Ethics in Business

Business ethics is generally referred to as the set of rules and regulations that participants in a certain field in business should live up to. These rules are usually directed towards ensuring that the employees are morally upright and socially responsible especially when dealing with their clients. In an organizational setting, bureaucracy is inevitable, there are those who formulate and ensure the rules are followed. On the other hand, there is a group – employees – who are expected to comply with the rules for efficiency. We realize that with the extreme competition in business today, chances that they may involve in unscrupulous behaviours are very high. This may negatively influence the field and affect the clients negatively. Health competition on the other hand ensures that businesses prosper and have room for improvement. Thus, the ethics are necessary to ensure there is orderly operation according to the objectives. It has however been established that for the ethics to be appropriately adhered to, they must be instilled in the employees at a very early stage. Similarly, the management needs to exercise ethical behaviour which the employees can emulate, rather than dictate. A well disciplined organization with morals and applied ethical behaviour undoubtedly realizes its goals with time.

Legal and Ethical Issues Facing Organizations and Management

Almost all organizations come up with strategies and rules that they deem fit for their operations. These are those that they feel will be more supportive towards the realization of their objectives. According to Craven, and Mills, (2004), “the Board of Directors has approved a Code of Business Ethics to provide a framework within which all business practices involving Lonmin must be conducted, managed and regulated.” These are entirely under the control of the company’s management, which although challenging, they must instil and uphold. However, there are some legal frameworks that describe business ethics and their application under different circumstances. These clarify on some necessary ethics that must be practised in an organization despite the variation in policies or way of operations. Some of these describe the employer employee relationships. For instance, it is legally unethical for an employer to fire a worker for whichever reason without prior notice especially on contract, thus, may be quite difficult to coexist with an incompetent employee for the purposes of respecting the contract.

Bribes as an Inducement to Buy in Business

As previously discussed, chances that a business, especially the management may engage in deceitful behaviours to compete in the global world is very high. Thus, where there are great opportunities, they may be tempted to give or accept bribes in return for the special favours. This is definitely not a fair and ethical behaviour according to any business. We realize that the role of ethics is to ensure moral standards are upheld in an organization and that they benefit both external and internal participants. In this case, bribes end up compromising the chances of other organizations to fairly participate in the market. Though the bribing party may be fully qualified, the unfair means used to reach the top of the specific business is unethical. Thus, bribery in any kind of business is unethical. This however, should not apply to management only. The junior staff should also be keen on accepting and giving bribes for favours such as quick promotion. Similarly, they should not accept the same from clients who demand special treatment in return from the junior staff. To ensure this happens, the managers should lead by example so as to instil the same values among their staff. Remuneration should also reciprocate the kind of work done so that the workers will not feel insufficiently compensated.

Importance of Ethics and Social Responsibility

According to (Koontz, and Weihrich, 2007), organizations have an obligation to the society in terms of monetary giving back and exercising ethical behaviours. Thus, it is very important that they have social responsibility and work ethics when dealing with each other and the society at large. As discussed above, the major importance of ethics is that it ensures fair and healthy competition among organizations. There will be minimal or no instances where the outcome is unfair with inability to compete on the same level with others. Besides the fairness, ethics are important because it gives the organizations a positive image where they can have good public relation skills. With a good image based on ethics, the firm is in a better position to brand itself to their advantage. Social responsibility is important because of the support that firms give to the community which in essence, is the reason behind their success. (Koontz, and Weihrich, 2007), mentioned the types of social responsibility which were ecological, technological, and economic environment. With appropriate response to the society, it is possible for organizations to rely on the support of the same group. Thus, a good relationship is developed.

Conclusion

From the above discussion, it is quite clear that the relationship between the workers and management should have a good but very professional relationship. This happens where the two parties are able to maintain morals and good company ethics when relating. Business ethics have been clearly defined as a result to ensure it is a fair market and healthy competition. With the legal frameworks put in place, the ethical standards have been observed over time and their results proven to be quite positive. It also makes perfect sense since in the absence of the regulations, it will be impossible to centrally coordinate the staff. Coordination, respect for authority and proper performance has proved to be directly proportional with proper ethics.

References:

Craven, J. & Mills, B. (2004). Code of Business Ethics. Lonmic Plc. Retrieved from http://www.lonmin.com/assets/pdf/code_of_business_ethics.pdf

Koontz, H., & Weihrich, H. (2007). Essentials of management: An international perspective. New Delhi: Tata McGraw-Hill.

Freshly promoted to International Tobacco Products Manager for GB Tobacco, Fiona Fuller finds herself at the cutting
edge of the firm’s growth strategy for the next decade. Faced with declining sales volumes and increasing taxes on
tobacco products in Western Europe and the US, GBT has targeted Gold brand for a growth in sales volume growth. The
prestige image of British cigarettes since the Olympic Games in many foreign markets has permitted higher prices and
margins on Tobacco products. This is particularly true of the Gold brand, whose symbol of achievement, urban and
professional is recognised worldwide.
In Malu, GBT’s plans have run up against a government policy which formally bans the import of cigarette products.
While the health ministry supports the ban, the major beneficiaries of the policy are the government owned cigarette
monopoly and the country’s tobacco farmers.
The monopoly is required to buy the crops of the farmers at above-market prices. Intense pressure from EU tobacco
companies and the EU commission has failed to convince the government of Malu to repeal the ban on cigarette imports.
Ironically EU brands have traditionally controlled about 20% of Malu’s cigarette market as a result of unregulated
(black market) sales by established distributors in neighbouringSinglaw. Malu’s government has not enforced the ban
in the past, nor has it made any efforts to stop GBT from spending £8 million a year to advertise ‘Gold”.
Apparently the government is convinced that high prices for unregulated sales of cigarettes are sufficient protection
for the brands offered by their monopoly .
Disgusted by what he considers a duplicitous policy, SuppakornRachinda, ‘Gold” brand manager in South East Asia,
has submitted to Fiona his first ever marketing plan for Malu.
He proposes to double the advertising budget in Malu to £16 million and increase prices to Singlaw distributors by
20%. He argues that his plan will allow GBT to capitalise on its premium position in Malu and share in the lucrative
profits from the unregulated market. He asserts further that the plan will not produce higher prices in Singlaw since
the smuggling distributors will not have to raise prices, thus ensuring that the non-smuggling distributors will be
unable to do so. Finally, he maintains that the plan is consistent with the established practice of the Malu
government, if not its formal policy.
Suppakorn’s proposed marketing plan is now on Fiona’s desk, awaiting her approval for implementation this coming
year.

Using the seven-step model, evaluate her options using ethical reasoning (you should use Kant, Utilitarian and Virtue
arguments) and make a recommendation about the decision she should take.
You are advised to supplement your analysis with research into the market for cigarettes in South East Asia. It may
also be helpful to refer to the Chartered institute of Marketing code of professional standards 2012.

http://www.cim.co.uk/Files/codeofprofessionalstandards10.pdf

N.B. the company name, countries and managers are fictitious. However, the vignette is based on actual conditions faced by cigarette manufactures in some Asian countries.