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Theoretical Approach To Business Ethics

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Question:

Discuss about the Theoretical Approach to Business Ethics of Prime Air Conditioning LLC.
 
 

Answer:

Theoretical Approach to Business Ethics

Business ethics refers to the principles that are followed by people running a business. The fundamental reason for the formation of Prime Air Conditioning LLC is to make profits. However, as it carries out this objective, it should be mindful of all the stakeholders that are affected by the business operations (guide2dubai 2017). These include the customers, employees, investors, the community, suppliers, and shareholders (Cline 2017).

Different theoretical concepts have been created about business ethics. A philosopher named Kant came up with a deontological approach towards ethics. This is also called duty based ethics. This approach aims to evaluate the motive leading to different actions in a bid to determine whether they are right or not. This approach does not focus on the results of the individual actions (Emelda 2011). However, it focuses on people’s obligation towards others and the environment based on morality. Therefore, regardless of how many people may benefit from a given action, the action should be not undertaken as long as it is unethical.

Another approach is the teleological approach. It determines the moral standard of an action based on the consequences One theory in this category is the utilitarianism theory, associated with John Stuart and Jeremy Bentham. It is also referred to as result-oriented ethics. This argument relies on the principle that the end justifies the means. It mainly observes past experiences to predict the future better. This approach, therefore, allows for organizations to be unethical so long as the results of their activities will benefit the most stakeholders (Hunt & Vitell 1986).

There is yet another ethical system called virtual ethics. This system pays more attention to how to aid people to develop character traits that are positive as opposed to giving directions on which rules should be followed. In turn, the positive character traits enable individuals to make the right decisions. There is also need for individuals to get rid of their negative habits(vices) and develop new positive ones (Cline 2017).

 

Absolute and Relative Ethics

Absolute ethics refer to the moral practices that are universal and unchanging. They are objective and apply to all people equally regardless of changing situations. Relative ethics, on the other hand, refer to moral principles that can change with a change in circumstances. This type of ethics is subjective and depends on personal opinions and bias. Relativistic ethics is mainly seen due to religious and cultural differences (Donaldson 1996).

Different business activities rely on absolute ethics and others on relative ethics. Incidentally, forced labor is not allowed anywhere in the world in this day and age. Child labor, on the other hand, is accepted in some locations such as some developing countries, and highly discouraged in others.

Ethical Issues that could affect Business Operations in Prime Air Conditioning Industries LLC.

Decisions taken by Prime Air Conditioning Industries LLC can be made by one person or a team of employees. Morality requires the employees to make ethical decisions. Though an ethical decision may lead to the loss of a short term profit, it may also result in sustainable results for the business in years to come. It is therefore up to employees of various organizations to act ethically. The owners of Prime Air Conditioning Industries LLC, however, have the greatest responsibility to show ethical practices. The working conditions provided for employees should be safe and conducive to work in.  This is to minimize accidents and enable employees to be most productive. The company should not lead to environmental degradation. Waste should be properly disposed, and the company should use sustainable raw materials to avoid depleting natural resources. Business practices should also be carried out fairly. For instance, there should be no bribery or use of copyrighted materials unlawfully. There should also be fair trade practices to bring about fair competition in the market and avoid monopolies or cartels (Gautschi, III & Jones 1998). Finally, workers should also be fairly compensated for their work and their human rights should be observed and respected (Barnett et al. 1994).

 

Impacts of Ethical Considerations on Business Objectives

The company to be used in this analysis is Unibeton Ready Mix. Since the primary reason for the existence of many businesses is to make a profit, some turn to unethical business practices to achieve this objective. Other goals contribute to the achievement of this primary objective. It is, however, important to use both the deontological and teleological approaches when trying to achieve every goal (Bloomberg 2017). The business should strive to minimize manufacturing costs but not on the expense of their ethics. There may be unscrupulous suppliers who can provide raw materials at low prices. The business should not just purchase from them due to their low price. In case a harmful commodity is bringing in profits for the company, such as expired goods, the company should stop the sales even if that would bring in some losses.

