Write a report on ethical theories & practices.
Business ethics are most o the time those code of conducts, which people assume that the organization would follow, although, there are chances of not following the set of code of conducts. There are certain behaviors within the organization that classifies the organization, either as a good or as a bad organization. There are entrepreneurs who, think that for the success of an organization business ethics is not that much important. Such is not the case because ethics are something that influences not only the stakeholders and the customers but at the same time, it influences the shareholders at the same time. Business ethics is something that affects the whole of the operations in the business in general.
The global market has many business scandals, which proves that the organizations that have not followed the business ethics had to suffer a lot. One such business scandal is the Sanlu milk scandal (Branigan, 2009). The scandal got its exposure in the year 2008 on the month of August. According to different reports, the Sanlu Group is one of the most important dairy producers in China, who contaminated milk powder with melamine. The result of this contamination was, 30,000 babies only in China became sick and six babies had to experience the fatalities. Fonterra, the company from New Zealand, was one of the shareholders of the company. Fonterra warned Sanlu group about the contamination that are there in the products (Yan, 2011). The particular incident not harm the reputation of the company or the group but the particular incident harmed the reputation of the country as well. Other countries like Hong Kong, Singapore, Australia, banned goods coming from China. The reputation that China earned as the leading exporter of the product faced a challenge.
Utilitarianism with Reference to Sanlu Milk Scandal
Utilitarianism is one of the most important moral reasoning that is being used in the business ethics. According to the utilitarian theory, anything or rather any act that brings happiness for the greatest majority of the people in a group or society is considered as the right or the good act (Approaches to the Study of Ethics. 2016). Utilitarianism is a theory that is concerned about the benefit of the majority and for the happiness of the greatest majority of the people; it supports things like coercion and manipulation. During the eighteenth and the nineteenth century the English philosopher Jeremy Bentham, for the first time came up with the theory of Utilitarianism (Khan, 2016). After Bentham came up with this particular theory, it went through lots of changes. For example, Bentham supported the fact that the happiness of the majority should be measured in terms of pleasure and pain. In the nineteenth century, John Stuart Mill, another follower of the utilitarianism theory, came up with a little variation in the theory. According to Mill, one should measure the happiness n terms of quality and the quantity of the pain and the pleasure. Thus, one particular theory has gone through lots of changes and in the workplace, the particular theory has two different division.
The first division of the utilitarian theory is the “Act Theory”, or the Act-Utilitarianism. According to this particular theory, if a particular behavior of the organization brings pain to the majority then the act or the behavior of the organization should be considered as right (Zuber & Asheim, 2012). If the act of the organization fails to provide happiness to the majority, then the act would not be considered as the right action. Thus, the particular theory actually supports not only, the fairest methods but at the same time, it supports the most ethical decision that the organization could make. The Sanlu Milk scandal does not gets approve even by the act-utilitarian theory, because the decision the organization had taken would have brought profit to the organization but it would not have caused happiness to the majority (Workplace Example of Utilitarianism Ethics | FutureofWorking.com. 2016). The decision of the Sanlu Group actually brought pain to more than one group of people, which includes, the customers, other stakeholders and even the shareholder of the organization. The scandal affected the reputation of the country, that is, China.
Rule-Utilitarianism is another form of utilitarianism, which is different from the act-utilitarianism. Rule-utilitarianism, unlike the act-utilitarianism, does not depend on the action carried on by an organization or by a person (Mautner, 2016). The theory depends on the set of rules, which will provide happiness to the majority of the people in the society or in a group. The rule-utilitarianism, considered a certain situation, and there are certain rules against that situation that would give greater happiness to the people. For example, according to the rule-utilitarian theory it is the rule that the manipulation of the price of the goods is not acceptable. Therefore, even if the act-utilitarian theory supports the manipulation of the prices for the greater good of the majority, such is not acceptable by the rule-utilitarian theory. The Sanlu milk scandal of the 2008 is not even approved by the rule-utilitarian theory as well. The group has manipulated with the ingredients of the product and this is something that is not an acceptable rule, which would bring happiness for the majority. Thus, neither the act-utilitarian theory, nor the rule-utilitarian theory approves the actions of the Sanlu Group.
