Business Ethics

Case 1

Business ethics refer to the standard principles and behaviors that are acceptable to customers, competitors, the regulatory authorities, and any other stakeholder during a business transaction (Boylan, 2001). Apart from making profits, any business needs to consider the impacts it has on the society.  

The cruise industry has experienced significant growth in number of passengers and people who use the ships for transportation of goods. However, several ethical issues have come up in business of the cruise industry notably in the US. Some of them are;

  1. The companies operate with certificates of foreign countries and pay little taxes.
  2. The cruise ships employees are exploited.
  3. The cruise ships release large amounts of waste products into the water causing serious pollution in the water.
  4. The life of passengers is at risk because only a few doctors are available.
  5. Passengers get frequently injured.
  6. There is a high frequency of crimes.
  7. The interests of the people with disabilities are not taken into consideration.

The cruise companies do not pay taxes to the US and are not bound by the US laws when they do not base in the USA, while they still operate and are recognized worldwide. The profit margins of the companies are large due the increasing number of passengers and the low pay given to workers. Most of the companies also evade paying taxes.

Kelly (2001) argues that the profits made by a company should reflect the incomes of the workers. The latter are responsible for the astronomical profits that the cruise companies make and which should determine the amount of the wages they gain. Instead, the workers in the cruise companies earn very little, meaning they are exploited. It is, therefore, unethical as the profit and wage gap in the cruise companies is big.

The profit margins have risen to an average of $3 million per day and the wages given to the US workers grew to more than $9 billion in a year. The income shows that the employees are exploited and are not paid according to the amount of work to be done.

The ICCL regulates itself to ensure that pertinent ethical issues prevalent in the cruise industry are corrected. The sector may be costly, but the companies must pay taxes, and safety gadgets as well as a better pay to the workers have to be provided. These will be reflected on the customer service. A cruise officer can offer free services in training other cruise members for the benefits of good business ethics. Safety standards have to be improved, and rules that are compatible with the laws of the country have to be enacted.

Case 2

Despite the fact that no one was made ill or harmed by the fake apple juice, it was against the law to imply that real apple juice was used to make the concentrate while it was not. Since LiCari was the Director of R&D in the company, he was obliged to perform his duty of informing the management about the standards of the product. He was, therefore, not overreacting.

Whistleblowing should be done by informing the relevant officials or the public about some legal or ethical violation. LiCari followed the line of authority because he reported Mr. Lavery, who was the vice president for operations. After no action was taken he informed Mr. Jones, who was the Purchasing manager. When the two did not react on the information, he resigned and informed the FDA. It is important to follow the lines of authority during whistleblowing, but a more dependable person can be consulted for security reasons.

Beech-Nut was going through a period of financial hardship that included a large number of creditors and debts. Consequently, the company had to increase its market share and lower its production cost so as to increase its profitability and hence ensure its survival. Interjuice company was supplying Beech-Nut with apple juice concentrate at a lower price than any other company would.

The two CEOs lacked moral sensitivity that people require to empathize with others. Firstly, it was immoral to feed children with starch syrup that might have even resulted in nutritional diseases. They failed to take the position of the consumers and reason out the appropriate measures to take. Secondly, the CEOs failed to make moral judgment while considering their arguments on making the fake juice. They did not visualize the consequences of their actions. Third, the CEOs lacked moral motivation because they put the company’s interest beyond the moral values. They also lacked moral character to take the right action when they were informed of the misdealing in both companies. Beech-Nut should have stopped receiving supplies from Interjuice and Interjuice should have changed its product appropriately, or told the public about the actual ingredients of it.

LiCari was convinced that unethical practice was carried out in the company, and the top management was unwilling to change the situation. For LiCari to expose the evil without facing the wrath of the employer, he had to quit the job and write an anonymous letter to the FDA. He did this for his safety because many whistleblowers face the risks that may be even life-threatening.

Hoyvald and Lavery escaped serious sentences on technicality because there was evidence that Hoyvald was acting on the advice of the legal counsel representing the company. He told Beech-Nut that the shipment of juices from San Jose plant to the Dominican Republic would be lawful. Hoyvald was also not liable for the events that occurred prior to his appointment as the CEO of Beech-Nut.

Lavery thought that he would use the hold harmless agreement form that he signed to protect himself against any lawsuit by pretending ignorant. Hoyvald wanted to temporize so that the company would regain its financial stability before he could take action. He, therefore, played the ‘cat and mouse game’ to gain time for the products that were already produced to be sold and hence avoid the losses that would have been incurred. Analysis of ethical dilemmas involves honesty, responsibility for one’s actions, integrity and loyalty (Boylan, 2001). These features would help anybody analyze any situation and come to ethical decisions.

