. But Google was one of the companies that stop working with Huawei, others stoped such as Qualcomm, Intel, Panasonic, Vodafone, Microsoft and some of them are not American companies just because their country is an ally to the US which complicated things for Huawei to stay in the same level as it was before but one the companies that made a huge crisis for Huawei is ARM, it’s a British company that design the Processers of Huawei that they developed called the Kirin but since Huawei bought up the license for 2 years, they still can be designed them for that time but after it won’t be possible which will have a serious impact on Huawei smartphone’s. Normally for Huawei to solve this Problem it needs to invest money and time to be able to produce and design their processor but that’s nearly impossible not only it can take several years to do that but also it won’t have the same performance as the processor that are designed by ARM. For now, they still trying to find a solution between Huawei and ARM to find a way to work together.
• Governments: In this issue, the government is very involved, the issue was created trough politics since they were a conflict between the 2 economic Power in the world.Because Huawei has an impact not just in China but in the world. The US wasn’t very happy with what they discover and with the fact, they couldn’t work with China to get the negotiation into a point where both parties will have a win-win situation but obviously after the ban of Huawei from the Americans, china is supporting Huawei in every possible way to minimize the impact that was caused by this situation. The president Trump decided that after the situation that it’s the best choice to cut ties with Huawei since they represent China and it’s the second manufacturing smartphone company in the world behind Samsung and apple in the third which not only it represents a threat to an American company but also to Samsung too ho also supplies some of the material to Apple. It is ethical that politics influence companies and to put pressure on Huawei?
• Media / Non-governmental Organizations: in this case, the media plays a major role and it is also impacted by the situation because it’s a global issue. Since The Us and China are also involved directly, obviously the media will talk more about the issue either by making rumors spread like they did recently by saying that The president Trump is working on an agreement to solve the Issue which he denied directly in a press-meeting. When we talk about the media, we talk also about E-platform such as Youtube ho contain Tech YouTubers such as MKBHD and others ho talked about this issue indirectly trough their test to one of the latest smartphone made by Huawei without Android.
• Consumers: One of the main parts ho are affected by the issue is the consumers because first they are the one ho buy and use directly the product and also because they are the one ho make reviews to give their opinions about the product. When the customer hear that google apps won’t be part of Huawei system, a part of them will be worried because the experience and most of the apps are well developed to compete with appel apps for example but the other part ( Chinese people ) they are not worried because in china they don’t use the Google apps, they have their own apps and that’s why since the Mate 30 is out the sales increased in China.

ETHICAL DISCUSSION

In terms of the stakeholder position on the issue, I found out that for customers they were forced by the US to stop working with Huawei even if they know that it will affect them negatively since Huawei is growing fast in the past 2 years .the decision that they made was based either on the fact that the country that they represent is an ally of the US or it’s an American company like the example of Google by revoking the license of android on any future Huawei device until further notice. For the governments, we see that the cause of the issue is a political, a crisis between two big countries that involved companies into their issue which not only complicated the situation but it made it worse today. For The media they were affected by the issue positively and negatively, for once the media show that because of unethical decision that was made by the president of the US, it created a crisis between countries and most important companies and because of that decision and the influence behind it will definitely affect both countries and American companies that use to do business with Huawei. For the consumers, well it really depend on the geography, if you are in America, the Chinese products are not welcomed after the Us put Huawei and other Chinese companies in their Blacklist because of the non-agreement between the 2 countries but it is clear that today it is not an easy decision to make when you want to buy a smartphone that is worth around 800 euros because of this issue. Obviously in Asia Huawei will not be affected by it because they don’t use google Apps .

CORPORATE ETHICS

When it comes to Ethics , Huawei is very serious about this matter . Because it is an IT company, it ‘s on her duty to protect the data and privacy of every user ( Companies, consumers) but it’s not just about that, there is also corruption and bribery that are trained very seriously in Huawei .the goal is to foster a fair business environment and maintain order .these issues must be not just addressed but also dealt with in the severe matter in the eyes of the company.

Integrity is one of the main aspects that Huawei relies on, in fact, the company has zero tolerance for Bribery or corruption and to see that Huawei is very serious about it, they launched programs to improve their anti-corruption and anti-bribery management system. Huawei makes sure that every employees or third parties who do business with them or on behalf of Huawei comply with Laws and regulation of the countries they operate and also all the companies must sign the BCGs ( Business Conduct Guidelines ) and also Huawei make their Partners sign agreement of honesty and integrity which help the company to establish an ethical and fair Business.

Based on all the efforts that Huawei is putting to fight corruption and Bribery to make their Business better.

• Culture of integrity and compliance: Culture is a very important part of the company since it’s multinational company and is present mostly every continent in the world, Huawei take multiple initiatives when it comes to culture and anti-corruption and anti-bribery to increase awareness in this point.
• Compliance management: Huawei takes all the measurements to anticipate any potential risks in all business scenarios.
• External communications: Huawei makes sure that all the stakeholders fully understand the compliance regulations and policies.

Huawei also applies the IPR and trade secret protection by owning 2 patents, inside chine and the other outside china .it complies with applicable laws and regulations.By building and developing this protection system, Huawei is against the practices that affect the trade secrets of the others.

Huawei was accused of spying on their consumers and that was one of the reasons why the President Trump decided to put them on the blacklist, but Huawei denied it and was and still want to prove that it’s not true, based what I mentioned the company has a very strict and strong point of view when it comes to ethics, it is seen as one of the companies that rely to ethics in their business. But the issue is more complicated than that, in fact, Huawei also is launching the 5G which is the latest technology when it comes to networking but the US is not accepting that gift to end this conflict with a motif of the 5 G will help Huawei to spy on American people. Huawei is the only company that is very advanced when it comes to 5G, others developed the same technology like Qualcomm but not as good as Huawei.

PERSONAL VIEW

In my opinion, this is an issue was complicated and cause by politics when it comes to politics nothing is ethical. When can see jut because the US and China didn’t have a trade agreement, it caused cause inside the Business world and affected on the biggest companies in the world ( Huawei and Google )? Google was the main company to react in the first place because it was influenced by the decision of the President of USA, is it Ethical ? of course not, in this situation it brakes every code of ethics and make thing even worse than they look. the company was accused of spying on the American people, because of an e-mail from Huawei’s company that proves that but nothing was shown to the public and Huawei offered to prove that it is not true. If the politics come to the business world and influence a company because they have a crisis in their country it definitely brakes every ethical code that exists in this world. But the fact that not just Huawei will be affected by this situation but also Google because Huawei is the second biggest manufacturing smartphone in the world, it means revoking the license will hit Google when it hurt the most but google did nit really have a choice but to follow orders. I believe politics should not involve companies in their issue, what stays in politics stay in politics. We can see that Business is involved everywhere even in politics where in this situation was dragged to it but it is part of our life now, everything is related to business. I think if there is any chance of resolving this situation politically without involving the companies by not influencing them to take action against each other, that would be the most ethical thing that happened in politics.

