University of Wales

Prifysgol Cymru

TASMAC
London
School of Business

ASSIGNMENT

Subject: Organisational Values and Business Ethics

Submitted To: Roland Bushell
Title: ‘Ethics and Ethical issues in Business World ’
Programme: Masters of Business Administration (MBA)

Submitted By:
Name: Sagar Mahat
Roll No: 1102021
MBA 1
Date of submission: 28th February, 2011
Total words: 2194
Word Limit: 2000 words (10% variation)
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 CONTENTS

Headings Page no.

Introduction 1

Objectives 3

Contrast in between the speech of Dr. Barry Morgan and David 4

Rosser.
Business ethics issues in relation with customers, employers, 5
environment and other stakeholders.
 Nike Shoe Factory Controversy.

 The McDonald's 'Beef Fries' Controversy.

 Pharmaceutical companies‟ controversy on anti-retroviral

drug Azidothymidine (AZT) patent right.

 Oil and gas industry leading to Caspian sea massive

pollution.

Conclusion 11

Bibliography
OVBE: Assignment, February 2011

INTRODUCTION:

Ethics means doing what we believe in and the way we like our society,

community or things around us to perform. It simply means the path in which we should

live our life and likewise business ethics is about all business institutions, corporate

sectors, business persons, firms etc. being responsible for their deeds and making

decisions those are environment friendly and being environmentally responsible, fair

justice toward employees, accountable to people, good services to customers and a

healthy return to the investors.

Profit maximization being the prime goal of business house, the business firms

are following various strategies, approaches, techniques and methods to gain their

goals forgetting about the business ethics; their responsibilities toward society,

employee and other stakeholder. “Financial growth is the only marker of success.” Dr

Morgan :http://news.bbc.co.uk

As the ideologies like capitalism, neoliberalism, and competitive individualism

developed business reputation has been on downward trends and as the widespread of

capitalism and neo-liberalism the surface of the globe, perhaps now is the time to

question to ask ourselves where we are leading toward and what can we hope as the

„free market‟ heads for worldwide dominance. Neo-liberalism is a system providing

people the chance to frame up businesses, allowing individuals high levels of personal

freeness, and achieve what one desires for, thus in neo-liberalism unhealthy

competitions in business is in rise.

General people as well as business leaders in today‟s world are very much

concerned about the trend modern business is going and the impact it is having to the

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OVBE: Assignment, February 2011

stakeholders. "Business reputation has been on a downward trend for too long and is a

concern to a growing number of business leaders” Rosser. :http://news.bbc.co.uk.

Both David Rosser and Dr. Barry Morgan speaking at the Professionals Group

Wales Conference were concerned about corporate sector not being responsible to

stakeholders and downward sloping business reputation. They are talking about the

business process being ethically wrong. Dr. Morgan expressed his anxiety upon bank

bonus culture and bank giving priority and better deals to new customers than their old

existing ones. He expressed his idea when Barclay Bank controversy was hitting the

news head.

So in this case study the author is going to evaluate and contrast in between

ethical issues in the process of business and the outcomes. Further contrasting both of

the speech given by Dr. Morgan and Rosser, we can measure the issues more deeply.

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OVBE: Assignment, February 2011

OBJECTIVES:

 To contrast between the speech of David Rosser and Dr. Barry Morgan.

 Identifying and evaluating ethical issues in business.

 To contrast ethics in between the process of business and outcomes of

the business.

 To evaluate how business trend has been on downward trend.

 To present with the practical examples showing that business sectors are

forgetting business ethics.

 To depict the impression of business today on customers, employees, and

other stakeholders.

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OVBE: Assignment, February 2011

Contrast in between the speech of Dr. Barry Morgan and David Rosser.

Dr Barry Morgan speaking to Professions Group Wales states that there is a

need of change in the operating process of business today especially after bank crisis

and MP‟s expenses scandal. He says that executive needs to be more careful to his

duty and responsibility. One needs to be ethically correct to run the process in right

direction thus practices can only be improved if executives are accountable and

responsible. “Ethical behaviour is influenced by characteristics of the individual, his or

her social relationships, and the organizational system in which he or she is embedded.

All this should be taken into consideration to help explain ethical behaviours when

individuals are accountable to more than one audience. The divergent expectancies of

multiple stakeholders may result in behaviour that is less predictable and that, in the

eyes of the organization, may be undesirable” Sims. (2003, pp.95).

Whereas, David Rosser has no problem if a bank pays high amount of bonuses

to those employees who delivers hard performance in making the profit for the

business but he just wants to ensure that the process by which the huge profits are

made should be moral and ethical. He also says that in today‟s era of information

technology, media, internet and rapid flow of information it is hard for one to maintain

the standard in business world. As the anxiety expressed by the public toward their

decisions in bonus payment, salaries to CEOs, etc is very much understandable as

some of the process or say operating system of bank in itself is unethical. He says

business reputation in eyes of customers, employees itself and other stakeholders is

decreasing and is expected more to decrease.

