A2
Business
Ethics
http://www.youtube.c
om/watch?v=CUCSK
1QFwts
Watch this film clip.
Note down the
ethical issues that it
raises for
businesses?
• Ethicists do not always agree about the purpose of
business in society – some see the main purpose of
business is to maximise profits for its owners or its
shareholders.
• Others consider that businesses have moral
responsibilities to their stakeholders; including
employees, consumers, the local community and even
society as a whole.
• Other ethicists have adapted social contract theory to
business, so that employees and other stakeholders are
given a voice as to how the business operates.
“Good ethics is good
business”
Do you agree?
http://news.bbc.co.uk/1/hi/business/8521514.stm
How might a company act
‘ethically’?
What companies can you
think about that have
sound ethical principles?
Unethical business?
• Businesses that are believed to be acting unethically may be
publicised in the press, and pressure groups that oppose the
activities of certain businesses are better organised, better financed
and so better able to attach such businesses.
• E.g. Huntingdon Life Sciences in Cambridge where the Animal
Liberation Movement set up a group called SHAC (Stop Huntingdon
Animal Cruelty) to try to close the company down, often using
ethically dubious methods; threatening employees etc.
• The campaigners understood business and its weak points very well
as the company nearly went bust.
• However, the company changed tactics and the public reacted
against the extreme methods of SHAC.
Q: Is it okay to act unethically in
order to promote ethics?
Cost/Benefit analysis
• Consequentialist
• Maximise pleasure (Bentham) or
happiness (Mill)
• Calculate empirically balance of pleasure
over pain or happiness over misery
• Tends to ignore individual rights, classic
criticism – minority is sacrificed for majority
• Does Mill’s rule utilitarianism get round
this problem?
We start by viewing a clip on the Ford Pinto.
What are three key facts you can find?
What were Ford’s priorities?
http://www.youtube.com/watch?v=rXZk_LNZWg
Style over safety?
• Cheap: The Pinto had to sell for $2,000.
• To increase the size of the luggage
compartment, the gas tank was relocated to the
car’s rear (Strobel, 1994)
This fault meant that Ford’s own
test result = explosion in 8/11 tests
Some cost /benefit facts
• The piece of plastic cost $11 a car to fit
• Estimated cost of fitting $137m
• Estimated cost of casualties $48m in
compensation
• But ….. a problem with utilitarian ethics is
we cannot know precisely what the
consequences will be….
• Actual compensation cost was millions,
and in 1978 a recall took place anyway.
Reputation and ethical outcomes
• 500 burn fatalities in crashes (Dowie, 1977).
Two million Pintos were sold.
• In September 1978, Ford issued a recall for 1.5
million 1971-76, making it the largest recall in
the industry up to that time.
• One result was the largest personal injury
judgment ever ($6.6m awarded).
• In the 1979 landmark case State of Indiana v.
Ford Motor Co., Ford notoriously became the
first American corporation ever prosecuted on
criminal homicide charges. Ford was found not
guilty in March 1980 (Schwartz, 1991).
Evaluate
• Is cost/benefit analysis to blame – or poor
cost/benefit analysis based on
Government figures ($200,000 per human
life)?
• Is utilitarian ethics to blame? Or a failure
to do a proper analysis of likely
consequences based on known facts –
that in two-thirds of rear end crash tests
the tank exploded?
• http://stevenclark.com.au/2010/03/13/busi
ness-academics-stop-promoting-the-pintomyth/
Homework
• Research a company that you can use as
a case study and prepare an A3 sheet for
others to use:
– Eg: Amazon, Ebay (recent taxation issues)
– Cigarette manufacturers
– Horsemeat scandal
– Nike/Gap (child labour)
– Monsanto (GM food)
– Banker baillouts
Discuss
• Should businesses be forced to act
ethically? Why?
• If so, how?
• How do you think ethical theorists would
respond?
The Relationship between
Business and Consumers
Who are stakeholders?
Share
holders
Management
Employees
Customers
The
Business
Government
Local
Community
Environment
Suppliers
• Consumers now influence business ethics, and have
been instrumental in bringing about change: consumers
expect businesses to demonstrate ethical responsibility
in its widest sense – affecting the treatment of
employees, the community, the environment, working
conditions etc.