ISSUE ANALYSIS

The US and China were negotiating a trade agreement between them, the US decided to raise the taxes by 25% for the Chinese product but the Chinese didn’t agree to it, the president trump decided to sign sanctions against some Chinese companies such as Huawei because they suspect them they are spying on the Americans with proof. By adding Huawei to the blacklist of the US, all American companies that use to do Business with Huawei cut ties with them and stopped doing Bussiness with them and even other companies that their country is allied with the US decided that it’s in their interest to stop doing business with them.in this case, it is definitely right versus wrong, because not only we can see that it is not fair to include companies into politics, but to make other companies do something that will benefit the US directly and affect the American companies in a negative way just to put pressure on Huawei and China. I can see that the relevant factors are definitely the fact that President Trump decides to attack china by punishing them through one of their protegy ( Huawei ) by putting pressure on them not just on the smartphone productions but also on the 5G technology that is definitely the future. In this case, the only way to solve this issue is either by solving the political problem between the countries ethically as soon as possible or not involve the Business in politics, after all in politics every weapon are allowed. but that’s not ethical.

Business Ethics and Social Responsibility

The motivation behind this paper is to clarify and characterize the part of morals and social obligation in building up a key arrangement while considering partner needs and plans. This paper will incorporate a case of an organization violating moral limits for partner motivation, and what sort of deterrent measures were utilized to maintain a strategic distance from to the circumstance. Business Ethics is a type of morals, which looks at the moral standards, and good issues that happen in a business. Morals assumes a to a great degree fundamental part in business today due to arrangements, methodology, and practices. Strategies are set up to control request and structure in an association. Workers as a rule undermine these guidelines and controls because of obtaining a practically no regard for his or her directors and the administration group.

Social Responsibility

The idea of social duty recommends that a private company has duties to the general public that reach out past making a benefit. Vital choices regularly impact different elements than simply the organization. For example, a choice to curtail by shutting some conveyance focuses and stopping produced merchandise influences the organization’s work force as well as the surroundings where the plants are found. This likewise thwarts the purchasers and merchants with having no other hotspot for the stopped items. Choices to subcontract, execution of programming, or client relations to contractual workers in different regions are probably going to have a noteworthy compel on more than simply organization income. These choices can bring up issues with respect to the reasonableness of guaranteed missions, targets, and techniques. Managers must have the capacity to handle these varying interests in a moral way to deal with devise a useful strategic arrangement.

Business Ethics

Both of these parts are advantageous for an association’s vital plans because of them protecting the organization from any observed and concealed issues. For instance, it is to the greatest advantage of an organization to have a code of morals. The code of morals will determine the desires of a worker’s conduct while working. This code of morals if executed will upgrade foundation, enhance consistence methodology, and increment mindfulness from the shareholders. Building up, a key arrangement while contemplating the requirements, and motivation of the shareholders is conflicting in a few associations. Most organizations endeavor to expand authoritative execution, keeping up its standards guaranteeing that they were a la mode, and keeping up the weights from society. Then again, a few associations may have confidence in the employing of minorities is the key, or the stowing away of organization financials is to the greatest advantage of the shareholders. Allegations of companies worldwide have been known not to come clean with respect to corporate financials. This distinction in qualities can make it entangled for one get together of natives to fathom another’s strategies. Essential partners are specifically influenced by the company and more often than exclude clients, representatives, providers, shareholders, and leasers (p. 60.)

Enron

As indicated by research the Corporation of Enron got to be celebrated for its farfetched strategies of its finish administrators in the structure of shaky sheet organizations used to shroud the organization’s financials, benefits from long-standing understandings reported in the first place as a substitution for being extended more than quite a while, distorting financials, and controlling the electric market. These activities could without much of a stretch have been determined by basically coming clean as opposed to costing the organization’s downfall. (Sims 2003)

Conclusion

Taking everything into account, as indicated by the examination accumulated the parts of business morals and social obligation vary contingent upon the associations business and moral strategies. This examination assist clarified how building up a vital arrangement while considering partner needs and plans is best in many associations. This paper incorporated a case of a company exceeding moral limits for partner motivation and what kind of safeguard measures were utilized to maintain a strategic distance from to the circumstance.

References

1. Davis, Stanley B., Goetsch, David L. (2010). Quality Management for Organizational Excellence (6th ed.) Pearson, NJ: Prentice Hall, Retrieved from: https://ecampus.phoenix.edu/classroom/ic/classroom.aspx
2. Dyer, J.H., Godfrey, P., & Jensen, R., Bryce. D. (2016). Strategic management. Concepts and tools for creating real world strategy. Retrieved from The University of Phoenix eBook Collection database.
3. Sims, R. R., & Brinkmann, J. (2003). Enron ethics (or: Culture matters more than codes). Journal of Business Ethics, 45(3), 243-256. doi:10.1023/A:1024194519384

Moral VS Legal Dimensions of Business Ethics

Does a moral responsibility without a legal obligation, bind a business to an appropriate response? Business modelling seems to approach moral responsibilities from a perspective of managing their public image rather than dutiful obligation to respond to community interests. In particular, morality becomes an important part of business when business product and business conduct are directly responsible for social problems. Purdue Pharma L.P. (Purdue from this point), a private drug manufacturer in the United States, faces a legal and moral battle over the effects of her drugs, notably OxyContin. The drugs are highly addictive to their users and are responsible for multiple deaths and drug dependence. An assessment of the case from the Deontological and Justice Perspectives suggest that scope of Purdue’s legal liability was responsible for the drug-use epidemic.

The deontological perspective approaches morality from a duty-bound perspective. Deontological ethicists such as Emanuel Kant proposed that the rightness of an action depends on a series of rules such as the Kant Categorical Imperative rather than using the effects of the action to vindicate the course of action (Shim & Kim, 2017). The “good will”, an intention to produce the right outcomes, is a better prediction of morality than the outcomes of the said moral action. Now, according to the National Survey on Drug Use and Health by the Federal Government, OxyContin and other painkillers are responsible for at least 190,000 American deaths since 1999 (Ryan, Girion & Glover, 2016). In addition, an excess of seven million Americans have abused OxyContin at one point in their lives, hence illustrating the troubling outcome of the drug to society (Ryan, Girion & Glover, 2016). Here, the outcomes of using OxyContin seem to validate corrective action from a legal perspective. In other words, American legal and legislative bodies sought to have taken corrective measures with an intention to promote the communal good will.

The ethical obligation to take the corrective action also applies to OxyContin. It is also worth noting that the justifications of introducing such a drug are questionable from the deontological perspective. The intention of Purdue when developing and marketing the drug are a topic of interest because they inform the morality of their intent and social responsiveness. For example, based on the principles against using humans as a means to an end, generate a profit regardless of the effects of the drug on the users, Purdue’s intention ought to align with promoting community health. However, according to Ryan, Girion and Glover’s article (2016) in the New York Times, Purdue’s executives were aware of the inability of their drug to produce the marketed benefits to patients. Symptoms of addiction in the trial group ought to have produced a definite response from the company. Instead, the continued marketing is a sign of adhering to the legal part of the issue (we are not guilty) as opposed to the moral effects of the drug. Regardless of the trial results (assuming that the trials showed the drug would help rather than harm), the signs of addiction and abuse ought to have stopped production and initiate research in an improved alternative.

It is interesting to note that the analysis of the ethical foundations of the decision does not include the role of physicians. If Purdue were to conduct a study and comprehensively prove that her drug produced the outcomes the company said it does, it follows that the company executives had a right to market the drug as a genuine attempt to trigger community wellness. On the other hand, physicians also had a responsibility to correct their prescriptions if the patients complained about symptoms of addiction and withdrawal within the day (Hoffman, 2019). In addition, as informed and educated professionals, physicians could easily read journal articles (from reliable sources) to inform their decisions rather than depending on the biased advisory of Purdue’s marketing approach (Hoffman, 2019). In particular, if a business trip from the company (a reward for prescribing the drug) swayed the physicians, they ought to face legal and ethical action for violating their duty to their patients and abusing the trust that patients put on them. In other words, the case illustrates unfair distribution of blame (finding a scapegoat to blame for all problems) rather than a genuine effort to identify a sustainable solution for the problem of drug use and addiction.