Individualism with Reference to Sanlu Milk Scandal
The theory of individualism is based on the self-interest of an individual that would help an organization to benefit, at least in the end. The individualism theory gives more emphasis to the personal benefits of the individuals (Business and Economic Ethics Lesson One: Business Society and Normative Ethics. 2016). According to this particular theory if an organization follows the theory of individualism then it could utilize the selfish interest of the people as an instrument of motivation. Thus, according to this theory the personal or the self-interest of the people is given more importance. The particular theory gives more emphasis to the long-term benefits and not much importance is given to the short-term benefits. The
The particular theory has one problem and that is although the theory gives more importance to the long-term benefits and not much importance to the short-term benefits; yet, many times, the organization move towards the short-term benefits (Weiss, 2014). Therefore, most of the time the self-interest of the individual or the organization leads to such decision making situations that does not bring happiness for the people; or it can be said that those decisions are not in any way ethical for the people or the society (Quinn, Reed, Browne & Hiers, 2016).. Therefore, most of the time, the individualism theory turned out to be fruitful for the organization but most of the time the ethical notion that is attached to it is missed out at the same time. The Sanlu milk scandal can be considered as one such incident, where the theory has been used in the wrong way, to gain maximum benefit (Velasquez, Andre, Shanks & Meyer, 2012). The Sanlu Group, like many other organizations emphasized on the short-term benefits and not on the long-term benefits. Therefore, the individual interest of the people served the short-term benefits of the people and the company gained profit as well (Liu, Lee, Hui, Kwan & Wu, 2013). The problem aroused when the scandal has its exposure in the global market; and the reputation of the group was hampered at the same time.
The individualism theory, therefore, lies in a stark contrast with the utilitarian theory, because this particular theory gives more emphasis to the individual gain and loss (The Chinese Tainted Milk Scandal|Business Ethics|Case Study|Case Studies. 2016). The utilitarian theory on the other hand gives more importance to the collective happiness of the people. The Sanlu milk scandal of the 2008 can be considered as such a case where the decision-making things are individualistic in nature and not collective in nature. It can be seen as a case where the individualism theory has been used to have short-term gains. The individualism theory can only be ethical if the theory is used to serve the long-term purpose. The particular theory therefore, raises a conflict between individual choices and the norms that are there in a corporation. Thus, it can be said that this particular theory is not really an appropriate theory for the modern corporations that are there in the global market. The Sanlu milk scandal, according to many scholars and critics, opened up the long-term and short-term orientation that should be there in the organization.
Rights Approach with Reference to Sanlu Milk Scandal
Another important ethical approach is the Rights approach, where the dignity of the individual and the freedom of the individual are given respect. According to this particular theory or approach, every individual has the right to live freely, and at the same time, they have the right to express their views and their wills. The particular approach depends n the choices that one make, and this choices should ensure not only that person but everyone else has the freedom to live their life, according to their will. The people, who are making the choices, should be responsible enough to make the choices (Donnelly, 2013). The choices should not only be legitimate but at the same time should be morally correct as well. The particular theory or approach can be divided into two parts. One way to interpret the particular theory is the positive way and the second way to interpret he particular theory is the negative way.
The German philosopher Immanuel Kant has made the positive way of interpretation of the rights approach, in the eighteenth century. According to Kant if individuals are seen as a means of a purpose then that will not actually, contribute towards the development of the humanity (van Hoorn, 2014). According to Kant, if people want to show respect towards the dignity of the other people and want to save them from moral wrong doings then they should see people as the end of a purpose (Meeler, 2016). If one goes by this definition of the positive approach then it can be said that in case of the Sanlu milk scandal, the babies and the customers are seen as the means to earn the profit for the company. Thus, the company made the free decision of manipulating the ingredients, because they thought that their customers are the means, through, which they will earn their profit (Williams, Galick, Knudsonâ€Martin & Huenergardt, 2013). Thus, they fail to provide respect to a larger amount of the individuals and to their dignity and thus ethically could not contribute to the society, nor did it sustained in the global market for a long time.
The other interpretation of the rights approach is the negative interpretation. According to this particular interpretation, there are certain rights that are being claimed by an individual, but to ensure that the individual receives what he/she has claimed, certain duties are imposed on the others (McMenemy, 2014). Among all such rights, there is one very important right and that is the “right to not be, killed” by others. The Sanlu milk scandal violates the particular negative right that people enjoy and want that the others perform their duties in such a way that they do not face any problem in enjoying their right. In case of the Sanlu milk scandal, the people who were working in the organization, and the decision-making body in the organization, fails to perform their duties (Feng, Brewer & Ley, 2012). Thus, six babies have to face the fatalities and they were denies the negative right of “not to be killed” by the others.
Justice Approach with Reference to Sanlu Milk Scandal
Justice approach again is another important approach, in the business ethics. The particular approach has its roots in the Western culture. The ancient western culture, which includes, philosophers like Plato and Aristotle, has the reference to the theory of justice. The particular approach is being referred as the fairness approach at the same time. The particular supports, neither favoritism nor does it support any kind of discrimination, as well. According to Aristotle, one could only ensure justice if there is an equal treatment for those who are equal and unequal treatment for those who are unequal (Arthur, Ashton & Beecher, 2014). Thus, the particular approach is of the opinion that people should be treated equally without any kind of discrimination. The particular approach can be explained as the distribution of happiness and the burden among the people. In deciding the fairness of distributing the happiness and the burden among the people, it is important to take into consideration the amount of benefits that is being enjoyed by a particular section of people.