Improvement of product quality may come with additional costs that will lower the profit margins. However, Unibeton Ready Mix should strive to produce high-quality products that will bring in sustainable returns into the future. One supply chain may be more efficient than another, but it may be conducting unethical practices such as environmental pollution. Unibeton Ready Mix should not use that supply chain regardless of the low costs. It should, however, use a supply chain that carries out ethical practices because this will also be more sustainable and bring better returns in the long term. Therefore, businesses should look at the long term of different practices and not only go for short term gains such as profit increase, increased market share, and higher revenues. This long term view ensures that the business is sustainable and continues being a going concern into the future.

Business Ethics about Stakeholders

Unibeton Ready Mix has different stakeholders with different interests in the organization. Shareholders expect the management to run the organization in a way that increases profits for them to gain dividends as well as capital gains from the business. It is, however, unethical for the management to exploit customers for this gain. Management and employees expect salaries at the end of every month. They should be well compensated for to ensure that they remain ethical (Goodstein & Wicks 2014). They should also be treated with respect and their rights protected.  Customers should be provided with high-quality products at the right prices. Unibeton Ready Mix should conduct due diligence when sourcing for ethical suppliers and they should ensure that the products are quality and the companies should pay the suppliers on time. Banks are significant in business operations for expansion and growth by lending the businesses money. Unibeton Ready Mix should, therefore, be ethical when dealing with banks and deliver payments at the right time and in the right amounts (Cromwell 2017). Pressure groups are organizations that put pressure on businesses to be ethical by pointing out their wrong doings such as environmental pollution or employee exploitation. They should be treated ethically, and businesses, for instance, should not bribe them to turn a blind eye.

 

Role of a Company Acting as a Moral Agent

A moral agent is a person or entity that can act ethically. A company can be a moral agent because companies are expected to show corporate social responsibility in the way they relate to all their stakeholders. Unibeton Ready Mix is a business that is accountable for how its employees conduct themselves. If this company failed to conduct its activities ethically, it would face the risk of ruining its reputation as well as receiving penalties and fines from the regulatory officials. As a result, Unibeton Ready Mix company has to ensure that all its stakeholders including their shareholders, suppliers, investors, as well as its employees are ethical in all their dealings (Aupperle et al. 1985).

Mechanisms for Achieving Employee Involvement and Empowerment at Unibeton Ready Mix Company.

When employees are involved in different sectors of the business, they gain a sense of belonging and feel empowered to carry out their responsibilities in an ethical manner. Employees should not have just one particular task day in day out. This brings in the sense of monotony and demoralizes the employees because they do not see how their work is contributing to the overall success. They should, therefore, be allocated different tasks and be trained further to be able to handle the different responsibilities. They should also be involved in decision making by asking for their opinions and factoring in those that apply to the business. Employees should also be encouraged to be more creative and innovative to find better ways to do various activities or to come up with new goods and services (Mitchell Ronald et al. 1997).

Employees should also be provided with clean and safe working conditions. This makes them feel valued by the organization, and it increases their morale to work hard and be more productive. The employers should also treat the employees with respect and not just as the helping hand. This makes the employees feel respected, and in turn, they feel empowered to be more ethical to ensure the business is a going concern in the future. Finally, meetings should frequently be held to remind employees of their ethical responsibilities and address any concerns they may have (Carroll & Shabana 2010).

Ethical Issues Affecting Port Operator DP and Other Companies

About a month ago, a senior manager formerly working for Port Operator DP world was accused of soliciting bribes from two companies amounting to Dh 4,800,000. The bribe was to aid the companies to win massive construction projects. The defendant, a twenty-nine-year-old lady, was accused of demanding Dh 500,000 from the manager of a construction company. In return, she was to grant his company a building project in Jumeirah Heights (Amir 2017).

The woman, who was Syrian, was additionally charged with asking for a bribe of Dh 4,350,000 from a manager of another company, who was Lebanese, to enable him to win a bid at Jebel Ali Port. In this case, the woman is charged with offering bribes while the company personnel is accused of offering bribes.