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OVBE: Assignment, February 2011

Business ethics issues in relation with customers, employers, environment and

other stakeholders.

There are many ethical issues in world‟s major largest company that come to be heard

time to time. Some of those are related to customers, some with employers, some

having negative impact in environment, some with others stakeholders etc.

 Nike Shoe Factory Controversy.

Nike is being accused for most of the decade by well-documented ethical

charges that its closely controlled contractors provide very less wages. It prefers

countries like Indonesia for an instance ruled and controlled by regimes that prohibits

labour organizing, exploit workers to hazardous conditions, demand very long working

hours and even physically abuse employees.

Children of age 13-15 have been working for up to 17 hours a day making just

$0.15 an hour. There are also saying that there was physical and verbal abuse in the

workplace. More than 2,000 workers (57% of respondents) indicated that they had seen

workers being mistreated by supervisors or managers. Examples of verbal abuse given

by the workers included the Indonesian equivalent of phrases like Fuck You! You Idiot! ,

You Whore! and You Pig! Examples of mistreatment included wage deductions, having

their ears pulled, being pinched or slapped on the buttock, being forced to run around

the factory yards and having to stand for hours in factory yards (being dried in the sun).

The allegations regarding low wages are spread out throughout Eastern Asia.

Workers at the Lian Thai factory in Thailand only receive the minimum wage of 162

Baht ($US4.25*) for working an 8 hour day and say they need about 200 Baht

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OVBE: Assignment, February 2011

($US5.25*) just to cover the basic needs of one person (Bissell 10). In Indonesia, the

minimum wage first year worker only receives Rp250,000/month ($US34*).

:http://pda.coolreferat.com

Here, the above fact clearly shows that even the reputed large company like Nike

is violating business ethics. Most of the Nike shoes are made not only with the fabric but

with the sweat and blood of children, old aged people who are forces to work in

unfavourable work conditions with minimum wages. Although the outcome is very fruitful

for the investors, the ways and methods involved needs a large discussion.

 The McDonald's 'Beef Fries' Controversy.

In May 2001, a lawsuit was filed against McDonald's, in Seattle, US. The French

fries server and promoted as 100% vegetarian contained beef extract. The lawsuit

alleged that the industry duped vegetarian customers for over a decade into eating

French fries that contained beef extracts.

Hindus and vegetarians all over the world feel shocked and betrayed by

McDonald's deception and ultimate greed. - Attorney Bharti (2001), on filing the lawsuit

against McDonald's. :http://www.seattlepi.com/local/21171_suit02.shtml

The incident shows that the world‟s largest food chain McDonald has no concern

about their responsibility to their customer rather than profit making. When sued for

such unethical behaviour, the company responded saying that those are the ways of

making fries in US but McDonald has customers all over the world and for lots of th em

vegetarian food means strictly food without any meat or meat extracts. Making such a

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OVBE: Assignment, February 2011

statement was itself an unresponsive behaviour. This sort of behaviour by huge

company is declining the image of the other food business as well. As the information

travels very fast due to modern media, further the mentality of public develops as

“business is all about making profit, they do not give damn shit about consumer interest

and welfare.”

 Pharmaceutical companies‟ controversy on anti-retroviral drug Azidothymidine

(AZT) patent right.

South Africa has high number of HIV infected population and is struggling with

extremely high cost of drugs required for controlling the disease. They developed

generic versions of these drugs for cheaper access to medication. An antiretroviral drug

Azidothymidine (AZT) is one of them, which helps to prevent the transmission of HIV

from a mother to her unborn child. Then US-based pharmaceutical companies which

accused South Africa of violation of patent rights and these companies were supported

by the United States government which states that they were losing more than $2.5

million per annum in royalties not paid to its pharmaceutical companies (O‟Manique,

2004: 84). It threatened economic sanctions against South Africa f or using these

“home-made generic versions” of the drugs to reduce the cost of treatment from

$10,000 to $300 per individual, per year. U.S.-based pharmaceutical companies

actually went to court to stop the South African government from making these cheaper

versions of the drugs available to its citizens. The news attracted public attention and

facing massive opposition from the international civil society, the pharmaceutical

companies dropped the lawsuits. :http://www.socialinquiry.org

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OVBE: Assignment, February 2011

The above fact shows that the interest of the United States government and

pharmaceutical companies was profit maximization. It did not seem to matter a bit that

this objective would be achieved at the loss of millions of lives and devastating misery in

South Africa and other countries which benefit from the cheaper versions of the

medications.

 Oil and gas industry leading to Caspian sea massive pollution.

Caspian Sea is now one of the most polluted sea in the world and the causes of

it is the unethical behaviour and irresponsive operation of the oil and mining company.