• http://www.youtube.com/watch?v=OWio7NVOnaI
• Some companies have been the focus of the consumer
criticism and forced to change their practices, e.g:
– Nike, Gap and Primark over child labour
– Shell over Brent Spar and Ogoniland
– Monsanto over GM food
– http://www.youtube.com/watch?v=hUSsG_tDDY0
• http://www.telegraph.co.uk/finance/newsby
sector/retailandconsumer/5099816/Ethical
-clothing-sales-quadruple-says-Mintel.html
• http://www.frankandfaith.com/ethical/
• Is this a good thing?
Cyber-crime and surveillance
• Governments worry about the loss of control and private
citizens worry about an excess of control over their
behaviour.
• Private papers used to be in people’s houses of place of
business, but now they are on computer disks which are
lost by government employees. Banks, insurance
companies, employers etc now know everything about
us and we have little control over how they use the
information.
• Surveillance covers many technologies e.g. international
ECHELON screens e-mails for key words in the name of
national security. This is done without our consent or
knowledge – it would seem that information is
considered more important than people.
• ID cards are used in many countries, in the armed forces, in
schools and universities etc. to allow legitimate access to
building and information. As these cards carry more
information, they leave us open to identity theft.
• Websites use forms of surveillance to find out about their
users e.g. log in info
• There area also subtle methods such as loyalty cards in
supermarkets which collect information about our purchases.
• We need to consider whether privacy is of greater value than
the needs of the state, national security or business.
Is this ethically right/wrong/neutral?
• J.S.Mill defined liberty as autonomy and considered it to
be the most important attribute. He said that the state
should not interfere within the private lives of individuals
unless it is to protect them from harm.
• In contrast to this, the totalitarian Marxist view rejects
any private ownership of property, including rights over
one’s body.
Good or Bad?
• David Lyon, Professor of Sociology at Queens University, Canada,
stresses that surveillance is about social sorting, so that different
groups of people can be treated differently; whether as a higher
risk/threat or for insurance or simply by postcode so that ‘suitable’
spam is sent to that address.
• Lyon says that surveillance is about predicting the future, and this
means that we so not need to see the use of the new technologies
as necessarily evil, but we should not see them as neutral either as
they have the most severe consequences for those who are already
marginalised society.
• We need to ask whether the utilitarian/capitalist approaches to
surveillance are necessarily right – does it make most of us happy
because a terrorist might be caught??
Discuss
• What rights SHOULD consumers have?
• What do you think different ethicists would
believe?
– Utilitarian, Virtue, Kantian
The Relationship between
Employers and Employees
What would be an
ethical relationship
between an employer
and employee?
Employer/Employee relations…
• For them to be successful
there has to be a balance of
interests; the employer
wants to plan for the future,
make profits, keep the
employees motivated.
• What do employee’s want
from the relationship?
What happens when it goes wrong?
Whistle-blowing
Whistleblower: ‘an informant who exposes
wrongdoing within an organisation in the hope of
stopping it’
What are the difficulties faced by
whistle-blowers? Is it ethically right?
• Danger of job loss
• Looked down upon
• Lack of trust in future
Case Study: Erin Brockovich
http://www.youtube.com/watch?v=kC5L4IJoERM
In 1993, American legal clerk
and environmental activist who
had no formal law school
education was instrumental in
bringing a case against Pacific
Gas and Electric Company
(PG&E). The case alleged
contamination of drinking water .
It was alleged that this caused
high rates of cancer in the area.
The company settled in 1996 for
$333million dollars.
Case Study: Watergate Scandal
The Watergate scandal happened
when United States President Richard
Nixon, a Republican was tied to a crime
in which former FBI and CIA agents
broke into the offices of the Democratic
Party. Nixon’s helpers listened to phone
lines and secret papers were stolen.
This was against the law. He
repeatedly lied and covered-up his
involvement. A whistleblower
(codenamed Deepthroat) was
instrumental in bringing the crime to
light. Nixon resigned.