A settlement agreement with the victims of the drug without an admission that the Purdue and the Sackler Family were guilty of wrongdoing also shows the direction of the moral consideration. With the growing volume of legal proceedings and calls for action against the company and is owners, Purdue agreed settlements with $3 billion dollars payable for seven years with the victims of abuse and promised to supply drugs and invest in methods of reversing overdose resulting from her products and help users to overcome their addictions (Hoffman, 2019). Unfortunately, the agreement is a statement of a questionable will (at best) because it also came in light of exposition that the Sackler family hid its holdings from the public, an illustration that the family was unwilling to return gains from the medicine to the community. For context, while the aforementioned deal is worth $3 billion over a cause of seven years, Ryan, Girion and Glover (2016) claimed that the value of Purdue’s revenue from the same drug exceeded $31 billion in a course of two decades.

According to Rawls’ theory of Justice, unfairness (such as visible in Purdue’s settlement agreement) of social entities and structures should benefit the “worst-off” rather than the “best-off” (Shim & Kim, 2017). Rawls was aware of natural inequalities such as physical and cognitive differences. To correct for these differences and the tendency for resources to trickle up (hence creating elite classes), Rawls’ principle proposed the difference principle to regulate inequalities (Shim & Kim, 2017). It is notable that Rawls’ theory is political in nature. It creates an impression of justice as a form of equal distribution of resources to all people.

The political aspect of Rawls’ theory create problems such as selecting qualified candidates for responsible action against the national background of free industry and enterprise (Blake, 2017). For example, without the protection of copyright laws and intellectual property, Purdue would lack the foundation to control and market her problematic drugs. In that context, the ethical issues facing members of the medical profession would not exist. In other words, the social structure creates an enabling mechanism for inequality (Blake, 2017). Given the unjust foundation of social actions, it follows that Purdue and her contemporaries are likely to act according to their best interests. In other words, the clash of perceptive between the current legal and social structures with the justice perspective trace the source of the problem to the structure of American social systems.

Wealth generation by creating social problems and contributing to close to 200,000 deaths is not justifiable from any ethical perspective (Blake, 2017). While members of the Sackler family may face an initial barrage of public outcry, they may eventually overcome the social outcry and enjoy their ill-begotten wealth. Consider the statement of such inequality to society. While millions will continue to struggle with addiction issues (including the tendency for addiction to trigger unemployment and social isolation among other indirect outcomes of the pandemic), the Sackler family is likely to lead wealthy and free lives because the case against them does not contain criminal proceedings other than the flagged cases of questionable wire transfers. The inequality in this case justifies social outcry and suggests an urgent need to revise the legislative measures underling businesses to avoid cases where businesses have to make a choice between their wellness and social wellness.

In conclusion, society has an unstable system of regulating the structure of business operations. The instability creates a situation where a business may thrive for decades provided her structure is legal, regardless of the moral implications of her conduct. From a deontological perspective, the recurrent problem is already compromising the “good will” aspect of business operations. Businesses seem to make choices from a pragmatic perspective (based on their interests to maximize profits) rather than from a moral perspective. The inequality is likely to sustain continued violations and endanger society where regulations leave wriggle room. Consider the fact that while the government has regulatory agencies to control drugs released to the public (The FDA), problematic drugs still make their way to pharmacies and cause such damage for two decades.

The Basics of Business Ethics

Description of the case: Collapse of Rana Plaza

On 24 April 2013, more than 1100 people were killed and another 2438 injured in a factory collapse in Sabhar, Bangladesh. (Disaster in Bangladesh, 2013) The cause of the collapse was quickly questioned in the media and the reason was serious: one day before the collapse, the industrial police had found cracks in the building and banned access. Unfortunately, industrial police’s crucial decision which could save thousands of lives and prevent huge tragedy was ignored. (Building Collapse in Bangladesh, 2013) The owner of Rana Plaza building (Sohel Rana) and the factory’s managers instructed the employees to enter this crumbling building and continue working. Employees were shocked, tried to express their fear but managers did not pay attention and threatened to cut the month’s salary of employees, so workers could not act against the will of their employer as wage cut would result in starvation and not being able to pay for housing. (Why Won’t We Learn, 2018)

But what was the reason for collapse? Emdadul Islam, chief engineer of the state-run Capital Development Authority, explained to journalists that local authorities gave Mr. Rana permission for a five-story building. However, the owner decided to create bigger space to increase the volume of production, so three additional stories were built. This action was illegal, of course, but no reaction of local authorities followed because Sohel Rana was influential person and had certain connection with politicians. (Reason and responsibility, 2013)

Moreover, after the collapse experts concluded that initial five-story building was made from materials of inadequate quality and building process regulations were not taken into account. So, it seems logically that this construction project should have been stopped by local authorities and state engineers from the early beginning, however, Mr. Rana gave bribes, so Rana Plaza started to function and then claimed the lives of thousands of poor workers. (Reason and responsibility, 2013)

The world was shocked by the reaction of Bangladesh ministers. Prime Minister, Sheikh Hasina, said: “accidents happen.” When number of victims reached 530, Finance Minister, Abul Maal Abdul Muhith, claimed: “the disaster wasn’t really serious.” (Reason and responsibility, 2013) These interviews made clear that the government does not want to support its inhabitants and that employees are in the really vulnerable position.

No doubt, garment workers wanted Sohel Rana and the factory owners to be punished and to take moral responsibility on this tragedy, so many street protests were organized to express pain and ask for justice. To avoid further disorders, Prime Minister Sheikh Hasina gave the order to the police to arrest Sohel Rana and the owners of those factories who based their activity into Rana Plaza. The justice came soon, after 4 days since the collapse, Mr. Rana was arrested, at that moment he was trying to migrate to India in order to escape from prosecution. (Reason and responsibility, 2013)

What are the consequences? No doubt, this tragedy made huge resonance all over the globe and brands decided to take pro-active measures. Corporations, for example, Benetton, paid 1.1 million of dollars to compensation funds but Primark – 1 million of dollars. (After two years, 2015) This money is actually nothing in comparison to the year profit of these companies. Also, Western brands became safety oriented. The Guardian writes: “About 250 companies signed two initiatives, the Accord on Fire and Building Safety in Bangladesh, and the less constraining Alliance for Bangladesh Worker Safety. Both were designed to improve safety dramatically in 2,300 factories supplying western brands. Both complete their terms this year.” (Rana Plaza, five years on, 2018) So, Western brands are concerned about the situation in Bangladesh and try to improve it. Workers agree that situation has become better. For example, Khatun has been working for garment industry since she was 11, in the interview she stated that now the owners of factories care about employees’ safety and take action in case of complains. The reason of such owners’ activity is the risk of being cut off by Western companies, so owners invest their money in safety measures such as making stronger foundation of building by the use of qualitative materials, making fire doors and alarm systems. However, the term of the Accord and the Alliance finishes soon, and workers are afraid that everything will be as it was before the collapse of Rana Plaza as government is corrupted and does not pay attention to workers’ conditions and their concerns are reasonable. “The government is not ready at this time to take over and regulate factories at a satisfactory level,” says Wayss, the Accord chief. The Alliance director, Moriarty, agrees: “It’s still early days for the government.” (Rana Plaza, five years on, 2018)

So, the Rana Plaza tragedy was huge and claimed lives of thousands of workers, thousands were injured. This was a tragic lesson for Bangladesh authorities, factory owners and Western companies which brought the importance of human life and employee’s safety on the new, higher level.