 LiCari’s decision was right because he could not change the situation within the company. He was mindful of other people’s welfare and hence made a moral decision to expose the issue.

The market share of the company dropped because of poor management, for example, the plant was poorly maintained, and there was stiff competition from other firms such as Gerber Baby Foods and Nestle. Beech-Nut Company had to face the consequences of the fake apple juice and the ‘cat and mouse game’ by paying hefty fines. The company paid $2 million fine for the charges and $140,000 to the FDA for the investigations during the ‘cat and mouse game’ period. Finally, the company’s reputation was ruined because it lost the customers’ trust and loyalty, and it would take some time before the consumers could trust it again.

Case 3

The companies covered in the case study had realized the significance of putting structures that made the environment of their workers safe. There are existing international organizations that monitor the conditions of industries and working environment worldwide. Organizations such as the National Labor Committee conduct research on foreign factories to assess the extent of violation of the workers’ rights and conditions under which they work. The international market has also enhanced more awareness of the standards used in the industries for the production of the goods. Goods produced in poor and unethical conditions such as using child labor made the companies change the styles of production to meet the requirements of the consumers. In regards to the statement, it is not possible to use unethical ways in the production without being censored by different authorities. The owners of the companies have set codes of conducts that have to be followed by all its subsidiaries. If the method of production is unethical, people will know, and the goods produced in such manner will be rejected and the customer base will be lost. This results in low gains.

It is unethical and shows the lack of both the social and corporate responsibilities if a company engages child labor. The companies should instead sponsor the vulnerable children to be in schools and pursue their education (Griseri and Seppala, 2010).

The number of hours that an adult can effectively work and be productive is 8 hours per day. The minimum wage should be paid for these hours. In cases of child labor use, the child would be taken back to school and be provided with the necessary materials that can help to achieve high education standards.

When the workers in Apple Company committed suicide due to the poor working conditions, it took a bold move to audit and give transparent revelations that it used to improve the working conditions of their workers. The company did not incriminate the employees for exposing accusing facts. The Nike Company introduced stringent measures to its customers who had joined the consortium to foster the rights of the workers. The products of Nike were associated with slave wages, workers being forced to work over the norm and ruthless violation of the rights of the employees. In the long run, the goods from Apple were still being bought while those from Nike were rejected.

Case 4

Social responsibility is considered as the role of the firm towards the society (Griseri and Seppala, 2010). The extent of environmental damage caused should not be excused due to the level of social responsibility of the firm. The oil spill in BP Deep-Water Horizon well and that of Exxon had similar environmental impacts and hence ought to be treated equally.

The company cut back on employees and maintenance expenditures so as to reduce its costs and therefore increase income and profit.

The risks of becoming too cost conscious lead to being profit oriented and hence overlooking important issues such as social responsibility. It also brings to taking unethical decisions that may result in various risks. Budget decisions are reached by the top management of an organization, and they affect the whole firm. Decisions made by junior workers may influence only some sections of the business and may not have serious effects.

Exxon might not make a similar decision about hiring an irresponsible employee and trying to cut down the costs after the spill. The reason of this of the fact that the company spent more than half of its profit on legal issues and was also to  pay extra $507,5 million as compensation for the damage. The two decisions cost the company a lot and hence a repeat of the same situation may not be possible.

Exxon’s secret deal to put a ceiling on the punitive damages by reaching a high-low settlement with the plaintiff was another unethical deal. This agreement was a manifestation of corruption because it would mean that the jury’s verdict would have no effect. The deal was a way of circumventing the trial so that the outcome could be favorable to Exxon despite the vast damage caused. This scenario reflected a conflict of interest and lack of moral integrity of the plaintiff.

The insurers denied repaying large claims so as to earn interest during the period that litigation was pending. This act was fraudulent because it lacked honesty, and it was a way of earning undeserved money.

The punitive damage charges were excessive considering the losses the company had undergone due to the loss of oil, cleaning expenses, compensation for the fishermen and numerous legal fees. This court decision was not considerate of the welfare of the company even after the company had done its best to save the situation. The oil spill act, passed by the congress to preclude the Valdez from ever entering Prince William Sound, was also excessive and ought to have been amended.

References

  1. Boylan, M. (2001). Business ethics. Upper Saddle River, NJ: Prentice Hall.
  2. Griseri, P., & Seppala, N. (2010). Business ethics and corporate social responsibility. Australia: South-Western Cengage Learning.
  3. Kelly, M. (2001). The divine right of Capital: Dethroning the Corporate aristocracy. San Francisco, CA: Berrett-Koehler Publishers Inc.