In the Sanlu Milk scandal, the organization and the decision-making body who was there in the organization enjoyed the profit. On the other hand, the customers or rather the consumers, of this organization are those people who had to suffer because of the manipulation of the ingredients (Sanlu | Homepaddock. 2016). Therefore, here one group is favored over the other and this is something that could not be claimed as the justice that is there for the people. The Sanlu milk scandal, supported favoritism and thus it had negated justice.
Justice has been denied in this particular scandal because here there is no equal treatment for the people (Noddings, 2013). If one group has enjoyed profit then the other had not only suffered but it actually took the life of many people as well. In this particular case people who were accused of providing milk powder, contaminated with melamine to the people, or rather to the babies, although received equal amount of justice. The Sanlu milk scandal, according to the reports presented by China, harmed almost 30,000 babies among these 30,000 babies six had to experience fatalities. There are almost 54,000 babies who had been hospitalized and after around four years or so 12 babies, who were being fed the Sanlu milk powder died of malnutrition (Ivey Publishing. 2016).
Therefore, the Chinese government conducted a criminal case against the company and two of the officials in the company were executed. Apart from these two officers, other officers had to face or rather experience imprisonment. The other officers of the company received 15 years of imprisonment. Thus, in case of receiving, if one go by the justice approach it can be said that the Sanlu group has been punished in the right way. Thus, it had provided the right justice to the people, who had suffered because they had consumed the products that are being offered by the Sanlu Group.
The Sanlu milk scandal, therefore, is a scandal that has actually not provided justice to most of the people. It not only includes the customers and the stakeholders but at the same time it includes other organization in the country. The Sanlu group gained benefit through the manipulation, at least a short-term profit, but the reputation of the other Chinese organization was affected because of the action that has been carried out by the Sanlu group. Countries like Hong Kong, Singapore, Australia, did not allow selling those goods in the country that were exported from China. Thus, the Sanlu milk scandal is such a scandal that has unfairly distributed the benefits as well as the burden among the people. The company although, could very easily have avoided it; provided the company adopts those strategies that were ethical in nature and aligns with the four discussed ethical approaches at the same time.
Thus, here are few recommendations that would have helped the company to sustain in the market in spite of huge amount of competition that is there in the market. The few recommendations have been discussed below.
- Sanlu group should have listened to the warnings of their shareholder, Fonterra, and should have followed the act-utilitarianism. The particular approach at that moment would have helped the company to take such a decision that would have brought happiness for the majority; in this case for the organization and its employees; the customers and the stakeholders.
- The adoption of rule-utilitarian theory would have saved the company from taking those actions that are unethical in nature. According to the set of rules, manipulating either price or the ingredients of the products would not bring happiness to the majority of the people. Thus, if this particular theory has been adopted then it would have become easy for the organization to not to adopt any unethical decision. Thus, they could not manipulate the ingredients and thus would have gain competitive advantage in the global market, which is good for the stakeholders, shareholders and especially for the consumers of the products.
- The company could have adopted the individualism theory for fulfilling the long-term benefit of the organization. Many scholars and critics believe that the individualism theory has been adopted by the Sanlu, but only for the short-term profit. Thus, if the group had adopted individualism theory for the short-term gain then it would have been turned out to be advantageous for the group and for the people living in the society.
- The Sanlu group should have abided by the negative rights approach, and then it would not have committed the unethical act such as contaminating the milk powder with melamine. Moreover, the company should have provided justice each people, and should not have thought about the benefit of a particular group. If the company would have thought about the justice for everyone then contaminating the milk powder and risking the life of several babies would not have taken place as well.
The Sanlu milk scandal, which took place in the year 2008, not only risk the life of several babies, but at the same time it affected the international relation between the countries as well. Many countries suspected that the things that are produced in China are not at all good and thus they did not allowed the exported Chinese goods in the country. Thus, the financial economy of the people too, suffered a lot. Moreover, the shareholders of the other countries, such as Fonterra, of New Zealand, who had 43% of its share in the Sanlu group, too had to suffered largely.
Therefore, it can be concluded that for the success of a business following business ethics is important. Business ethics is not something that people know that one will follow but it is something that people assumes that one must follow. Therefore, business ethics, and the ethical approaches bring in success to the business and help in the growth and the development of a particular business.
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