The main arguments for the debate

Position: Western companies and consumers did not have moral responsibility for Rana Plaza disaster.

Argument 1: Western brands made business deal with in Rana Plaza placed factories as with legally operating business agents.

To start with, it should be defined what kind of relationships bound Western companies and in Rana Plaza placed garment factories – and it was supply contract. Western brands (retailers/buyer) in this case had same rights and duties as common end-consumers on the market. It means that Rana Plaza building’s and factories’ owners are the only ones who are responsible for their employees’ working conditions, safety and environment. As long as company follows all of the state legislation/any implemented international agreement rules – it operates legally, so its products are legitim. By this way Western companies had a right to make partnership with Rana Plaza without any doubts of breaking business ethics as Rana Plaza was legally established and operating entity.

As the business entity is considered to be a sovereign subject on the liberal market, (Liberalism, pub. 1996, rev. 2018) no one has a right to influence corporate governance of it and dictate how to run company, how to treat workers, what wages to pay unless there are issues contradicting country’s legislation. In principle, it is impossible for some representative of Benneton or Walmart to interfere and ask for some changes in factories’ strategical management, organizational culture and safety compliance if government does not pay attention.

Dozens of NGO’s and journalists claimed that Inditex, H&M and others, should have done something, at least to pay compensations for the families of dead workers. (Why were Western retailers blamed, 2017) However, Western companies cannot be obliged to do this because those workers were not Western companies’ employees but employees of in Rana Plaza operating factories.

Argument 2: Western companies and consumers were not provided with the information about safety issues in Rana Plaza.

To continue, the duty of a seller (in Rana Plaza placed garment factories) is to provide relevant information about the product they are offering to customer according to the right of a consumer “to obtain necessary and truthful information in order to make a conscious choice among the goods and services offered.” (Consumer rights and protection) Here it is clear that Western brands were not provided with information about mistreatment of factory’s workers, so they could not consider this during decision making-process. This fact is proved by words of the ex-workers of a factory: “A buyer is coming so be alert and be good. If they talk to you just answer like this – you joined at age 18, you get a lunch-break, all is good, all is fine.” (Rana Plaza: are fashion brands responsible, 2015) As Western brands (retailers) were not provided with relevant information about safety issues in Rana Plaza, so they could not inform end-consumers about the situation. As the result, consumers were buying products without any knowledge.

Argument 3: Western brands could not take responsibility due to potential moral hazard problem.

According to Transparency International, Bangladesh has high level of government corruption [rank: 149/180]. (Corruption Perception Index 2018) If Western companies take responsibility of dealing with safety issues, there will be risk of moral hazard as factory owners will continue giving bribes to government and state engineers to receive permission for buildings. Nobody will care about safety environment because factory owners and local authorities will always know that Western companies will be legally and morally responsible for every accident. (Why were Western retailers blamed, 2017) In this way no changes in state’s policies will be ever done to improve working standards, construction standards and work of controlling mechanism.

They would wait for someone coming and saving their citizens instead of taking responsibility for the possible disasters in future. It is unacceptable as according to UN Guiding Principles on Business and Human Rights, the government has the responsibility to protect and promote workers’ rights and the companies have the responsibility to respect these rights. (Des Jardins, McCall, 2014)

The personal viewpoints of the team

There is a certain tendency of making economic achievement bound with social value (Osorio-Vega, 2018) and popularity of corporate responsibility and business ethics is expanding with a huge speed. However, it cannot be taken as a pure benefit of nowadays business environment as there are still case when companies and other global market participants cannot find a consensus and so called codes of ethics and sustainability policies are not really implemented but just exist in a written form. Our team see that the case of Rana Plaza crash is a crucial example of such complicated business world that we have in 21st century. There was no question that someone’s wrong actions caused a huge disaster, but there according to our discussion in previous point, it is clear that Western companies cannot take the fault of this case.

For all of the team members the decision-making process is Western values driven. Our analysis is based on non-consequentialist ethical theories such as ethics of duty and ethics of rights. Considering ethics of duty, asking a question who do Western companies have obligation to in this situation, the answer is obvious: to factories’ owners whom Western brands signed contracts with. So, Western brands do not have obligations to Rana Plaza employees as there is no direct link or contract. Considering ethics of rights, asking a question whose rights do Western companies need to consider here, answer is: rights of direct stakeholders, i.e. business partners (in Rana Plaza situated factories owners), end-consumers, shareholders and employees they signed contract with.

The main reason we do not see Western brands as guilty party is based on well-known stakeholder theory. (Freeman, 2010) From the Inditex, H&M and others side their task was to create value for their supplier as in the case it was their direct stakeholder. Here it can be clearly seen that by choosing to provide employment possibilities for developing regions big corporations wanted to improve economic health of the region. Moreover, investments in human capital and living conditions of citizens of Bangladesh were made possible as there was a non-stop flow of profits that Rana Plaza were guaranteed by supply contract partnership. The problem here is wrong allocation of profits that supplier made, but it cannot be somehow impacted by Western brands as it is internal process of each enterprise.

The guilty party undoubtedly stays Supplier (Rana Plaza factory) itself as it did not comply with “policies and operating practices that enhance the competitiveness of a company while simultaneously advancing the economic and social conditions in the communities in which it operates” (Porter, Kramer, 2011, p. 66) that is a basics of CSR (Corporate Social Responsibility). It broke fulfillment of legal and ethical as well philanthropic responsibilities as such. (Carroll, 1991) We also need to add to previous discussion the fact that there was no local citizens (NGO) movement that could fight or was starting to fight Rana Plaza owner illegal actions. In addition, corruption levels were increasing and therefore there was no (resistance on administrative level. (Bangladesh collapsed building owner, 2014) So, the lack of Bangladeshi response during that period of time had unbearable influence on further development of illegal acts. (Islam, 2017)

Overall, we strongly believe that CSR of Western companies in this case should not be questioned, but exactly Rana Plaza owner CSR and ethical behavior should be put under consideration. In our work we tried to emphasize the complexity of the issue that for most of the observers of the case led to wrong conclusions about the guilty party.

Although, we have different backgrounds and experiences there was no disagreement about our collective viewpoint. Undoubtedly, we see ethics from various perspectives but our work process because of that was rich of discussions and opinions. We found it is easy to express our positions and there were no doubts that everyone of us would be understood. For the next time, we certainly see some potential improvements to be done to make our cooperation smoother. For instance, we could meet in different place (not university premises), so the working environment would be more motivational and inspirational, for example, we could have a discussion at open-air or similar.