All the defendants were further charged with forgery which was used to aid in winning the bidding project. There were more accusations of money laundering and the use of a different company to carry out the bribing process (Amir 2017).

 

Ways in Which the Companies Can Improve Their Business Ethics

Port Operator DP should first find out what the employees think about this case of unethical business practices. This is to ensure that the other employees in the company do not believe that the woman’s behavior was warranted. Port Operator DP and the other companies involved in this scandal should then organize sessions to teach their employees on ethics. This should include participation from employees to make them feel part and parcel of the process. Moreover, the owners should reward ethical employees to motivate them to do the right thing even when they are tempted to be unethical.

Ethical Code

A code of ethics should be put in place to ensure professionalism and make sure that the employee conduct is ethical. It also dictates how employees should make decisions and puts into consideration all stakeholders to an organization (Aupperle et al. 1985). Based on the incidence discussed above, three companies can give the following code of ethics.

The ethical code expects of the following from all employees;

  • To conduct themselves ethically and with integrity at all times.
  • To form networks within the organization where they can consult when in doubt.
  • To never discriminate fellow employees or colleagues based on any factors such as; race, gender, or religion.
  • To never carry out business activities while posing as employees of the company for their interests.

Therefore, it is important for every company to have a code of ethics that all stakeholders, mainly employees, are aware of to ensure that all activities they carry out are ethical and do not put the reputation in jeopardy. By maintaining ethical standards, the business is able to experience sustainable growth that will last for long.

 

References

Amir, S., 2017. Ex-Dubai port company manager on trial accused of cash for contracts.

Aupperle, K.E., Carroll, A.B. & Hatfield, J.D., 1985.an empirical examination of the relationship between corporate social responsibility and profitability. Academy of Management Journal, 28(2), pp.446–463.

Barnett, T., Bass, K. & Brown, G., 1994. Ethical ideology and ethical judgment regarding ethical issues in business. Journal of Business Ethics, 13(6), pp.469–480.

Bloomberg, 2017. Unibeton Ready Mix L.L.C.: Private Company Information - Bloomberg. Available at: https://www.bloomberg.com/research/stocks/private/snapshot.

 Carroll, A.B. & Shabana, K.M., 2010. The Business Case for Corporate Social Responsibility: A Review of Concepts, Research and Practice. International Journal of Management Reviews, 12(1), pp.85–105.

Cline, A., 2017. 3 Types of Ethical Systems to Follow. Available at: https://www.thoughtco.com/atheism-types-of-ethical-systems-4058406

Cromwell, J., 2017. What Ethical Responsibilities Does an Organization Have to a Different Stakeholder?

 Donaldson, T., 1996. Values in Tension: Ethics Away from Home. Available at: https://hbr.org/1996/09/values-in-tension-ethics-away-from-home

Emelda, M., 2011. Difference Between Deontology and Teleology | Difference Between. Available at: https://www.differencebetween.net/miscellaneous/politics/ideology-

Gautschi, III, F.H. & Jones, T.M., 1998. Enhancing the Ability of Business Students to Recognize Ethical Issues: An Empirical Assessment of the Effectiveness of a Course in Business Ethics. Journal of Business Ethics, 17(2), pp.205–216.

Goodstein, J. & Wicks, A., 2014. Stakeholder Responsibility | Building an Ethical World. Available at: https://blogs.darden.virginia.edu/ethicalworld/2014/07/23/stakeholder-responsibility

guide2dubai, 2017. Prime Air Conditioning Industires LLC Manufacturing Companies Dubai.

Hunt, S.D. & Vitell, S., 1986. A General Theory of Marketing Ethics. Journal of Macromarketing, 6(1), pp.5–16.

Mitchell Ronald, Agle Bradley & Wood Donna, 1997. TOWARD A THEORY OF STAKEHOLDER IDENTIFICATION AND SALIENCE: PRINCPLE OF WHO AND WHAT REALLY COUNTS.

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