Co
Freedom to Care
Organisations have now been set up to protect whistleblowers. Freedom to
care promotes our ethical right to accountable behaviour from large
organisations. It argues that employees have an ‘ethical right’ to express
serious public concerns in the workplace and if necessary, go public.
Work through the issues:
• Complete the case studies questions in
pairs:
Homework
• Case Study. Chocolate and Coal. Read
and answer the questions.
Discuss:
• What kind of responsibilities do you have
towards your employer?
The Relationship between
Business and Globalisation
http://www.youtube.com/watch?v=3kZUv1YjZ3c
Homework
• Make notes from both textbooks
answering the questions as you go
through.
• Remember that next lesson, you are
presenting your case studies and ethical
theories!
Have a guess?
• How many restaurants does Mcdonalds
have?
• How many people does Mcdonalds
employ?
• How many countries have a McDonalds?
How has life changed over the last 100
years because of Globalisation?
The reasons for globalisation
1. Technological change – especially in communications
technology (switchboards in India)
2. Transport is faster and cheaper
3. Deregulation – increase in privatisation, so countries
now able to own businesses in other countries
4. Removal of capital exchange controls – money can
now be moved easily from one country to another
5. Free trade – many trade barriers have been removed;
many by grouping such as the EU
6. Consumer tastes have changed – people are now more
willing to try foreign products
Globalisation: good or bad?
Good
•Cheaper products
•Provide jobs for those in less
developed countries
•Makes links between counties
and businesses
Bad
•Open to exploitation
Exploitation Vs Benefits
Globalisation and Unfair Trade
Free Choice Defence
“In a typical developing nation, if you’re able to work for an American
multinational, you make eight times the average wage. That’s why
people are lining up to get these jobs.”
- Johan Norberg – In Global Defence of Capitalism
• The choice isn’t always a free one – there is no real alternative (but
not physically forced)
• But, are we powerless to offer other choices?
• The individual has autonomy – are we limiting this?
Better than Nothing Defence
“.......because a lousy job is better than none at all.”
- National Centre for Policy Analysis
• The question is, what if the alternative is nothing?
e.g. Junk food is better than no food
Is it a good idea to pull out when a supplier is found to be immoral?
No Sweat Movement
No Sweat exists to fight against
sweatshop exploitation. We organise
solidarity for sweatshop workers from
the UK to the four corners of the world.
We stand for workers' self-organisation,
international solidarity and for the right
to organise in every workplace.
http://www.nosweat.org.uk/
Legality Defence
• There is a tendency to comply with regulation and assume that this
is enough. Is it?
• Lots of things are legal, but not necessarily ethical
e.g. Tax evasion Vs Tax avoidance
Anti-globalisation
The WCC (World Council of Churches)
campaigns for responsible lending and
unconditional debt cancellation.
This project brings churches and partners
together to reflect on the connections
between poverty, wealth and ecology; act
against economic injustice; address just
trade, ecological debt, and decent work:
http://www.youtube.com/watch?v=ryqZY3A
DUsU
‘Globalisation is the best approach for all
stakeholders in multi-national
business’
Discuss?
Business and the Environment
All businesses
impact on the
environment: they
emit pollution, they
produce waste and
use resources.
Businesses,
however, are
continually being
encouraged to
improve their
approach to
environmental
issues.
Every year there is a prestigious
award, the Business Commitment
to the Environment Award, and in
2007 the Co-operative was one of
the winners for its response to
global climate change. Some of its
efforts for the environment
include: the reduction by 86% of
its CO2 emissions, use of 98%
green electricity and the ethical
investment policy of the Cooperative bank.
Case Study: Anglo American
They are one of the twenty largest UK based companies, heavily
involved in mining and quarrying. When Anglo American carries
out its mining operations it tries to have a positive effect in three
areas:
• In the area where
the mine is located,
it carries out its
operations with care
and tries to improve
the lives of local
people e.g.
Minimising noise
and other types of
pollution.
• In the area immediately surrounding
the mine, it is active in conservation
and improvement.
• In the wider region around the
mine, it contributes financially to
local communities and helps
generate new businesses.
http://www.youtube.com/watch?v=cTWSlOmeoMo
Utilitarian ethics offers the best
approach to the morality of
business ethics?
(35 marks)