List of Literature and Internet sources

Literature

1. Carroll, A. B. The pyramid of corporate social responsibility: Toward the moral management of organizational stakeholders. Business Horizons, 34(4), 1991. pp. 39-48.
2. Des Jardins, J.; McCall, J: Contemporary issues in business ethics. Cengage Learning, 2014, p. 405f.
3. Freeman, E. Strategic Management: A Stakeholder Approach. Cambridge University Press, 2010.
4. Islam, M. Non-governmental organizations and community development in Bangladesh. International Social Work, 60(2), 2017. pp. 479-493.
5. Osorio-Vega, P. The Ethics of Entrepreneurial Shared Value. Journal of Business Ethics, 2018. p. 1.
6. Porter, M. E.; Kramer, M. R. Creating shared value: How to reinvent capitalism and unleash a wave of innovation and growth. Harvard Business Review, 89(1–2), 2011. p. 66

Internet sources

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13. Transparency International. Corruption Perceptions Index 2018. Bangladesh. (retrieved from https://www.transparency.org/country/BGD , accessed 20.02.2019)

Influence of Business Ethics Education on the Possible Behavior of Individuals

WHILE BUSINESS ETHICS in general education is greatly dealt with the effects of teaching business ethics to a student’s moral reasoning and his/her ability to recognize moral issues and moral dilemmas and based on these how his behavior is in effect to given circumsatnces, Douglas May, Matthew Luth, Catherine Schwoerer, S White, R Walls, D. Mohr, G Wolcott, mentions in their respective papers the need for outcome-oriented research would be the need of the hour. Specifically, they are concerned with “factors that facilitate ethical decision- making” (2014: 68, emphasis in the original). They justifiably theorize the factors that facilitate ethical conduct in business and explains the reasons why they should be studied empirically, because these factors have the potential to promote positive ethical organizational cultures and positive organizational reputations. Their work identifies, describes, and applies a hypothesis to three such factors, or variables, which are the focus of their study: moral efficacy, moral meaningfulness, and moral courage (2014: 68). Ultimately, their analysis reveals that a behavior course in business ethics “influenced each of the positive psychology variables” with the most notable change occurring in the moral efficacy outcome (2014: 75). As a secondary effect, their study demonstrates the ongoing “potential value of positive psychology and positive organizational scholarship (POS) literature to business ethics researchers”. I share the authors’ enthusiasm, and I applaud their innovative steps into a new field of research, but it is the “potential value” of their statement that gives me to pause and analytically question the dependability and usefulness of their results and conclusions in the absence of further research on this subject.

The Authors’ Purpose

Teaching ethics has most often followed a “traditional negative approach to ethics” which “generally focuses on prohibited behaviors, enforceable rules, and sanctions for misconduct” (2014: 68). However, a growing trend toward a “positive approach to ethics,” promoting “morally praiseworthy ideals and behaviors,” has created a need for exploring and examining effective methods of teaching and learning ethics “in order to enhance the ethical culture and reputation of corporations”

The subject expert propose the joining of the body of literature concerning business ethics education, and the body of literature concerning POS, in order to better understand the influence ethics education may have on a person’s ability to successfully address ethical challenges in the workplace. They begin their study by defining each of the three variables. Moral efficacy consists of an individual’s belief in his ability “to deal positively with ethical issues . . . and to overcome obstacles to developing . . . solutions” in a workplace environment. Moral meaningfulness consists of the value an individual places on ethics in the individual’s work life. Moral courage consists of an individual’s willingness to “stand up for what is right even in the face of adverse personal outcomes” (2014: 68). The authors puts forward three hypotheses, which drive their study; the hypotheses are that moral efficacy, moral meaningfulness, and moral courage increase for individuals who take a business ethics treatment course (2014: 70–71).

The Authors’ Study and Outcomes

The authors use a “experimental pretest and posttest control group design” The pretest-posttest design group – ended an 8-week, required MBA course. The ethics treatment group was enrolled in a course dedicated to the topic of business ethics, while the control group was enrolled in a human resource management class. In addition to the measurements for moral efficacy, moral meaningfulness, and moral courage, three va*riables were also control- led for:

• (1) An individual’s ability to assimilate educational materials;
• (2) An individual’s impression management (the tendency to present a positive social image); and
• (3) Whether participants had previously taken a stand-alone ethics course (2014: 72–73).

The authors provide evidence of the validity of the studies as three outcome measures what they were supposed to measure, and they also tested for selection effects and a one-way analysis of any variance. The breakdown of the study’s results supports all three of the authors’ hypotheses with the largest, positive change occurring in the moral efficacy outcome.

Evaluation

This study spearheads a new area of research based on a changing perception of, and pedagogical approach to, business ethics ushering in new areas of future research on similar subjects. Perhaps the most significant effect of their study is described in the opening sentence of their “Discussion” section of the research paper:

The results of this study demonstrate the potential value of positive psychology and POS literatures to business ethics researchers as a source of psychological constructs that ethics education may influence.

While the authors’ study appears valid and reliable on its face, I would still not look more upon this area by overestimating the implications of the study’s goals and its results unless further on the subject are done. Too many variables require further research, and are likely to have a significant and measurable impact on this topic, before the authors’ premises and conclusions can be said to be generally, and consistently, reliable. The authors identify seven areas for future research, and their discussion of their study’s strengths and limitations fairly address several of its shortcomings. However, while some of the limitations identified by the authors may be more significant than others, there is at least one in particular that should be considered a fundamental limitation according to my own knowledge and study of other literatures on this subject by Sims, R. and J. Brinkmann, , potentially compromising the entirety of the study’s reliability, is the underlying instructional medium and methods adopted to impart the courses for design group that constituted the experimental and control arms of their study. Another limitation has the potential to challenge the study’s reliability: the subjectivity of the definitions of moral efficacy, moral meaningfulness, and moral courage.

The first such limitation, regarding underlying instructional methodologies used in the classroom, is raised by the authors themselves, but because of its notable impact on influencing the “learning that students [can] achieve” (Bulger, et al. 2002), I do not think the parameters of the authors’ study properly take into account the influence of instructional methodologies as a variable for determining the effectiveness of teaching business ethics.

Their first suggestion for future research is to “explore the influence of specific instructional methods. The authors disclose that the instructional methods in their treatment group were “varied”. If students are given hands-on-style teaching and/or intervention methodologies to practice their skills, and to analyze, develop, and recommend solutions for ethical dilemmas (Penn 1990), it is very likely their moral efficacy will increase to a greater extent than if students merely learn about these competencies through a lecture-style methodology (Laurillard 2002). The authors rightly point out that “more research needs to be conducted to determine what [teaching] method may be most influential in producing such fundamental changes in students” Indeed I believe, future studies based on ethics courses largely taught by lecture may not reflect the same positive results as did the courses in the authors’ study. Another significant question worth asking is whether the subject matter of an ethics course is the primary factor that leads to increased moral efficacy, moral meaningfulness, and moral courage (Sims and Brinkmann, 2002). 2002), versus the teaching style by which ethics is taught. Perhaps an ethics curriculum might mean very little without the use of an interactive and “applied” teaching method in the classroom .The students would feel it is just another subject matter part of your curriculum .The authors’ second research suggestion is to “focus on instructional methods that enable individuals to tie the discussion of ethics and values more directly to [students’] own experiences or future chosen profession”) – begs the same question as the first:

Whether instructional methods that draw associations between ethics and specific industries or companies and the personal experiences of people in these companies are the major driving forces behind positive increases in moral activity and moral meaning in the workplace in Indian scenario it can be related to people associating good moral behavior with TATA’s or Bosch. I would propose further new studies should be performed which seek to identify specific connections between instructional methodologies and increase in moral activity in the workplace.