The gas injecting activities to ensure constant flow of oil from the well is also a major

reason for declination of the water pollution in the area.

“Motavalli (1999) reported that the World Bank estimated that a million cubic

meters of untreated industrial waste water is discharged directly into the Caspian, with

the bulk coming from oil and mining operations.” :http://www.iseis.org

Tons of petroleum by-products, sulphites, and tons of chlorine are dumped in the

sea. Ecosystem near the seashore, marine environment, flora and fauna are threatened

by the pollution. Thousands of seals that live in the Caspian Sea have died since 2000

because of the consequences of pollution that affected their immune systems. This sort

of incident easily hits international media and people‟s impression to business becomes

negative.

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OVBE: Assignment, February 2011

 Barclays bank‟s controversy:

Barclays bank recently paid 1% corporate tax which according to the public was not

acceptable. The public were saying “Books not bonuses”. The bank pays very huge

amount of bonuses to its employees and also huge salaries to its CEOs which are not

disclosed to public. UK government had always been there for Barclays at the time of

crisis but when the company eventually rose, in return it paid such little amount as tax

making many excuses. For all of this reasons pubic are demonstrating against the

bank.

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OVBE: Assignment, February 2011

CONCLUSION:

Modern business sector provided facility with the free market policy, supported

by their government and driven by the capitalism and huge profit maximization goal are

operating in unethical manner. Those operation and processes carried out is easily

widespread to the general public in today era of transparency and mass media resulting

decline in reputation of business. Oil industry, gas industry and other huge industries

carrying out their operation unethically causes adverse impact to environment and other

living creatures. Attention and anger are expressed by the business leaders as business

and industrial sector are increasing being irresponsiveness to society, environment, and

overall business ethics.

The process of any business of controlled by the executives, if they themselves

become self-conscious to these operation they can maintain the decreasing standard of

business. As Morgan mentioned an oath for those with the Master of Business

Administration (MBA), which lays out a code of principles like the Hippocratic Oath does

for doctors, would help with responsible leadership in business. The corruptness and

business situation today clearly implies the need of such oath.

Banks not being responsible to the government tax regulation, instead paying

huge bonus to the employees. This sort of news creates a controversy in the general

public. Bank for the purpose of transactional leadership can reward the employees for

their performance but the profit from which they pay the huge bonus should be from an

ethical process. There are many examples of ethical issues in business that still needs

to be discussed.

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OVBE: Assignment, February 2011

Food and health related industries priority should be public health and welfare.

CEOs, executives, managers, and all leaders should be responsible in their activities

and can play a vital to increase the business standard. “What is needed at the outset is

integrated strategic leadership that simultaneously develops organizational integrity and

quality systems to leverage their reciprocal benefits” Lindsay & Petrick (1997).

All stakeholders need to raise a question on those subject matter and process

where business ethics are forgotten and all business leader need to address those

questions and walk along business ethics.

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Bibliography:

 Archbishop of Wales calls for ethical business code. Retrieved 14 February

2011, (online) available on http://www.bbc.co.uk/news/uk-wales-12166032

 Capitalism and Crime. Retrieved 14 February 2011, (online) available on

http://www.internetjournalofcriminology.com/Horsley_Capitalism_and_Crime_Oct

_2010.pdf

 Nike Shoe Factory Essay Research Paper. Retrieved 15 February 2011, (online)

available on :

http://pda.coolreferat.com/Shoe_Industry_Essay_Research_Paper_Shoe

 The McDonald „beef fries‟ controversy. Retrieved 19 February 2011, (online)

available on : http://www.seattlepi.com/local/21171_suit02.shtml

 Crimes of Globalization: Health Care, HIV and the Poverty of Neoliberalism in

Sub-Saharan Africa. Retrieved 25 February 2011, (online) available on :

http://www.socialinquiry.org/articles/IJSI-V1N122008%20-%20005.pdf

 Pollution of the Caspian Sea Marine Environment Along the Iranian Coast.

Retrieved 25 February 2011, (online) available on :

http://www.iseis.org/eia/pdfstart.asp?no=06017

 Polycyclic Aromatic Hydrocarbons (PAHs) along the Eastern Caspian. Retrieved

25 February 2011, (online) available on :

http://www.idosi.org/wasj/wasj9(2)/14.pdf

 UK Uncut activists target Barclays Bank branches. Retrieved 25 February 2011,

(online) available on http://www.bbc.co.uk/news/uk-england-london-12514687

 Ronald R. Sims (2003) Ethics and Corporate Social Responsibility: Why Giants

Fall. Westport, CT: Praeger, p.95.

 Lindsay & Petrick (1998) Managerial Ethics: Moral Management of People and

Processes. Mahwah: NJ. Publication, p.115. Retrieved 26 February 2011,

(online) available on: http://www.questia.com/PM.qst?a=o&d=47611954