The second area that should be explored as part of future research – the definitional bias of each of the three variables – is harder to locate in the authors’ own assessment of their study or in their recommendations for future work. While the authors’ study relied on a set of “treatment” students, who took the same MBA course dedicated to the topic of business ethics, another ethics course might have taught these same students a different viewpoint of morality, subsequently altering their understanding and subjective interpretation of what constitutes moral efficacy, moral meaningfulness, and moral courage (Taft and White 2007). For example, when we were taught the business ethics courses in fourth trimester, our faculty typically began each course by individually building the course from the students’ own personal ethical principles in order to create a connection about how they should behave in terms of at workplace or organizational level. This approach can identify diverse, but legitimate, definitional biases related to subjects like moral meaningfulness and moral courage. When a study attempts to evaluate an individual’s subjective assessment of his or her own actions based upon specifically defined factors, it is necessary to make sure the definitions and meanings of those factors are as widely agreed-upon as possible; if a widespread definition is not possible, then the subjectivity of those factors must be taken into account. If not, results that appear to have meaning may have dormant, and significant, inaccuracies. For instance, a person’s understanding of the word “moral” depends on that person’s perception, understanding, and application of other words, such as “right,” “wrong,” “goodness,” “badness,” “proper,” “improper,” “religion,” “belief,” and “faith.” Likewise, a person’s understanding of the word “moral” may also depend on a collection of sociological and historical factors. This concern about definitional bias may point to a casual misconception of which to be wary: what constitutes a “well-taught ethics curriculum” is not a concept or curriculum which is well-defined, fixed and frequently existent throughout academic world.

Result-oriented research based on the efficacy of an ethics curriculum, such as the authors’, needs to be understood in wake of the horde of ways in which business ethics can be taught and may be learned in any given university setting.

In conclusion, the article focusing on the influence of business ethics on an individual moral and values has done a fine job of introducing research that attempts to examine the factors that facilitate a person’s ethical decision-making abilities. Their study lays the groundwork for the proposition that business ethics instructors are able to not only build students’ skills in moral acknowledgment and reasoning, but also increase individuals’ beliefs in their abilities to use these skills to deal with complex moral issues and to derive and recommend solutions. While there are important limitations to the authors’ study, overall, but I am encouraged by their results and by the promise of business ethics education producing notable, positive, ethical results in the workplace by individuals and organization as a whole.

The Importance of Ethical Corporate Culture in Management

A macroeconomic factor that could contribute to Japan’s uncertainty avoidance stems from the fact that Japan is constantly at risk by natural disasters such as earthquakes, tsunamis, or typhoons. As a result, the Japanese have learned to prepare for this uncertainty. Natural disasters have an adverse affect on Japan’s economy. In the 1980s, “Japan was the world’s second largest economy” (Dutta & Lawson, 2018) and has been growing since World War II. However, challenges continued as the value of the Japanese yen (¥) was rising and price advantages were no longer competitive in foreign countries. This results in decreased exports and slowing down of the Japanese economy. The Japanese government also tried to stimulate the economy; and this led to a boost in asset prices. However, prices of assets dropped due to a subsequent bursting of the asset price ‘bubble’. The Great Recession of 2007 involving the U.S. banking crisis also caused an impact on the Japanese economy. In the next two years, Japan experienced the largest recession since World War II. Later in 2011, a large earthquake with a magnitude of 9.1 triggered a tsunami that devastated the country, leading to another recession in the middle of 2012. Environment uncertainty along with macroeconomic events has shaped Japanese culture and corporate culture into one that is comparable to a collectivist society. These events have major repercussions on the economy; which can force companies to take extreme measures including accounting fraud in order to meet shareholder expectations.

Fraud at Toshiba – The Unethical Company

Over a seven year period, Toshiba’s engagement in fraud inflated its cumulative net income by about 150 billion yen. In contrast with Olympus, this scheme was orchestrated by mid-level managers and senior management instead of top executives like the CEO and president. Toshiba was able to secure long-term contracts worth billions of dollars to build power plants around the world due to its expertise in that area. The revenue recognition method used for these contracts is the percentage-of-completion method. The amount of revenue recorded is dependent on a reasonable estimate the percentage of completion. Under this method, it requires the ability to reliably estimate future costs as well as disclosure of anticipated future losses. Companies like Toshiba that undertake long-term contracts need policies and procedures that enforce periodic assessments to make these estimates. Toshiba failed to report on these losses. “In some cases, the contract losses were evident at the inception of the contract” (Dutta & Lawson, 2018). The division delayed recognition of losses in order to keep revenue figures high. If these losses were recognized, the level of profitability would not be acceptable for the CEO because a “moral certainty of loss or firm loss figure” was needed before recognizing these losses. Price masking was another method of boosting revenue. Toshiba subcontracts its manufacturing to a production shop. When the products are transferred to Toshiba for sale, this is done using an artificial price, hence “masking” the actual transfer price. Toshiba exploited this method when the CEO demanded additional profits of 5 billion yen from its PC division. A similar demand of 12 billion yen was expected from the PC division in 2012 just three days before quarter end. As a result of these transactions, the cumulative profit boosted was estimated to be 65.4 billion yen.

The accounting malpractices that Toshiba exhibited were in violation of the Institute of Management Accountant’s (IMA) standards. Toshiba lacked competency and credibility by not carrying out professional duties in accordance to laws, standards, and regulations. In addition, information was not communicated in a fair and objective manner to investors and shareholders. Instead, the information was used for unethical/illegal purposes due to the lack of positive ethical culture in the workplace, which also violated the IMA standards. The culture of the company truly does start at top management which goes along with tone at the top. The amount of commitment that management and the board of directors have to creating an open, honest, and ethical corporate culture is key. This effect can be exemplified as Japanese corporate culture is hierarchical. Followers will always look towards their leaders or superiors for guidance and if these leaders create a climate such as the one in the Toshiba accounting scandal, followers will follow and adopt bad practices.

Fraud at Olympus – A Similar Case

Due to the rising value of the yen, there was a decline in exports; leading to a decline in income for Olympus. Olympus was also a victim of the asset bubble burst and this caused huge losses on its investment portfolio in these assets. Instead of selling off these investments and reporting the losses, it reported the investments at cost to avoid having to report the losses. Olympus continued to invest in investments disregarding the risk. This strategy failed and by 1995, the amount of unrealized losses had accumulated to tens of billions of yen. Throughout this time, there had been many turnovers of CEOs due to retirement and every single CEO resisted disclosing these investment losses even though these losses were incurred by their predecessors. Initially, failure to report these investment losses were not in violation of the Japanese Generally Accepted Accounting Principles (GAAP), which allowed investments to be valued at cost or fair market value at the company’s discretion. However, a new standard arose in 1997 that disallowed this reporting method of reporting historical costs of investments. Instead, Japanese accounting adopted US. GAAP. With a new challenge in its path, the company came up with an elaborate scheme of setting up shell companies that would buy its toxic investments. The funds required to buy these toxic investments were diverted through intermediary companies based in the Cayman Islands and British Virgin Islands and also through bank loans. Olympus got away with this because it was not required to consolidate its financial statements with the shell company that held its toxic investments. The CEO, president, chairman of the board, head of finance, and executive vice president were all aware of this scheme. This scheme was unraveled ten years later when the shell companies had to repay the bank loans. In addition, there was an overpayment for advisory services related to the acquisition of the British companies that alerted Olympus’ CEO, Michael Woodford, to potential fraud. He was later fired by the board of directors, but six months later, he got promoted to CEO and president of Olympus.

Using the ethical perspective of justice as fairness, the company including the board of directors were acting unethically even when the CEO brought the accounting fraud to light. Michael Woodford, who was the CEO at the time, was fired then rehired as the CEO and president of Olympus. Firing an individual for having professional skepticism and questioning the accounting practices violates the principle of fairness. Leaders need to make fairness the epicentre of their decision-making in terms of how to manage resources, whether it is financial resources or human resources. Practicing procedural justice, where processes and procedures are the same amongst everyone, as well as interactional justice, by treating everyone with dignity and respect, and lastly distributive justice: distributing rights, resources, and outcomes in a fair manner; all three types of justice is needed to foster an ethical corporate climate that may have prevented the accounting fraud to occur.

Olympus’ actions have violated the following: honesty, fairness, objectivity, and responsibility. The company engaged in business and accounting practices that had a sole purpose of deceiving the users of the financial statements. What happened fits the definition of dishonesty: behaving in an untrustworthy or fraudulent way. The corporation created a false impression by failing to disclose correct information. Doing so not only harms the shareholders as well as stakeholders of the company, but the company itself. Being dishonest hurt the company’s reputation and investor confidence. The underlying issue was the corporations loyalty and adherence to the hierarchical corporate climate of the company. Followers are expected to be faithful and loyal to their superiors no matter the situation. This can be related to the shadows that leadership can cast on their followers. The most relevant shadows of leadership cast in the case of Olympus include the shadow of mismanaged information, irresponsibility, and misplaced loyalties. Olympus failed to maintain their integrity by providing trustworthy and correct financial information to its shareholders. It can be said that the company was influenced by self-interest without considering the negative consequences. Top management failed to act responsibly by not accurately describing nor reflecting the true nature of the company’s financial performance. In turn, this has only led to short-term successes instead of the long-term vision that is usually adopted in Japanese corporate culture. In a study, even leaders that we do not classify to be dishonest leaders, are more likely to encourage dishonesty through what they say instead of exercising their coercive or reward power. Since Japanese corporate culture is so reliant upon hierarchical principles, it is easy for anyone in a managerial position to force followers to take a course of action. According to this study, employees are more likely to perform when they receive acknowledgement from their leaders, especially from top management of companies, than using leader incentives. In some cases, employees may prefer non-financial incentives such as recognition, relationships, and respect from superiors over financial compensation.

Sony Corporation – The Ethical Company

In contrast with Toshiba, Sony acknowledges that by being committed to an ethical business conduct, it provides a competitive advantage. Top management in this company is committed in promoting ethical culture throughout the organization and “leads by example” (Ethics and Compliance, 2019). The Group’s Code of Conduct is the foundation for its ethics and compliance program. It sets the standards for ethical and responsible business conduct, ethical values, and policies. In February 2019, Sony was recognized as one of the world’s most ethical companies by Ethisphere Institute. This institute researches and sets standards of ethical business practices worldwide. This award is only given to those who “achieve outstanding results in the areas of transparency, integrity, ethics, and compliance” (Ethics and Compliance, 2019). Sony’s culture stems from the following core ethical values: Fairness, Honesty, Integrity, Respect, and Responsibility. These values have been mentioned earlier in the analysis of Toshiba as well as Olympus. These values were the ones that were violated in the IMA standards, which led to both companies engaging in unethical accounting practices. The Code was created by the Board of Directors and other seniors of Sony and all employees are required to complete the Code of Conduct training within 90 days after hiring. The Group also enforces in-depth training on at least one part of the Code every year to keep employees up-to-date.

In addition to Code, Sony believe in a ‘speak-up/listen-up’ culture; which happens to be part of the Code of Conduct. This means that no matter the position within the organization, employees of the company are encouraged to raise their concerns. A culture and environment is created to make the employees feel confident that they can do so without the fear of being retaliated against. By promoting a healthy ethical corporate culture, many negative consequences of whistleblowing can be eliminated. Sony has many channels and reporting programs for employees to raise their concerns. The most popular method for this is a ‘Hotline’. The Hotline offered is available in 27 languages, available both online and by phone, available 24 hours a day, and 7 days a week. These hotlines are set-up by third-party organizations and are specially trained.

Sony has an Ethics and Compliance Program that also promotes an ethical corporate culture. The program provides mandatory training on ethics and compliance. Some key compliance training in the program includes: anti-bribery, customer due diligence, antitrust and fair competition, import / export trade compliance, and information security and privacy. By having an actual program set up really shows how much effort Sony is putting in to educate its employees on the importance of ethics in the workplace and puts Sony ahead of its competitors in the industry.

Discussion/Analysis/Recommendation

The fraud that perpetuated in Toshiba were a result of ethical failures due to its employees. These failures can be evaluated from the viewpoint of the IMA Statement of Ethical Professional Practice. The IMA Statement requires its members to “contribute to a positive ethical culture in their organizations and to place integrity of the profession above personal and corporate interests, thereby fostering a strong, open, and positive ethical culture in their organizations” (Dutta & Lawson, 2018). The IMA Statement is similar to the Code of Conduct, which organizations usually have in order to set rules that outline norms, responsibilities, and/or proper practices of every individual employee. The IMA Statement has four major ethical principles: honesty, fairness, objectivity, and responsibility as well as four standards: competence, confidentiality, integrity, and credibility. The standards are more relevant in an accounting sense. However, the principles are what drives the ethical culture of an organization. After analyzing Sony, three out of the four principles are presented in its core ethical values. Sony is one of the leaders in the consumer electronics industry that demonstrates undeniable ethical leadership and has been awarded for its commitment to creating a company that has high ethical standards. The single thing that Toshiba can focus on to prevent accounting fraud from reoccurring in the future is the ethical corporate culture of the company. Having a strong ethical corporate culture is essential for any organization’s long-term success. As mentioned earlier, Japanese culture is long-term oriented. People often view their own lives as a short moment in time that contributes to society or a corporates long-term success. It is as if Toshiba had lost its long-term orientation when it focused on short-term, quarterly revenue figures instead of looking at the long-run. Toshiba needs to reinvest in its corporate culture and retrain its employees to focus on long-term goals.

So how can Toshiba improve its ethical corporate climate? Honesty and integrity are the basis of forming human relationships. Without trust, relationships often do not last long if they form at all. From a corporation view point, those who earn the trust of their employees, suppliers, communities, and shareholders are more likely to achieve long-term success. Doing the right thing and being transparent will always create value. What steps can Toshiba take going forward to implement create a corporate culture that is ethical? First, comparable what Sony has implemented, Toshiba should restructure its Code of Conduct that encourages ethical behaviour by making employees feel safe when raising their concerns. For example, a third-party hotline for reporting concerns should be implemented as humans always feel safe by being anonymous. In addition, annual training should be reinforced upon all employees in order to keep them up-to-date with the Code. The training should be in the form of scenarios that present real-life situations and dilemmas and not just a regurgitation of the Code. Story-telling is a powerful tool as it can allow people to exercise their moral imagination. To be able to pretend to be in a situation and think about courses of actions can take can build one’s character and moral identity. By providing these training sessions yearly, it can have an improvement on top management as well as employee’s moral character. Lastly, Toshiba should investigate its internal audit division. The internal audit team should be robust and have the right monitoring tools and procedures in place to ensure compliance with company policies and government regulations. Management needs to ensure that internal audit practices are done fairly and openly.

The main takeaway is that management is the governing body that guides the direction of the company. If a bad example is set at the top of the organization, its effects can trickle down throughout the organization. Corporations should focus on long-term successes instead of short-term/quarterly results to meet shareholder expectations. By focusing on the long-term, it can help avoid unrealistic short-term goals, which can contribute to self-serving, fraudulent acts. And by promoting an ethical corporate culture, employees can keep each other in check as well as management without the fear of retaliation.

Volkswagen Scandal as One of the Auto Industry’s Biggest Scandals

Business ethics means applying or implementing set of appropriate business policies even if difficult obstacle comes in between for example obstacles like without bridging government laws, refraining from corrupt practices and other illegal practices. Ethics plays an important role in individual judgment and decision which lead to downfall or profit in businesses. When thinking about ethics, it consists of all the ingredient like integrity, honor, fairness, honesty, principles, moral, value, conscience, right and responsibility which made up the principles of ethics. We become moral individuals by practicing good at being truthful by habitually telling the truth and becoming honest by trying always not to be dishonest. It is similar with the business ethics where individual play at organisational level. It is simply another level where business man or woman takes decision on bigger picture. For example, if managers conduct his business with his ego of profit maximisation and sheer believe on dominance then they will take all the decisions accordingly with his temperamental and ego. If, on the other hand, they are aware of moral values and social policies that affect their own societies and the wider world, then they will be likely to make a judgment purely weighing based on cause and effect to their society.

Social responsibility means the obligation a business assumes to have for society. They have to be socially responsible for maximising positive effects and minimising negative effects on society. The economic responsibilities of a business are to produce goods and services that meet the needs and wants of society at a price that can perpetuate the business while also satisfy the needs of the investors. Ethics plays vital role in shaping society we live now, for instance if the country is led by the leaders who are all corrupt then eventually all the employees will follow the lead and imagine how the society will suffer with this consequences of these corrupt individuals. Connecting with the Volkswagen scandal, one of the notorious examples of how corporations can shape the ethical and political issues of the environment. Their deceitful action was not discovered for so long year and just imagine how much it would have done harm to environment, small growing business, competitors and loyal customers who had full trust in the brand. The Volkswagen Group which is headquartered in Wolfsburg, Germany owns many range auto company brand like Bentley, Bugatti, Lamborghini, Audi, Porsche, SEAT, and Skoda. Volkswagen is one of the gigantic auto manufacturing companies which were widely appreciated and trusted brand up until this scandal was unfolded. When this scandal was unfolded it made headlines not because of the legal and financial repercussions or profit they made different countries, but because of the lasting damage caused on society and the environment which cannot be claimed back by their money or any product.

When conducted a test, they rigged eleven million car carbon emission tests which is estimated to have emitted at least one million tons of carbon each year leading to permanent damage to our environment. Each year different government comes together to talk about the climate change and one of the ways to reduce carbon emission is to go green or electric car by the auto manufacturing industries. Exemplifying particular country, Bhutanese government have promised to maintain sixty percent of their landmass with forest cover and every year they introduce to electric cars and taxis. In 2016 country announced that they are not only carbon neutral but also carbon negative which means they emit lowest carbon compare to any country. While some other country like China and India which are the highest polluted country are promising to reduce fossil fuel consumption and substituting it to renewable power sources, Volkswagen the one of the prominent auto manufacturing company just set aside their principles, laws of ethics and compromising the environmental and climate change challenges in order to maximise profit and become one of the top companies in the world.

Volkswagen previously had a goal of becoming the world’s largest automaker by 2018, but the scandal caused the company to lose one third of the company’s market capital. In an attempt to compensate for the emissions violations, Volkswagen ordered a voluntary recall, issued a public apology, and the CEO along with other directors of the firm resigned. The company is also facing lawsuits and criminal charges and the future of the company looks grim. In order to analyze how such a global company could commit fraud for so long on such a big scale, it is beneficial to view this case as a problem of regulatory capture involving information asymmetry, issues with oversight, and private governance. This analysis attempts to examine the problems of social concern presented by the behavior of Volkswagen in the international economy and provide some recommendations to increase the system of accountability within the global auto industry. The International Council on Clean Transportation suspected that Volkswagen had installed a defeat device because many testing were done but each time result of carbon nitro oxide came different. In the initial test none of the researcher doubt that one of the biggest auto manufacturing company would have taken this step but eventually after carefully examining the default they found programmer writes the code that tells the computer it is on the official test cycle and allows for changes in how the emissions control system. In this case they can manipulate the how much carbon emission the car emits by just installing the devices. They have broken the ethical principle of the any Organisation by doing it, in short they have cheated the whole world, and they have cheated the customers, dealers, and other competing auto manufacturer and so on.

Volkswagen was soon investigated by any other countries suing them. Prosecutors from the United States, South Korea, France, Italy, Canada, Germany, and the UK tried to find out how many people knew of the deceit that occurred within the corporation. One German newspaper even labeled this scandal as the “most expensive act of stupidity in the history of the car industry”. As news of the scandal began to leak, Volkswagen’s stock price immediately began to fall. Volkswagen admitted that 11 million cars worldwide had been fitted with the defeat device. Then on November 2, 2015, it was also found that the same device were used on additional Volkswagen, Audi, and even Porsche models. However, the biggest tragedy of this entire scandal is the release of enormous amounts of nitrogen oxide into the atmosphere. This gases cause smog, acid rain, and the formation of the ground level ozone which are associated with adverse health effects such as inflammation of the airways and respiratory problems including asthma, bronchitis, emphysema, etc. High levels of these harmful gases also cause damage to vegetation including reduced growth. The European Union also published an inventory report in 2011 that stated the majority of nitrogen oxide emissions come from the road transport sector at 40%. It is important to realize that the environmental damage of this scandal will have a far more lasting and immeasurable impact on the ecosystem. Their ambition to become top auto manufacturing companies might have caused huge damage to our ecosystem which may take thousand years to recover.

Aside from public apologies, Volkswagen announced a voluntary recall of all the vehicles, The CEO had to immediately resigned and Volkswagen’s top US executive also stepped down. Head of other brand like Audi, Porsche were also suspended which were also leveled as way of rectifying their mistakes. The Volkswagen head office in Wolfsburg and other offices were raided for investigation purposes. It is impossible to fathom that only a handful of people were involved in the master plan of the manipulation software. Perhaps the company made the wrong decisions and followed a wrong strategy, but this scandal was way too big to be an accident. It was one of the auto industry’s biggest scandals proving dishonesty in conducting a business. Firms have an obligation to be open and honest to owners and managers should be held accountable to stakeholders. However, this was more than just a problem of simple deceit. This case involved more complex theories that deal with the theory of regulatory capture. The main issue here is how manipulation software went undetected for so many years other than Volkswagen should be held as per their actions. If it were not for the existence of non-governmental Organisation, this scandal may have never been uncovered and Volkswagen would have proceeded to emit harmful gases above permitted levels. Environmental groups had previously warned national car approval authorities and the European Commission that diesel cars emitted much less Nitrogen Oxides in official laboratory tests than on the roads. Many also knew that this was due to tricks used by manufacturers, but regulators did not take urgent measures.

These cases have questioned the trust worthiness and importance of ethics of any Organisation. It also proves how easily people are being deceived by the big Organisation in order to maximise their profit and increase their market value setting aside the basic ethical values.